J. Edward Ketz, an accounting professor at The Pennsylvania State University and author of Hidden Financial Risk, has been featured here before for his articles at SmartPros. His most recent piece offers substantive measures for Congress to take to curb CEO pay, rather than just pandering:

"The first thing to do is to separate the position of chairman of the board from the CEO position. The board should represent the shareholders and, as such, it ought to supervise and control the activities and the proposals of managers. The board cannot function very effectively for these purposes if the board is populated with the top executives. As the British have learned, there are important benefits to separating these functions, including better oversight by the board of directors.

The second thing to do is to empower shareholders to vote. It is shameful for managers to prevent votes to take place on important issues, including but not limited to, compensation. But I would not take the toothless position of having these votes nonbinding. After all, these are the shareholders -- the owners of the corporation! Surely in a capitalistic society such as ours the owners of the firm or their agents can have a say in how the business is run.

The SEC had several chances during recent years to empower owners to regain control over their firms, but instead the SEC fumbled the ball. It wouldn't hurt for Congress to question Christopher Cox and ask him why the commission's recent decisions favor managers over shareholders. I thought the purpose of the SEC was to represent and protect the interests of shareholders."

Because 'golden parachutes' were not enough, a WSJ story reported on another way to absurdly pay CEOs, even if they are dead:

"For instance, Nabors Industries (NYSE: NBR) would owe the estate of CEO Eugene Isenberg a "severance" payment of at least $263.6 million, which is more than the first-quarter earnings at the Houston oil-service company, the Journal said.

Compensation critics call the practice the ultimate in pay that is not based on performance.

Death benefits are not a new feature of executive contracts, but a federal rule change 18 months ago that forced companies to provide more detail on severance arrangements has exposed just how lavish some of these arrangements are, the Journal said.

It said the CEO of Shaw Group Inc (NYSE: SGR) is in line to be paid $17 million for not competing with the engineering and construction company after he dies."

According to a Reuters story, presumptive Republican Presidential nominee Senator John McCain would make say-on-pay shareholder votes mandatory if elected:

"Americans are right to be offended when the extravagant salaries and severance deals of CEOs ... bear no relation to the success of the company or the wishes of shareholders," he says, adding that some of those chief executives helped bring on the country's housing crisis and market troubles.

"If I am elected president, I intend to see that wrongdoing of this kind is called to account by federal prosecutors. And under my reforms, all aspects of a CEO's pay, including any severance arrangements, must be approved by shareholders," he says.

From a Matthew Daneman piece in The Rochester Democrat and Chronicle:

Being the head of a major company often comes with rewards beyond a nice paycheck and oodles of stock.

As part of his 2007 compensation, Eastman Kodak (NYSE: EK) CEO Antonio Perez received $7,000 worth of financial counseling, $24,723 for a security system and personal use of Kodak aircraft valued at $340,007, according to the company's proxy statement.

Securities and Exchange Commission filings by other companies showed 2007 perks including:

• $135,725 moving expense reimbursement for Stephen S. Romaine, CEO of Ithaca-based Tompkins Financial Corp.
• $19,578 to cover taxes for Carl E. Sassano of Transcat Inc. in Ogden, a distributor of calibration equipment.
• $64,825 in perks, including club membership dues, meals and the cost of a Buffalo apartment for M&T Bank CEO Robert G. Wilmers.
• $1,250 clothing allowance for Homi B. Patel, CEO of Hickey Freeman's parent company, Hartmarx Corp.

Not surprisingly, in this selection from a Reuters piece on a new industry group fighting for CEO pay status quo, the group reveals its true colors: the average stockholder (meaning the average owner of the company) couldn't possibly understand the complicated reasons why a CEO needs to be paid an outrageous sum of money - hence say-on-pay is bad for business and bad for America:

With business leaders facing rising scrutiny from shareholders and lawmakers about their compensation, a new organization wants to tell corporate America's side of the executive pay story.

Leaders of the Center on Executive Compensation, an industry-backed group based in Washington, say they want to offer a reasoned view about how to create good pay practices.

The center says its mission is not to blindly defend CEO payouts that have angered investors, but to strengthen the links between pay and performance industrywide while ensuring companies remain competitive.

The media has "rightly" put the spotlight on instances of excessive CEO pay, "but our concern is that paints a picture of corporate America in total," said Richard Floersch, the center's chairman.

"For the vast majority of companies, they are dedicated to a very strong executive compensation program with very strong principles around pay for performance," he said. "Unfortunately, that story doesn't come out when you do have some of these outlier situations."

Activist investors have lashed out over executive payouts they consider too lavish, while members of Congress have publicly scolded some corporate chiefs for receiving outsized pay packages at a time when their companies have been hard hit by the U.S. mortgage crisis.

CEOs themselves play no direct role at the new center, an offshoot of the HR Policy Association, which represents human resources officers at big U.S. companies.

The center has a 16-member advisory board made up of chief HR officials at companies such as American Airlines (NYSE: AMR), International Business Machines (NYSE: IBM)) and Lockheed Martin Corp (NYSE: LMT).

Shareholder rights activists say they do not have high hopes that the executive compensation center will advocate for investors.

"This is part of the effort of the business community to protect the status quo from angry shareholders and a concerned Congress," said Richard Ferlauto, director of pension and benefit policy at the American Federation of State, County and Municipal Employees (AFSCME), a frequent critic of executive pay plans.

"It just shows that the business community is mobilizing, rather than reforming pay," he said.

The executive compensation center opposes the "say-on-pay" investor proposals and a bill pending in Congress calling for a mandatory shareholder vote on executive pay, saying they could end up forcing companies to adopt "cookie-cutter" pay plans aimed at winning shareholder support rather than be in the corporations' best strategic interests.

"There are a lot of unintended consequences and negative consequences from adopting a shareholder vote," said Charles Tharp, the center's executive vice president for policy.

From an Anne Moore Odell piece on SocialFunds.com:

This year over 90 companies have faced, or are going to face, shareholder resolutions on "say on pay." The resolutions were filed by a broad coalition of 75 plus investors managing over $1 trillion in assets. Walden Asset Management, one of the lead filers of these resolutions, reports that of the proposals that have faced voters this year, a majority have received at least 40% approval with six proposals reaching over 50%.

"The advisory vote on executive compensation would help insure that corporate boards, specifically the compensation committees, do a better job at explaining to shareholders how executive pay is linked to performance," said Brother Steven O'Neil, shareholder action coordinator for the Marianist Province of the United States.

"Even if the shareholder vote is advisory, the board would have a lot of explaining to do if they implemented a pay plan that the majority of shareholders were against," explained O'Neil. The Marianists were the primary filer on "say on pay" resolutions at Capital One and Oracle. They were co-filers at Exxon-Mobil.

The 2008 proxy season has seen a 50% increase in the number of "say on pay" resolutions from 2007, jumping from over 60 resolutions in 2007 to over 90 in 2008. The first "say on pay" resolution was filed by the AFSCME Employees Pension Plan in 2006.

RiskMetrics Group reports in it Midseason Review of the proxy season that executive pay vote proposals have averaged 43.1% support over 35 meetings where preliminary or final results are known. This compares to 42.5% support of these proposals in 2007.

"Under new SEC rules, companies have to disclose the total compensation of their top officers," explained Tim Brennan, treasurer and vice president of finance for the Unitarian Universalist Association. "In the past, much of this information had been buried in the annual filings."

"Now, what can investors do with this information? The most effective and efficient way for shareholders to communicate whether company management, their agents, are being fairly compensated is to have a vote at the annual meeting. This is also a great way for boards to get a reading on the judgment of the shareholders, whom they represent," Brennan continued.

Aflac became this first company to support an advisory vote on executive pay. Shareholders overwhelming supported the issue, voting 93% for the measure.

"I think that the fear of the proposals on the part of the companies is largely unfounded, at least for those with rigorous and fair compensation systems," said Brennan. "Witness the vote at Aflac, the first company to conduct such a vote. Management compensation received approval from over 90% of the shareholders. That's a great vote of confidence for the company and the board."

Other companies that have adopted policies regarding advisory votes on compensation include Blockbuster, Verizon, RiskMetrics, and Par Pharmaceuticals.

As of the end of May, the 2008 "say on pay" resolutions votes that received a majority, some of which are preliminary, include Apple Computer (51%), Alaska Air (53%), Lexmark (60%), PG&E (52%), Motorola (54%), and South Financial Group (52%).

Other results on "say on pay" include Bank of New York Mellon, (46%), Bank of America (45%), Citigroup (42%), Dresser Rand (46%), Dupont (45%), Edison International (47%), Boeing (46%), Goldman Sachs (46%), IBM (43%), Johnson & Johnson (45%), Lockheed Martin (46%), Occidental Petroleum (45%), Merck (48%), PepsiCo (44%), and Waddell & Reed Financial (49.5%).

RiskMetrics notes that as of May 23, no "say on pay" proposal has received less than 30% support.

From The Motley Fool's Alyce Lomax piece "Bad News in CEO Pay":

Many newspaper companies' CEOs actually got raises in 2007, even though a dozen newspaper companies he surveyed saw their share prices decrease by an average of 35.7%. (Granted, CEO pay in the group did decrease by 11.7% on average, but you wouldn't know it from some of the figures.) Check out some examples:

    * News Corp.'s (NYSE: NWS) Rupert Murdoch got a whopping total payout of $32.1 million in 2007. That was a 24% increase over the prior year, even though News Corp.'s shares lost about 8%.
    * Here's a piece of news that might be more at home in a scandal sheet: Journal Register's former CEO Robert Jelenic enjoyed a 333.2% pay increase to $6.3 million, even though the company's shares shed three-fourths of their value. (He's gone now, so his pay included severance; Journal Register now trades on the Pink Sheets. Ouch.)

Situations like these tend to deflate the customary arguments that CEOs should make mad money. Some people argue that exorbitant pay for CEOs reflects the high degree of risk these individuals assume. I'm sorry -- risk?

We've all seen CEOs do an indisputably lousy job, then walk away filthy rich. They often get high-profile gigs elsewhere, too -- look at Home Depot's (NYSE: HD) former CEO, Bob Nardelli, who went on to Chrysler. And what about Merrill Lynch's (NYSE: MER) former CEO, Stan O'Neal? He almost immediately joined Alcoa's (NYSE: AA) board of directors after leaving Merrill. Sure, everybody makes mistakes, but given their rich rewards for underperformance, we can't exactly call these folks' positions "risky." And there seems to be little (if any) shame in accepting tons of money for public failure.

On the bright side, Mutter pointed out a couple of newspaper companies on the other side of the spectrum, where stock performance and CEO pay more closely matched reality last year:

    * Washington Post's (NYSE: WPO) Donald Graham's compensation fell 52.4% to just $411,700; the company's shares fell 17.9%.
    * Scripps' (NYSE: SSP) CEO Kenneth Lowe's pay also dropped even more precipitously than his company's stock price. He took a 20.3% pay cut to $7.9 million, while Scripps shares fell 9.9%.

Mutter called Washington Post and Scripps "two of the most diversified and progressive companies in the publishing industry," and pointed out that their compensation policies are obviously set up to penalize the company leaders for not attaining tough goals. These CEOs took a hit to their wallets even though their companies' shares actually did better than many others in the industry.

Call me crazy, but that sounds like a common-sense policy for all corporations to me. "Our company's not as much of a loser as our peers, and that makes us a winner -- so pay up!" doesn't strike me as a path to greatness.

General Motors (NYSE: GM) executives took some heat during their latest annual shareholders meeting. Investors blasted executives for raking in huge salaries and bonuses while the automaker has continued to struggle financially. However, yet another say on pay proposal was defeated by apathetic institutional investors. The fear on their end is that shareholders may be too harsh and the measure would result in an exodus of executives.

Many shareholders believe that GM's market share, stock price and credit rating have all decreased in recent years, but the management and directors have not been held accountable. Employees have also felt the pressure with more than 10,000 jobs set to be cut in Canada, the United States and Mexico. According to one investor, "We either need to change this company or have the Japanese come in and run the whole place."

GM suffered a $38 billion loss in 2007 and the auto market continues to struggle in 2008. While many of the circumstances surrounding this decline is market and not company related, many investors still believe that executives should share in the pain. However, those supporting executive maintain that many own a substantial amount of stock and therefore are already sharing in the pain.

In the end, this is another example of shareholders disagreeing with management and the board. Executive compensation may remain a hot-button issue, but it clearly still isn't being resolved as long as public fights like these occur.

An excerpt from a Jon Talton piece in the Seattle Times:

Even back in the 1980s, shareholder activists and academics urged companies to separate the jobs of chief executive and chairman, as well as to have more independent directors.

The CEO is the top manager. But the chairman of the board should represent the larger interests of shareholders. He or she ideally is an independent director and can act as a check on the chief executive.

An independent chairman, for example, might have stopped Thompson from risking Wachovia's (NYSE: WB) future by acquiring mortgage lender Golden West Financial in 2006, when the signs of a housing and credit bubble were already abundant.

Yet America spent the 1990s worshipping at the altar of the imperial CEO, who held the title chairman as well, as if by divine right. CEO pay began its rise to imperial levels, no matter the company's performance.

The model here was Jack Welch at General Electric (NYSE: GE). Rubber-stamp boards became the norm. These corporate celebrities wrote books that not only promised to unlock the secret of business success, but even personal enlightenment.

Of course, it's easy to be a genius in a bull market. When scandal and corporate missteps brought on the 2001 recession, the centralized corporate-leadership model showed its worst weaknesses.

Enron, WorldCom, HealthSouth, Tyco International and others lacked independent chairmen and boards.

Congress passed reforms focused on the bookkeeping, but few companies emerged into the 2000s with independent chairmen, or even independent judgment.

The problem is all-powerful CEOs don't always act in the best interests of shareholders. This is on display with the disconnect between CEO compensation and performance.

Nor do imperial CEOs always act for the long-term health of their companies. This was the point of last week's unsuccessful effort to split the chairman and CEO jobs at Exxon Mobil (NYSE: XOM).

Dissident shareholders, including the Rockefellers, argued that the current imperial CEO refused to invest enough in alternative energy.

Exxon, of course, is awash in profits.

Facing a shareholder revolt of no small power, [Wachovia has] the opportunity to break the imperial model, split the jobs and bring independent judgment to the toughest calls.

What a concept.