On the other side of the world, the Sydney Morning Herald decries CEO Owen Hegarty's $10.7 million farewell package from the company Oxiana:

But the fact remains that [Hegarty] is already sitting on more than $60 million worth of stock (27.3 million Oxiana shares and 5 million options which are vested), and the proposal to pay out his maximum bonus for 2009, for being retired, and cash out options that are yet to vest sets a poor precedent in executive remuneration.

The whole point of performance pay is performance, not retirement. Retaining Hegarty's services as a non-exec will no doubt be cited as rationale by Oz Minerals, as will the fact that an "independent'' consultant had been given its imprimatur.

The first point is reasonable, the second not. If anyone can cite an example of a remuneration consultant which had ever advised that an executive was paid too much, please respond to the email address below.

A rare piece that adds something truly thoughtful, though still debatable, to the discussion of executive compensation, from Emirates' Business 24/7:

The field of executive compensation has long been dominated by "agency theory", which predicts a "positive relationship between executive compensation and firm economic performance". According to this view, managers receive pay-for-performance awards in order to give them incentive to pursue the shareholders' values; pay is established based on "arm's length contracting between shareholders and management".

Though this line of thought is pervasive among researchers (it's often considered the 'neoclassical' approach), the surprising truth is that little evidence exists to support such a relationship between executive pay and firm performance. In fact, some researchers attribute recent corporate scandals to the overemphasis on maximising shareholder value, without regard for the effects on other stakeholders...

With all this in mind, a new question arises: What's missing in executive compensation plans? The answer is clear: social responsibility. In the wake of corporate scandals such as Enron, in which highly paid but unethical executives wrecked havoc on their workers' lives, business ethics and corporate social responsibility have entered the discussion around executive compensation.

The Motley Fool takes a humorous look at the nebulous category of “other compensation” in SEC filings – pointing out that security expenses are a favorite:

Google's (NASDAQ: GOOG) Eric Schmidt, another guy with a $1 salary, got nearly $500,000 for personal security.

What the heck are these guys so afraid of, that shareholders should foot the bill for "other compensation" like security expenses? I've come up with some possible ideas:

• Killer mold.
• A group of terrorists kind of like the ones in that movie that time, you know, with Bruce Willis.

Wachovia Corp. (NYSE: WB) announced in a regulatory filing that new CEO Robert Steel will be paid handsomely to help turnaround the bank – possibly as much as $38 million.

The former Goldman Sachs Group (NYSE: GS) employee who most recently served in the Treasury Department has an annual salary of $1.1 million, bonus incentive up to $12 million, a separate long-term bonus award of $15 million, plus a restricted stock-grant of $10 million to be issued on July 15.

In a provocative article from Associated Press writer Rachel Beck, she argues that Wall Street CEOs should return some or all of their huge paydays that occurred as America was led into the current financial crisis:

If Wall Street CEOs really want to revive their credibility, they should return the bloated bonuses they got when they made what eventually turned into wrongheaded bets on the mortgage market.

We all know how that outsized risk-taking ultimately backfired for their firms. Record profits have turned into massive losses as financial companies worldwide have taken some $250 billion in write-downs due to their free-falling credit-related assets.

Yet the CEOs still are clinging to the compensation they made from busted business models. And not just bonuses from 2008, when the subprime mortgage meltdown and the credit crisis became more acute, but also those from the last few years that were "earned" when profits were soaring.

That's what they should be giving back to shareholders. It would be a genius public relations move.

Jack Welch, in a column co-authored with his wife Suzy for The Times of South Africa, unsurprisingly defended executive compensation being set by the free market. In case you don’t remember, Jack Welch is the former CEO of General Electric Co. (NYSE: GE) who was paid handsomely for his work, including a package for his retirement of (as quoted in yesterday’s post):

An annual retainer of $86,000 and perks that included sports tickets, use of company aircraft and an $11 million Manhattan apartment, bodyguards and other things that the U.S. Securities and Exchange Commission later valued at about $2.5 million annually. 

In the column, Welch argues:

We think the debate over executive compensation is exactly as it appears — a philosophical divide. There are those who believe that many CEOs just make too much money compared with average workers and their relative value to the organisation, and that someone — be it the shareholders themselves or government regulators — must close that gap. Outsized CEO compensation, this group generally believes, is bad for society and morally wrong. Then, there are people who generally don’t say what they believe, because it’s so politically incorrect. But allow us to step in, because we share their view. Yes, most CEOs make a ton of money, and sometimes they make too much. But in the market economy, salaries are set by supply and demand. The companies that field the best teams win and, because of global competition, the best teams tend to be expensive.

Albany’s Times Union writer Marlene Kennedy decries Grasso’s victory last week – not on legal merits or out of a sense of outrage, but because it “denies us a rich spectacle:”

I had been looking forward to daily, nonstop TV coverage of the trial -- think O.J. Simpson, but for the Wall Street set [of the late 90’s]…

You remember the period: The bull market was beginning to roar and the titans of industry were amassing hefty compensation packages. Jack Welch left General Electric Co. (NYSE: GE) in 2002 with an annual retainer of $86,000 and, it turned out, perks that included sports tickets, use of company aircraft and an $11 million Manhattan apartment, bodyguards and other things that the U.S. Securities and Exchange Commission later valued at about $2.5 million annually.

The disclosures mightily embarrassed the company, and Welch subsequently gave back much of the package.

There were the shenanigans of former Tyco (NYSE: TYC) chief Dennis Kozlowski (of the $6,000 shower curtain fame) and HealthSouth's Richard Scrushy (found guilty of bribing the governor of Alabama) and WorldCom's Bernard Ebbers (accounting fraud and conspiracy), and the late Kenneth Lay of Enron (deceiving company employees and shareholders).

In a thoughtful though not necessarily convincing piece from The Motley Fool, Dick Grasso's pay while at the NYSE is defended based on the length of his tenure and the success of the exchange during his leadership (as well as other, more obscene pay packages):

If you've worked at the world's largest and best-known stock exchange for 35 years -- during eight of which you were the CEO, including after 9/11, when you provided unparalleled leadership -- you think you'd be entitled to end your tenure nicely compensated for a job well done.

Here's what's important in Grasso's case:

• The NYSE was a private organization when the dispute arose.
• Grasso had been CEO for eight years before he left, during which time the NYSE earned more than $900 million.

Heck, if Grasso ran a hedge fund, he'd practically be eligible for food stamps [given his paltry $190 million payday]. His retirement package is equivalent to what hedge-fund manger John Paulson made every two and a half weeks last year. Grasso worked hard. He benefited the company. He deserves his pay.