The Economic Times of India suggests giving directors a more complete set of tools to set executive pay with:

1. Market Assessment
2. Internal Pay Equity
3. Wealth Accumulation
4. Profit ‘set-aside ’

Market assessment [is the] first step in conducting a market assessment is ‘Peer Group Selection’ in light of the level of role complexity and job worth differences. The appropriateness of the peer group is an important issue that is raised constantly by members of remuneration committees.

Some say that CEO pay should be roughly twice the amount paid the next management level, and that a differential by a factor of two is ‘felt fair.’ There seems to be something to this ratio, in that the difference in every ‘real’ level of work would lead to a doubling of pay.

Another approach to determine executive pay is to set wealth accumulation targets over a number of years, given a pre-determined level of performance. Once executives start to exceed these levels, pay would be adjusted in terms of future base pay increase or future equity awards.

The final perspective on determining pay is to set it in relation to the company’s profits or net revenue , as is done in many ‘professional’ service firms, such as by investment banks, private banks and consulting firms. For example, among the investment banks or commercial banks with a substantial investment banking arm, total compensation and benefits typically constitutes between 30% and 50% of net revenues.

Forbes features an Oxford Analytica article drawing the obvious connection between poor company performance and complaints around CEO compensation:

Increasingly poor corporate performance, in the context of the current U.S. economic downturn, has raised shareholder discontent regarding governance and executive pay issues. This has fueled a slew of proxy challenges and demands for reforms to promote "shareholder rights."

Changes in corporate compensation practices are likely, but the most far-reaching moves are likely to be implemented by companies themselves, rather than by government regulation. In the case of troubled sectors such as finance, reforms may be applied to compensation standards for all employees, rather than focused on the senior executive level.

Imagine you are a CEO with a clause in your contract stipulating the company is liable for any legal fees you incur as a result of your job - sounds fair enough. Now, imagine that the legal fees you are incurring are related to a criminal investigation into whether you fraudulently manipulated your pay as CEO - delicious, isn't it.

On Tuesday just this occurred when Westar Energy Inc. (NYSE: WR) was ordered to pay former CEO David Wittig $1.67 million for legal bills related to a criminal case brought in 2003 alleging he used schemes to inflate his compensation while masking it from shareholders. After a long legal soap opera, Wittig is scheduled to go on trial for a third time in September on circumvention and conspiracy charges.

Though Wester is suing Wittig for breach of contract that would nullify its need to pay his legal bills, in the meantime they are on the hook. It's not bad being CEO...

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.