When Edd Lampert merged K-Mart and Sears Roebuck into Sears Holdings Corp. (NASDAQ: SHLD), he probably didn't plan for a complete and unmitigated disaster. But, from all accounts, that is what the company is at this time. Its sales have consistently plummeted for more than just a few quarters now, the competition has killed it. Sears merchandising frankly is really, really bad -- and on and on.

Lampert's grand vision is still alive, but the realities of running a national retailer in an intense environment have not proved easy at all. What's keeping Sears Holding's shares above $100, you say? Check out the company's vast real estate holdings. Don't think for a second that this isn't the reason Sears is majority owned by Lampert, who could care less about the retail end of the business.

Still, you have to run a business. It's always nice to see that a former CEO who appeared to do virtually nothing in terms of performance get an annual base salary of $1 million through the next few years -- even though he's no longer at the company. Ousted CEO Alwyn Lewis, who was highly regarded when recruited for the Sears Holdings CEO spot but who was wholly ineffective, will receive his salary package through March 24 of 2010. Lewis will also continue to have health and welfare plan availability along with having his remaining stock and option awards vest until 2010 as well.

Even though the boards of public companies should be completely separate from the management and owners of the company, it's hard to see that they're not when excessive, after-term packages like this come to light. Pay for performance? Hogwash. CEO compensation committees can be as corrupt on company boards as those Enron folks from years back. Well, to a degree, anyway.

Herb Greenberg reported on CEOs on the hot seat in his latest column. He included a reference to Sears Holdings (NYSE: SHLD) CEO Alwyn Lewis, who may be poised to serve as sacrificial lamb for the company's failed turnaround -- which should probably be blamed on chairman Eddie Lampert, because he controls the company's investments and failure to invest in its stores.

Greenberg notes that, "Still, with a 2006 salary of $1 million and total compensation of $4.8 million, it would appear that unless Sears reports exceptional fourth-quarter results, Lewis may be on the path to scapegoat, which might not be so bad: If he's fired for what the company calls "constructive termination," he will get a cash payment of $3 million with a total package valued at $22.9 million. A Sears spokeswoman declined to comment. "

I've heard the phrase "constructive termination" before but never really given it much thought. Lewis' employment agreement defines this phrase as Lewis' voluntary resignation following a board stripping him of his titles, an adverse change in his responsibilities, or even a reduction (heaven forbid!) in his base salary and/or bonus.

This is about as great of an example of management gibberish as you'll ever come across -- and sadly it exists in the employment agreements of many executives. Constructive termination means resigning after you've essentially been fired. Calling it constructive is like saying that kicking someone in the groin for giving a wrong answer in math class is constructive criticism.

It would appear that this idea of constructive termination is a key factor in allowing executives who are essentially fired to walk away with huge, or even moderate, severance packages. Why should someone who's fired for bad performance even get severance?

Hopefully shareholder activists will take this issue on in the future.