There's a difference between a CEO that's paid well and one that's raking in loot he clearly doesn't deserve. The former may invoke a bit of ire in this economic climate, but when cooler heads prevail, the cash laid out is usually but a rounding error on the increases in market cap he's driven. An overpaid CEO, on the other hand ... well, it's a bit harder to justify the inflated package.

Kerri Chyka over at CNN Money reports that the Corporate Library sifted through the bloated and legit packages out there to let us know which top dogs are rolling in dough that should probably be left in the company coffers.

1. Michael Jeffries, Abercrombie & Fitch (NYSE: ANF)
Last year, Michael Jeffries made $71.8 million in total, with a base salary of $1.5 million, according to corporate governance research firm, the Corporate Library. It even included a $6 million retention bonus ... because you want to hang on to a guy who the research firm calls one of the five "Highest Paid Worst Performers" of 2008. If that stings, Jeffries can hop on the Abercrombie corporate jet instead of running away. He's paid better than 75% of rival CEOs, while the share price generally underperformed them.

2. James W. Stewart, BJ Services Company (NYSE: BJS)
James Stewart had a good year in 2008, as it outperformed most of its peers, and he nailed a $34.6 million package. In all fairness, $30 million came from the value realized on stock options. The four years that preceded Stewart's strong performance, on the other hand, were lackluster. The future, it seems, is immaterial, as Baker Hughes picked up BJ Services last month, and Stewart will probably be out the door at the end of the year, when the deal closes.

In the private equity world, Stephen Schwarzman -- who is the chief at the The Blackstone Group L.P. (NYSE: BX) -- is a legend. Because of the nature of his business, he really didn't have a high profile; that is, not until last year, when his firm went public.

And the PR was horrible: He took a huge slug of cash off the table. He even had a blow-out 60th b-day party. Oh, and he owns a variety of opulent homes, such as in St. Tropez and Jamaica.

But, as is usual, the real person is much more complicated. And, that's the take from a tremendous piece in The New Yorker. The author, James Stewart (who is also the author of the best-seller, The Den of Thieves), had a chance to interview Schwarzman as well as some of his colleagues. He has also done quite a bit of research.

There's been some pretty idiotic commentary on the departure of Merrill Lynch & Co., Inc. (NYSE: MER) CEO Stanley O'Neal, starting with the USA Today's assertion that it was somehow a setback for African American CEOs. But James B. Stewart had the most trenchant analysis of the O'Neal's fall that I've seen with his column (subscription required) in today's Wall Street Journal:

... What was Merrill's board asking Mr. O'Neal when Merrill was earning record profits on the outsize success of its huge investment in subprime mortgages and related collateralized debt and loan obligations?

I know it's hard to ask tough questions in the face of success. It's not a strategy for winning popularity contests. But it's essential in the worlds of business and investing.

Exactly. Nearly every great business blow-up in history might have been prevented -- or at least had its impact limited -- if people had asked probing questions when everything was going well. Remember when analysts lamented that Enron's earnings were a black box? Jeff Skilling even agreed with that assessment! But hey! It was fine because the stock was going up! It wasn't until after the company imploded that people decided to question the wisdom of investing in a company when you have literally no idea how it makes money.

Read Stewart's column, and forward it to everyone you know who invests. There's probably some deeper metaphor in it about life, but I shan't bore you.

The always-insightful James B. Stewart has some sage advice for investors in his his latest Wall Street Journal column (subscription required). He sums it up like this:

Don't fall prey to sharp swings in market sentiment. Stick to a disciplined, long-term approach.

Don't try to bottom-fish in mortgage and housing markets. It's too early.

Don't chase yield. Junk bonds remain especially precarious, in my view. Short- and medium-term certificates of deposit still offer attractive yields, are government-insured and pose little risk to capital.

A key point that he brings up is the issue of visibility in financial stocks and the mortgage markets. As I've pointed out in previous posts, the earnings of investment banks are very, very difficult to understand right now. The mortgage market is impossible to predict.

To use the words of Donald Rumsfeld, we are dealing with a lot of known unknowns -- there are a lot of things we don't know yet and know that we don't know. There may even be some unknown unknowns -- things we think we know but are wrong about.

James Stewart is one of the best investment minds in the world, and he thinks Valero (NYSE: VLO) is a good buy. Valero is the largest refiner in North America and Stewart, like many great investment minds, thinks gas prices are likely to remain quite high. He thinks Valero is the best way to play this, and it even makes him feel better about paying outrageous prices to fill up his car:

Still, my costly trips to the gas station have had a silver lining, especially since I've made a point to patronize Valero Energy... Not only does Valero tend to undercut its competitors by a few cents a gallon, but I own Valero stock. Watching the dollars and cents spin by on the pump, I at least have the satisfaction of knowing that some of that will be returning to my pocket in the form of dividends or higher prices for Valero shares.

Most interestingly for investors, Stewart suggests using the strategy of writing covered calls. While options trading is normally too risky and complex for most individual investors, covered calls can be an effective strategy for locking in profits.

Schaeffer's Investment Research has an excellent primer on covered calls, and more experienced investors may want to look into this strategy.

When I first saw the headline of James B. Stewart's latest SmartMoney column, "Microsoft's Value Play," I thought, "Oh no, here it comes again." Another story about whether Microsoft is a value stock or a growth stock. I must have written that one myself about three times in the past three years and blogged about it as recently as a week ago.

But when I actually got around to reading Stewart's piece tonight, I have to say it was well worth my time. Stewart offers a great summation of all Microsoft's current woes, including reminding us that Linux is also a threat (something we haven't heard all that much about lately).

He also reminds us that by traditional value measures -- price to earnings and sales relative to its industry and the S&P 500 -- Microsoft is starting to look cheap.

Here's where the article gets really interesting: What did Stewart do? He bought a few long-term call options. Since I have a hard time understanding options, I'll just quote him: "With Microsoft stock just under $24 this week, the January 2008 options with a strike price of $20 were just $5.50; the $15s were $9.50. I took advantage of the low premiums to add some of these calls to my holdings."

I see this as a slight hedge. If he was really convinced Microsoft was cheap, I think he would have bought the stock.