The Bush administration has taken the approach that business can do no harm. So we have had eight years of the fox guarding the hen house. Adding a few more thoughts to yesterday's Sunday Funnies: Business should have NBA type salary cap. The subject of executive pay at public corporations sometimes raises eyebrows, sometimes raises voices, and often loud protests.

When companies perform poorly financially and it is reflected in the share price the protests are even louder and more justified.

Like they say about pornography... When executive pay becomes so high that it becomes obscene, you may not be able to define it exactly, but you know it when you see it!

Unfortunately these protests are not coming from the board room, or large institutional investors or pension funds, although they should! They come from the "hard working stiffs" that go unheard and disrespected -- and the common shareholder.

Lehman Brothers Holdings Inc. (NYSE: LEH) Chief Executive Richard Fuld continues to keep his job even though shares of the New York-bank have slumped more than 60% this year. Meanwhile, American International Group Inc. (NYSE: AIG), whose shares are down 42%, ousted CEO Martin Sullivan because of the continued poor performance of the world's largest insurer.

Why didn't Fuld follow Sullivan onto the unemployment line, albeit the cushy one for failed CEOs? It makes no sense.

Last week, Fuld shocked investors by pre-announcing that Lehman lost $2.8 billion, or $5.14 per share, results that were officially confirmed today. In the earnings release, Fuld proclaimed the results as "unacceptable" and vowed to "take the necessary steps to restore the credibility of our great franchise." Well, at least he says that's what he wants to do. He dismissed Lehman President Joseph Gregory and Chief Financial Officer Erin Callan last week. On the conference call, Fuld even took responsibility for the loss and investors cheered this act of contrition, sending shares of Lehman up.

The euphoria is not going to last. I am not sure why Wall Street believes that Fuld can extricate Lehman from the financial quagmire that occurred on his watch. They certainly did not give Merrill Lynch & Co.'s (NYSE: MER) Stan O'Neal and Bear Stearns & Co.'s (NYSE: BSC) James Cayne or Citigroup Inc.'s (NYSE: C) the benefit of the doubt.

The Associated Press reports that "as the American economy slowed to a crawl and stockholders watched their money evaporate, CEO pay still chugged to yet more dizzying heights last year." The average S&P 500 CEO took home a pay package valued at $8.4 million in 2007, an increase of 3.5%. The top 10 highest paid CEOs took home a total of more than $500 million, but 5 of those companies saw huge drops in profitability at their companies. It's good to be the boss, even when it stinks to be the shareholder.

On one level, criticizing rising executive pay based on the performance of the economy is grossly unfair: executives should be paid based on their marginal value to the company, not based on broader economic trends that they have no control over. The problem is that executives routinely benefit from factors they have no control over: any CEO of any oil company is doing quite well just for being in the game. When things are going well, everyone's happy, and shareholders generally don't complain about CEO pay when they're earning double-digit returns. But when CEOs don't take a hit with the shareholders on the way down, it's not fair. CEOs are in the ideal "Heads I win, tails it wasn't my fault and I still win" situation.

What can be done about executive compensation problems? That's easy: improved corporate governance that can only be achieved through an increase in shareholder activism. Large institutional shareholders need to get off their hands and threaten with proxy fights when corporate boards fail to do their jobs. For its part, the SEC can improve proxy access, making it easier for dissident shareholders to affect change if that is the will of the majority.

Right now, companies can be run by small clique of insiders who have virtually no stake in the company's long-term future -- and decades can go by without any accountability. Until that changes, executive compensation in America will continue to be a disaster.

A new bit of research is out that shows CEOs are feeling the effects of the economy, much like everyone else...

With CEOs taking home absurd amounts of money, many top companies are hearing calls from shareholders to limit pay to senior executives. The AP reports: "Fund managers and individual investors alike are campaigning for a 'say on pay' rule giving shareholders a vote on executive compensation at major corporations, especially America's biggest banks. This is the latest salvo in the battle against Wall Street's exorbitance, and this time it appears shareholders might stand a chance."

The argument for limitless compensation says that in order to attract the best leaders you need to pay them. I agree wholeheartedly. In fact one need only look at what happened to Ice-Cream maker Ben and Jerry's to see how the principle works in real life. They wanted to limit the CEO pay to a certain percentage of the lowest paid employee. What happened was that they couldn't find anyone worthy enough to take the job. In the end they gave in to the forces of capitalism and paid a normal CEO salary.

My question is simply why can't we compensate senior executives based on their performance? Why should a CEO who managed to lose his company $5 billion, and lose his shareholders 60% of their investment, receive $50 million plus stock? Why not incentavize CEO's so that if they do a good job, they make tons of money, and if not, they don't. On the other hand a CEO that creates shareholder value as well as corporate profits should make lots of money.

There is no doubting that CEO's work extremely hard and 99% of the population couldn't do their jobs. That being said we shouldn't be rewarding them just because they have the title "CEO." We should reward them based on their success.

Aaron Katsman is the lead Portfolio Manager and Managing Director of America Israel Investment Associates, LLC. and Senior Editor of IsraelNewsletter.com. DISCLOSURE: Writer's fund has no position in any stock mentioned, as of 4/13/08.

Corporate Library reports that 20% of CEOs receive tax gross-ups -- reimbursement for most of the taxes due on their perks. Specifically, 650 CEOs received tax gross-ups for perquisites such as housing, gifts, security, country club fees, executive retreats, and even PS3s. While most of the tax gross-ups were related to perks, 30 CEOs had income tax grossed up on restricted stock awards and/or bonuses.

These tax gross-ups gross me out. Not only are CEOs among the highest paid and most pampered members of our society, but their employers are paying their taxes for them. I had more of a gut reaction to this report than Corporate Library's Paul Hodgson who said, "The sight of Angelo Mozilo [CEO of troubled Countrywide Financial (NYSE:CFC)] defending his request to the board to have the income tax due when his wife traveled for free on the corporate jet paid by the shareholders gave me pause for thought."

This thought led to Hodgson's more detailed study. One man's pause for thought is another man's puke. How do you feel about it?

Peter Cohan is President of Peter S. Cohan & Associates. He also teaches management at Babson College and edits The Cohan Letter. He has no financial interest in Countrywide securities.

According to a new study of company leaders, CEOs tend to approach business risks more prudently when compensated with material pay packages as a larger percentage of overall compensation, instead of a heavy dose of stock options.

From one point of view, this makes little sense: Many (many) executives perform just to the point of making stock prices rise quarter after quarter. After all, would you want to buy options with cheap strike prices only to sell them later for massive profit -- company long-term performance be damned? Due to the greedy nature of many CEOs, this situation seems head-on. The only problem here is that this study refutes that belief.

It concluded that CEOs who are granted large numbers of stock options as a main form of compensation are more likely to make riskier decisions with often negative repercussions on company stock prices. This also makes sense: With more stock options on the table, the risk-taker mentality may come out more for leaders-- who ascend to their positions usually by taking risks in the first place.

The only problem is that most of those risks end in bitter disappointments instead of glowing results. Although stock options are geared toward motivating executives and middle managers to improve a company's future performance, the study's authors argue that that form of compensation is not all that effective in increasing a company's overall results. Moral of the story: liberal stock option granting is a good idea, but just don't overload comp packages with them.

How many days in a year? Three hundred sixty five. How many worker salaries fit in one CEO's pay? Three hundred sixty four. Meaning that by the end of this day, there is a chance your CEO has made the equivalent of your yearly salary. He (less so she) is also making one of your year's salary on Saturdays and Sundays. Sweet!

Indeed, the CEO-to-worker pay gap is enormous. According to a new report by the Institute for Policy Studies and United for a Fair Economy, the average CEO of a large U.S. company made roughly $10.8 million last year, 364 times that of the average U.S. full-time and part-time worker salary of $29,544. Looking only at full-time workers, including benefits, CEOs made only 270 times the average $40,000 pay. But don't you worry about them, this still doesn't include perks and pension benefits CEOs get. If it sounds excessive, that's because it is, especially if you consider that in 1989 CEOs earned 71 times the average worker pay.

An interesting anecdote from this IPS/UFE report shows that the pay of the 20 top U.S. CEOs was 204 times that of the 20 highest paid U.S. military generals, 38 times that of the 20 highest-paid non-profit leaders, and three times that of the top 20 CEOs of European companies with higher sales than their U.S counterparts.

But the average Joe can gloat. Those CEOs who make your yearly salary in a day probably also feel on the short end of the stick when their salaries are compared to private equity and hedge fund managers pay. These guys made an average of $657.5 million in 2006, about 61 times the average CEO pay and more than 16,000 times the average full-time worker pay.

Let's see, with 31,556,926 seconds in a year, these managers make your yearly salary each half hour (roughly) that passes in a day -- including sleep time!

It wasn't the bagels burning up, it was the owner.

Before work I often stop by New York Bagel & Deli (NYBD) in Santa Monica for coffee, a bagel and the word on the street. Well this morning I got an earful from my friend Brian Gruntz, the owner, about the pay and severance package Bob Nardelli received for running The Home Depot (NYSE: HD)...before bailing out after failing to increase shareholder value in terms of share price. Hundreds of millions of dollars...for what?

Even though it is almost six months later, Brian still finds it outrageous that Nardelli and other CEOs are rewarded for contributing nothing to their company's bottom line, or shareholders', and often negative results due at least in part to their failure of leadership. Brian went on to rant about a story he read somewhere linking CEO performance and the construction of personal mansions, which start to pop up, like oracles, six months before their demise.

This post is written as part of AOL Money & Finance's Best & Worst of 2006. Vote for Barry Diller, or to check out the other overpaid CEOs.

I'm sorry, but I so totally win. What I mean to say is, Barry Diller so totally wins. He is the undisputed worldwide best freakin' ever King of the Overpaid!

There are many reasons someone might see fit to award their company's CEO a Whole Lot of Money. Perhaps that CEO oversaw a banner year for the company, with record profits and growth in sales and maybe the launch of a whole new enterprise. Maybe that CEO got named as Most Powerful this or Most Influential that. Maybe the CEO played less golf than any other CEO in the whole U.S. of A. Maybe -- this company might award its CEO, say, $10 or $20 million in salary and bonuses and another $20 or $40 million in stock compensation. I mean, that would be a lot of money for a job well done, right?

Ha ha. Hahahaha. HAHAHAHAHA! That's Barry Diller laughing at you. Because in one year, as CEO of IAC/InterActiveCorp (NASDAQ:IACI), during which by all accounts his company did a whole lotta nothing, he made: $295 million.

More than four times the next-most-highly-paid CEO for 2005. That doesn't even count the stock options from Expedia, Inc. (NASDAQ:EXPE), which he spun off during the year, which by one calculation has Diller clocking in at nearly $500 million.

What does IAC/InterActive do? Mostly, it owns the Home Shopping Network, with lots of other little properties like Match.com, Ticketmaster, Evite, Citysearch, and LendingTree. Actually these are mostly really great companies but I think for pay like this Diller should at the very least be hosting the overnight cubic zirconia and Bedazzler marathon on HSN once a week.

Color me surprised. Along with the rest of the investing world, I was happily wandering around, lulled to contentness by the belief that the highest-paid CEO was the nice, boring Eugene Isenberg of Nabor Industries Ltd. (NYSE:NBR). And why wouldn't I believe it?

Well, mostly, because it's not true. IAC/InterActiveCorp (NASDAQ:IACI), you see, filed the proxy indicating its CEO's pay later than most companies. And the end result? IAC CEO Barry Diller blows poor Eugene out of the water. Eugene? $71.4 million (that's a lot Eugene! congrats!) Barry on the other hand:

$295. Million. Dollars.

What did Barry Diller do for this money (which was mostly stock options)? Well, during 2005, the year covered by the executive pay survey, his company spun off Expedia, Inc. (NASDAQ:EXPE), the online travel site, which was -- I suppose -- a useful thing (although the spin-off's stock is down 30% this year). Stock in IACI declined during 2005, 7%, and while operating income improved by almost four times in 2005, it was still a quite-modest $868.2 million.

And, as this article points out: if you add in stock options from Expedia, Barry Diller pulled in $469.7 million.

I think we can slice and dice the numbers however we like, but none of us are ever going to believe that he's worth that much. The Home Shopping Network is a fascinating slice of Americana, a weird, wacky and wild-eyed universe in which Midwestern grandmas discuss their impending purchases of lawn ornaments and appliqued baby sweaters with highly made-up wannabe "Personalities." An unqualified Wall Street success it's not, and I, for one, vow never to buy anything from HSN again.

That doesn't mean I won't watch the scrapbooking marathon ...

I want, oh so deeply, to be shocked. But I'm not. Here's the thing: women are powerful! Women are amazing! Women are reaching the upper echelons of corporate America! Hurray! And while I'm sure everyone at NOW threw a soda party when Indra Nooyi took over as CEO of PepsiCo, Inc. (NYSE:PEP), I'm sure they also tried to get mad about today's "news": male executives make way more than female executives. And then I imagine they remembered: this is nothing new. This is nothing surprising.

Women have been making less than men since the dawn of time. And although Oprah and Indra and Meg are so darned powerful, they can hardly sway the enormity of gender history in a few decades of exerting their collective feminine force.

Let's try one reason female CEOs, CFOs and the like make pocket change compared to their male brethren (and no, there seems to be no relation between executive pay and corporate profit, sales, stock performance, or how many pageviews your bio on the corporate homepage got this year): there just aren't as many of them. Naturally that doesn't explain why (for instance) the top-paid female executive, Safra Catz -- president and CFO Oracle Corporation (NASDAQ:ORCL) -- made a sad 36% of what the top-paid male executive made (that's Eugene Isenberg, CEO of Nabors Industries Ltd. (NYSE:NBR), for the record). Catz wasn't even the highest-paid executive at her own company, pulling in about half of what founder and CEO Larry Ellison scored.

Well. That is Larry Ellison after all. His ego has to be worth at least as much as three women executives put together.

Google continues to demonstrate its particular brand of goofy-yet-financially sound thinking, as the company indicated in a proxy filing yesterday. CEO Eric Schmidt and co-founders Sergey Brin and Larry Page will collect $1 in salary for 2006, just as they did for 2005. According to the filing, "Their primary compensation continues to come from returns on their ownership stakes in Google. As significant stockholders, their personal wealth is tied directly to sustained stock price appreciation and performance, which provides direct alignment with stockholder interests."

(On a multiples basis, however, they might have the highest bonuses anywhere; Brin was paid $1,723 in bonus, with Schmidt and Page collecting a tidy $1,630, over 1600 times their annual salaries!)

Google also announced that the company intends to forgo dividends to its shareholders "in the foreseeable future."