After the closing bell sounded yesterday afternoon, Yahoo! (NASDAQ: YHOO) announced that its executives received bonuses that came in at half of their targeted range for 2008. The year was a "trying year," thanks to a falling stock price and an unsolicited takeover bid from Microsoft (NASDAQ: MSFT).

As for the specific payouts, former President Sue Decker (who departed YHOO in January) received only $600,000 in bonuses for 2008. This payment does not include YHOO's payment of $23,000 for Decker's "car services" during the year. YHOO's CFO Blake Jorgensen (who will depart when the company finds a replacement) received $250,000 in bonuses during the year.

Widespread outrage over abusive executive pay practices has some companies going to unusual lengths to gain shareholder support for the way they compensate their top earners.

Amgen, Inc. (NASDAQ: AMGN) has invited its shareholders (subscription required) to fill out a ten question online survey assessing the level of executive pay, the clarity of proxy statement disclosures related to compensation, and how well pay practices are aligned with performance and shareholder value. Other companies are instituting similar programs, and more are expected to follow.

On Monday, the stock market rose 498 points -- a move that many attributed to the announcement over the weekend of a plan to buy $1 trillion in toxic waste that uses government loans to lure investors -- such as hedge funds -- into buying extremely risky securities.

That sounds like the same thing that got us into the financial crisis in the first place. It also sounds like the sort of thing that hedge funds do for a living -- and those hedge funds are making a handful of skilled people into billionaires.

While American politicians whine self-righteously about corporate governance travesties at bailed out companies they had every opportunity to extract concessions from, Australia's government is actually taking steps toward long-term improvements in executive pay practices.

The Wall Street Journal reports that "Treasurer Wayne Swan said the center-left Labor government will amend the Corporations Act to require shareholder approval for any termination payments that exceed average annual base salary, which excludes additional compensation such as shares or stock options."

With outrageous and undeserved pay packages gaining unprecedented attention at shareholder meetings this year, some activist investors are taking on one of the most egregious perks of the executive suite: "golden coffin" payments made to the estates of executives who die.

My favorite example is Nabors Industries (NYSE: NBR) which will have to pay the estate of 78-year old chairman an astounding $263 million if he kicks the bucket.

But today's Wall Street Journal reports (subscription required) that some activist investors and pension funds are taking on these death benefits this proxy season, with a pretty good argument: Paying executives large bonuses for dying is the polar opposite of pay-for-performance -- although a crass person might argue that General Motors (NYSE: GM) would be in much better shape had it paid CEO Richard Wagoner a couple hundred million to take a dirt nap a few years ago.

Bank of America (NYSE: BAC) Ken Lewis' compensation fell by 80% in 2008 as the company's stock declined by 66% and a pair of just plain stupid acquisitions primed the company for an even greater fall. In 2008, Ken Lewis took the steps that transformed one of the most powerful financial institutions in the world into a welfare diva, narrowly avoiding nationalization by sucking at the nipple of Uncle Sam. Either way, shareholders have all been wiped out.

Aside from not paying Lewis a bonus, what did Bank of America's compensation committee have to say about all this? "Regardless of our profitability and continued progress and growth, our performance for 2008 did not meet our expectations, including a loss for the fourth quarter."

The Wall Street Journal reports (subscription required) that "More than 40 financial firms have been hit with pay-related proposals, including Bank of America Corp. (NYSE: BAC), Citigroup Inc. (NYSE: C), J.P. Morgan Chase & Co. (NYSE: JPM) and Morgan Stanley (NYSE: MS). Most of the targets are recipients of government capital from the Troubled Asset Relief Program."

This is great news and represents an increase of more than 60% over last year, according to RiskMetrics. Of course, it doesn't matter nearly as much as it should: The "say on pay" votes are really just advisory: All that they do is put a little box on the proxy ballot where shareholders can say how they feel about their company's egregious executive pay practices.

Can President Obama force CEOs to take a massive pay cut? While many others in the economy -- particularly the millions of regular Joes and Janes who have lost their jobs -- are helping to push down wages, CEOs have been immune from the pay cuts. But if Obama forces CEOs who take government money to limit their pay to $500,000 -- 25% more than Obama takes in -- will that cause all CEO pay to tumble? I think the answer is "no."

Why? Many reasons. First, no CEO in his or her right mind would volunteer to take government money given the ensuing pay cut. For example, if the CEO of a car company made $14 million in 2008, why would that same CEO volunteer to make $500,000 in 2009? Instead, the CEO would seek a position with a company that did not take government money and therefore did not limit the CEO's pay.

Over the past 12 months, shareholders in Ambac (NYSE: ABK) have lost more than 90% of their investments as the bond insurers ill-advised forays into structured finance have resulted in massive losses.

But for some reason the company's compensation committee deemed that performance worthy of $3 million in bonuses for 4 of Ambac's top executives. The company's latest proxy statement shows that CFO Sean Lenorard received a $950,000 cash bonus and Executive Vice President Douglas Renfield-Miller got $550,000. Chairman Michael Callen received $975,000 and Chief Executive Officer David Wallis took home $500,000

Just when you think you've heard it all, you hear more. In the last year, Wall Street -- or more specifically, the brokerage units of New York financial companies -- lost $35 billion. (Worldwide, financial institutions have taken $1 trillion in write-offs of bad assets). Those firms received a large proportion of the $350 billion TARP and persuaded the Treasury to guarantee losses from hundreds of billions worth of their financial toxic waste. Their reward? $18.4 billion in bonuses.

How much of the TARP went to paying for those bonuses? The banks have cleverly neglected to report that. But let's face it -- money is fungible. So if they did not use the money from the deposits they received from the Treasury to pay bonuses, our tax dollars freed up cash they may have had from other sources that did go to paying those $18.4 billion in bonuses.

An era of greed that began with the election of Ronald Reagan has come to an abrupt end. That means that the seething emotions of greed and envy that come along with bonus time at investment banks will have fewer dollars attached to them. And talent will flow to government and academia rather than Wall Street. This could be good for the U.S.

Some of those masters of the universe in the investment banking industry have seen the value of their stock tumble (and many of them are going without bonuses this year). Here are some of the "casualties":

Starbucks (NASDAQ: SBUX) CEO Howard Schultz and the company's other top executives did not earn bonuses for 2008 as the company's fortunes deteriorated.

Schultz's compensation package declined to $9.7 million from $10.6 million in 2007. According to the proxy statement, Schultz will be taking a long-term stock option grant in lieu of bonuses for the current fiscal year as well.

That all sounds good but in March, the company will be asking its shareholders to approve a plan that would allow executives to trade in their underwater stock options for a smaller number of new ones with a lower strike price. Ordinarily this is the kind of thing that drives executive pay hawks nuts but in this case it might be fair.

Starbucks fortunes have declined along with the rest of the restaurant industry because of an unprecedented rout in consumer spending. There have also been some significant missteps leading up to that mess, but the company's low stock price is partly a result of factors beyond Schultz and company's control. If the options are not repriced, executives could be tempted to bold for competitors who are offering options grants priced based on current low valuations.

The exchange ratios also seem fair. For instance, executives with options with strike prices of $35 or higher will be able to trade those in for new ones based on the price of around $9 per share: But they'll receive 1/15.5th the number of options.

In The New York Times, Cornell economics professor Robert H. Frank makes the case that executive compensation isn't as big of a problem as so many are convinced it is.

Frank writes that "In the past, a C.E.O. could often stay in the job for many years despite lackluster performance. Today, a C.E.O. who fails to deliver is often dismissed after a year or two."

I'm not sure what planet Mr. Frank is on. It might be true that executives don't last as long as they used to on average, but the financial markets are full of underperforming companies run by ineffective CEOs. When changes are made, it's often as a result of prodding by activist shareholders rather than by proactive decisiveness on the part of the board of directors. Then there's this ridiculous point:

If the market for executive talent is competitive, critics ask, why are C.E.O.'s in an industry paid about the same, regardless of performance? That's because no one knows with certainty how a particular executive will perform.

Exactly. But the point of pay for performance is to align executive compensation with performance. If they do well they make a lot of money, and if they don't then they don't. Mr. Frank seems to concede here that pay for performance is essentially a myth.

That said, I basically agree with Frank's point that imposing congressional limits on executive pay is a bad idea. Limiting tax deductibility would simply lower shareholder returns.

But maybe there's an alternative. If Congress imposed a limit on the tax deductibility of executive pay (one with teeth, not one that provides a giant loophole for anything that is tied to "performance") and then used the extra revenue produced to buy down capital gains tax rates, the result would be to provide an incentive for companies to limit executive pay while also giving a portion of the money back to shareholders when they pay excessively.

With bonuses down big across Wall Street as the market meltdown send income statements deep into the red, a lot of investment bankers aren't going to be too pleased with their bonuses this year.

Credit Suisse is trying something a little bit different. Credit Suisse will be paying it bankers their bonuses with a combination of the usual cash and nearly impossible to trade junk bonds: the kind of garbage that banks have been trying to sell to the Treasury Department to dump the liquidity problem onto taxpayers.

I like this plan: If the bonds really are just illiquid -- and not total crap, as I'm inclined to suspect -- then the bankers will make out like bandits in a few years when credit markets stabilize and liquidity returns.

Another part of Credit Suisse's bonus program is generating some controversy: a portfolio of the cash bonuses paid out will have a "clawback" provision requiring that they be repaid if the employee leaves within two years. According (subscription required) to The Wall Street Journal, this could lead to some lawsuits

I'm not exactly sure what the problem is: As long as employees are notified of the terms of their pay package before they do the work, the banks can pay them whatever/however they want.

They should be happy to be receiving bonuses at all.

The Wall Street Journal reports (subscription required) that RiskMetrics Group is advising investors to withhold votes from corporate directors who approve tax "gross-ups" to cover taxes on forms of executive compensation like perks and golden parachutes offered in the case of a merger or buyout.

I've always thought that the whole tax gross-up thing was ridiculous . Do people earning 8-digit pay packages really need help paying their taxes? Worse, the tax gross-ups could also make it harder to figure out the total compensation given the absurd legalese that is found in proxy statements. But was it really that big of a deal? Or was it just a complication that really didn't result in any additional shareholder cash being wasted? A company that pays $6.5 million plus $3.5 million in tax gross-ups is no worse than one that pays $10 million in cash.

But according to RiskMetrics, tax gross-ups are indicative of an "anything goes" corporate culture: S&P 500 firms offering tax-gross ups to their executives had golden parachutes 61% bigger than those that didn't -- without including the value of the gross-up!

The one nice thing that has come out of the market mayhem is a renewed interest in corporate governance. Tales of executive looting are making the front-page of newspapers, and Congress has taken interest. Whether anything will come of it depends on the willingness of the large institutional investors that control the voting rights to most of the stock in this country to put their foot down.