Dateline, January 3, 2007: Bob Nardelli steps down as CEO at Home Depot (NYSE: HD). In leaving, Nardelli, who had been at the head of Home Depot for six years, scooped up a severance package valued at about $210 million, kindly tipped his hat, and slid his resume across the desks of Chrysler. Does this make the man an opportunistic corporate blood sucker, an overcompensated leadership figurehead, or just plain shrewd? My answer to that question would be, none of the above.

When trying to judge the departure of Robert Nardelli relative to his compensation and performance, two things need to be considered right on the front end. First, our jealousy factor must be removed from the equation. Second, we need to remember that compensation packages at this level are negotiated on the front end. Bob Nardelli didn't "get away" with anything. He executed the terms of an employment contract, plain and simple. How many of the ambitious persons reading this blog wouldn't have done exactly the same when given the same circumstances?

Most of the negative sentiment surrounding Nardelli's well-heeled departure emanated from shareholders who were hurt by a slow yet significant decline in HD's share value. But the fact is that within the past four years of Nardelli's tenure, HD's shares provided more consistent performance than the four years prior. Granted, investor's haven't seen Home Depot shares approach the past high of nearly $70, but in light of today's economy they probably won't see anything like that in the near future, and that's certainly not Nardelli's fault.

After Merrill Lynch & Co., Inc. (NYSE: MER) sent its CEO packing with $161 million, the Houston Chronicle's Loren Steffy had a funny proposal for the company: Loren promised to go in as a replacement, fail miserably, and leave for "a mere $100 million." He also wrote that "I hope you find my severance requirements satisfactory and that you will consider me for the position of CEO. After $8 billion this quarter, what more do you have to lose?"

Read Loren's whole letter -- It's absolutely hysterical. But it also underscores an important point: Why exactly are CEOs being rewarded so heavily for abject failure? If they've done so badly do they really deserve the severance?

Executive compensation is a pretty hot topic these days. Even most executives agree that CEOs are overpaid. But the most egregious example is the huge golden parachutes being handed to executives who were terrible.

If you can't beat 'em, at least get a good severance package. Anticipating a takeover by Rupert Murdoch or someone else, Dow Jones (NYSE: DJ) has given its top 160 managers rich severance packages [subscription required] if there is a change of control at the company. The move is a bit odd since Murdoch has indicated that he would not be trying to change the editorial direction of the company. Presumably, senior editorial management will be part of the new arrangement.

And the arrangement is rich. Richard Zannino, the company's CEO would receive $19.7 million. The publisher of The Wall Street Journal, Gordon Crovitz, would get $7.9 million. Paul Steiger, former WSJ editor, would receive $5 million.

Do the managers deserve the larger severance packages? Perhaps not. Dow Jones stock traded in the mid-$30s before the Murdoch offer. It was trading in the mid-$30s two years ago. Revenue growth has been slow and operating profit has been modest.

But severance packages are an inside game. If the board goes along, the managers take the spoils.

Douglas A. McIntyre is a partner at 24/7 Wall St.