CEo's are flocking to them because the compensation is multiples what they get at public companies and the work is less stressful.

So some asshole on Wall Street got $400 million? You know, nothing surprises me anymore. My flame of outrage has guttered out because it had to burn too bright too often over the last twenty years. Speaking of which...

Alexander Cockburn and two other lefties were on "Nightline" in I believe it was 1990. The Berlin Wall had come down, and Koppel was asking them whether this meant the end of Communism and Socialism. Cockburn argued that it did not, and later admitted that sitting on the table next to him was the recent issue of Forbe's. On its cover was a Canadian CEO who had just gotten a $35 million bonus (those were the days, huh?). He stated that he had wanted to grab it, hold it up to the camera and exclaim "THIS is why we need Socialism!" Why he didn't do that is still beyond me.

If someone builds a thing, patents it, trademarks it, builds a factory to make it and they sell like hotcakes, that person has earned every dime. But no one "earns" a $400 million bonus. It is given to them, to the detriment of the rest of the economy.

But don't worry. These fools will keep pushing things until there's a violent reversal, and they will learn what the Bourbons of France and the Czarists learned before them.

As an authority on executive assessment working for one of the top executive search and assessment firms in the world, I have a few comments on this article.

The real issue identified here -- and it is no news in the business world -- is that you should pay for executive performance, and a good deal of effort has gone into figuring out how to do this properly. Many firms have changed their compensation plans recently precisely because previous plans failed to distinguish levels of performance. For that matter, there are whole consulting firms dedicated to determining nothing else. It's a difficult problem, as smart people learn to "play the game," using the letter of the law.

The prevailing wisdom on boards is that members must be independently minded, because their most important job is judging the CEO's performance. Some boards have been rightly criticized in such business-minded bastions as Business Week because all members are friends of the CEO, which means they allow the CEO to get away with too much. When you are paying more to get rid of a poor performer than you should pay a good one, something is clearly wrong!

Whatever Jack Welch's abilities as a CEO (and they are substantial, make no mistake), I think he has picked an imperfect analogy. Another logic I have heard is in terms of cost-benefit. An outstanding CEO can move the performance of an entire company up a notch, in which case $200million bonus is peanuts compared to the benefit to the company. Well-designed companies share that benefit all the way down: growing the company instead of laying off, profit-sharing, better benefits, investing in employee development, upgrades to equipment, and so forth. You can argue with the logic that gives such massive payouts to individuals simply because they run big companies (Ben & Jerry used to have a maximum salary, no more than seven times the lowest-paid employee, but they abandoned that some years ago), but of course no one cares when they are successful. It's the failures we notice, and it's the failures that should be punished.

The side comments about where CEOs come from are frankly irrelevant. Most CEOs do indeed fight their way up the ladder, and referring to the family-business exceptions simply does a disservice to those who worked their way up -- including some family members. There's plenty of evidence as to the remarkable level of competencies found in top-level executives in areas such as leadership, influence, strategic thought, and driving results. One study found that the average executive had an IQ of 115-120, putting them in the top 15% of the population -- and even then they get weeded out ruthlessly based on their ability to use that intelligence in business-related ways. In terms of key competencies, CEOs tend to fall in the top 5% of our database, made up entirely of senior executives -- even the mediocre ones. If it were that easy, we'd have a lot more good ones!

The disparity between rich and poor in the West will always be less than that in the developing world. While it may be bad managment to award a mediocre manager such compensation, you should go to places like Brazil, Hong Kong, Central America and Africa is you want to see truly obscene differences.

The real issue is for stockholders, not social engineering and ideology. Home Depot can afford to pay that compensation. The question is, is it wise to do that given the otherwise poor performance of the company. I as a stockholder would be thrilled if the CEO got 200 million dollars if my investment went up correspondingly. But CEO's are generally slackers who play political games with the Board to wring out excessive compensation in spite of performance.

Of seconday importance is the relation between executive compensation and employee compensation. IF executives are highly paid and they spend every other day sending missives to the employees exhorting them to be happy with the third year of no increases, benefits cuts and jobs going to China then employees are clearly getting hosed and over time the company will probably suffer. At the least, stock performance will be flat as they discover they really can't save their way to prosperity.

The real problem, of course, is that shareholders repeatedly make the mistake of thinking that an insider is qualified to sit on the board of directors. Ever. Shareholders need people on the board who are compensated as shareholders (and, modestly, as directors) only in order to see their interests properly represented. As soon as a director is compensated as an executive, he has a conflict that is going to make executive compensation explode into the realm of the unreal.