One major reason, IMO, is the large-scale conversion of executive compensation from a salary largely based in cash to one now dominated by equity compensation - in particular stock-compensation grants. It would be interesting if a study could be done of the salary garnered by an executive if the only considerations included are cash and options that were exercised during the year, as the numbers reported as compensation are merely the value reported as of the grant date - a value that can change (increase or decrease) over time. To me, that is the more relevant number to look at.

Why do Boards of Directors of corporations use different models to hire CEOs than to sell the company off?  (Put another way -- wouldn't the Board's fiduciary duties to the shareholders require the same approach?)  Aren't both about maximizing shareholder value?  Then why not use the same system for both?  Namely -- Would the idea of an auction (or at least competitive bidding or a market check) for the CEO spot fly?  People make a big deal out of football players who eschew guaranteed comp in favor of performance-based comp.  What if we put the CEO spot up for auction/bidding and hired the best performer at the best terms for the company?  It seems it would have a salutary effect on shareholder value.  Assuming, that is, that the maximization of shareholder value is really what the high CEO pay is about. . .

No doubt that people are starting to get a bit ticked off when executives earn such immense paychecks, especially when a lot of Americans are struggling to make ends meet.

That's part of it.  But there's also the fact a number of top execs have been incompetent, some corrupt, and still they get the big paycheck.

One rationale for the immense compensation to execs is that they're responsible for the company doing well.  But when something goes wrong, their immediate reply is that they didn't know "this" or weren't aware of "that".  When someone is being paid some ungodly amount, you expect some accountability.

CEOs and CFOs in the U.S. make 400 times what the average worker earns. In 1965, it was more like a factor of 20.

To me, a more shocking way of presenting this issue is:

"In 2005, average total compensation for CEOs of 350 leading U.S. corporations was $11.6 million." A CEO making $10 million/year makes as much money in a month as someone working at the minimum wage makes in her lifetime. There is no reasonable justification for one person to make as much money in a month as another earns in a lifetime. No matter how smart, beautiful, refined, charismatic, brave, clever, educated, experienced, or hard working, no human being deserves to receive a thousand times as much money as another.

($10 million/year = $833,000/month; minimum wage = $5.15/hour = $10,712/year for 40-hour workweek = $535,600 for 50 years of work.)

I was recently part of an interesting debate aboput pricing in one of my last MBA courses and we got into this issue.  Regardless of the reasons or even for that matter the moriality of the issue, it became apparent that our overlal cost structure in American Business is so out of whack in terms of executive compensation that it is going to be high near impossible to compete in pricing is China and other countries continue to rise as we all expect they might.  

Let us know when the minimum wage earner's skills are on parity with the CEO.  Most can barely run their own household, much less one of 350 large top corporations.  You focus so much on the distraction of the scandal that you do not see what the day to day work involves.  I assure you it involves a little skill than asking if fries are desired with that meal.

Could it be because they (or at least people in their same orbit) set their pay?

Teaching, policing, and fire fighting are only survivable by people with a passion, who don't want to do anything else. Employers have long since figured this out and make use of it to abuse and underpay them.

Who becomes an executive? Ignoring the crooked, incompetent (with the right degree / friends / pedigree), or purely venial, a good CEO is also passionate. I'm glad there are people that enjoy running companies: they're certainly needed, but I wouldn't willingly spend one day in the company of most of Don Trump's Apprenti. If a CEO-inclined person wants to get rich, he should do so by starting a company (which I admittedly couldn't do and don't care to try) or running one well enough to raise the value of the stock he bought. Oh, they expect us to provide the stock? Okay, stock options instead of a huge wage would work. Why should I feel confident about someone who obviously isn't about himself and/or the company!

How many would still be interested on those terms? And would you want anyone that wasn't?

I am to the right of many over here on fiscal issues. SOmething is wrong in our country when even I begin to sound like a socialist activist on this issue.

I think one place to check out is DELTA AIRLINES. Pilots were overpaid, but management was EXTREMELY OVERPAID. The old management of Leo Mullin and his gang of thieves got paid obscene amounts of money for driving Delta to the ground, gave themselves golden parachutes, guaranteed pensions, ridiculous retention bonuses(while almost every one of them bolted as soon as they fulfilled the term to which they stayed on to "shepard" the company and "avoid" disaster). In reality, they were just biding their time to cash in these bonuses.  Grinstein came in, got paid well, but took a LOT less than a gangster like Leo Mullen. And he did a better job. So you do not need to pay someone an obscene amount of money to get the job done.

Another thing: the pilots pay. I really think that if Delta had more execs who behaved like Grinstein did in his recent tenure, then the DElta pilots may have felt more of an obligation to compromise on their pay. If I am an overpaid Delta pilot, maybe I too wouldn't feel like compromising when I realize it makes no huge difference in the long run and my management are making out like bandits.

I heard the AFL-CIO has a website up compiling a list of exec pay and deciphering some of the benefits thaat are not easy to understand for the lay person. It is about time they have done this. I think labor unions have done a shitty job in recent decades of keeping execs in check. Sure government hasnt made it easy. But they should have come up with an idea like this a while ago.