Gretchen Morgenson had a good piece in the Times documenting some of the ways in which corporate boards manage to dish out bonuses to CEOs even when they miss performance targets. With all the scandals in CEO pay over the last decade, it is remarkable that this sort of nonsense persists unchecked. Clearly there is a structural imbalance, with top executives being able to pilfer corporate coffers to enrich themselves at the expense of shareholders.
It would be a simple matter (legally, if not politically) to change some of the rules of corporate governance to redress this imbalance. For example, how about requiring that the compensation of packages get sent out for shareholder approval at regular intervals? Suppose the rules also require that shareholder proxies that don't get returned don't count? (The standard practice now is that unreturned proxies are counted as supporting management.) How about also making corporate directors personally liable for not using proper care in setting CEO pay? (See the chapter on corporations in the Conservative Nanny State.)
Inflated CEO pay is not just a question of taking money from shareholders. These outsized salaries set standards that infect pay scales throughout the economy. It is now common to see university presidents pulling down salaries in the high six figures. Even heads of charities often draw salaries in this range. Restoring the balance in pay for corporate CEOs could reverse this recent trend.