CEO: Chief Exorbitance Officer

One worthwhile result of the recent corporate scandals is a harder look by shareholders and company directors at the supersized pay and perks of top executives.

A few years ago, during the economically roaring 1990s, the issue might not have gotten much attention. But with exposure of the handsome compensation given to CEOs from Tyco and WorldCom now under indictment, investors are rightly asking if their companies receive the biggest bang from the big bucks given to celebrity managers.

And disclosure of the lordly retirement package awarded former General Electric CEO Jack Welch offers fresh impetus to the question: Is the compensation being given US corporate leaders seriously out of whack?

Before giving in to a reflexive "Yes!" a bit of historical perspective might be useful.

The rise of top-level salaries into the stratosphere has been going on for much of the past two decades. In the '80s and through the '90s chief executives who could turn companies around quickly, often mercilessly slashing payrolls to bolster bottom lines, were in demand by investors wanting quick hikes in stock prices. An investor culture keyed to short-term gains and CEOs committed to providing those gains thrived together.

That synergy lost energy in the past two years as the stock bubble burst and many corporations were exposed for fudging numbers. The demand for management accountability is forcing new bookkeeping rules and tighter government rules.

But no rule except common sense can dictate executive pay. As Mr. Welch acknowledged, appearances count for a lot in today's climate. Vast compensation or retirement packages can certainly appear irresponsible, hurting a firm's image and possibly its stock values. To his credit, the former GE boss has relinquished such perks as free use of a corporate jet.

Shareholders and directors need to rethink an executive's role in the company, especially what drives long-term value rather than merely quarterly results. CEOs must keep work morale high – not an easy task when some top managers earn over 400 times as much as the lowest-paid employee – and set high ethical standards in their actions, not words.

Executives who fight market pressures for quick results may just find their rewards in the long-term health and stability of a company providing valuable goods or services to society.