With executive pay season well and truly upon us, well-healed boards continue to adopt a convenient “heads executives win, tails shareholders lose” approach to remuneration.

While the astronomical Allan Moss/Phil Green-style salaries have temporarily stopped (the former Masters of the Universe collected upwards of $30 million annually before the global financial crisis) — institutional shareholders are becoming increasingly agitated at boards’ willingness to pay executives even where performance has been lacklustre.

Wal King and Rupert Murdoch stand alone in terms of pure obscenity: King stands to collect almost $30 million in termination payments and salary this year while Leighton’s share price remains a smoldering ruin. Rupert, meanwhile, almost comically takes home $US33 million, including a $US12.5 million cash bonus, for overseeing a company that is facing criminal and civil investigations for phone hacking, Dow Jones circulation scandals and the increasingly regular multibillion corporate blunders, such as the Dow Jones and MySpace.

If market watchers were in any doubt as to why Queensland Rail executives were so enthusiastic to float on the ASX after 145 years of government ownership, a quick look at CEO Lance Hockridge’s pay packet would dispel any doubts. In 2006, the former CEO of Queensland Rail, Bob Schueber, was paid $447,000. In 2010, when QR was still owned by taxpayers, Hockridge received $981,000. This year, despite doing the same job, with sales increasing by a relatively pedestrian 11%, Hockridge scooped up more than $3 million in cash alone, and almost another million in share-based payments.

Hockridge’s pay rise was assisted by the usual suspects, with high-price remuneration consultants Egan, Deloitte and PwC providing “advice” to the QR board. It was, of course, imperative that Hockridge was paid “market” rates, like those paid by Asciano to former CEO Mark Rowsthorn (who oversaw a share price decline of 86%). Apparently, the job of running QR National is 10 times more difficult now, as it was five years ago.

Then there’s the curious case of the mysterious, disappearing, return on equity at Wefarmers. The Western Australian conglomerate, under the guidance of Trevor Eastwood and then Michal Chaney, famously adhered to a slavish following of making investments that delivered a strong return on equity — this allowed the company to deliver return on equity of 25% to shareholders and years of strong shareholder growth.

That all ended in 2007, when current CEO Richard Goyder led Wesfarmers on a risky and costly acquisition of Coles, shortly before the onset of the global financial crisis. Following the $20 billion purchase of Coles, Wesfarmers return on equity slumped to  6.4% last year, recovering to 7.7% this year. Earnings per share this year were $1.66, down from $1.95 in 2007. This was due to the company having to undertake a hugely diluted share issue to fund the acquisition.

While the underlying Coles business, under the guidance of Ian MacLeod, is improving — from a financial perspective, Goyder’s acquisition remains a semi-disaster.  This, of course, hasn’t stopped Goyder from being extremely well paid — largely because the Wesfarmers board conveniently widened the goalposts.

This year, Goyder was paid $3 million fixed pay, and a further $2 million cash bonus (Goyder also received $1.5 million in share-based remuneration). However, just in case $5 million in cash isn’t enough for Goyder, the Wesfarmers board noted that:

“The performance rights previously granted to Mr Goyder in 2008 under the Rights Plan did not satisfy the challenging performance condition set at the time of the initial grant, which requires a return on equity of 12.5%, achieved in two consecutive years prior to 2014 … Mr Goyder did not receive a long-term incentive grant for the 2011 financial year.

“The board is proposing that, with effect from the allocation made in November 2011, [Goyder] will participate in the [company’s long term incentive plan].”

To translate — after appointing Goyder, the board offered him a long-term incentive that would vest if the company’s return on equity was 12.5%. Despite the claims, this target was not “challenging” at all — in fact, it was half the level being achieved before Goyder became CEO. That meant by leading the company to performance that was 50% worse than before he took over, Goyder would receive a bonus.

But if that wasn’t a low enough hurdle, this year, the board is lowering the bar even further, allowing Goyder to receive a share-based bonus despite the company’s return on equity has slumped to 7.7%. The company has allowed Goyder to be remunerated under the company-wide long term incentive, which is based on a “forward looking performance period”.

As a final insult to shareholders — in the event that they have the audacity to reject Goyder’s appalling pay plan, the “company intends to provide Goyder and [Wesfarmers finance director] Terry Bowen with a cash benefit that will place each of them, insofar as possible, in the same after tax position as they would have been”.

While the Wesfarmers board is happy to hold a proverbial gun to the head of shareholders, Wesfarmers owners do have one other option. Instead of voting against the equity grant, they could vote against re-election of Bob Every (chair of the remuneration committee) and Charles Macek (who is on the remuneration committee, and once claimed to have “written the book on corporate governance”). Given the Wesfarmers board clearly cares not for shareholder returns, perhaps it’s time for Wesfarmers shareholders to send a message of their own.