The typical response I get from companies about escalating CEOs pay and perks amounts to finger-pointing. They say they keep raising pay because everyone else is doing it; it takes huge numbers to compete for talent.

"There's a race to the top, or the bottom, depending on how you look at it," explains Lisa Lindsley, director of capital strategies at the American Federation of State, County and Municipal Employees. "You get companies that want to benchmark their compensation above the median, and that just drives up the median."

This is a sort of Lake Wobegon logic, where all CEOs are above average and thus entitled to above-average pay -- which means pay spirals higher and higher. High severance pay is the flip side of this. Above-average CEOs never fail; those who don't deliver are almost always dismissed without cause, letting them collect big dollars on the way out.

There are ways for shareholders to fight back. They can vote against directors on board pay committees that cook up crazy pay plans. And they can also vote "no" in "say on pay proposals" -- a yea or nay vote on executive pay plans that companies now have to offer shareholders annually. But too few shareholders exercise these rights.

Which brings us back to Yahoo.

Earlier this year, the shareholder advisory firm Glass, Lewis & Co. chastised Yahoo for an executive pay policy which "has consistently failed to align executive compensation with performance." In light of this disconnect, the firm said, shareholders should be "gravely concerned" with the company's executive compensation program. Glass Lewis put Yahoo on its "Overpaid 25" list of Standard & Poor's 500 Index ($INX) companies with the worst pay-for-performance practices.

Yet only 29% of shareholders voted against Yahoo's executive compensation plan earlier this year.

Bartz's high-paying farewell

Yahoo declined to comment for this story, but, according to company filings, Bartz was fired without cause. That ensures she'll get her severance, even if it doesn't seem right to some.

The payout is "laughable, considering her performance," said Eric Jackson of Ironfire Capital, which holds a big stake in Yahoo. "I don't think she's entitled to anything. Two months' salary, tops."

Given her level of pay, a $10 million severance package is "unconscionable," echoed Brandon Rees, a corporate governance expert at the AFL-CIO Office of Investment, which also has a stake in Yahoo.

And while Bartz has always had a reputation as a free-speaking CEO, some wonder whether her farewell tirade could cost her. "It's been wild to watch. It's been like TMZ meets CNBC," says Jackson. "I would expect it from a 26-year-old engineer who gets fired and sends a flaming email on his way out but not from a CEO."

There have been reports that her public broadside against Yahoo, littered with four-letter words, would put her severance pay at risk. Like most employment contracts, hers contains a non-disparagement clause prohibiting her from bad-mouthing her former employer.

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But as harsh as her words were, it's not clear they rise to the level of disparagement that actually hurts the reputation of Yahoo or its board, says Stein, the employment contract attorney. "(Yahoo) could potentially bring a lawsuit, but it would be unusual for a board to do that," he says.

Besides, a lawsuit may not be the best use of the company's time, at this point. "The board of a publicly traded company that is stagnant should be focused on running the company, not fighting with its ex-CEO," says Stein.

After all, there's another above-average CEO for them to hire.

At the time of publication, Michael Brush did not own shares of any company mentioned in this column.

Michael Brush is the editor of Brush Up on Stocks, an investment newsletter. Click here to find Brush's most recent articles and blog posts.