Editor’s note: This is the first in a two-part series on the subject of CEO pay.

Let’s start with the obvious: Shareholders are mad about the state of CEO compensation.

Some are as mad as the news anchor in the film “Network,” screaming, “I’m mad as hell, and I’m not going to take it anymore!” Others are merely ticked off; as one executive at the California Public Employee Retirement System said, “We’re not against pay, but we are certainly against pay for failure, or for just showing up.” Neither sentiment is particularly pleasant for boards of directors.

A recent Equilar report ...