The AFL-CIO cast itself this week as a modern-day Robin Hood, taking from the rich and greedy ... and giving to the irresponsible and wrong-headed.

Last week, the labor federation released its 2008 Executive Paywatch, a database that tracks executive pay for many of the country's largest companies. The officials urged support for legislation that both curtails excessive executive pay and provides aid to home foreclosure "victims."

How overpaid are these guys?
Paywatch's statistics are both startling and maddening. According to Paywatch, the average total annual compensation for an S&P 500 CEO in 2007 was $14.2 million. The AFL-CIO also cited a study that pegs the 2005-2006 salary of a CEO at 364 times the yearly salary of an average worker, up from 42 times in 1980. In other words, a CEO makes nearly the same amount in a single day that you make in a year.

Also, an average worker would have to work for 287 years, based on AFL-CIO metrics, to match what Washington Mutual (NYSE: WM) CEO Kerry Killinger made in 2007, even while he ran the company into the ground. The website also provides case studies of CEO compensation at Bear Stearns (NYSE: BSC), Merrill Lynch (NYSE: MER), Citigroup (NYSE: C), Countrywide Financial (NYSE: CFC), Morgan Stanley (NYSE: MS), and Wachovia (NYSE: WB).

The AFL-CIO argues that excessive CEO compensation takes dollars from shareholders and their retirement savings, and that it's structured to provide incentives for poor short-term decisions at the expense of a company's long-term interests.

What can be done about it?
The AFL-CIO maintains that excessive CEO pay reflects deficiencies in corporate governance. While a company's board of directors is supposed to protect shareholder interests and ensure that CEO pay reflects performance, at two-thirds of companies, the CEO chairs the board. Also, CEOs dominate the election of directors, who are mostly handpicked by incumbent management.

Gosh, no wonder they're so well paid! The AFL-CIO urges support of the "say on pay" legislation currently under consideration in Congress, which would require publicly traded companies to submit executive pay plans to a nonbinding shareholder vote.

Good job, AFL-CIO! It's a smart idea to track and question CEO pay, since executives' salaries and bonuses have gotten way out of hand. I used to somewhat buy the argument that successful CEOs deserved such riches because of the billions they created in shareholder wealth, and the good they did for the employees and society. But now I see CEOs who have lost billions in shareholder money and damaged the economy, yet still made obscene fortunes. Executive pay has become a gross and problematic misallocation of precious resources. I applaud the AFL-CIO on this one.

You want to give what? To whom?
I almost became a fan of the labor federation -- until I read on. It seems the AFL-CIO also advocates legislation to bail out people who were "encouraged to take on ... risky mortgages." The recommendations include an immediate moratorium on home foreclosures, the expansion of bankruptcy protection laws to protect a homeowner's primary residence from foreclosure, and a provision that will extend the short-term teaser rate into a 30-year mortgage. (Some mortgages offer artificially low "teaser" rates before adjusting to sharply higher rates for the remainder of the term.)

You've got to be kidding me. First of all, the federation portrays these people as unsuspecting victims of predatory loan practices. Hogwash. I used to do mortgage originations. Loan terms have to be fully disclosed. In most cases, the homebuyer must sign multiple documents that thoroughly explain the loan terms, complete with examples of possible higher payments when the loan adjusts. If a potential homebuyer cannot afford the adjusted rate, they shouldn't buy the house. Or, if the homebuyers gambled that they could afford a higher payment in the future and were mistaken, they should deal with their own mistakes like adults.

How is it fair that people who greedily and irresponsibly purchased a house beyond their means somehow deserve to pay off their mortgage at a rate nearly half of what most people pay? Stupid me -- I spent all these years living in a small house I could afford, while paying the going rate on a 15-year mortgage. I guess it's only fair that my tax dollars should subsidize these people, right? Wrong.

Almost a great job, Big Labor
I really appreciate and admire the AFL-CIO's work in tracking excessive executive pay. Unfortunately, that accomplishment is somewhat diminished by its attempts to channel money to another undeserving group. The federation seems to be saying: As long as resources are misallocated, why not misallocate them toward people who might be union members, or a least vote the way we do?

How's this for a novel idea, instead? Let's try not to misallocate money at all.

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Fool contributor Tom Hutchinson holds no financial position in any companies mentioned. The Motley Fool has a disclosure policy.