There's long been a disconnect between a CEO's pay and the performance of that CEO's company. When a manager does well and shareholders prosper because of it, compensating him or her appropriately is not out of line. But it shouldn't be too much for shareholders to expect that a front-office position doesn't simply become a means for enriching the person who happens to hold it.

Consider, then, the case of Flextronics International (NASDAQ:FLEX), an electronics manufacturing service provider. Flextronics recently awarded its outgoing CEO with a package that can only be described as princely. Aside from elevating Michael Marks to the position of chairman of the board of directors, a position with its own perks and benefits, the company granted him $7.5 million in cash, medical and dental benefits for life for both him and his wife, accelerated the vesting of certain options worth about $14 million at current share prices, and modified the terms of other option grants that would have required him to step out of the money options but now gives him an additional 10 years to exercise those options. And for good measure, the company gave him use of the corporate jet.

For such a severance package, Flextronics must have been a star performer. Right?

Well, over the preceding four quarters, the company has posted steadily declining profits, and it foresees lower earnings and sales ahead. Even the company noted in its proxy statement filed last March that an investment in the company's stock hasn't been such a good deal for investors. A $10,000 investment in Flextronics in 2000 would have been worth just $3,419 last March, and the stock sits an additional 8% lower now.

When you compare Flextronics' performance with that of competitor Jabil Circuits (NYSE:JBL), for example, you see that the latter has run away, even as both have outperformed their peer group. And while a similar $10,000 investment in the S&P 500 in March 2000 would also be a losing proposition today, it still would be worth more than 2.5 times the same investment in Flextronics.

And that shows just how tough the contract manufacturer industry has been on semiconductors. The particularly rough slump cut across all categories of the industry, and it's been able to pick itself up out of the mire only in the past year or so. Celestica (NYSE:CLS) and Solectron (NYSE:SLR) have turned in performances even more dismal than that of Flextronics, yet it doesn't follow that you richly reward an executive because your company stinks less than the competition.

As shareholders, we rely on boards of directors to exercise fiduciary restraint in compensating executives, yet since boards mostly consist of fellow CEOs, there appears to be no shame in awarding excessive grants, packages, benefits, and perks. Certainly, Flextronics isn't the most egregious case of over-the-top remuneration, but shareholders ought to be asking themselves whether management and the board of directors really have their interests aligned. It looks as though Flextronics has disconnected performance pay from reality.

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Fool contributor Rich Duprey does not own any of the stocks mentioned in this article. You can see his holdings here. The Motley Fool has a disclosure policy.