A bonus normally implies a job well done, and in the case of the AIG (NYSE:AIG) controversy, you've got to wonder how "job well done" was defined. "You did a good job of destroying a company, injuring our economy, and repeatedly fleecing taxpayers" -- if that's the definition, I suppose it fits.

I'm starting to think our society has some pretty loose definitions of what a job well done really is. Cue up FEMA's Hurricane Katrina failure, and former President George W. Bush's quotable remark, "Brownie, you're doing a heck of a job." I find that rather symbolic of our problems. I have to wonder if our entire society has simply gotten too lazy about judging true merit and not wanting to hurt anybody's darn feelings. Heck of a job?

And if that's the case -- that we don't reward for a good job, but rather for any kind of job at all -- then our entire system is going to continue in a downward spiral. For starters, we must stop paying handsomely for failure.

Every man for himself
I am no fan of government intervention, and the rule of law argument with AIG does concern me; it's true that it's not a good precedent for our government to run around breaking or changing laws, even if we're all rightly outraged. My Foolish colleague Nick Kapur made the excellent point last week that public shame is probably best, reminding these folks that taking bonuses at taxpayer expense is, in fact, morally reprehensible. (It still sticks in my craw, though, that had the government not intervened, there would have been no bonuses because it would have been bankrupt.)

Although Senator Chuck Grassley's quote about resignation or "suicide" for AIG executives outraged many people, I get the gist of such a rhetorical statement, which brings to mind the old ideal of falling on one's sword when one is guilty of epic fail. What has happened to any sense of honor or shame in the face of failure, not to mention the whole idea of personal responsibility? These all seem like rare commodities these days.

Today's "captains of industry" aren't like the noble captains of yore who would gladly go down with their ships. In fact, these captains of industry seem to have absolutely no problem jumping on the only lifeboat and smiling and waving goodbye to their hapless crews standing helpless on the decks of the doomed vessels. So long, suckers!

Every man for himself, indeed.

Pay and parachutes
I'm disturbed by the idea that government is increasingly getting involved in pay strategy for businesses (although in the case of companies or anybody else who accepts taxpayer money, it's government's prerogative to call the shots, which of course underlines why many of us recognize why accepting government funds is a slippery slope). Call me crazy (go ahead, I'm used to it), but government isn't exactly known for its own efficiency and fiscal common sense either.  

I think we as shareholders need to do more, and we haven't been doing it for years; we need more shareholder awareness and activism on things like "say on pay" initiatives -- we must voice our outrage about lucrative compensation for jobs not well done, or against golden parachutes where failed executives jump the sinking ship with their pockets lined richly. We should either agitate for changes in companies where this comes to pass, or make that a darn good reason we won't invest in those companies at all.

I mean, come on, Citigroup's (NYSE:C) Chuck Prince left that disaster with a huge golden parachute, as did Merrill Lynch's Stan O'Neal; O'Neal's successor, John Thain, also tried to leave the company with a bonus as it was getting passed off to Bank of America (NYSE:BAC), before blowback got in the way. Golden parachutes are the height of absurdity, in my opinion, because they generally seem to sum up the outrageous habit of "paying for failure."

Shareholders need to start doing more more than just sitting back and passively implying that what had become status quo was acceptable. Companies need to start feeling the heat for pay practices that do nothing but destroy shareholder value and enrich managers for a job horribly done.

Celebrate the achievers, not the thieves
I understand the argument that there is a risk involved running some companies. But at the same time, I believe there are many courageous, smart individuals who understand that beyond monetary compensation, there is compensation in the form of pride in a job well done or the challenge of running a successful business, not to mention rescuing an ailing one from disaster.

Some of us know life is risk, nobody's automatically entitled to anything, and there can be sheer joy in taking on risk for reasons other than monetary gain. Call me crazy (yeah, that's twice now), but true achievement is a bigger and better rush than riches one doesn't really deserve.

And of course, if somebody's so money-oriented that the only reason they'd do a job is for outrageous pay, then maybe we get what we deserve when such "leaders" raid the coffers.

Here are some examples of achievement-oriented CEOs: Berkshire Hathaway's (NYSE:BRK-A) Warren Buffett and Costco's (NASDAQ:COST) Jim Sinegal are good examples of CEOs who have historically taken extremely modest base salaries. Apple's (NASDAQ:AAPL) Steve Jobs and the Google (NASDAQ:GOOG) guys take just $1 in salary.

Perhaps these guys understand the true competitive entrepreneurial spirit that makes capitalism great, and that true achievement is the real payoff.

These are ugly days, but one thing they give us is an opportunity to think about how to make things better in the future. Is rewarding failure acceptable? No, it's not, and it does not build stronger companies or a stronger society, for that matter. Shareholders need to act like real owners again, and stop letting companies' managements get away with this race to the bottom, completely divorced from performance and merit.