Proxy season's approaching: It's that time of year when executive pay comes under particular scrutiny. Watch out for CEO pay apologists, analysts, and financial media pundits making some specious arguments to defend outrageous compensation.

For example, they may say that recent corporate results and economic activity are improving and therefore, chief executives and other high-powered individuals' compensation pay should get a nice boost.

Don't buy it, shareholders. Plenty of difficulties are still cropping up right before our very eyes, whether it's through unemployed friends, the bite of the payroll tax hike, or high prices at the gas pump or grocery store. Consider the leaked email that revealed a Wal-Mart executive freaking out about recent sales trends: "Where are all the customers? And where's their money?" That's not heartening news for Wal-Mart shareholders or anyone else.

Factors like these indicate that in the real world, the economy really hasn't gotten that much better for many people, and could still get a lot worse, despite a long-toothed market rally. Today, many chief executives' pay should be scrutinized even more, particularly because the real economy will likely start manifesting itself in real corporate results soon.

"Richer than you" doesn't mean smarter than you, investors
JPMorgan Chase (JPM -0.06%) -- long considered one of the most well-run financial giants under CEO Jamie Dimon until recently -- announced that it will eliminate 17,000 positions in attempts to cut $1 billion in costs by 2014.

Last month, we learned that Dimon took a pay cut in the wake of blemishing moments like the London Whale trading debacle. (The compensation "cut" still left him with compensation worth $11.5 million. Cue up the nano-violins.) Real long-term shareholders should always question layoff news. Job cuts may boost corporate profits in the short term, but they are a negative indicator for a fragile economy and, often, for long-term corporate health at the companies that lower the ax.

Meanwhile, during the company's annual meeting, analyst Mike Mayo asked why JPMorgan hasn't chosen to have more cash on hand like rival UBS (UBS -3.43%), which has decided to aim for a 13% capital ratio compared to JPMorgan's 10%. Dimon's way of getting the last word in the conversation was to quip, "That's why I'm richer than you." I'm sure employees facing layoffs find that hilarious.

In other pay cut news, General Motors (GM 0.01%) CEO Dan Akerson voluntarily agreed to forgo a pay raise for the second year running. Akerson's decision followed rumors that he was getting a raise from the approximately $9 million salary he makes now.

The U.S. Treasury still retains a 19% stake in the bailed-out auto company. Until the Treasury's dumped the stake, pay comes under scrutiny. Still, GM is trying to OK raises for 18 other executives excluding Akerson. In the past, Akerson has used the market-based salary argument for balking at Treasury's pay restrictions, given how much Ford (F -0.54%) executives like CEO Alan Mulally rake in. Of course, the galling part of this story is that Ford never had to take a bailout.

We can tie all this together with a neat bow given the recent news that the U.S. Treasury allowed bailed-out executives to get away with murder in the pay department. TARP watchdog head Christy Romero recently told the House of Representatives' oversight committee that executive compensation at bailed-out companies like AIG (AIG 0.16%), GM, and Ally Financial is still too high after the financial crisis. That, of course, made AIG's recent pondering of suing the government over the bailout even more galling.

Romero's best quote accuses the executives of failing to "view themselves through the lenses of companies substantially owned by the government."

Big questions about oversize pay
When we're considering companies' compensation policies before making our say-on-pay votes, let's really think about several questions, all of which do require exercising a long-term attention span that, granted, many short-term traders lack.

  • Has the company really done that well under its leader's stewardship over the last several years?
  • Did recent "outperformance" come at the expense of people's jobs (or for no reason at all, given the market's recent mania)?
  • Does its board of directors, particularly the compensation committee, rubber-stamp outrageous CEO pay over and over again?

Boards and managements need to take accountability for things that are not going right. Signs that things aren't going right even if "profitability" has been increasing include slashed workforces,  costs cut to the bone, reduced R&D, shoddy customer service, floundering sales, and so forth.

These are elements many investors and traders have been ignoring while they've been bidding up subpar stocks higher and higher during rally modes. Meanwhile, speaking of rallies, stock price doesn't equal performance most of the time, particularly in the near term. Operations are a far better gauge of things that are going right.

Boards and managements need to remember that, in this day and age, more and more shareholders are watching them -- and their paychecks. If they're richer than you because they haven't been properly held accountable, and lack the humility to hold themselves accountable, remember that you've got your proxy ballot to voice your outrage and vote against compensation policies.

Check back at Fool.com for more of Alyce Lomax's columns on environmental, social, and governance issues.