The recession and the financial crisis have glaringly focused attention on the issue of the magnitude of compensation for higher-ups, relative to average working people. This has occurred much to the chagrin of upper management who pay public relations firms handsomely to portray them in the most positive light possible.

As for the regular mass media, they too, have in the past been very kind towards the "captains of industry" and the "leaders of Wall Street", not least because many are owned or controlled by the very people they are supposed to analyse in an objective light.

Power wielded by the likes of Rupert Murdoch is a well-known phenomenon. But there is also the more subtle influence exercised by the expenditure of advertising dollars. Is a newspaper or broadcaster going to compromise its badly-needed revenue stream by stepping on sensitive toes in the corporate world?

For years we had been told that the fat profits made by corporations were due to the extraordinary talents of its top managers. Fortunately, the onslaught of the recession revealed the truth, namely that hefty earnings were the result of a credit-fuelled bubble generated by irresponsible monetary and fiscal policies.

It was in the financial services sector that the most egregious errors were committed, on a large scale. Ignorance, greed and stupidity were the order of the day, even as the luminaries of Wall Street were being feted as masters of the universe.

There has been universal abhorrence in the United States and elsewhere at the compensation received by the high and mighty for performance that can charitably be described as dismal. And these folks have lived for so long in a protected and privileged environment that initially they refused to admit any errors or take temporary pay cuts.

Although they are now making contrite noises, it is not clear that they have actually learned any lessons. It is more than likely that they are merely making the right gestures for public relations purposes.

Most firms are badly managed, even in normal times. Anybody who hasn't been brainwashed by business-school ideology can readily figure it out by actually working in a company. As for ethics, surveys at noted management schools have found that students can't wait to get top jobs and make big bucks by employing every dirty trick in the book.

What do the statistics show regarding pay discrepancies? In the United States, up to the late 1970s, the ratio of the total compensation of the average CEO to the average worker in major companies was around 20 times. By 2008 the multiple had ballooned hugely.

This cannot be explained by differences in relative productivity, education or training. Essentially it represents institutionalised grabbing. A system was gradually perfected for over-compensating top executives, based on interlocking compensation committees, aggressive head-hunting firms and extensive pubic relations propaganda to justify it all.

It should be noted that market forces have played a very weak role in determining the compensation received. The usual explanation trotted out by apologists that such high pay is necessary to attract rare talent is utter tosh. Repeatedly, studies have failed to find a strong correlation between compensation for CEOs and their performance.

Some shareholders are fighting back. At a recent Shell annual general meeting, a decision by the remuneration committee was rejected by voters. Normally, such proposals are routinely rubber-stamped because large institutional shareholders side with management, however biased and unfair the proposals may be.

This time around, the institutions sided with the small investors and against management. Hopefully, the climate is changing and the extortionate practices of compensation committees will be rolled back. However, the current system is well entrenched and it will take effort to reverse it at major corporations.

Among other things, the bonus scheme requires significant revision. As it is currently formulated in financial institutions, it incentivises excessive risk-taking with damaging impact on shareholder interests when thing go wrong.

Iraj Pouyandeh is a strategist and senior portfolio manager at LOM Asset Management. He manages the LOM Global Equity Fund. For more information on LOM Asset Management please visit www.lomam.com