Many companies are doing well and paying boards/CEOs a small amount, and others are doing well but paying many times more for their executives, in similar companies in similar businesses. Additionally, Japanese and European executives are paid much less than American executives.
In England, shareholders vote on executive pay. In the US, many investors (most?) don't know how much the CEO is paid in the companies they partially own. (Most probably don't know that Obama makes about $400k per year either.) This disconnect allows many CEOs to raise their compensation and enact various anti-takeover rules (golden parachutes, poison pills, etc) that make it difficult to fire them.
In the 80's, takeovers were profitable because corporate raiders identified executives that were "overpaid" in their opinion, purchased the company, hired new executives at a lower amount, and enjoyed the difference as their compensation for the takeover. Today, with multiple anti-takeover rules, corporate raiding is no longer as easy and profitable as it was before, even though many executives are still "overpaid" in the eyes of a would be raider.
Here is a decent article, quoting Buffet. If you ignore the obvious leftist bias, he has some good points, and here is a wiki entry regarding the various "poison pills" that executives use to maintain their overpaid status (without these measures, raiders would identify high pay and attempt to turn a profit by purchasing the firm.)
