In the never-ending grab for higher levels of excessive pay at shareholder expense, CEOs have shown a remarkable set of qualities: hubris, greed and brazenness. This list runs on but today, I am reminded by CorpGov.net that another talent has been overlooked, at least at the financial services company Waddell and Reed. That quality is hyperbole. It seems that the company’s CEO, Henry J. Herrmann has quite a talent in that department.

In a March 5, 2010 letter to shareholders, Mr. Herrmann suggests that a shareholder proposal coming to a vote on April 7th “could put Waddell & Reed Financial, Inc. at a serious competitive disadvantage and could erode the value of your investment.”

Really?

This apocalyptic event Mr. Hermann refers to is a shareholder proposal calling for an advisory vote on executive compensation. As Mr. Herrmann notes in a quieter moment in his letter, the proposal “recommends that the Board of Directors adopt a policy requiring an advisory vote of our stockholders to approve the Compensation Committee Report and the executive compensation policies and practices set forth in the company’s Compensation Discussion & Analysis in our proxy statement.” Somehow, this doesn’t strike me as a doomsday event so it prompted me to see what’s going here at WDR. (See ProxyAnalyst’s recommendation on this vote here)

A quick glance at the company’s proxy statement clarified things. Indeed, somebody would be at a disadvantage should shareholders be allowed some say on executive pay. However, it wouldn’t be the company’s investors.

Mr. Herrmann received approximately $4.9 million in total compensation in 2009, up roughly 20% from 2008. The market was up, company performance as measured by stock price for 2009 was up. One could argue that pay linked to performance was as it should be. Unfortunately for shareholders, the process could use a bit of tweaking considering how pay was set at the company.

As noted in the company’s proxy statement, four factors were used in determining Mr. Herrmann’s pay:

• The Company’s financial and operational performance for the year;

• Market survey information for comparable public and private asset managers prepared by the Committee’s independent compensation consultant;

• Recommendations of the Company’s Chief Executive Officer, based on individual responsibilities and performance;

• The previous year’s compensation levels for each named executive officer; and

• Overall effectiveness of the executive compensation program.

Yes, it seems that at Waddell and Reed, the CEO calls the shots when it comes to setting his own pay package. This arrangement is threatened should investors have some sort of input into this process. Undoubtedly, Mr. Herrmann is disturbed at the prospect that shareholders might take exception to his pay package, which includes the free personal use of the corporate jet, tickets to sporting and cultural events as well as this nifty pay package. Mr. Herrmann has undoubtedly worked hard to cultivate a solid relationship with his board of directors and doesn’t need that apple cart upended by the company’s owners.

However, it seems unlikely that this hullabaloo will come to much should shareholders approve this proposal. After all, the same proposal submitted by the same shareholder received majority support from shareholders last year. What did the company do in response?

Nothing.