The average U.S. CEO was paid $11.8 million last year, presumably for his or her performance—for hard work and a clean nose. If CEO pay is supposedly an accurate indicator of company performance, then investing in the companies who pay the most to their CEOs should be a great investment strategy, right? Guess again.

If you had, starting in 1991, invested $10,000 in the stock of the companies with the highest paid CEOs—each January 1st moving your investment to the company with the previous year’s highest paid CEO—you actually would have lost money. Between 1991 and the end of 2004, your investment would have shrunk to $8,079—disastrous by any standard. In comparison, if in 1991 you had invested your $10,000 instead in a fund receiving the average return of the S&P 500 index, you would have $48,350 in your pocket today, almost six times more than a stock portfolio betting on ‘pay for performance.’

So much for CEOs’ hard work, or at least CEOs’ effective work. How about those clean noses? Charles Wang of Computer Associates has the dubious distinction of delivering the worst stock performance in the year following his rise to the top of the highest paid CEO list. In 1999, Wang took home $655 million. Months later the company announced a business slowdown, questions about its accounting practices emerged, and the stock price collapsed, losing 72 percent of its value within a year after Wang’s windfall. In the years that followed, Computer Associates admitted to accounting lapses including a ‘35 day month,’ keeping the books open past month’s end in order to book additional sales. The company restated its 2001 and 2002 earnings, reversing $2.2 billion in ‘improperly booked'—that is, non-existent—revenue.

The trend toward earnings-inflating ‘aggressive accounting’ and, in some cases, outright cooking of the books has been one of the most important drivers of excessive CEO pay. Among the ten highest paid CEOs over the ten years from 1995 through 2004, eighteen of these 100 slots were filled by CEOs whose companies were either later found to have committed fraud or have been forced to make revised earnings statements to correct previous overstatements of profits. The prevalence of book-cookers on the list of ten highest paid executives peaked in the year 2000, when half of the executives were later found to be presenting faulty accounting statements.

Best known for $6,000 shower curtains and a two million dollar birthday party underwritten with corporate assets, Dennis Kozlowski of Tyco International was the book-cooking CEO that took home the greatest amount of pay over the last fifteen years. Convicted of misappropriating $600 million of corporate assets, Kozlowski is presently awaiting sentencing of up to 30 years for his crimes. Between 1990 and 2003, when he left the company, Kozlowski pocketed more than half a billion dollars in pay and perks.

Far from pay for performance, some CEO’s seem to be getting paid for just having a pulse. The average CEO made 431 times more than the average production worker last year, and over 1100 times more than someone working full-time at the minimum wage. Since 1990, the average production worker’s pay has increased by 4% after inflation, compared to 319% for CEOs. In the same period, the value of the minimum wage dropped by over 6% after inflation. New data released by the Census Bureau last week shows that real median household income is stagnant, while the percentage of people living in poverty in the U.S. is on the rise.

American workers expect and deserve fair pay for hard work and clean noses, not pay for pulse, pretenses, or pilfering. If workers performed as badly as CEOs, they’d be fired or ‘outsourced’—not enticed with stock options, country club memberships, and cash bonuses just to grace the executive suite with their presence.