He's the man everyone loves to hate; the dart board bullseye for legions of investors, politicians, regulators and customers.

No prizes for guessing why.

Court actions from Federal Government agencies and shareholders, probes by the banking and corporate regulators over the failure to meet statutory obligations on more than 53,000 occasions and the astonishing decision to keep that little bombshell a secret. They've all combined to trash the Commonwealth Bank's already tarnished reputation.

Until last week the nation's biggest company by market value, its shares have been pummelled as an uneasy uncertainty about what else may come to light and what penalties may be meted out hangs over the organisation.

All that aside, what's has been overlooked is that throughout the disaster, CBA boss Ian Narev has made a valuable contribution to the ludicrous system of corporate salaries.

Admittedly, it's been an unwitting contribution, but a valuable one just the same.

Sorry, this video has expired Senior business correspondent Peter Ryan says Ian Narev was coming towards the end of his term

Consider this comment to Leigh Sales on ABC's 7.30 immediately after the scandal broke.

"I stand with my team accountable for the bank's reputation and that is why the board took the action it did yesterday and said that all the short-term bonuses for the whole team, because of the reputation, have been axed," he said.

"I am not sure whether that has ever occurred before in corporate Australia."

If he's not sure, it's a good guess it's never happened. Which begs the question: Are bonuses, really a reward for outstanding service, or are they merely an artificial construct to prop up already ridiculous pay levels?

How the bonus system evolved

Here's the Macquarie Dictionary's definition of a bonus: "Something given or paid over and above what is due."

A bonus should be a rare event. But that's not the way the corporate world sees it. These days, executives expect and demand a bonus, regardless of performance.

The bonus system was foisted upon shareholders to allay their concerns about excessive pay. Instead, it merely has entrenched the practice.

The idea, supposedly, was to align the interests of shareholders and management, to put executive pay "at risk". The theory was, that if the shareholders lost out because of mismanagement, executives too would feel the pain.

But the system quickly turned to farce. Almost 15 years ago, when the dot.com boom imploded and global stocks went into reverse, the system was hastily reworked.

Executives, particularly those in non-tech industries, argued the market downturn had nothing to do with their management, and that they were being unfairly penalised. Oddly enough, none of them had argued the tech boom had artificially inflated their salaries in previous years and they shouldn't be entitled to them.

The solution was simple. Base salaries, the cash component, were lifted. Meanwhile, the hurdles around bonuses, particularly bonus shares, were lowered. It was a recipe that would be tweaked every few years to maximise pay.

When markets are running hot, executives demand a greater proportion of shares. In downturns, they demand greater base salaries. In more recent times, rather than hitch the bonuses to share price performance, "soft targets" that can't be accurately measured, such as improved customer satisfaction, have been introduced.

In short, the bonus system has successfully removed performance from the equation.

Who calculates the bonuses?

There's an entire industry that's grown up around executive bonuses and it's been designed to be incredibly complex and utterly opaque. A company's board will assign several directors to work on a remuneration committee.

Most directors once were executives, who were paid vast sums of cash. So, rather than rock the boat or draw heat upon themselves, the first thing they do is call in remuneration advisors or consultants.

The consultant plays a crucial role in the salary setting game; to shift the blame away from the board for the outrageous largesse it bestows upon executives.

Ian Narev last financial year took home $12.3 million, That was made up of $2.65 million in base pay, a decent whack in anyone's estimation. But that was swelled by a further $1.43 million from a short term cash bonus. The rest comprised shares, as long-term bonuses from previous years fell due.

The inexplicable public premium

There's a cult of personality that's grown up around public company executives that's spilled over into remuneration. What's often forgotten is that executives and directors are not business owners. They are employees.

On rare occasions, the chasm between what is reasonable and what is paid becomes starkly visible. It's at its most apparent during privatisations.

When the federal government floated Medibank Private on the stock exchange, boss George Savvides' pay suddenly trebled from $1.2 million to $3.99 million.

Queensland Rail boss Lance Hockridge experienced a similar windfall when the state government floated the company, now called Aurizon. His salary jumped from just over $1 million to $4.1 million.

You could argue both men had to deal with more shareholders, and were more exposed to scrutiny.

Essentially, though, both were running the same operations before the ownership changes as afterwards. And both previously had been happy to work for the lower wage.

The global market place myth

The most common excuse for the exorbitant rise in corporate salaries during the past 40 years is competition, that it's driven by global market forces.

That's not entirely true. The corporate salary extravaganza is largely an Anglo world phenomenon. Corporate salaries in Asia, including Japan, are nowhere near those in the West. Continental European firms pay way less than the US, the UK and Australia.

American chief executives on average receive about 35 per cent more than their UK counterparts who, in turn, take home about 55 per cent more than their European colleagues.

We are catching up, however. Until recently, Ahmed Fahour was the world's highest paid postie with a $5.6 million pay packet.

In Asia, it's a different league. Ordinary workers may have been told they now compete with lower cost Asian employees but that hasn't trickled up to mahogany row.

Never was that more graphically illustrated than in 2008, as US investment banking titan Morgan Stanley teetered under the weight of its toxic assets.

Japan's biggest bank Mitsubishi UFJ rode to the rescue, bailing out the Wall Street heavyweight. Imagine their surprise when they learnt just how much John Mack, the man who presided over Morgan Stanley's near death experience, was paid.

Mack earned $US41.4 million the previous year. Mitsubishi UFJ, on the other hand, paid its top 14 executives a combined $US8.1 million.

That's right, Mack personally took home five times more than the entire upper management of the organisation bailing him out.

The widening pay gap

Burgeoning corporate salaries have played a big part in the growing inequality across western democracies.

Research by Queensland University's Julie Walker shows American bosses now take home 300 times more than the median wage. In the UK, chief executives trouser around 188 times their employee salaries.

They wealth gap has become a potent force in the simmering political discontent spreading across the west.

Ian Narev, even on the previous year's pay of $8.3 million, earned around 106 times the annual average wage. Most was in bonuses.

He may be walking out the door sometime early next year, once he's taken the heat for the current debacle. You can bet the bank will load up the saddlebags on his way out. The bonuses will continue to flow.