THE BURNED OVER DISTRICT

And the absolute thumbing of the Wall St. corporate nose at the federal regulators in doing so.

Everyone from the Financial Times to Forbes.com to the Huffington Post decried the move. The Wall Street pundits mostly thought it was a dumb play by the Chase board from a self-interest perspective, one guaranteed to inspire further investigations by the government. Meanwhile, the non-financial press generally denounced the raise as a moral obscenity, yet another example of the serial coddling of Wall Street's habitually overcompensated executive class.

Both groups were right. But to me the biggest news was how brutal an indictment Jamie's raise was of the Obama/Holder Justice Department, which continues to profoundly misunderstand the mindset of the finance villains they claim to be regulating.

Chase's responses to Holder's record penalties have been hilarious. Their first move was to make sure people outside the penthouse boardroom took on all the pain, laying off 7,500 employees and freezing salaries for the non-CEO class of line employees.

Next, Chase's board members sat down, put their misshapen heads together, considered the impact of this disastrous year of settlements, and decided to respond by more than doubling the take-home pay of the executive in charge, giving Dimon about $20 million in salary and equity.

In the end, the fines left the decision-making class of the company not just uninjured but triumphant. Dimon's raise was symbolic of a company-wide boost in compensation following the mass layoffs, as average per-employee expenses rose four percent overall, to $122,653, despite the $20 billion burden imposed upon the firm by the state.

There were a variety of reasons for the board's decisions, but one of the big ones, according to various reports, was that bank honchos wanted to send a message to the government that it believed the company had been unfairly treated. This was a notion Dimon himself snootily trumpeted just before his raise was announced.

And on the other hand, the New York Times has an article defending all that money Jaime Dimon gets for breaking the law and deflecting any useful punishment.

But in the world of executive compensation, especially when viewed from the rarefied perspective of other chief executives, and more broadly on Wall Street, Mr. Dimon’s pay — and how it was determined — is not only defensible, but laudable. Warren Buffett said he thought Mr. Dimon’s pay was not high enough.

David Larcker, an expert in executive compensation and director of the Corporate Governance Research Program at Stanford University’s Graduate School of Business, said his father “was a regular guy working as a carpenter, and to him this kind of pay would be inconceivable.” But, he added, “If you look at this from the point of view of the board, this package seems to be structured the right way. ”

He noted that the bulk of Mr. Dimon’s pay — $18.5 million — was in the form of restricted stock, which does not vest immediately and can be canceled by the board. “It’s not like he’s taking home $20 million in cash,” Professor Larcker said. “His incentives are aligned with shareholders. There’s risk imposed on him. That’s called pay for performance, and it’s a good thing.”

Christopher Armstrong, associate professor of accounting at the Wharton School of the University of Pennsylvania, whose research focuses on executive compensation, agreed. “I can totally understand the populist backlash. This level of pay is difficult for the average person to wrap their heads around. But there’s a lot to be said for pay for performance. If shares go up and his restricted stock gains in value, you’re not going to hear any shareholders complaining. And in the context of the labor market, if running that large a company is so complex and difficult, those people are going to command a premium.”

So whether you look at as a reward for protecting illegal activity or a reward for corporate excellence (in protecting illegal activity), one thing is clear. He got it and you don't.