So you're angry at outrageously compensated CEOs and other executive fat cats who prosper while employees and shareholders take all the pain.

The question is, should you voice that anger and sell your shares in the company?

In ordinary times, answering this question would lead me to revisit the ancient argument between investors who believe politics and morality should help guide investment decisions and investors who believe that politics and investment shouldn't mix.

But these aren't ordinary times. It's time to realize that at some corporations, the ethical behavior of management has become a business issue -- because it threatens the ability of that management to run a company efficiently.

The Employee Backlash Calculation

People make companies go. But at many companies now in the news, employee anger at management is so intense that many of the best workers are either exiting or digging in their heels to fight their own bosses.

I'm not exactly sure how to factor that into the target price for a stock, but I'm convinced investors need to include "employee backlash" in any calculation of what a company's shares will be worth in the future. Getting workers and executive-level managers back on the same side will determine whether some companies succeed or fail.

Some CEOs have fairly distributed the pain, clearly communicated company goals and honestly admitted mistakes. Result: The vast majority of employees remain committed to management's vision and company goals during some pretty tough times.

But other CEOs have written themselves big paychecks while firing thousands of workers, spun corporate visions that turned out to be fraudulent, and lied to cover up mistakes -- all of which has alienated employees. The energy of these employees is now going into such activities as writing resumes on company time, copying management-bashing cartoons on the company Xerox machines and filing lawsuits against directors. None of that increases a company's chance of survival.

A Look at My Inbox

Do you think I'm exaggerating the intensity of alienation at some companies? Take a look at my e-mail. Ever since I've been writing on the fat-cat pensions and the bloated paychecks of CEOs, my mailbox has overflowed with messages from workers who can't stand their own management. Here are just some of the anecdotes -- with all identifying characteristics removed and the language paraphrased, for obvious reasons.

From what was once

Hewlett-Packard

(HPQ) - Get Report

:

CEO Carly Fiorina couldn't even get a majority of H-P employees to vote their shares for this merger, and now she expects we'll help her pull these two companies together while she cuts another 10,000 jobs? Fat chance.

(The actual language was somewhat less polite.)

From

Electronic Data Systems

(EDS)

:

CEO Richard Brown is king of the ripoff artists. He has terminated thousands of employees and will receive an annual pension of $1.2 million for life after just five years of service. After many years with the company, I have to admit I hate what is going on. As soon as I can, I'm changing jobs.

From

Tyco International

(TYC)

:

We're facing further furloughs and management's bonuses remain untouched. It's incredible that managers who can only meet their numbers by sending employees home without pay would be rewarded.

From

Nortel Networks

(NT)

:

It's unconscionable to me that Nortel executives are receiving bonuses when 50,000 people have lost their jobs. They have run the company into the ground.

From

Qwest Communications

(Q)

:

Though the CEO is a bandit who collects his bonuses with no risk associated with his rewards, the board of directors is the real enemy of the people.

And finally, from an employee at

AT&T

(T) - Get Report

:

Directions to the Web site for AT&T Concerned Employees, an organization formed by AT&T workers to fight the forced conversion of their pensions to a cash-balance plan that slashed the benefits of senior workers who had been at the company for 15 years or more. (Congress recently began hearings on cash-balance plans after a Department of Labor Inspector General report showed that almost 25% of such plans shortchanged workers who left the company before normal retirement age by as much as $100,000 each.)

How to Gauge the Anger Level

If these views represent large employee populations, managements at these companies face significant internal challenges that could derail turnaround plans. It's hard to keep customers and find new ones if your best salespeople are either walking out the door or spending all their time complaining to their peers about the CEO's perks.

To be sure, while the emails I received are anecdotal evidence that there might be "people problems" at these companies, it's impossible to tell how many employees are this angry. Quantifying the anger is key for an investor trying to decide if anger at management behavior is enough to sink a company.

So how do you judge the extent of employee resentment?

Start with the obvious: moves that could potentially generate employee anger. I'd put layoffs in this category. Anything greater than a 10% cut deserves closer scrutiny -- call it Strike One. Companies that have been through multiple rounds of layoffs -- with each being billed as the final cut -- get my Strike Two call.

Lucent Technologies

(LU)

and Nortel Networks both fit the bill on these grounds. Companies that have awarded big pay and perk packages to CEOs while laying off workers would get a Strike Three call from me.

Then review company history over the last few years, looking for thinly healed wounds that the current hard times might have reopened. At the top of this list, I'd put acquisitions that merged companies of near-equal size, but with very different cultures.

A lot of the worker anger at Qwest, for example, comes from former US West employees who felt insulted by disparaging remarks by Qwest management after the acquisition. They now feel even more badly treated as they've watched the value of US West pensions stagnate or fall. Acquisitions that resulted in benefit cuts at the acquired company are especially likely flashpoints for employee anger.

Battles Found in Proxy Filings

Do a little reading in the company's most recent proxy statement for the annual meeting. First, take a look at the section called "Voting Issues." This contains the standard company-sponsored proposals for the election of directors and for the appointment of auditors, as well as any shareholder-sponsored resolutions asking for changes in company policies or rules.

Are there any shareholder resolutions that you'd characterize as angry and likely to rouse strong employee support? Here are two that fill the bill from the Qwest proxy:

Vote on a shareowner proposal, if properly presented, requesting that we seek advance shareowner approval of future or renewed severance arrangements with our executive officers that provide for more generous payouts than to our other managers.

Vote on a shareowner proposal, if properly presented, requesting that we disregard the effects of accounting-rule income, particularly pension credits, when determining performance-based compensation for our executive officers.

Granted, shareholder resolutions don't necessarily correspond to workers' issues. But I think it's still a good bet that if things like executive severance packages are on shareholders' minds, they're also on employees' radar screens.

To double-check on that, look to see if the company has moved its annual meeting to a location well away from major corporate facilities. That's often a sign that the company is trying to damp the expressions of anger at the meeting by controlling who attends. For example, Qwest is based in Denver but held its annual meeting in Dublin, Ohio, the home base of a small division.

And finally, do an Internet search looking for employee Web sites. I've already mentioned the one published by AT&T employees fighting changes in the company's pension plan. EDSLawsuits.com gives information on a wide range of lawsuits against Electronic Data Systems, including a potential class-action suit by laid-off employees. Searches can also turn up such goodies as the class action by

WorldCom

(WCOM)

employees over losses in their 401(k) plan investments in WorldCom stock.

The Power of Bulletin Boards

Sites such as Vault.com provide bulletin boards that let company employees vent. For example, one person who claims to be a Nortel employee recently posted this message: "I have been with the company for less than a year and have experienced nothing but chaos! I've gone through at least 4 reorgs (I lost count), two projects that went nowhere, and I am on a third that may possibly go nowhere as well. So far, it's been a waste of time!"

With so much of the value of a U.S. corporation consisting of the skills, contacts and knowledge of its workers these days, it just makes sense to see how much of this intellectual property is about to walk out the door.

Companies that are facing major reorganizations, or rapidly changing markets, or increased competition -- and simultaneously face disgruntled workforces -- are at a serious disadvantage in this market. And investors should factor that into their investment decisions.

At the time of publication, Jim Jubak owned or controlled shares none of the equities mentioned in this column. He does not own short positions in any stock mentioned in this column.