Thank heavens for the outrage over the scandal at Home Depot ( HD). It's about time American investors got angry about the way their pockets are being picked by corporate executives.

But the people who should be right at the center of the scandal aren't the executives who are taking the loot or even the directors who gave it to them. It's the managers of some of America's biggest mutual funds, including Vanguard and Fidelity. Instead, so far, they're getting a pass.

In case you've spent the last two weeks in a cave, Home Depot has found itself at the center of a storm after revealing it is paying former chairman and chief executive Bob Nardelli $210 million in severance pay.

We can dismiss the claim that this sort of windfall has any business or economic rationale. Home Depot stock actually declined during Nardelli's six years in charge -- during the biggest real estate boom in American history. Investors in Lowe's ( LOW), the company's chief competitor, trebled their money over the same period. Profits rose a lot faster, too.

The biggest canard going around is that these executive windfalls must be OK because they are somehow the outcome of an efficient "market' for executive "talent." Never mind the questionable use of the word "talent."

The real flaw? An efficient market needs buyers and sellers who are both motivated to get the best price. In the case of CEO pay, those "selling" executive labor, namely the executives themselves, are certainly motivated. Bob Nardelli didn't really do anything wrong. He just asked for, and received, a massive amount of money. Wouldn't you?

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