As keystroke was committed to screen in the writing of this post, J.C. Penney honcho Ron Johnson received his walking papers. This after it was announced last week that the ousted CEO had his pay cut 90 percent– tanking his 2012 salary to a mere $1.9 million from a sum north of $50 million in 2011.

With numbers like that, Johnson more than likely won’t apply for unemployment benefits anytime soon. But his compensation unfortunately will add more fuel to the fire of those proxy shareholders advocating for “say on pay” rules for upper management.

For example, The Nathan Cummings Foundation submitted a proxy shareholder resolution to Caterpillar Inc. that reads: “The shareholders … ask the board of directors to adopt a policy that incentive compensation for senior executives should include a range of non-financial measures based on sustainability principles and reducing any negative environmental impacts related to Company operations.”

According to its website, NCF “is rooted in the Jewish tradition and committed to democratic values and social justice, including fairness, diversity, and community. We seek to build a socially and economically just society that values nature and protects the ecological balance for future generations; promotes humane health care; and fosters arts and culture that enriches communities.”

Leaving aside whether NCF’s mission statement makes any sense pertaining to executive compensation, it’s possible their proxy resolution is working at cross purposes with their intended goals. As noted by Manan Shah, partner for employee benefits and executive compensation practice at Jones Day, in The New York Times: “If a ‘say on pay’ vote fails, the resulting fallout of negative media attention and frivolous shareholder litigation can cause significant damage to a company’s image and even its share price. Therefore, companies are facing extreme pressure to use significant financial resources and manpower to guarantee passage of the vote.”

Shah continues:

An even more alarming consequence is that mandatory ‘say on pay’ votes may be forcing boards and compensation committees to substitute their knowledge of the company for the perceived wisdom of proxy advisers’ guidelines. Even among companies facing little risk of opposition, boards are acting cautiously to ensure proxy guideline support of pay packages. The result is that companies feel increasing pressure to make executive compensation changes to appease proxy advisers regardless of whether those changes are really in the best long-term interests of the company.

Shah notes that shareholder resolutions on executive compensation practices pose significant financial hazards to the companies targeted by the likes of NCF. Among the harms he lists are “financial damage to the company through wasted assets and potential reputational harm, which could far outweigh the costs of the perceived ‘excessive’ executive pay.

In its zeal to curtail executive compensation under the “social justice” rubric perpetrated by so many religiously affiliated proxy shareholder groups, NCF indeed may be wreaking havoc not only on Caterpillar’s bottom line, but as well on its very existence. How this benefits the employees of Caterpillar or the other shareholders to whom the company is beholden is anybody’s guess.