The boss lurks around the printer to see what his employees are printing. He's spying on them, hoping to catch them printing jokes or personal stuff or resumes. They figured him out so they photoshopped his face onto the back end of a horse and printed it for his benefit.
In America (dunno bout anywhere else) we have a slang term "horse's a s s" which is often used to describe someone who is especially "a s s inine", moreso than just your usual, lesser insult (without the "horse's" prefix).
So basically Dilbert and Wally figured out the PHB's insidious plot to spy on them via their printouts and sent him a clear message of what they think of him. Oddly enough, he's clever enough to realize that this was a deliberate indication that they've figured him out, surprisingly insightful for the PHB.
Or, maybe they just printed it for their own amusement and the PHB happened to intercept it and mistook it for them figuring him out. But that's less funny.