What's wrong with AIG CEO's pay package? Plenty

As I see it, the Feds made a huge mistake in bailing out these financial thives. Houses are still being or in foreclosure, loans are stagnant, and the Feds are not getting accountability for the money they gave away. Yet the burden of all this is going to be on the taxpayers, present and future.
Want to get back at these institutions and all this BS?
The people have the power, if we all do what needs to done, as we did with the oil companies hiking gas prices. We STOPPED BUYING there product. So all middle class and poor taxpayers, take you money out of the big banks. (BofA, Wells Fargo, Chase, Citibank, etc.) You're not getting much having it there anyway. You just get nickled and dimed. Put it in your local credit union. Anyone can open an account. You need not be in a Union. Sell your stocks!!!! Get out of the stock market. Wall Street screwed up your lives, now it's payback time. It's about time the taxpayer had their day in court.

Great post Zac.

Boy, AIG has had so many opportunities to get it right and have failed over and over again. It even failed this time with someone looking over its shoulder. $7 million in salary, with $3 million in stock and $4,000,000 in equity. Has the comp committee got any mates over at Wells Fargo by any chance? There’s also a further $3.5 million in more equity, the only difference between the so-called “salary stock” and the so-called “long-term incentive stock” being that Mr. Benmosche has to wait two years for the “long-term incentive stock” whereas the “salary stock” vest immediately.

Where’s the performance measurement in all this? Haven’t these people heard of performance-based pay? It’s pay that only gets paid out if performance targets are met. A simple enough concept, one would think, but apparently beyond those responsible for setting Mr. Benmosche’s pay.

What’s that I hear? $7.5 million is being paid in stock and that will align his interests with stockholders?
Ah, why didn’t you say so before!

But let’s do a little stock research here. The stock is trading at around $25, and it used to trade well over $1,000 as recently as the beginning of 2008. Where’s it going to go? Down? It’s been down. How can it do anything but go up? It started going up even before Mr. Benmosche was touted for the job.

There is no downside in this package, certainly not enough equity risk.

Now we all know that in order to get anyone to work for AIG in this capacity, the rewards were going to have to be high. But why hand them on a plate? If the stock goes back up to a grand, that $7.5 million is worth $300 million. For one year. The shareholders, who by the way would only be getting back the $975 they lost if they bought at a grand, wouldn’t mind outsize rewards, but they have a right to expect some delivery for it, some specific challenges that have to be met.

And The Special Master for TARP Executive Compensation has expressed approval in principle regarding the structure and amount of Mr. Benmosche’s compensation arrangements? If this is true, the position of Pay Czar sounds more chicken than Purdue.

Paul Hodgson — Senior Research Associate
The Corporate Library http://blog.thecorporatelibrary.com/blog/