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During the past year, there's been no shortage of discussion about executive pay at American International Group (AIG) -- and the deluge continues. CEO Robert Benmosche reportedly threatened to walk last month over frustrations with the Obama administration's pay caps, but was persuaded to stay by the company's board.
Apparently, Benmosche's maneuver inspired five other AIG execs to issue similar threats, with the group warning last week that they might walk if pay czar Kenneth Feinberg gets too handsy with their compensation packages.
Tuesday, a Bloomberg report suggests that Feinberg is ready and willing to accommodate such temper tantrums. (Despite the fact that AIG is 80% owned by the U.S. government, which would ostensibly supply the White House with some authority in deciding highly controversial compensation matters.)
Specifically, the article states that Feinberg is prepared to exempt some AIG executives from a $500,000 salary cap. Back in October, the pay czar explained that employees would be exempted only in cases where there was "good cause" to hike the base salary (such as peer pressure, perhaps?). He is expected to issue a ruling on compensation at AIG as early as next week.
Of course, a source close to Feinberg insists that any threats to quit by AIG's top brass were not factored into his decision. However, the sheer absurdity of the situation brings to mind an episode of NBC's The Office, wherein Michael Scott defects from Dunder Mifflin to launch The Michael Scott Paper Company. The start-up is almost immediately bankrupt, but Scott dodges Chapter 11 and legal action from his former employer when Dunder Mifflin is suckered into offering him a ridiculously rich buyout. Talk about setting a dangerous precedent for other disgruntled employees ...
AIG is down 1.6% at last check, once again disproving the notion that any PR is good PR. American taxpayers have lost roughly 4% of their investment in the insurance company this year, and the stock is currently pinned beneath resistance from its 10-day and 20-day moving averages. These short-term trendlines have guided the shares lower since mid-October.
Elizabeth Harrow is a senior equities analyst and financial writer in the research department at Schaeffer's Investment Research. She is featured in the video series Schaeffer's Daily Q&A on SchaeffersResearch.com.
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Reader Comments (Page 1 of 1)
12-08-2009 @ 11:55AM
thedude said...
So what ! Let them quit. AIG will be better for it, the shareholders will be better for it.
It's not like there is a short supply of qualified people to replace these morons. I can probably spot 300,000 to 400,000 more capable managers out of the 9+ million unemployed that can do a better job than the current executive package at AIG.
Leave them to "pursue other options" as the lingo goes.
12-08-2009 @ 12:05PM
Sonny said...
They would already be gone along with Goldman Sachs and a few others if not for the US taxpayer and generous friends in govt. So let the MF's go and look for another position where they can extort money from the US Treasury.
12-08-2009 @ 12:06PM
mikerat42 said...
Have security escort them to the door......Throw in Benmosche while they're are at it... Whatever happened to "pay for performance"?
12-08-2009 @ 1:09PM
Randy said...
Label them: GONE! Nobody...Nobody...Nobody is irreplacable! I'm a taxpayer, therefore I pay their salaries...I vote to FIRE THEM, before they quit!
12-08-2009 @ 3:26PM
Louise said...
WASHINGTON WILL JUST REPLACE THEM WITH MORE CROOKS. IT IS PROBABLY GETTING RID OF THEM, SO THEY CAN'T TELL ON BUSH AND CHENEY, AND NOW OBAMA AND WASHINGTON. THEY ARE ALL CROOKS, WAITING FOR OUR MONEY. THERE POCKETS ARE SO FULL , THE CAN'T WALK STREIGHT.
12-09-2009 @ 8:59AM
Gary Kurzawa said...
Another crazy holiday season is about to come in and all the wall street big boys want there money weather they did or did not sink there company to the lowest in there history. Let them quit, what good are they anyway? There companies would have failed if not for the bailout money. And not they threaten to quit, buba think twice here!!! Let them "QUIT". There will always be someone capable out there to fill there shoes!!!
12-08-2009 @ 4:45PM
Allen said...
Let me see if I have this straught - AIG is 80% government owned - i.e. owned by the taxpayers - and would have failed and gone into bankruptcy had it not been for the taxpayer financed bailout (which has not been repaid) - as would have been the case with Goldman Sachs, Bank of America, CitiCorp and the other losers. So, an AIG attorney and several of her cohorts, all of whom would have a very difficult time finding any employment, much less what they are being GIVEN at AIG, threaten to leave if they don't get significant pay raises. OK - let them leave. If the AIG general counsel (her title) was even remotely competent, she would have known that AIG was failing and warned management and the shareholders! Oh, perhaps she was aware of this and actually conspired with management to conceal this? Either way, she should be terminated immediately, along with her co-conspirators!
12-11-2009 @ 10:32AM
Allen said...
So Kelly is leaving?! Good riddance! Now, MAYBE, AIG can hire someone with a degree of competence as its general counsel.
12-11-2009 @ 4:22PM
yorkmint said...
Hmmmm....why is it that common sense, like all the comments on this article, never prevails? If U have made 10's of millions of $$$ and can't deal with a short term pay cut after you ran your business to the verge of bankruptcy, "GOODBYE and GOOD RIDANCE! These clowns are so out of touch with reality it is indescribable. Let some other company hire them at a "starting salary" and let them "sacrifice" like the millions of Americans that are trying to make do with Unemployment Compensation from their state. It should be legal to stone baffoons as arrogant as this!