Can you imagine this! American International Group (AIG) is paying its employees $100 million in bonuses.

This is after AIG was bailed out to the tune of $182 billion by the U.S. government. The government owns 80% of the insurance giant. AIG employees have agreed to a $20 million cut. However, some employees are screaming that that is not enough. They claim that their contracts dated earlier than the bailout must be honored.

Nobody expected bonus season to be comfortable, even with the financial crisis more than a year in the rear-view mirror. Yet, Goldman Sachs (GS) is getting sued over its compensation package, under which key executives are only compensated in long-term stock. In the latest development, John Mack, CEO of Morgan Stanley (MS), is skipping his bonus for the third year in a row, according to Reuters.

Mack isn't the first banking CEO to go sans bonus this year. Kenneth Lewis, top dog over at Bank of America (BAC) is getting neither a salary nor a bonus for 2009. Both plan to step down at the end of the year, though Mack will stick around Morgan Stanley as chairman. The last time Mack got a bonus was in 2006: he picked up $36.2 million in restricted shares.

In a column that would seem more appropriate for a left-wing college campus news zine than The Wall Street Journal, McGill University professor Henry Mintzberg offers a proposal for how to change compensation practices in America: get rid of bonuses.

Mintzberg offers some well-worn -- and completely valid -- criticisms of stock-based compensation: golden parachutes, retention bonuses, etc. He explains the problems that come with assessing performance and raises another question that isn't talked about nearly enough: just how much of a role do CEOs really play in determining a company's success or failure?

It's still a tough time to be a CEO. In October, 89 top dogs moved on (by choice or not). Though this is 15% lower than the 105 in September and 29% off the whopping 125 CEOs who turned over a year earlier, it's still a sign that "stability" doesn't equal "recovery."

The latest study that Challenger, Gray & Christmas revealed to BloggingStocks reports that October was the eighth month this year in which CEO turnover was down year-over-year. Through the end of last month, 1,028 CEO positions changed hands -- down 18% from the 1,257 by the same point in 2008. In fact, the tally for the first 10 months of 2009 is the lowest since 2004, when the big office found only 561 new inhabitants.

The financial industry remains the toughest place for CEOs, with 19 leaving the job last month. Even though the situation has gotten easier, this industry still has the highest turnover. For the year, approximately 10% of all CEO departures (106) have been in the financial sector. "The financial industry is still incredibly volatile, as both October and September saw major announcements from leading companies including JP Morgan Chase (JPM), Bank of America (BAC) and last month's bankruptcy of CIT Group, which led to the exit of CEO Jeffrey Peek," John A. Challenger, chief executive officer of Challenger, Gray & Christmas, says.

It's easy to save the world when you've already taken care of yourself. But, we rely on these mavericks -- the wealthy who realize they can make a difference -- to do what we cannot on our own. So, it comes as a relief that Bill Gates, founder of Microsoft (MSFT) believes executive compensation is still too high.

It's a murky topic, and some forms of regulation, Gates believes, won't help. In a discussion on philanthropy at the 92nd Street Y in Manhattan, where many of the people Gates criticized send their kids for early education, the former CEO and still rich guy cites the $1 million executive salary cap required by law in 1993 as a big mistake. While compensation has to be controlled, he believes this measure backfired and thinks that other, similar efforts are doomed to fail now.

The Wall Street Journal reports (subscription required) that "General Motors Co.'s search for an outsider to replace its chief financial officer is being complicated by the pay restrictions the Treasury Department is imposing on companies that received large bailouts from the federal government, according to people familiar with the matter."

GM is expected to be able to offer its CFO a pay package consisting of a significant amount of stock (Hah!) but a salary of only about $1 million per year -- not much for a company of GM's size and problems. Plus, ya gotta live in Detroit and work with Fritz Henderson.

A study by the Washington-based Institute for Policy Studies found that executives from our top 10 financial firms earned about $90 million in the value of stock options in recent months.

This is how the game was played. Bankers took stock options on their companies when their stock prices were low during the financial meltdown. Now, with the price of bank stocks shooting up, the value of these options also skyrocketed, helping them to pocket a neat $90 million if they choose to exercise them.

The Wall Street Journal reports (subscription required) that "A top Citigroup Inc. (NYSE: C) trader is pressing the financial giant to honor a 2009 pay package that could total $100 million, setting the stage for a potential showdown between Citi and the government's new pay czar."

The trader involved is Andrew J. Hall, who heads Phibro LLC, a Citi-owned energy trading division. But here's the kicker: His compensation is determined by the profitability of his unit so if he is to receive a $100 million payout, it will be because he generated far more than that in profits for Citigroup.

The Obama administration proposed legislation yesterday that would require fully-reporting publicly traded companies to give their shareholders a non-binding vote on executive compensation. Under the proposal, directors would have to ask shareholders what they think before going ahead and doing what they were going to do anyway.

Administration insiders predicted that the measure would pass Congress easily, but that isn't stopping the Chamber of Commerce and the even more infamous Business Roundtable from opposing the measure.

Why would anyone what oppose a non-binding vote is beyond me. Why are they so opposed to taking a straw poll of their shareholders to find out what they think about their pay practices? Why are they so opposed to companies soliciting the opinions of their shareholders?

If anything, this measure doesn't go far enough. What's needed in the boardrooms of America is a revolution -- where shareholders take back their company from lazy, incompetent and just plain crooked directors who bankrupted General Motors, sent Bank of America (NYSE: BAC) onto the welfare rolls, and turned American International Group (NYSE: AIG) into America's most degenerate gambling addict. And non-binding resolutions will lead to a non-binding revolution, which is really no revolution at all.

What are the new changes in financial regulation? First and foremost, President Obama wants to expand the powers of the Federal Reserve to assume primary responsibility for averting an new financial crisis.

Secondly, he wants to create a "council of financial regulators" who would improve coordination among agencies. The council would discuss systemic risks, but the Fed could at alone without its approval.

The administration has decided not to consolidate regulatory agencies due to the political fallout involved.

President Obama and Treasury Secretary Tim Geithner have selected Washington lawyer Kenneth R. Feinberg to serve as the executive pay czar. Feinberg will be charged with setting pay standards for top executives at the seven companies that received the most bailout money.

The New York Times reports that "For 80 other financial institutions that have received federal assistance, Mr. Feinberg will develop the overall compensation structure, but without setting the exact level of pay. For these 80 companies, the goal is to reduce excessive risk-taking by executives whose compensation is tied to company performance. Mr. Feinberg will also determine whether it would be in the public interest to force any executives at companies receiving assistance who might have been overpaid to return some pay."

The Securities & Exchange Commission may force public companies to disclose more information about how they compensate their lower-ranking employees, but there's a catch: They still wouldn't have to say how much they're paid.

The Wall Street Journal reports (subscription required) that "The Securities and Exchange Commission plans to propose that companies disclose in general terms how they compensate lower-ranking employees, expanding disclosures for the first time beyond the executive suite."

Widespread outrage over abusive executive pay practices has some companies going to unusual lengths to gain shareholder support for the way they compensate their top earners.

Amgen, Inc. (NASDAQ: AMGN) has invited its shareholders (subscription required) to fill out a ten question online survey assessing the level of executive pay, the clarity of proxy statement disclosures related to compensation, and how well pay practices are aligned with performance and shareholder value. Other companies are instituting similar programs, and more are expected to follow.

While American politicians whine self-righteously about corporate governance travesties at bailed out companies they had every opportunity to extract concessions from, Australia's government is actually taking steps toward long-term improvements in executive pay practices.

The Wall Street Journal reports that "Treasurer Wayne Swan said the center-left Labor government will amend the Corporations Act to require shareholder approval for any termination payments that exceed average annual base salary, which excludes additional compensation such as shares or stock options."

One of our reader's who blesses us with frequent comment's, B. Harrison, left the following tidbit for us recently (responding to: Buffett suffers big losses at Berkshire Hathaway) and I thought I would share it because this sentiment comes to us frequently.

• "And the American people are simply apathetically sitting back while our CORRUPT Congress who enabled and allowed all of the corporate FRAUDS, continues to allow the CORRUPT CEOs and Boards of Directors run those corporations, and to keep their ill gotten "weath" that they amassed while mismanaging the corporations, and orchestrating and perpetuating all of those FRAUDS."

I do not agree that the American people are "apathetically sitting back".... They are voicing their opinions on the web, in letters and emails to their representatives, they take to the streets and protest, they sell the stock of poorly run companies and file class action suits. The truth is that they are frustrated because our representatives have an unwavering singular focus, and that is to sustain themselves in office. Nothing takes a higher priority then that; it's called political self preservation.