AIG execs: Cut our pay and we’ll quit
There’s no end in sight to the battle between the government and the private sector over bonuses and benefits. A group of executives at AIG have threatened to leave if their compensation is cut significantly by the government, which owns 80% of the company.
Kenneth Feinberg, the government’s man in charge of setting pay limits at bailed out companies, has already reduced compensation for AIG’s top 13 employees by 57% this year. Most base salaries were limited to $500,000. Feinberg’s now working on pay structures for the next 75 highest-paid employees. The Wall Street Journal says five people in that group, led by AIG’s top attorney Anastasia Kelly, threatened to uh, bail out:
The five senior AIG executives indicated on Dec. 1, in written notices, that they’re prepared to leave by year-end, say the people familiar with the matter. They are trying to preserve their ability to collect severance payments, these people say.
In other words, their golden parachutes, which Feinberg has indicated will be gone next year. More:
According to terms of the severance plan, which was put in place before the government bailed out AIG, certain executives are entitled to severance benefits if they resign for “good reason,” which includes significant cuts in their annual base salary or target bonus.
This group of employees is apparently saying: We’re just letting you know that if Feinberg chops our pay, that’s good reason for us to resign, so you’ll still have to pay our severance package. What if their pay was cut for performance issues? I mean, what if — and this purely hypothetical — their company pushed itself to the brink of collapse and everyone in America filled a collection plate with $180 billion to save it? Would that be “good reason” to cut their pay?
And, by the way, the Journal says two of the five people have already changed their minds and rescinded the threats. One of the executives who’s still on board with the rebellion is William Dooley, the man in charge of the wonderfully-run financial services division:
Mr. Dooley’s division includes AIG Financial Products, whose credit-derivative trades were the biggest reason for AIG’s 2008 financial problems. The other four executives weren’t involved in the problems that sank the company.
If you’ll recall, AIG’s CEO Robert Benmosche, threatened to quit last month over the pay limits, but then he too changed his mind.
Meanwhile, across the pond, bankers are responding to government threats of a major tax on bonus payments:
“Windfall taxes are usually three things — they are populist, they are political and they are also penal,” Angela Knight, chief executive of the British Bankers’ Association told BBC television on Monday.
Populist, political and penal — all true, no doubt. But that’s how government works, doesn’t she know that? As long as you’re in the government’s cradle, you will eat what the government feeds you. And if you’re in that position, good luck with the complaining.
As for threatening to quit, I haven’t heard any government officials muster up the courage to spit it out, but I imagine that all across America, people are singing a rousing chorus of Don’t Let the Door Hit Ya…
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