Many Bailed Out Execs Flee Before Pay Cuts

Washington Post: Even Before New Regulations Were Announced, Some Executives Left Affected Companies

(Washington Post)  This story was written by Tomoeh Murakami Tse and Brady Dennis.

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Even before the Obama administration formally tightened executive compensation at bailed-out companies, the prospect of pay cuts had led some top employees to depart.

The administration had tasked Kenneth Feinberg, the Treasury Department's special master on compensation, to evaluate the pay packages of 25 of the most highly compensated executives at each of seven firms receiving exceptionally large amounts of taxpayer assistance.

But Thursday, he ruled only on slightly more than three quarters of the pay packages that were to be under his purview. The balance reflected executives who have left since he began his work in June or will be gone by the end of the year.

Many executives were driven away by the uncertainty of working for companies closely overseen by Washington, opting instead for firms not under the microscope, including competitors that have already returned the bailout funds to the government, according to executives and supervisors at the companies.

"There's no question people have left because of uncertainty of our ability to pay," said an executive at one of the affected firms. "It's a highly competitive market out there."

At Bank of America, for instance, only 14 of the 25 highly paid executives remained by the time Feinberg announced his decision. Under his plan, compensation for the most highly paid employees at the bank would be a maximum of $9.9 million. The bank had sought permission to pay as much as $21 million, according to Treasury Department documents.

At American International Group, only 13 people of the top 25 were still on hand for Feinberg's decision.

Feinberg did not detail how he plans to tackle the politically sensitive issue of nearly $200 million in bonuses due in March to employees at AIG Financial Products, the unit whose complex derivatives contracts led to the collapse of AIG last fall. Feinberg has urged the company to find a way to scale back the bonuses in hopes of preventing another round of public outrage.

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In his written ruling Thursday, Feinberg noted that the firm had played a role "in the events necessitating taxpayer intervention," and concluded that AIG Financial Products employees should be paid only what their base salaries were on Dec. 31, 2008. In addition, he said that he continues to urge company officials to recoup the bonus payments that some Financial Products employees pledged to repay earlier this spring but did not. Until that issue is resolved, he wrote, employees should receive no pay in addition to their base salaries.

That news drew scorn Thursday from employees at AIG Financial Products who said they had repeatedly offered to rework their pay arrangements but that Feinberg was unwilling to work with them.

"He has zero credibility with FP employees at this point," said one employee, who was not authorized to speak on the record. "It's a very demoralized workforce."

Several of the companies said they had already been making changes in their compensation plans to better link executive pay to performance and that their compensation committees had worked closely with Feinberg's team to come up with a final plan reflecting that principle.

"We've been going down that road," said Bob Stickler, a Bank of America spokesman. "This is really more of the same." But he also said that the ruling "does go pretty far and there are competitive issues we're worried about."

On Wall Street, reaction to Feinberg's ruling was swift, with some executives arguing that it will further handicap the most troubled firms by driving away top employees while making companies unwilling to promote rising stars for fear of bringing them to Feinberg's attention.

But Nomi Prins, a former Goldman Sachs employee, said Feinberg's rulings are unlikely to change the culture of bonuses on Wall Street.

"I don't think Wall Street is afraid of this at all," said Prins, author of "It Takes a Pillage: Behind the Bailouts, Bonuses, and Backroom Deals from Washington to Wall Street."

"It's going to affect a small portion of a small portion of the industry. It won't have a lasting impact."

[garyl615]

Scooted with the loot...These fat cats really appreciated all our help. Laughing all the way to the "bailed out" bank.

[Newster1]

Many executives were driven away by the uncertainty of working for companies closely overseen by Washington, opting instead for firms not under the microscope,"

LOL, the very ones who created the mess run to other companies, we'll see how long they last there.




March 17, 2009
Excessive Righteous Indignation Over AIG Bonuses

AIG CEO Edward Liddy defended the bonus payments as necessary to attract and retain "the best and brightest talent to lead and staff" and that compensation should not be subject to "continued and arbitrary adjustment by the U.S. Treasury."

Politico's Roger Simon didn't buy into Liddy's defense:

"The best and the brightest? Is this guy serious? As of Sunday, AIG stock had gone down 99 percent over the past year because of these geniuses. But we have to worry they might quit and go elsewhere?

"Fine. Let them go. Maybe they can get jobs in Zimbabwe, where kleptocracy is official policy. I think some of them would feel more comfortable there."

LOL ROTFLMAO so good!!!! so good!!!

[Treadlightly2]

Not everybody is broke. There is a 2009 Rolls for sale on E-bay and the top bid so far is $201,000..Must be nice....Located in Manhattan.
Trump probably has his eye on it.

[babooph]

I thought bank robbers always run away with the money?I guess an inside job usually lets you stay & stuff some more in the bag....

[Treadlightly2]

Senor/Principal Power Engineer - Dakar, SENEGAL
Job Stream: Infrastructure
Location: Dakar, Senegal
Close Date: 20-Dec-2009

Oh Yea! Right up your alley PP Engineer!..Senior! PP Engineer

[Treadlightly2]

The World Bank Tajikistan Country Office in Dushanbe is looking for a Receptionist.
The Republic of Tajikistan became a member of the World Bank in 1993.

Hustle up guys there's already a line around the block for this one.

[Questionews]

Want that big ol fat salary back guys? Pay back the money!!

[goodsense1]

Giving money to people who cheat, lie, steal and do all manner of evil with it and expecting them to make it all better when you bail them out is just plain stupid. We wouldn't save an alcoholic by giving them more alcohol to consume. The same with a drug addict. Wake up America and smell the crap falling out of the White House. We are in big trouble and unless our President can tear himself away from the health care reform and fighting with a news organization that doesn't agree with his views, we Americans that are working and trying to pay our bills will end up on the street with all the others. It is time to help us economically. By putting in the bailout it did not help the American public just those who helped get us there. Let's focus on what is really important the ECONOMY. You can't save the real people, the American working class, by bailing out crooks. This Health Care Reform is going to cause more money from the pockets of those working. Wait and see. WAKE UP! WAKE UP!

[speakinup04]

I'm not going to pass judgement on people I haven't been able to evaluate. All of their actions, no matter whether they were good managers or bad, may have been as meaningless as trying to improve a blackjack hand of 13 when the dealer already had 20.

But, if they leave - you have to ask yourself - who will take their jobs ?

As a talented MBA from Harvard, would you work for 10% of what everyone else was getting ?

How do you think that would effect the overall future of those companies ?

I'm NOT saying these guys should be making this much money, but let's NOT go for the knee-jerk reaction when our tax dollars are the ones paying for the mistakes and future of the companies...

Doesn't it seem reasonable to look for a way to level the WHOLE playing field instead of just the part we have an investment in ?

[sean58x]

How about a pay cut for Ed Rendell? Pennsylvania's chimp-in-chief plans to terminate hundreds or possibly thousands of state employees. His budget for 2009-2010 fiscal year was a quarter of the year past due for signature. A pink slip goes out to the worker who is late.

[Questionews]

As much as I hate seeing anybody lose their jobs & won't lose too much sleep about state workers feeling the some of the same pain as the rest of us. Why should they be protected against what everybody else has to deal with? I know our state is bloated with state employees. They went with a furlough program as opposed to pink slips. They have far more people on the payroll that what's needed.
The game they play is the state employee unions tells the Gubernatorial candidates that they will get the state union vote block for state concessions in salary/benefits & an increase in the percentage of state workers. Every 4 years the union gets larger, they get more pay & bennies & have a huge influence on the Governor'e election. After a few more elections there won't be anybody in the state that's not a state worker.

[midlclass]

these people should be found and taxed to get our tax money back freeze there assets whatever. these people are bailing out after the taxpayer bailed there arse's out. the goverment should control these companies with an iron fist. as a warning sign to any other financial firm that get's to big to fail! If we have to bail you out it's under our rules and you ain't going to like it. run your buisness's in a proffesional manner and we'll leave you alone.run it like crooks and we'll treat you like one.

[chonder2]

NY-Joe, Thanks for defending the people that ran the economy into the ground and for argument sake, maybe they didn't push the stall button but they rode that economic jet all the way to the ground.

[speakinup04]

What possible good can come from a statement like this, chonder2 ?

Don't you like people to state their opinions ?

[Treadlightly2]

Who did't see this coming? Greedy self serving, country trashing, white collar criminals. Where are they going to run to? Might want to try Argentina it worked for the Nazis.

[stuart-johns2]

by N-Y-Joe-11 October 23, 2009 12:06 PM EDT

What's the matter Joey boy? Afraid to face the music for posting you utterly absurd comments?

[hungry1968-16]

Usually.

[stuart-johns2]

You know what gets me about these ignorant anti-American compassionless republican fools?

They complain about Welfare people. Welfare people don't get to live high on the hog. They don't even get enough from the same entity that claims they live under the poverty level to eat properly.

But these corporate welfare cases are a diffent story. They deserve to get rich while collecting Welfare. Go figure. The hypocrisy of the republican extremist freaks knows no bounds - nether does their greed.

[FabFran]

Compensation of $21 million....come on. NO ONE IS THAT GOOD. Try hiring 3 people at $7 million each, I bet the job get done and better than before. Added ++++, three people (and families) are now rich and will spend, spend, spend.
In a world where folks are losing their homes, jobs and can't feed their children the Wall Street gang is truly obscene!!!
I'm a capitalist, but enough is really enough. Go President Obama!!!

[stuart-johns2]

by N-Y-Joe-11 October 23, 2009 12:06 PM EDT

Obama, thanks for violating the constitution, by making up imaginary powers that are not granted to you
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And what part of the Constitution has Obama violated? Show us where and how he has done this! Your argument might have some merit if Obama was to implement this policy nationwide but he is'nt. This applies ONLY to the companies that recieved bailout TARP funds.

Of course, you naturally forgot to mention that part...or deliberately did'nt mention it perhaps.

[ianlou]

Why would a company spend BIG BIG BIG bucks to hire someone who ran their last company into the ditch?

[midlclass]

thats how the good ole boys do it. hey this guy ripped off the us goverment and screwed over his employee's and they paid him million. this is the guy we need to use whatever slippery idea they can come up with to increase the profits. we'll give him a million 5 for doing it.

[zippiez]

It will be interesting to find out what companies hire these "executives."
Will companies really want leeches attached to their corporate bodies?
If companies hire these "executives," maybe those companies are, in fact, leeches on the American economy.

[stuart-johns2]

by hologram5 October 23, 2009 11:55 AM EDT
Hope they "Flee" to another country. They are nothing but white collar crooks anyways.
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Where will they go? England has the same restrictions we are implementing. And most other countries have more restrictive policies already in place.

I noticed the story just gave figures and no names. Who left? I believe this thread is another manufactured fear tactic. An ill attempt to manipulate the public into fear so they will make a stink about what Obama is doing.

That's all this is. These guys, even WITH the restrictions can go nowhere in the world and make the amopunt of money the de-regulated United States allows them to make.

Who the hell do they think they're kidding?