First, CEO Robert Benmosche was reportedly ready to quit. Then, after a scene in the board room, he graciously relented and agreed to stay at his $10.5 million a year post. Now comes word that five "top" AIG executives are ready to leave, including general counsel Anastasia Kelly and the heads of some of its insurance businesses, if their pay is significantly reduced.
Pay czar Kenneth Feinberg wants to control the salaries paid to executives at companies that have taken federal TARP money, and AIG is a prime target because it has taken the most. It still owes the government and taxpayers about $62 billion.
The culture of privilege, prevalent at AIG before its collapse in early 2008, hit head on into the wreck that is the U.S. economy, with double digit unemployment in 2009. AIG employees who worked at the unit that caused the collapse stood to gain $182 million in previously negotiated bonuses. And despite the ranting and raving by Congress and New York Attorney General Andrew Cuomo, most of those eligible took their bonuses.
Feinberg's mantra of never again has a glitch. If you won't pay, they won't play. Benmosche and these executives have pointed out very clearly that if they don't play, then Feinberg is risking $62 billion in federal funds.
So what's a pay czar to do? Bloomberg News is reporting that Feinberg, who is apparently leaking news as well, will exempt some AIG executives from the $500,000 salary cap limit, and issue a ruling on the rest. One suggestion: pay can also come in the form of stock options and deferred bonuses. Golden handcuffs have always been a way to keep talent from going elsewhere.
But if they still want to leave, then let them. Insurance Journal reports that AIG's human resources director left in the middle of these pay negotiations. If he can be replaced, anyone can.