It looks like the new AIG (AIG) CEO will get his $7 million bonus and $3.5 million incentive program. A number of shareholders and government officials have questioned why the head of a company that has received $180 billion in taxpayer money should do so well. Robert Benmosche has just joined what was the world's largest insurance company after retiring from MetLife (MET). It is very likely that his tenure in his old job made him millions of dollars. His predecessor at AIG worked for $1 a year.
The Wall Street Journal, in an exclusive report, says that Treasury pay czar Kenneth Feinberg will approve the AIG compensation deal. Apparently Mr. Benmosche has threatened to leave if he does not get what the board offered him.
Whether Benmosche leaves is not at the heart of the question. There are other insurance executives, many of them currently retired, who could do a good job of working on the AIG restructuring. Much of the job has to do with selling off pieces of the company in the hopes of paying the federal government back.
Running AIG should be viewed as a public service, a service to American taxpayers. Offering Benmosche a large pay package runs against the grain of everything the Obama Administration is trying to do to curb excessive Wall Street practices and sends a message to bankers that the government is not serious about insisting that compensation at bailed-out financial firms be reasonable and not extravagant.
AIG should let Benmosche leave. He is a symbol of what is wrong with the "star" system on Wall Street.
Douglas A. McIntyre is an editor at 24/7 Wall St.