Are senior AIG execs going broke?
Dec 15th 2009 9:00AM
Updated Dec 15th 2009 10:13AM
AIG (AIG) CEO Robert Benmosche wants to make it clear that many of his senior staff have made tremendous financial sacrifices in the insurance firm's restructuring. This isn't simply due to salary cuts by the government's pay czar. Many top AIG executives have also lost all the money they had in AIG stock.
Benmosche told The Wall Street Journal that "10 individuals who report directly to him have lost a combined $168 million in prior years' pay since the U.S. bailout of AIG in September 2008." Many of the losses stemmed from stock options and unvested shares.
Does Benmosche expect pity for his top staff from the government or the public? Perhaps so. At the very least, he may be using the numbers to get the pay czar to increase the cash compensation for AIG management.
But AIG executives took the same risks as the management of any company. Pay packages are usually tied partially to stock performance. This was true at other U.S. financial firms that ran into trouble during the credit crisis. It was true for executives at hundreds of companies that went public during the Nasdaq boom of 1999 and early 2000.
Benmosche is famous for his odd behavior and strange public statements about AIG and the government's treatment of his employees. He apparently threatened to quit when his own pay package was at risk and has made a huge fuss over the pressure that the pay czar has put on the compensation plans for other top AIG brass. Benmosche has argued, perhaps appropriately in some cases, that AIG's best talent could leave if not adequately paid.
However, if Benmosche is expecting pity for himself or the other senior executives at AIG, he won't find it with the public or government officials. Taxpayers put $180 billion at risk to save his company. No one is in any mood to hand the firm's management a dime more than the pay czar has decided.