Thumbing their noses at government pay czar Ken Feinberg, five high-ranking executives at AIG have threatened to resign
if their compensation gets significantly cut. The execs are protesting a move, announced in October, to slash
of top brass at seven bailed-out firms. While bloggers are castigating the
executives for their ultimatum, some business writers say Feinberg's pay
restrictions aren't helping banks or taxpayers. As the showdown
continues to unfold, the WSJ
reports that two execs may have rescinded their threat. Here's what finance bloggers are saying:
- Pressure's On Feinberg, observes Paul Smalera at The Big Money: "Their announcement makes Feinberg’s already difficult job that much
tougher. Feinberg has to balance compensation with preservation of
talent at the firms he has oversight of. In essence, he must
decide whether these executives, or any of the top 75 earners in the
company (all of whom are subject to his authority), are replaceable.
And he has to do it by year's end, which, thanks to the provisions of
AIG’s executive severance plan, is the deadline on which those
executives could quit and still collect benefits."
- We're Talking a Lot of Money, writes Lita Epstein
at Daily Finance: "Salaries aren't the only issue at stake for these
five executives. They
also want to preserve their ability to collect severance payments...
Only about two dozen individuals have this protection, and the five who
threatened to quit want to do so before they lose it. Those severance
packages must be huge to encourage anyone to quit in this job market."
- Calling the Government's Bluff, notes Douglas A. McIntyre at 24/7 Wall Street: "In the case of AIG, Wall St. bankers have decided to call the bluff
of pay czar Kenneth Feinberg. It may put pressure on him to back
down from some of his radical caps on banker compensation particularly
if the banks losing the people can convince him that the employees are
critical to future profits.
Feinberg’s aggressive stance on what bankers at firms that still
have government money can be paid was always a high stakes gamble."
- Underpaid and Over-Hated. Wouldn't You Resign? writes Vincent Fernando at The Business Insider: "Whatever one 'feels' they should be paid, when an entire market is
willing to offer them a much higher rate, you need to be practical and
realistic. Getting the right people is important to shareholder value,
and to do so you need to pay the market rate for talent. You can't let
your 'feel' for proper pay trump massive evidence in the market of what
the actual level is."
- Give Me a Break, writes Ravi Somalya
at Gawker: They're hardly starving; they're currently limited to
$500,000 — or about $1400 a day — by the terms of the bailout. To put
that in perspective surgeons earn about $330,000 at the top end...Does
William Dooley, the head of AIG's financial services division, the
same division that drove the company to catastrophe, and who is among
those the Wall Street Journal report is threatening to quit, provide more good to society? (That was a rhetorical question. The answer is no.)"
Want to add to this story? Let us know in comments
or send an email to the author at
jhudson at theatlantic dot com.
You can share ideas for stories on the Open Wire.