Looks like the top lawyer and other fat cats at AIG, whose salaries are now paid by American taxpayers, are maneuvering to be able to escape limits on their pay. Today’s Wall Street Journal reports that a Ms. Anastasia Kelly, the General Counsel of AIG, and four other insurance executives gave notice last week that they were “prepared” to leave by the end of the year if their pay is cut by Kenneth Feinberg, the government “pay czar” who sets compensation levels for companies that got bailout money. AIG got $182 billion in taxpayer dollars. AIG’s top employees want to bust the $500,000 pay cap set by Feinberg.
Threatening to quit over compensation is apparently SOP over at AIG. The newly appointed CEO of the company, Robert Benmosche, said he was thinking about quitting a few weeks ago – after being on the job only four months – unless the government relented on pay limits. He later got a $10.5 million contract and “agreed” to stay on. Thank you so much, sir, for your sacrifice.
General Counsel Kelly asked her senior colleagues to join her in threatening to leave, the Journal reports, even going so far as to hire outside lawyers to advise the cabal. That sure sounds like a violation of her duties to the company and U.S. taxpayers – which is no doubt why an AIG spokesperson denied that Kelly had instigated the others to depart and told the Journal that Kelly only “advised the other executives of what they needed to do to protect their rights.”
Over the weekend, two of the executives rescinded their threat to leave – just a guess, but I bet they did that right after the Wall Street Journal reporter called. Executive suite hijinks like trying to leverage pay boosts and bonuses can backfire when they show up on the front page of the newspaper.
It is excruciatingly apparent that the taxpayers never should have been forced to bail out AIG. The recent report (PDF) by the government’s independent bailout monitor provides fresh evidence that the company was kept alive not because its collapse would crash the entire banking system – the excuse we were given at the time by then-Treasury Secretary Paulson – but rather to protect the deals AIG had made with various Wall Street firms, like Paulson’s company, Goldman Sachs. These firms would have been hit hard if AIG had collapsed.
Before we decide what to do about the unhappy execs at AIG, someone should explain to the American people what those folks are doing anyhow. After reports surfaced that he was threatening to quit, CEO Benmosche wrote a letter to his employees saying, “We are all working aggressively to overcome this compensation barrier that stands in the way of restoring AIG’s value.”
But exactly what is AIG’s “value”? The way the bailout was structured – no conditions or quid pro quo – AIG is of no practical benefit to its owners, the American taxpayers. It’s an insurance company like all the rest, only much bigger. It’s not as if the company has agreed to give its owners a break of their auto or home insurance. Paying vast sums of taxpayer money to its employees isn’t going to replenish anything other than their bank accounts.
The suggestion that people need to be paid millions of dollars, year after year and in the middle of a devastating recession, to work hard is bogus. As AIG’s General Counsel has shown, these people have no sense of responsibility or concern for their company – they are out to make a big, big, buck. Period.
There are plenty of Americans who can and will do their jobs, probably much more competently, and who would be grateful for anything approaching $500,000 right now. Check the pages of any legal newspaper in the country: there are lots of unemployed lawyers out there. Kelly should be one of them.
I say, call the Kelly cabal’s bluff. Fire her and the rest of them right now.