Five AIG Execs Start a Revolt, Threaten to Quit Over Pay Cuts

December 7, 2009

(ChattahBox)—Last month Robert Benmosche, chief executive of insurance giant AIG, threatened to take his millions and go home, because he was angered over the government imposed compensation limits and curbs on bonus payments. Now, according to the Wall Street Journal, five top executives with AIG are following in Benmosche’s footsteps and they threatened in writing to quit, if Kenneth Feinberg, the government’s pay czar significantly reduces their compensation.

AIG, the insurance giant considered too big to fail in the wake of the economic collapse last year, was bailed out by the government with $182 billion in taxpayer funds. The federal government now owns 80 percent of AIG, which subjects the firm’s compensation practices to the scrutiny of the Treasury Department.

According to the report in Sunday’s WSJ, general counsel Anastasia Kelly persuaded four other executives to join her in an “administrative action,” by submitting written notices to management on Dec 1, saying that they would leave at the end of the year, if their compensation was significantly cut.

The written notices were intended to preserve their golden parachute severance payments, which the executives are currently eligible for. But the special compensation master, Kenneth Feinberg plans to end golden-parachute severance payments in 2010.

Under the current terms of the contracts of the five executives, they can receive a golden-parachute if they resign for “good reason.” And a good reason includes a significant reduction in base salary or bonus payments.

Anastasia Kelly denies she instigated a corporate revolt against government curbs on compensation. A spokesperson for Kelly told the WSJ: “…Ms. Kelly says she didn’t “instigate or encourage” the other four, but “only advised the other executives of what they needed to do to protect their rights” under AIG’s executive-severance plan, and helped them arrange for outside counsel.

The other four executives joining Kelly are, Rodney Martin, head of an international life-insurance unit, William Dooley, head of the financial-services division; Nicholas Walsh, vice chairman and head of AIG’s international property-and-casualty-insurance businesses; and John Doyle, the head of the the U.S. property-casualty business.

Over the weekend, Walsh and Doyle apparently changed their minds and rescinded their written notices to resign.

Last month Feinberg reduced executive compensation for dozens of AIG executives. The pay czar reduced the original pay packages submitted by AIG for approval, because they were “inconsistent” with the public interest.

President Obama endorsed the curbs on excessive Wall Street compensation and bonuses of firms receiving federal taxpayer funds saying, “it does offend our values.”

AIG’s risky investments and excessive compensation based on short term gains, nearly took down the entire US economy. Kenneth Feinberg and the Treasury Department want to ensure the economy is not put in peril again from risky compensation practices.

Feinberg is expected to announce additional compensation cuts, which would affect the five AIG executives, within the next two weeks.

Source


Comments

8 Responses to “Five AIG Execs Start a Revolt, Threaten to Quit Over Pay Cuts”

  1. Hank VW on December 7th, 2009 1:18 pm

    Let them quit. I am sure there are others who can do their work. They are bluffing and I sure hope no one falls for it.

  2. About quit, aig executives, pay | Find me About on December 7th, 2009 2:22 pm

    […] (ChattahBox)—Last month Robert Benmosche, chief executive of insurance giant AIG, threatened to take his millions and go home, because he was angered over the government imposed compensation limits and curbs on bonus payments. …Read Original Story: Five AIG Execs Start a Revolt, Threaten to Quit Over Pay Cuts – ChattahBo… […]

  3. Old Man Dotes on December 7th, 2009 2:49 pm

    Here’s my response, as one of the people who paid for the AIG bailout, and thus, the employer of the “executives” threatening to quit: “Don’t let the door hit you in the ass on the way out, you greedy bastards.” Oh, and “Die in a fire, too.”

  4. Bill on December 7th, 2009 3:36 pm

    Greedy for trying to protect what was promised them years ago in guaranteed contracts? If you read the article, you will notice that only one of the five executives threatening to resign, William Dooley, is from the financial-services division and therefore had anything to do with the credit default swaps that brought down the company. The rest are simple administrators who have been working 70 hour weeks for the past two years and now are being told they will no longer be paid what they were promised.

  5. Bob on December 7th, 2009 4:12 pm

    It’s greedy when the rules have changed thanks to your company. If another divsion lost money and forced an entire company to shut down (which has happened before) then all bets are off. This is almost the same thing. Others had to take a pay cut. Leader’s lead by example. Everyone harps on contracts. Contracts are only good if the enitiy it covers still exists. In this case it doesn’t, It has been nationalized. So the rules have changed. Deal with it.

  6. About quit, pay, top aig, aig executives threaten | Find me About on December 7th, 2009 5:33 pm

    […] (ChattahBox)—Last month Robert Benmosche, chief executive of insurance giant AIG, threatened to take his millions and go home, because he was angered over the government imposed compensation limits and curbs on bonus payments. …Read Original Story: Five AIG Execs Start a Revolt, Threaten to Quit Over Pay Cuts – ChattahBo… […]

  7. J. Sawyer on December 7th, 2009 5:38 pm

    GOOD RIDDENCE TO BAD RUBBISH! you all brought the company down, and now its time for you to go… SEE YA!!

    If you can’t live on the outrageous income you’re making already, you’re pretty much a failure at not only you’re own finances but your job as well.

    For each one of YOU, there are probably 50 that could do your jobs, and for a fraction of what you make…

    Give us all a nice Christmas this year… be gone with you, before someone drops a house on YOU TOO!!!

    J.

  8. t walsh on December 7th, 2009 9:37 pm

    Doing the right thing appears to be a lost concept at AIG, as does putting the greater good ahead of self.

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