There is apparently no sense of responsibility or shame at AIG. You remember AIG...the insurance giant we taxpayers "loaned" $182 billion because the firm's executives apparently did not understand the risks associated with over-investing in credit-derivatives. Deemed too big to fail, Washington ultimately landed up nationalizing the firm by purchasing 80% of this poorly managed behemoth with our hard-earned dollars. Now here's the rest of the story. Despite their clear leadership failure, AIG executives still feel entitled to outlandish compensation and golden-parachute severance payments. Yes, you read correctly -- AIG executives are now threatening to quit if their pay is dramatically curtailed by the Obama administration's compensation czar.
On 7 December 2009, the Wall Street Journal reported AIG's general counsel and the heads of some of its largest insurance businesses were prepared to resign as a result of pay concerns. (Warning, those who are currently unemployed or have been compelled to work reduced hours should stop reading now...the outrage at what you are about to learn can cause elevated blood pressure and a desire to irrationally lash out at one's computer screen.) According to the Journal, the five executives involved in this latest bid for corporate infamy are concerned the compensation czar is going to trim their 2009 pay and impose even greater restrictions on their 2010 remuneration--including a prohibition on collecting golden-parachute severance packages.
The Journal goes on to note Ms. Anastasia Kelly -- AIG's general counsel -- seems to be the prime culprit behind this outlandish behavior. A source familiar with the story told the Journal Ms. Kelly claims she didn't "instigate or encourage" the silliness, but "only advised the other executives they needed to protect their rights." I'm sorry, but when an attorney -- particularly one who has been named a corporate general counsel -- tells me I need to "protect my rights," well, he or she is now leading the charge. Oh, by the way, did I mention Ms. Kelly is trying to protect a golden parachute she supposedly earned after serving at AIG for less than five years...unbelievable. This is a sense of entitlement that makes even Marie Antoinette a sympathetic character.
One of the other culprits in this cabal...Mr. William Dooley, the gentleman responsible for overseeing AIG's financial-services division -- the very division that pushed AIG into its current woes. How Mr. Dooley can possibly feel entitled to a large bundle of cash is beyond me. My recommendation is that we treat him to the salary offered to any other senior member of the federal bureaucracy -- and thus subject to a salary cap that falls well short of $200,000. Keep in mind Mr. Dooley works for the U.S. taxpayers -- we own 80%...80% of his current employer. If the salaries Congress has imposed on the federal bureaucracy are good enough for all those who have chosen to serve the people, this pay scale should certainly be good enough for the financial industry robber barons who went looking for taxpayer bailouts.
Perhaps Ms. Kelly and Mr. Dooley need to be reminded that, absent taxpayer dollars, they would be former employees of a now-bankrupt firm. Talk about a let down...ask the former employees of Enron about the fate of their bonuses and golden parachutes. Or, better yet, Ms. Kelly and Mr. Dooley could have a long conversation with one or two of the approximately 80,000 members of the financial industry who have lost their job in the last 18 months. Somehow I suspect they won't find much sympathy on the cold, hard streets of Atlanta, Las Vegas, Miami, or New York.
I have to wonder where this audacity of greed is generated. Do they teach "Greed 101" in business school? Or is that a trait learned on the job? My friends in academia insist no such course exists, so it must be a special program offered at only the most select firms. I know the class is somewhere in Goldman Sachs' training catalog. Last year Goldman Sachs was asking for taxpayer backing and legal protection as a bank holding company rather than remaining an investment bank. This year Goldman Sachs is planning to payout an estimated $17 billion in bonuses. Admittedly, those bonuses are likely to be heavier on stock options than dollar bills, but that only happened as a result of shareholder outrage.
Well, I'm expressing my shareholder outrage at the behavior of AIG's top executives. President Obama's compensation czar needs to take a ruler to these executives' knuckles and then make clear all future compensation at this taxpayer owned entity will be based on the federal bureaucracy's pay scale. One can be assured this will cause some of the greed mongers to flee the firm -- but who is going to hire people who managed to endanger the entire American economy? Surely someone on Wall Street understands culpability in a scandal of this magnitude should not be rewarded with further exaggerated remuneration.
Oh, and I have one other candidate for a bit of draconian behavior modification while Washington is on the subject. Citigroup also wants out from under the pay czar's thumb. We should oblige the executives at Citi by selling the 7.7 billion shares we taxpayers currently own at that corporation. As the Kuwait sovereign wealth fund just demonstrated, now is the time to make a killing by selling Citi holdings. Kuwait earned a profit of $1.1 billion by bailing on Citi. The U.S. taxpayers would pick up an estimated $6 billion in profit by following suit.
I'm sorry if such a move would leave Citigroup vulnerable to collapse and even further layoffs, but, hey, your corporate managers are more concerned about their paychecks than your future employment. Chalk it up to a sense of self entitlement...and lessons they learned from watching events unfold at AIG. Alas, we have indeed now entered the season of greed.