Dispensable After All
by digby
Following up on this post from this morning, perhaps there’s going to be a little policy to go with their rhetoric. Pay Czar Kenneth Feinberg called the AIG Masters of the Universe’s bluff (sort of):
A top executive at American International Group Inc (AIG.N) has resigned because of pay curbs imposed by the Obama Administration’s pay czar, the insurer said on Wednesday.
Anastasia Kelly, AIG’s vice chairman for legal, human resources, corporate affairs and corporate communications, resigned effective Dec. 30 for “good reason” and is eligible for severance pay under the terms of the company’s executive severance plan, the insurer said.
Kelly stands to be paid about $2.8 million in severance, according to a source familiar with the matter.
Kelly’s resignation comes after Kenneth Feinberg, who is charged with monitoring pay levels at companies that received taxpayer funds, imposed pay caps for AIG’s top executives.
Earlier this month, Feinberg set the compensation structures for the 26th through 100th highest-paid employees at four firms, including AIG, limiting most cash salaries to $500,000.
Feinberg also granted less than a dozen special exemptions from the cash salary cap, including several AIG executives, after being urged to do so by Federal Reserve and Treasury officials.
Kelly met frequently with Feinberg to discuss pay issues as he prepared to rule on compensation at companies that received extraordinary taxpayer bailouts.
She was among five executives reported by The Wall Street Journal to have notified the insurer that they were prepared to resign and collect severance benefits if their pay was cut sharply by Feinberg. Chief Executive Robert Benmosche separately also had considered quitting because of the pay constraints, the Journal has reported.
Cornelius Hurley, director of the Morin Center for Banking and Financial Law at Boston University, said no AIG employee was irreplaceable.
“We have been duped into thinking that these AIG employees have some kind of secret code that no other employee could discover if they were hired to replace them and therefore they are able to basically hold the company ransom,” Hurley said.
Well, except nobody was duped. Everyone knew that this was a scam and they all pretended to believe it because they want to protect the absurd pay incentives that benefit all the overpaid elites. Why, if this idea catches on people might wonder if any of these obscenely overcompensated executives are worth the disgusting, gluttonous pay they give each other. And then where will they be?
But it is still a very good thing that Feinberg didn’t capitulate to blackmail. Their threats to blow up the company by walking en masse should have been a national scandal. At least they didn’t get away with that, even if the Democrats failed to properly frame it for political advantage.
It should not go without mention, however, that the people who walked were allowed to keep their million dollar-plus severance packages. After all, they couldn’t be expected to try to scrape by on the meager millions they already had. (And it’s also true that the Fed and Treasury intervened to exempt certain executives from the salary cap.) Still, baby steps …
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