Although opinion about AIG has warmed slightly since the reviled company's stock went on a tear, incoming CEO Robert Benmosche hasn't gotten a break. First pundits were mocking him for taking a two week vacation before the start of his new job. Now they're digging in because his compensation package comes to $7 million--a mere seventeen-and-a-half times the salary of fellow public servant Barack Obama, as Mark Knoller of CBS deadpanned.
What's a guy got to do to win a little respect? Benmosche has few options, since what analysts are reacting to is not his qualifications, but the symbolism. If the White House can't rein in pay on its own employees--since A.I.G is 80% nationalized--how can we take seriously Obama's condemnation of the "shameful" pay scales prevalent on Wall Street?
Here are the main objections to Robert Benmosche's gilded salary package:
- The Last Guy Worked for $1, says Douglas A. McIntyre at 24/7 Wall Street. A longtime champion of ex-CEO Ed Liddy, who worked for a volunteer's wages at AIG but was browbeat by Congress during the bonus scandal, McIntyre seethes that the government would "overpay a man with the job of dismantling a large company."
- Reinforces Wall Street Delusions, says Robert Reich, Secretary of Labor under Bill Clinton on his personal blog. Since the Treasury department has the power to approve executive compensation at bailed out firms, Reich thinks the notion that "talent" requires salaries in the multiple millions should be nixed from on high. "I needn't remind you that over the last several years Wall Street has exhibited a truly astonishing lack of talent," he says.
- Shows Obama Caved on Pay Reform, suggests Mark Knoller, White House Correspondent for CBS. "Back in January, reacting to big money bonuses some Wall Street bankers were giving themselves, Mr. Obama called it "shameful" and the "height of irresponsibility."
- Benmosche's Thumbing His Nose, says Yves Smith at Naked Capitalism. "We the great unwashed public are being given the message that we should not run
Goldman operativesfine upstanding men like Edward Liddy out, because look what sort of commitment to the job we get now."
The White House defense has persuaded some commentators, however. The administration line says that paying $7 million to untangle what Press Secretary Robert Gibbs admitted was still a "royal mess" at AIG is worth it. Jonathan Berr at Daily Finance agrees:
Benmosche wanted to be fairly compensated to leave his cushy retirement, and who can blame him...If this works out, the government's $7 million investment in Benmosche will pay off many fold. Until it does, he will earn every nickel of his salary.