Thumbing their noses at government pay czar Ken Feinberg, five high-ranking executives at AIG have threatened to resign if their compensation gets significantly cut. The execs are protesting a move, announced in October, to slash the salaries of top brass at seven bailed-out firms. While bloggers are castigating the executives for their ultimatum, some business writers say Feinberg's pay restrictions aren't helping banks or taxpayers. As the showdown continues to unfold, the WSJ reports that two execs may have rescinded their threat. Here's what finance bloggers are saying:
- Pressure's On Feinberg, observes Paul Smalera at The Big Money: "Their announcement makes Feinberg’s already difficult job that much tougher. Feinberg has to balance compensation with preservation of talent at the firms he has oversight of. In essence, he must decide whether these executives, or any of the top 75 earners in the company (all of whom are subject to his authority), are replaceable. And he has to do it by year's end, which, thanks to the provisions of AIG’s executive severance plan, is the deadline on which those executives could quit and still collect benefits."
- We're Talking a Lot of Money, writes Lita Epstein at Daily Finance: "Salaries aren't the only issue at stake for these five executives. They also want to preserve their ability to collect severance payments... Only about two dozen individuals have this protection, and the five who threatened to quit want to do so before they lose it. Those severance packages must be huge to encourage anyone to quit in this job market."
- Calling the Government's Bluff, notes Douglas A. McIntyre at 24/7 Wall Street: "In the case of AIG, Wall St. bankers have decided to call the bluff of pay czar Kenneth Feinberg. It may put pressure on him to back down from some of his radical caps on banker compensation particularly if the banks losing the people can convince him that the employees are critical to future profits. Feinberg’s aggressive stance on what bankers at firms that still have government money can be paid was always a high stakes gamble."
- Underpaid and Over-Hated. Wouldn't You Resign? writes Vincent Fernando at The Business Insider: "Whatever one 'feels' they should be paid, when an entire market is willing to offer them a much higher rate, you need to be practical and realistic. Getting the right people is important to shareholder value, and to do so you need to pay the market rate for talent. You can't let your 'feel' for proper pay trump massive evidence in the market of what the actual level is."
- Give Me a Break, writes Ravi Somalya at Gawker: They're hardly starving; they're currently limited to $500,000 — or about $1400 a day — by the terms of the bailout. To put that in perspective surgeons earn about $330,000 at the top end...Does William Dooley, the head of AIG's financial services division, the same division that drove the company to catastrophe, and who is among those the Wall Street Journal report is threatening to quit, provide more good to society? (That was a rhetorical question. The answer is no.)"