With the big banks out from the government's clutches, pay czar Kenneth Feinberg's job has become a lot less interesting. Now, the only big name firms he gets to regulate the pay for include AIG, GM and Chrysler. But today, we learn that he's decided to pay one AIG employee a bonus of $4.3 million -- a great deal more than I've heard him paying pretty much anyone else. I wonder what makes this particular employee so valuable.
Previously, the employee was to get only a base salary of $450,000, but the pay czar agreed to reconsider that.
Feinberg said the insurance company also will be allowed to pay the employee incentive payments worth about $4.3 million, made up of an annual long-term restricted stock grant worth about $1 million and a stock grant valued at about $3.3 million on the grant date.
Feinberg said the incentives were allowed because the employee had been expected to leave but had decided to stay.
That's a pretty nice change for that employee -- a 10x compensation increase! He or she must be a pretty valued employee to get Feinberg to waive the usual restraints and provide the employee with a whopping $4.3 million bonus. If only we knew more about just why this employee was so valuable!
And it wasn't their CEO. It was, however, one of the firm's top 25 most highly paid executives.
I wonder if this employee is one of those who were part of a report I wrote about earlier this month. Five AIG employees threatened to quit, so Feinberg decided he would pay them more. That could be what Feinberg is talking about when he said that he thought this individual was going to quit, but then decided to stay. Indeed, I'd probably stick around too at a company I didn't like if they increased my expected compensation by more than 1000%.
So should this move anger our inner populist? After all, in a way taxpayers made that $4.3 million payout possible. Well, assuming that the employee really is as valuable as this lofty paycheck implies, the style of compensation explained seems pretty sensible. It's not like AIG paid this bonus in cash. It appears to be in stock that can't be touched for some time. So the logic goes that s/he would have to help AIG to succeed in order to eventually collect. So if Feinberg plans on allowing AIG to pay any of its employees millions, then this is probably the most reasonable way to do so.