AIG Quitters: Bless Their Hearts

According to the Wall Street Journal, five high-ranking executives at American International Group (AIG) are prepared to quit if their compensation is cut significantly. You may recall that AIG was one of the companies that nearly brought the worldwide economy to its knees last year and that continues to be a problem. AIG was bailed out by American taxpayers and is now 80% owned by the U.S. government.

In October, the government’s compensation czar reduced 2009 compensation for AIG’s top 13 employees, including limiting most base salaries — base salaries (not to be confused with additional bonuses) – to no more than $500,000. Those threatening to quit apparently can’t make it on that salary. They’re too talented and will jump ship to go to another firm that pays highly talented people more.

The Treasury Department and the Federal Reserve, the two government agencies responsible for overseeing the bailout money, have urged the compensation czar to ease up. What would they like? A limit of $750,000? $1 million? No limit at all? Why have a compensation czar?

There are other places for the AIG executive victims to go. Goldman Sachs, for example. GS has socked away almost $17 billion for its executive bonuses during the first nine months of 2009. Now there’s a firm that appreciates talent. I’m going out on a limb and guess that there are highly talented folks willing to step into the shoes of the AIG execs for $500,000 or less – folks who will focus on turning the company around rather than on their own pay. After all, it’s estimated that fewer than .9% of American workers earn $500,000 or more per year.

And then there are the millions of unemployed workers in the U.S., some of them former executives. I’ll bet that at least .9% of them would consider $500,000 per year.