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Banking industry

Pay Czar Approves $10.5 Million Deal for AIG Head

Strategic Insights

— 1 min read

Kenneth Feinberg, the U.S. Treasury's pay czar, has been tasked with approving compensation formulas for the top executives of companies that have received federal aid, including American International Group, Citigroup, Bank of America, General Motors Co., Chrysler, Chrysler Financial, and GMAC. The deal for Robert Benmosche, the head of AIG, includes $3 million in cash and $4 million in fully-vested common stock. Benmosche took over AIG in August, replacing Edward Liddy, who reduced his pay to $1 in November 2008. Feinberg faces criticism from both sides, but has approved the deal, saying that any number he picks will be controversial.

Key Takeaways:

  • The U.S. Treasury's pay czar, Kenneth Feinberg, has approved a $10.5 million pay deal for AIG's head, Robert Benmosche, which includes $3 million in cash and $4 million in fully-vested common stock.
  • Benmosche took over AIG in August, replacing Edward Liddy, who reduced his pay to $1 in November 2008.
  • The pay deal is sparking criticism, with Feinberg saying he faces a "no-win situation" and any number he picks will be criticized from both ends.
  • Feinberg has been tasked with approving compensation formulas for the top executives of companies that have received federal aid, including Citigroup, Bank of America, General Motors Co., Chrysler, Chrysler Financial, and GMAC.
  • Edward Liddy, the previous AIG CEO, reduced his pay to $1 in November 2008, setting a precedent for other executives to follow.
  • Robert Benmosche's compensation package is a departure from the precedent set by Liddy, and raises questions about the fairness of executive pay versus the financial struggles faced by the companies.

Statistics:

  • AIG's new CEO, Robert Benmosche, is set to receive $3 million in cash and $4 million in fully-vested common stock, totaling $10.5 million.
  • Edward Liddy, the previous AIG CEO, reduced his pay to $1 in November 2008.
  • The U.S. Treasury has approved $10.5 million in compensation for AIG's head, with no details on whether this number represents a one-time payment or an ongoing structure.
  • The Troubled Asset Relief Program (TARP) has provided funding to companies such as Citigroup, Bank of America, General Motors Co., Chrysler, Chrysler Financial, and GMAC.

Sources:

  • "Treasury pay czar approves $10.5 million AIG deal" by The Washington Post, October 2 (no date specified)
  • "AIG CEO gets $10.5 million in compensation" by UPI, October 2 (no date specified)

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