Posted on 08 Dec 2009
According to sources, Kenneth Feinberg will lift the $500,000 salary cap for some executives at AIG after at least five employees threatened to quit because of the limits.
Feinberg may issue a ruling as early as next week on pay limits for 75 of AIG's executives, the sources said. Last week, five executives said they were prepared to resign if their compensation was significantly cut, according to the people, who declined to be named because the talks are ongoing. Two have since retracted the threat.
“It’s the equivalent of saying, ‘We’re going home and we’re taking our toys with us,” Frank Glassner, CEO of Veritas Executive Compensation Consultants LLC, said yesterday in an interview. By paying more in salary, AIG is “increasing what may be considered guaranteed pay by bulking up salary.”
Feinberg, the Obama administration’s special master for executive compensation, said in October that base salaries at AIG wouldn’t exceed $500,000 a year except in cases where there was “good cause” to pay more. Treasury Department and Federal Reserve officials have urged him to strike a balance between curbing excessive pay and retaining key employees. AIG was rescued with a bailout valued at $182.3 billion.
In October, Feinberg announced he reduced 2009 cash salaries for New York-based AIG’s 13 top-earning executives by 91 percent, and used more stock for their total compensation. He controls pay for the 25 highest-paid employees at AIG and advises on the compensation structure for the next 75 workers. About half of the first group of 25 departed since the insurer’s September 2008 bailout.