Posted by: samhenry | August 31, 2009

Executive Pay Adjustments in Funancial Companies – Effect on Product?

by SamHenry August 31, 2009

A recent article in the FINANCIAL TIMES outlined a nw plan for the government-run AIG Corp to adjust executive pay and bonuses. Will this affect the quality of personnel hired? and will it affect the bottom line?


New AIG chief to receive $7m pay

By Francesco Guerrera in New York

Published: August 17 2009 22:40 | Last updated: August 17 2009 22:40

Robert Benmosche, AIG’s new chief executive, will receive annual pay of $7m in cash and shares and be in line for a bonus of $3.5m a year, the government-controlled insurer announced on Monday.

Mr Benmosche’s package has been approved “in principle” by the Obama administration’s “pay czar” Kenneth Feinberg in a move aimed at avoiding a repeat of the political row that broke out earlier this year over bonuses for AIG’s staff.
Harvey Golub to become AIG chairman – Aug-07
Greenberg pays $15m in SEC settlement – Aug-06

Edward Liddy, Mr Benmosche’s predecessor who stepped down this month, agreed to receive $1 in pay after lawmakers attacked the insurer for paying out bonuses to some traders despite having received some $80bn in taxpayers’ funds.

However, people close to the situation said Mr Benmosche, a former chief executive of rival insurer MetLife, had made it clear it would only take the job if he were paid a salary and a bonus.

Under his pay deal, Mr Benmosche, 65, will receive a cash salary of $3m a year plus $4m worth of shares in AIG, which he will be barred from selling for five years. His annual bonus – to be awarded by the board depending on his performance – could total up to $3.5m in shares.

The terms of Mr Benmosche’s package underline a trend toward increasing base salaries and reducing bonuses at US financial services companies following the crisis.

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