Good for the Money by Bob Benmosche

Good for the Money by Bob Benmosche

Author:Bob Benmosche
Language: eng
Format: epub
ISBN: 9781466883574
Publisher: St. Martin's Press


NINE

CLAWBACK

NO ISSUE IN MY TIME AT AIG was more emotional, or political, than pay. For the public, incensed at having its money go to private companies that brought the financial system to the edge of ruin, how much cash went into our executives’ pockets was understandably of major interest. For our employees, on the other hand, the paycheck was a highly personal matter, the ultimate proof of their worth. Reducing the amount of their compensation would be viewed by them as such a punitive measure, such a kick in the teeth as well as the wallet, that some people would decide the job was no longer worth it, and leave.

Simply saying “good riddance” to them might have seemed a satisfying response for the public. But even from the taxpayers’ point of view it was self-defeating. I—and they—needed these people to stay, and badly. At units like Financial Products, at the heart of the meltdown, the expertise of those who understood the deals was crucial to undoing the damage. My mantra of restoring company pride, too, was based on the idea that people would be rewarded appropriately, according to their contributions. At MetLife, I championed a model of personnel performance review that compelled managers to rank employees as a way of determining compensation. I liked to think I had a highly developed sense of how to assess value not only of financial instruments, but of people, too.

So the unprecedented controls over compensation that TARP had put into place by the time I arrived at AIG were a serious crimp in my plans—an impediment, of course, that I knew I had to live with. The subject consumed much of my time during my first six months at the company. Earlier in 2009, Congress, looking for additional ways to control the companies it bailed out, had passed the American Recovery and Reinvestment Act, which gave the Treasury the power to limit the amount of money paid to executives at the seven companies governed by TARP, including AIG. Specifically, the law mandated that the government itself set the compensation for the top twenty-five executives at each company, and establish guidelines by which the companies fixed the salaries of the next seventy-five highest-level employees.

There were rules set out on other items, like a $25,000 ceiling per executive on “perks” such as the use of corporate jets. All of these matters fell under the control of a “special master” appointed by Treasury, whose job it was to meet with the companies and hammer out the hard numbers. That person was Kenneth R. Feinberg, who took the job for no pay himself. A lawyer and skilled negotiator, he had previously assumed a delicate role after the terrorist attacks of September 11, 2001, as special master of the September 11th Victim Compensation Fund.

Feinberg and I had begun talking during the summer of 2009, shortly after both of us started our new jobs, when he waived the new guidelines and met my demands for my $10-million-plus AIG compensation package.



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