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Wednesday, March 18, 2009

AIG: nice work if you can get it

Think about those AIG numbers. While we hear “$165 million,” there was more in the “Retention Plan” for 2008: $55 million that already was paid out (in December), well after government support of AIG began under the Bush-Paulson plan, and an additional $93 million would have been paid if financial objectives had been met. (Ummm . . . .)

That's a total of $313 million, but get this. That $313 million was going to be distributed, according to said Retention Plan, to 400 AIG executives. That's an average of $783,000 for each of those 400 executives. That's just the bonus, not the base salary, which according to the plan was intended to be about 60% of total compensation.

In other words, the average base for those 400 executives was in the neighborhood of $1.2 million, meaning, of course, that the combined amount on average for those 400 crack financial hotshots would be probably just a little less than a cool $2 million. That's for one year of doing – well, whatever the hell it was they were doing to put the company and the world economy at an unacceptable risk level. As the late Illinois Senator Everett Dirksen said it (more or less), $2 million here and $2 million there, pretty soon you're talking about real money! How many beachfront mansions are there in the Hamptons?

For not making objectives – to put it charitably – the bonus will only be about $550,000 instead of $783,000, and the total only about $1.75 million instead of almost $2 million. That's only fair, of course, since these are tough times. I wonder how many of them will grumble about creeping socialism if Obama succeeds in taxing the taxable amounts above $250,000 (after exemptions, adjustments and deductions) at 39.6% instead of 35%?

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