$24 million in AIG stock? that's a lot of toilet paper...

You know, I'm okay with this new guy, because most likely he wasn't responsible for this mess. He was retired, and came back into work to work through AIG's mess. And $460,000 is a lot less than most mid-level execs get, let alone top execs. This is an improvement.

460k seems like reasonable compensation. I wish that that would be CEO average standard. 400k-600k is reasonable, compared to 38 millions or 3 months worth of work.

@pecan 3.14159265: Also, a good bit of this seems to have been for lawyers (to fend off misplaced anger from congresscritters) and to pay the taxes on the paying for the lawyers.

The apartment and car services count as personal benefits that would be considered compensation and not business expenses he'd not have but for the job.

$162k in legal fees and $180k in taxes eats up all but $70k of that amount, and aren't things he'd actually want if he didn't work there. $70k a year is a very low compensation for what has to be an insanely stressful job.

I don't have much money! I hate everyone that is rich! I am envious internet man!

Also, let's keep the creepy posts about to Meg to a minimum from now on. Please?

I also find this very fair, but who knows what hidden somewhere on page 10...

All CEO's should be paid 1$ and have their bonus determined by their yearly performance. I would have no problem as a shareholder of a company to give a multi million dollar bonus to a CEO that raised the value of my shares throught the year. I however would have a problem doing the same if the price droped.

Is commenting broken for anyone else. The reply isn't working in:
Google Chrome
2.0.169.1
Windows 7, 7000 x64

@Megladon
I agree. Steve Wozniak built Apple from spare parts at HP, and is now a multi-millionaire. He created the company, and changed the industry. He deserves it. The Steves behind Vista though, not so much. They deserve pay this year. (Win7)

@Megladon: Everyone could say that, but CEOs are like major league sports stars. Remember, the board of directors (and ultimately the stock holders or their proxies) set CEO pay. So say we have a "reset" where everyone makes $1, plus performance bonuses. Along comes a board that says, "We'll give you $100 per year, plus the same bonus." The next board comes and offers $1000. Pretty soon, we're back where we are. The fact is, the CEOs earn what they earn because the board (and via proxy, the owners like you and me) seem to think that they're worth it.

And actually, how do you objectively measure performance? Allan Mulally runs a money-losing corporation, but not nearly as much as if Jaques or Bill were still in charge. He made a huge, positive difference. How long should he work for $1?

@Megladon: So how would you judge performance when every business in a given industry is losing money? Would you consider your new CEO to have performed well, and worth a bonus, if he/she made sure your company had the smallest loss of all the companies in the industry, especially if half the competition went into bankruptcy?

@Révolution: It's working for me on Firefox in Linux.

How does one incur 180,000 on taxes on 280,000 of spending? (approximately)

On its face, this seems quite fair to me. The bulk of his compensation is accounted for as covering necessary operating expenses. I'm sure he's living well on the company dime, but he's guiding them through hard times for much less money than his predecessors.

One thing continues to stick in my craw about this entire executive pay boondoggle: I really don't see how executives at these big companies are entitled to earn what amounts to literally 500 times more than entry-level employees, assuming that folks coming in are earning 30-40k per year.

If I owned an operation like United Airlines or AIG, I could not fathom paying myself millions, particularly if the company was losing money left and right.

The people talking about $1 a share then being paid based on performance are blind to what caused the problems in the first place. MOST CEO compensation comes from keeping stock prices high and concentrating on short term profit rather than long term viability of the company. Enron is a prime example of this. They lied, and fudged numbers to keep the stock high. Fair compensation should be maybe 30-40 times the lowest paid worker in the organization. If you pay your lowest paid person 100k then you could make say 4 million a year. The ability to KEEP your job should be based on whether you meet the goals the board sets for that year. That goal should be a function of improvement in certain metrics which provide LONG term sustainability. I would also suggest the entire stock market is a ponzi scheme. People keep putting money into it (through mutual funds and 401ks) to make more money, while those at the top of the pyramid continue to make more and more, until finally the growth in 401 K investment and individuals playing the market dried up. No more huge demand means a large drop in prices.

I am so sick and tired of these types of articles. What good will come out of the spitefulness of this man's compensation? The media is trying to create class warfare and a lot of people are falling for it. If we wanted to get into compensation a lot of government employees are pulling in six figures. Obama flew Airforce One around NYC and scared the h**l out of the New Yorkers for a photo opt but if a CEO tries to fly a jet they will be run out of town.

To reply to Coren's question about how you get $180k taxes on $280k spending -- I'm not entirely sure, but I believe part of the answer may be that payment of an employee's taxes by an employer counts as taxable income to that employee.

So let's theoretically say that compensation of $280k = $120k tax. If the employer pays the tax, that's $120k more taxable income to the employee. The tax on that $120k would be, say, $40k, which brings the total up to $160k.

Now here's the tricky part -- and I don't know that I have this right under tax law (not a tax lawyer). I believe that if the employer then pays the $40k, that $40k is ALSO taxable income. The employer would then have to shell out another, say, $15k to cover the taxes on that. And then $5k tax on the $15k. And so on. And, suddenly, it's $180k tax on $280k income.

I'm not saying that's how it went down -- just throwing it out there as a possibility.

@coren: Federal top bracket, plus NY state, plus NY city. We're taxed heavily here.

37.6 million - 24 million = still way more than what I make. Sounds like that old CEO knew how to make it look like he was a company man and still take a ton of cash.

He also owns quite a few shares of Goldman Sachs since that is where he is from, and may be why he is funneling AIG's taxpayer bailout funds to pay off GS for its toxic junk at par (face value, not parket value, and which GS got paid off by the TARP already).

Say I owned a gazillion shares in Citi and was made the CEO of GM for $1, then strangely all the banking and finance for GM suddenly went to Citi at far higher than bid prices, GM bought their dreck as "an investment", etc. and Citi stock quadrupled.

Of course Geithner is also from GS, as was Paulson, Ruben, and many others.

@Mike Toole:

Do you think sports figures deserve the money they earn? How about concert pianists? Opera singers? Movie stars?

All of these individuals share many things in common with these executives. It's a niche job that requires a very particular set of skills and abilities. As much as you hear idiots say that anyone can be a CEO, it's about as valid as saying anyone could pitch for the Yankees.

You also have a very flawed view of how a publicly traded company with a board works when it comes to compensation. The CEO doesn't 'pay [him]self'. It'd be different if it were a private enterprise that he owned, but the CEO is an employee.

@moore850:

Maybe you should have used your birthday wish last earn for more brains, skills, and contacts then.

@henwy: Feh. earn=year.

@TEW: I don't see any spitefulness. On the contrary: it seems that most people are going "Huh... OK, makes sense."

He's having expenses covered. Probably still living better than I am, but nothing seems exorbitant.

Wow. AIG ensured that the man didn't incur huge debt as a result of coming in and trying to turn their company around. How outrageous.

I love how everyone thinks they should be able to judge someone else's pay package. Who are you to say what's reasonable pay? Have you ever been a CEO? Any clue what the job ACTUALLY entails? No, but you still think that it's simply unreasonable for anyone to make more than, say, 40x what you make, because it's just not fair.

@coren:
And unless I'm wrong, he would also have to pay taxes on the money he got paid for his taxes. So if he got compensated $280,000, and his tax liability for that is $100,000, and he gets that, then his tax liability now becomes $380,000, so he needs to pay more taxes, which means he needs more money, which will also be taxed. Eventually this infinite loop will become <$1 and the cycle will end, which is somewhere around $180,000 I guess.
Unless I am missing something.

@Megladon: The problem with that logic is that you are transferring all risk to the CEO. Unless the CEO is extremely risk seeking that would not be sufficient incentive for someone to take the job. You choose to be employed by a company because you are willing to trade away some potential for compensation for reduced risk. If you were risk seeking you would go start your own company. The CEO has a lot of control over what the company does, but not complete. There are lots of factors that can hurt or help a company so by relating so much of their compensation to only bonus would be unfair.

Finding a good balance between the two (bonus as incentive for good performance, and salary to reduce risk) is the hard part. The other issue is making sure that the bonus is not incentive to take improper actions just to meet performance goals. This is why stock options are much better in long run situations over stock grants for the C-level employees. If you structure it correctly they want the company to perform well long-term so that when they exercise the options down the road after they leave it's worth something.

Esquire99 & Gaywolverine-- In many parts of Europe (I'm familiar with Germany and Austria specifically) the top-paid guy makes 8x what the lowest paid guy makes, in any organization. This is true even for government jobs.

Here in the US we shrug at the 40-to-1 gap, but we who aren't the top-paid guys are the ones getting screwed.

@Mike Toole: Here's what entitles them: people are willing to pay it.

Equality of outcome is an extremely dangerous idea to push. Why should engineers make more than janitors? Let's just drop everyone to minimum wage - we could save tons of money!

I'm not gonna get tricked into a "class war". If some corporation thinks that their top employee is worth whatever amount that's their choice.

People complain about athletes and movie stars and CEOs and how what they do isn't that "hard" and "anyone" can do it. That's just being jealous and bitter.

@Harry Pothead: I don't feel screwed just because someone makes more money than I do. If I wanted to be like the Europeans, I would move there.

@Harry Pothead: That would seem to imply non-CEO Europeans make 5x what non-CEO Americans do. I very much doubt that is the case.

I hate the way CEOs come into a company knowing damn well they are going to stay just long enough to get their bonus' and golden parachutes and then bail. No long-term vision, only short-term gain. Employees and consumers pay for this shortsighted system of good old boys.

@dave_coder:

"If some corporation thinks that their top employee is worth whatever amount that's their choice."

It's only their choice until they destroy the economy and need a taxpayer funded bailout. As soon as you take the first penny from the government, that argument fails.

You guys are really funny.

How exactly do you figure he's living pretty well?

$3000 per month for an apartment in NYC means he's living in a place that is definitely not as nice as his primary residence.

Legal counseling isn't actually a luxury item, when the reason he needs it is because of the work he's doing for AIG.

The travel expenses are pretty much normal for any C-level executive. And it's travel he wouldn't need to do if he hadn't come out of retirement to try to save AIG.

For all this "high living" you guys are trying to pin on him, he's still only making a net gain of $1 per year.

@savdavid Aside from the fact you have no idea what you're talking about, look at people in government. Their 30 year Senate seats of 'long term vision' give back what? Sweet pay and vacation time, zero accountability, and trillions in debt. You pay for this behavior significantly more than what takes place in private industry.

@Skaperen: It comes and goes for me. Also using chrome. It's working now, but it's F'ing up about 50% of the time.

You'd think it wouldn't be that hard to accomplish.

"The other issue is making sure that the bonus is not incentive to take improper actions just to meet performance goals"

Exactly. Do anything possible to raise the share price so stockholders don't give a crap about what it was I did. This is exactly how corporate meltdowns start. Pay them a good salary and if things are good short term AND long term goals are met, then pay them whatever bonus they want.

@TEW: Also, in point of fact, Obama neither flew the plane nor was on it, nor arguably even knew about it.

Just sayin'.

@henwy: Uh huh...takes a special set of skills to run a company into the ground. I gather us mere peeons wouldn't be able to match that.