One of the main contributing factors of the spectacular implosion of AIG's Financial Product unit was not knowing the real value of their assets. However, based on the behavior of AIGFP's senior management, the value of at least one thing from the unit, a promise, is becoming crystal clear. Adding credibility to Bobby Benmosche's contention that AIG is almost immune from Ken Feinberg's reach, the Pay Czar issued a reminder to the four senior managers in the group who had promised to return their retention bonuses that he is still waiting.
But this shouldn't come as any surprise. Given the amount of outrage at executive compensation this past year, it's natural for people who received generous retention bonuses to think twice about giving them back. With the changing pay landscape, what are the chances they'd be able to recoup that money and who would go to bat for them? Even AIG must know when enough is enough when it comes to unjustified compensation.
In an August report to the pay master, AIG suggested increasing the Financial Products executives' base salaries to as much as $950,000 and awarding bonuses of as much as $2.6 million.