The Treasury Department's soon-to-be-announced executive pay guidelines will drastically slash cash payouts to executives at GM, Citibank, AIG, Bank of America, and Chrysler. Not on the list: AIG pass-through beneficiary Goldman Sachs.
The top 25 executives at each of those companies—as well as GM and Chrysler's financing arms—will have their cash salaries cut by an average of 90% under the guidelines, and total executive compensation will have to decline by an average of 50%. At AIG, according to the New York Times, no top executive will make more than $200,000.
Of course, the companies will still be free to compensate their executives with (worthless) stock, as long as they are restricted from cashing it in immediately.
This is all very exciting. The prospect of AIG executives getting by on just four times the nation's median household income is, well...satisfying. On the other hand, these people always find ways to enrich themselves, and we have a feeling they'll continue to do so. The firms subject to the rules are the recipients of the most dramatic bailout actions—run-of-the-mill TARP recipients are exempt.
We wonder, since Citigroup is under the restrictions, whether they'll find a way to claw back the $126 million that Robert Rubin skimmed off the company during his eight years there.
The really funny thing about the rules is that AIG is bound by them, because it was the recipient of a $173 billion bailout, which was necessary because if AIG collapsed, then all the firms it owed money to would collapse. So we bailed out AIG so that it could then pay out $50 billion to two dozen companies whose stupid bets AIG had insured, and those companies are prepping massive 2009 bonuses—Goldman Sachs got that $13 billion pass-through bailout, for instance—while AIG execs are getting a lousy $200 grand. The world sure is funny, sometimes.