Keep Executive Pay Honest: The Innovators

NEW YORK (TheStreet) -- Eight months ago, failed insurance giant American International Group(AIG Quote) became the target of unparalleled public outrage when its executive compensation practices made headlines.

Having accepted billions of dollars in federal bailout money, AIG turned around and paid millions in "retention payments" (that looked suspiciously like bonuses) to many of its executive employees, including the group that allegedly caused the company's demise.

At a time when the economy was in free fall and Americans were losing their jobs at record rates, the idea that the executives who tanked AIG would be handsomely rewarded for their apparent incompetence was simply appalling.

And it appears that it's about to happen all over again. Unless the Obama Administration's "pay czar," Kenneth R. Feinberg, is able to renegotiate the multi-year contracts that require AIG executives to receive millions each year, there's bound to be a firestorm when AIG hands out another round of retention payments in March.

AIG isn't alone in paying such lavish compensation to its top employees. For example, Bank of America(BAC Quote) CEO Ken Lewis will retire soon with a reported $69.3 million in total compensation, and he would have received $2.5 million more in salary this year if Feinberg hadn't intervened.

This comes at a time when Lewis and the bank are both under fire over the bank's merger with Merrill Lynch and, in particular, the bank's alleged decision to withhold from shareholders its agreement to allow Merrill to pay as much as $3.6 billion in employee bonuses and incentives as part of the deal.