NEW YORK (
CEO Robert Benmosche has had it with
Word on the street is that after just three months on the job, Benmosche is threatening to walk away from AIG because of the shackles placed on him by the Obama administration, in particular the compensation constraints. Confidants say Benmosche feels he is in an "impossible situation" according to the
Wall Street Journal
Sounds to me like Benmosche and outgoing
Bank of America
CEO Ken Lewis have a lot in common. Note to Benmosche: Lewis lost his battle with Obama.
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Benmosche's level of frustration and threat to leave should come as no surprise. He demanded more independence and took a stand on pay issues from the very beginning. In his first month on the job, he reportedly got a
stern warning from the AIG board
to tone down his tough talk about keeping compensation competitive.
In the end, Benmosche was granted approval for his own
, split between $3 million in cash, $4 million in stock and as much as $3.5 million a year as part of a stock incentive plan. Under the terms of the government's approval, he doesn't get any kind of severance.
This whole compensation debate is fraught with peril because banking salaries and bonuses seem so out of whack with the incomes of ordinary Americans, creating wonderful opportunities for political grandstanding.
While we are a nation founded on the ideal of endless opportunity for those with the gumption to pursue it, that only applies when you succeed on your own.
When trillions of dollars in taxpayer money is used to prop up the financial sector because of a massive self-inflicted crisis, then it's easy to argue that the bankers and insurers haven't earned the money they've grown accustomed to being paid. So on behalf of the people, the government is now challenging the compensation structure.
AIG is in a particularly weak position to demand independence since it is the poster child for the bailout and is now owned 80% by taxpayers. Without the bailout, AIG would be dead.
That said, I applaud Benmosche for taking a stand. Free markets and capitalism are also fundamental to the American way of life. We don't like massive government intervention in our private business affairs. We've never believed in socialist-style government ownership of private enterprise.
Benmosche just seems to want the government to start acting more like a shareholder and less like his boss. I haven't heard him say he wants to dole out
As far as I can tell, he just wants to be treated like a CEO instead of a government lackey. He wants the freedom to run AIG and fix the mess.
That's not likely any time soon. The Obama administration is clinging to the emergency powers it gained through the bailout and is imposing martial law on business rather than regulating and getting out of the way.
At some point, Washington's meddling needs to stop. In the meantime, Benmosche isn't likely to win this fight.
--Written by Glenn Hall in New York.
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Glenn Hall is the New York-based Editor in Chief of
. Previously, he served as deputy editor and chief innovation officer at
The Orange County Register
and as a news manager at
in Frankfurt, Amsterdam and Washington, D.C. As a reporter, he covered business and financial markets, worked in both print and television in the U.S. and Europe, and conducted in-depth investigative coverage at
in Fort Wayne, Ind. His work also has been published in a variety of newspapers including
The Wall Street Journal
The New York Times
International Herald Tribune
. Hall received a bachelor's degree in journalism and political science from The Ohio State University and a certificate in project and program management from Boston University.