Asinine Audacity at AIG

"Why can't the government act like a free-market entity?" whine executives from companies like AIG (NYSE: AIG  ) . The answer, perhaps: Because it isn't one.

Five AIG executives have threatened to walk if government overseers cut their pay, according to The Wall Street Journal. (Two members of the group reportedly changed their minds over the weekend.)

News flash, guys: There's nothing "free market" about being 80% government-owned, so I wish these people would stop making the "free market pay" argument. In a true free market, AIG would have failed. It would no longer exist, and the market would have rewarded its execs with a salary of zero dollars.

This is a major reason I was always opposed to bailouts for companies like Bank of America (NYSE: BAC  ) , Citigroup (NYSE: C  ) , and General Motors. It wasn't hard to predict that rewarding these businesses' failure would create a field day for moral hazard, and spawn a host of complications and controversies. Complaining about your compensation when you work for a shambling zombie of a company is a woefully clear example.

Maybe these folks should feel grateful to have jobs in the first place. Given how many folks are currently unemployed through no fault of their own, I somehow doubt that a pay-related insurrection will earn AIG executives any sympathy.

Riff (or rant) in the comments boxes below.

Alyce Lomax does not own shares of any of the companies mentioned. Try any of our Foolish newsletter services free for 30 days. The Fool's disclosure policy works pro bono.


Read/Post Comments (16) | Recommend This Article (22)

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  • Report this Comment On December 08, 2009, at 12:15 PM, tkell31 wrote:

    lol, dont let the door hit you on the way out guys. I'm sure having AIG on your resume will open all kinds of doors.

  • Report this Comment On December 08, 2009, at 12:26 PM, TMFLomax wrote:

    In breaking news, apparently their complaints WORKED:

    http://www.bloomberg.com/apps/news?pid=20601109&sid=a5oF...

  • Report this Comment On December 08, 2009, at 12:29 PM, theHedgehog wrote:

    Unable to recommend more than once. :)

    Well said!

  • Report this Comment On December 08, 2009, at 1:32 PM, hawaiibob007 wrote:

    All these high paid executives have this entitlement mentality, that being because they work for a large company, they are entitled to a huge salary. Sorry guys, let someone else in that will work for less to get the company back in the black and free of government controls.

  • Report this Comment On December 08, 2009, at 1:37 PM, davion13 wrote:

    Here's a thought: don't cut their compensation, just provide them with 90% stock and 10% salary.

  • Report this Comment On December 08, 2009, at 2:01 PM, TMFCop wrote:

    Now that Feinberg may actually pay these AIG execs more because of their hissy fit, how many more executives under the government's yoke do you suppose will start throwing tantrums of their own?

    I'd say we'll probably see a conga line start, and really, how can Feinberg now say "No?"

    The old adage the squeaky wheel gets the oil seems to have worked perfectly here.

    Rich

  • Report this Comment On December 08, 2009, at 2:10 PM, Bamafan68 wrote:

    I am voting with my feet re: AIG. I had a 401K with them when I was with a different employer. After all of their antics, I am yanking my money away from them to go into a self directed IRA. It may not mean much to the company, but it makes me feel better at least.

    FYI: Rolling over a 401K from AIG is akin to a root canal sans anesthesia. They are the WORST I have ever dealt with.

  • Report this Comment On December 08, 2009, at 3:11 PM, TMFLomax wrote:

    Yep, Rich, I'm sure there will be a conga line indeed. Unbelievable.

    hawaiibob007, it's funny, I kind of wrote about what seems to be an entitlement mentality amongst these folks back in September:

    http://www.fool.com/investing/general/2009/09/22/ceo-pay-and...

    Thanks for the thoughts on this topic, folks.

  • Report this Comment On December 08, 2009, at 3:19 PM, tkell31 wrote:

    Gee the corrupt politicians caving to their wealthy friends. I am my complete lack of surprise.

  • Report this Comment On December 08, 2009, at 3:25 PM, catoismymotor wrote:

    This article should be retitled: When Lomax Attacks or The Malice of Alyce.

    Well said, my friend. I'd like to take that nest egg from their old commericials and...well, I'll save that thought for a different time.

  • Report this Comment On December 08, 2009, at 3:45 PM, TMFLomax wrote:

    It was that bad, Cato? Ha! :)

    Yeah, you know what, I still contend their old commercials were really cruel jokes. (Personally I still get stuck on the "I'm thinking about butterflies.." one and it blows my mind.. Ugh.)

  • Report this Comment On December 08, 2009, at 4:44 PM, TMFLomax wrote:

    Cato, that cracked me up... And as for AIG ads, I still can't stop thinking what a cruel joke those "I'm thinking about butterflies" ads were... Sheesh...

  • Report this Comment On December 08, 2009, at 6:05 PM, TMFLomax wrote:

    Oops, sorry about the double post. There was a major delay for some odd reason so I thought the first iteration didn't "take."

  • Report this Comment On December 09, 2009, at 12:04 PM, Kai327 wrote:

    I did work for one of the companies owned by AIG. I should have seen the writing on the wall. Two years prior to the meltdown of AIG--Valic started changing dramatically---I left when I realized that Valic was going down the same path. Haven't looked back except to be thankful that I had the balls to leave.

  • Report this Comment On December 09, 2009, at 12:59 PM, LeftStranded wrote:

    After losing $8K during the 4th quarter of 2007, I pulled all of AIG stocks out of my 401K which was the smartest thing I did. Then after being laid off I rolled over my 401K to an IRA; since then additional funds were added to my IRA by AIG from a class action settlement, and which AIG will not release into my account to date.

  • Report this Comment On December 09, 2009, at 7:09 PM, TMFLomax wrote:

    Some personal stories too...! Doesn't sound heartening. Thanks for the feedback, everyone!

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