When reporting on AIG's bonus payments and the resulting political backlash, it's easy to get bogged down in numbers without seeing the full picture. So here are some points to keep in mind.
AIG CEO Edward Liddy has already agreed to take a $1 salary for 2008 and 2009, and he isn't in line for any of the $1 billion in total retention bonuses that are at issue this week -- $450 million of which is slated to go to the company's disgraced Financial Products unit.
But it's important to distinguish retention bonuses from plain ol' bonuses, because senior AIG executives certainly do. In a December 5 letter to Rep. Elijah Cummings (D-MD), Liddy said that five of the company's seven most senior executives (called the Leadership Group) "will not receive annual bonuses for 2008 or salary increases through 2009."
Yet Cummings himself had first called Liddy's attention to a November filing from AIG that said senior executives had agreed to delay payments of their retention bonuses, the money that's being paid out this week in defiance of the Obama administration. Among the AIG execs receiving retention payments are two members of the same Leadership Group that had pledged to forgo its bonuses: Chief Financial Officer David Herzog and Executive Vice President of Retirement Services Jay Wintrob.
So to be clear, these executives are getting paid this month ... while continuing to tout their willingness to give up other bonus payments. There's no stronger argument for seeking to reclaim the money without negotiating with Liddy, as the Obama administration had been previously attempting to do.
Late Update: To shed some more light on the retention bonuses being paid out this week, they're different from the ordinary annual bonuses that most companies give. The retention payments were negotiated early last year, according to AIG, with the goal of retaining key executives and preventing them from decamping to competing firms.
The focus on retention bonuses explains some of the weirdly out-of-touch rhetoric in Liddy's Saturday letter to Tim Geithner, where he argues that keeping the "best and the brightest" talent at AIG would be impossible if the government actually used its power to limit executive compensation.