Wednesday, March 24, 2010

The World Of the Wealthy

Is a planet which revolves around a sun made out of real gold and diamonds:

Six of eight managers who had their 2009 awards set by Feinberg, the Obama administration's special master on executive pay, had their overall packages increased this year, according to a Treasury Department report released today. Chief Executive Officer Robert Benmosche has said that AIG must offer competitive pay to keep employees needed to repay its rescue.

Feinberg, who controls pay for AIG's 25 highest-paid employees, last year slashed overall compensation for that group by about 58 percent and instituted a $500,000 base salary cap for most workers. The majority of the employees who were among the top 25 when the insurer was bailed out in 2008 have left the company, and those new to the group had their 2010 awards lowered, on average.

It's that word "competitive" that deserves further attention, because I don't think the markets for top executives in this field are at all competitive. Neither do I quite understand why the skills of destroying a financial market are so rare that one needs to pay huge amounts for people who were doing that.

I understand that AIG is not necessarily rewarding the people who broke the market as the current crop of executives appears to have been hired recently. But that's the argument I read whenever someone defends the very high compensation packages of financial market executives: The skills and talent required are so rare that all the firms are fighting for a small handful of supermen (and an even smaller number of superwomen).

Of course such a market wouldn't be "competitive" in the first place but a monopolistic one. But if those people are truly so scarce, why not hire me? I'm pretty sure I can destroy a market. Can't be harder than goddessing.
Hat tip to moonbootica.