Gregg Easterbrook Lies About AIG Lies

This week’s TMQ had 2 paragraphs I felt like commenting on. In the first, he talks about the outbreak of courage in the NFL this weekend because of the increase in teams going for it on 4th down.

Has courage broken out in the NFL? This weekend, team after team went for it on fourth down, eschewing fraidy-cat kicks…..(deleted: a bunch of examples)…..Overall in Week 2, there were 34 fourth-down conversion attempts -- some in desperation time when coaches had no choice, but most when kicking was a reasonable option.

Why this sudden burst of manhood?

The answer: because of cheer babes and football gods!

The real answer: There wasn’t, really. There were 34 fourth-down conversion attempts in week 1 too. This works out to 1.06 fourth down attempts per team per game. This is up from the 2008 season, which saw .96 fourth down attempts per team per game. I’m not trying to minimize this difference (10%), but it doesn’t strike me as huge and it probably won’t hold. Multiplying that out, it means that, on average, each team will attempt just under 17 fourth down attempts this season versus just over 15 last season. The way Easterbrook led off his column I expected it to be 20-40% higher.

So there is a slight increase over last year (as noted above). However, if you look at 2007, there were 1.04 fourth down attempts per team per game. This is virtually the same as 1.06. In 2006, it was .92. There actually was a much more significant increase from 2006 to 2007 than there has been in the small 2 week sample so far in 2009, when Gregg is applauding teams for being more manly men. In 2007 he was doing his usual (mostly correct) schtick of hammering the teams for being “fraidy cats” for punting too often.

Conclusion: Nothing to see here (yet)… keep moving. He probably just needed something to lead the column with.

The other piece I’m going to pick on is Gregg calling out the former interim CEO of AIG for essentially being misleading and dishonest. See, Liddy was asked by our government to come in to run AIG for a while to help maintain our economic system, which AIG had become an immense and important part of by insuring a large portfolio of subprime loans and basically propping up Wall Street for a couple of years. Ed Liddy was not the CEO of AIG when it helped to crash our financial system, but Easterbrook won’t clarify that for you. Ed Liddy was requested by our Government to be the CEO of AIG to help stabilize the company (and therefore the economy). Here’s what Easterbrook had to say:

Meanwhile, previous AIG CEO Edward Liddy repeatedly said he was working "for $1 a year." He asserted this on "60 Minutes" and in sworn congressional testimony, and was broadly praised for his dollar-a-year service. Now it turns out he was lying.

This is incredibly petty. Liddy did not say he was “working for $1 a year”. He was making a $1 per year salary. He wasn’t lying. Easterbrook says “now it turns out” like this is any big secret being uncovered or this is even recent news. Here is the Proxy statement filed with the SEC on June 5th. Scroll down to 2008 compensation. There it is. Nothing hidden.

AIG quietly said Liddy received $38,368 for a New York apartment, $47,578 for personal airline flights, $31,348 for car services and $180,431 "to cover tax obligations” " In what sense are these not income?

How did they quietly say this? Should they have issued a press release about some perquisites that frankly are quite small in the context of a CEO’s compensation package? What would you have done, if you were running AIG? They did not say he had no expenses paid, they said he had a $1 salary. I'll tell you in which sense those payments are not income. The entire purpose of the above expenses was to make sure that Liddy, in working for $1, was not actually paying to work for AIG. Since his home is not in New York, that required an apartment and transportation home. This is unfair and misleading, how?

You work at a job in order to be able to pay for your housing and transportation. You must earn income to pay your taxes; nobody pays them for you. If AIG was paying for Liddy's housing, personal travel and taxes, then he wasn't earning $1 a year.

He was earning a $1 salary. The expenses were paid for so that he wasn’t paying to work for AIG (at the government’s request, by the way).

Yet he lied through his teeth about this and got away with it.

This is an entirely inaccurate, misleading way to represent the situation, more so in any way than Liddy’s compensation package was a lie.

That's the core lesson of corporate scandals -- the CEOs tell lies, pocket cash and never pay any penalty.

What cash did he pocket? He had use of an apartment, a plane and some money went to federal, state and local governments. He did not live in New York, but was asked to run AIG. Was he supposed to call a realtor up and go apartment hunting or was he supposed to get busy running the company?

What does this encourage? More CEO lying. Liddy also received stock options. AIG has never said how many; suppose it was 200,000, the number just granted Benmosche.

Yeah, that seems fair, let’s just speculate that he received 200,000 stock options even though you have no evidence of that and then criticize him for it! I have been unable to find a record of Liddy receiving stock options (only positive statements to the contrary) and Easterbrook linked nothing to support this claim. If anyone has proof of this, please forward to me. I’m genuinely curious.

When Liddy went to AIG, its share price was hovering around $5; if that's the strike price, 200,000 shares would be worth about $7 million right now. Plus AIG quietly said Liddy may receive a bonus payable in 2010. The man who was widely praised for claiming to work for $1 may end up with a king's ransom in his pockets, all pilfered from the average taxpayers. Why have the media dropped this story?

This is very shady. If Liddy had been given 200,000 options upon arriving at AIG (which is what Easterbrook is implying/making up, because he’s using the beginning stock price as the strike price), then that would certainly be in the proxy I linked above. This is the number of Options that Liddy received upon joining AIG in September 2008: 0. Zero fucking options. Yes, but IF HE HAD THEN HE WOULD HAVE MADE A LOT OF MONEY! That's awesomely interesting. Except he didn't. If I had a 19 inch cock I'd be a porn star. Also interesting and made up. Fun, right?

This is from the proxy: “Mr. Liddy volunteered to receive only $1 in salary. He has received no cash incentive compensation and no equity-based compensation. It was expected that Mr. Liddy ultimately would be compensated through an equity grant. However, Mr. Liddy declined to move forward on work toward that arrangement as AIG addressed the immediate challenges facing it.”

This is directly in conflict with what Easterbrook said above. Is Easterbrook lying? At a minimum, his fictitious $7 million gain that he’s criticizing Liddy is wrong. Maybe Liddy did receive stock options, but name a cite and use those numbers in computing a gain to rail him on.

Here’s what they said about his tax obligations: “AIG also made additional payments to offset any tax obligation Mr. Liddy incurred in accordance with the preceding arrangements to avoid his effectively having to pay to work at AIG. AIG does not believe that any of the amounts described in this paragraph represents an actual compensation benefit for Mr. Liddy.”

Let’s say that you live in Florida. The government asks you to spend 9 months helping to build affordable low-income housing in Wisconsin. They provide a few trips home and an apartment in Wisconsin. Since you are still paying rent/mortgage in Florida, is that not reasonable? Is that really “income”? Easterbrook would call you a lying thief if you didn't call it income.

In the very same Bloomberg article that Easterbrook links to, it says this: "Liddy declined to accept equity grants for compensation, AIG said, canceling what was to be the largest component of his pay under an arrangement disclosed on Nov. 25.” But that didn’t stop Easterbrook from somehow computing a $7 million option gain for Mr. Liddy and calling him a liar for this $7 million gain.

Easterbrook is being more dishonest here than AIG or Ed Liddy.