Chances are you've read this post (like 200 times) from a few years ago where Gregg Easterbook expresses outrage at Ed Liddy's "kings ransom" like compensation package that he and AIG LIED about. Well the wait is over, because now we have the exciting conclusion to this story.
While looking up Apple's proxy for the last post, I remembered the old AIG post and I thought it was a good time to do a follow up.
For reference, Gregg took issue with AIG paying certain of Liddy's living expenses - calling it out as being essentially the same as base compensation. See, Liddy lived in Chicago, and he was asked to step in as CEO during an insanely turbulent time (remember that financial crisis thing? No? Remember Bear Stearns and Lehman Brothers? Riiiighhht....that crisis). They structured his compensation as $1 salary, he declined stock options, and AIG would pay certain living expenses for him in NYC since he already was paying for ongoing living expenses in Chicago. Sounds reasonable, right? The intent, as disclosed by AIG, was to make it so that Liddy wasn't paying to work for AIG. What did Easterbrook say about Liddy's $1 a year salary and zero stock options?
Yet he lied through his teeth about this and got away with it.
Sure. He said that the living expenses WERE salary and said that zero stock options was actually 200,000 stock options, based on what a different CEO was given. Kind of a jerky thing to do, right?
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. 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?
At the time, I took issue with Easterbrook's hypothetical stock option grant and $7 million gain being passed off as if it was in Liddy's bank account. AIG specifically disclosed that Liddy turned down an option award, and Easterbrook still told you the opposite.
I checked AIG's proxy for 2009 here. What did I find?
Final tally of options granted to Ed Liddy during his tenure at AIG: 0 shares
Restricted Stock awarded Ed Liddy: 0 shares
Gain on exercise of stock: $0
Gain assumed by Easterbrook in calling Liddy a liar: $7 million
Amount Easterbrook was off by: $7 million
% Easterbrook was of by: 100%
Bonus paid to Ed Liddy: $0
Why did the media drop the story? There was no story. You made up the story.
So Easterbrook frequently rails on the New York times for making mistakes in their reporting, but not issuing corrections with the same level of prominance.
Where was his correction? Since he insulted someone's integrity - where was his apology?