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Grassley Questions ‘Severance’ Pay to AIG Exec

As Wall Street prepares to dole out billions of dollars in 2009 bonuses, Sen. Charles Grassley (R-Iowa) has his eyes on one particular payment of $2.8 million. That’s the amount reportedly paid to Anastasia Kelly, AIG’s general council, who resigned abruptly on Dec. 30 rather than accept new pay limits imposed by Kenneth Feinberg, executive pay czar for the Wall Street bailout. (Other reports put Kelly’s windfall at $3.8 million).

In a letter to Feinberg, Grassley, senior Republican on the Finance Committee, is wondering (1) why such a large payment should go to an employee at a company that would no longer exist without the government’s help, and (2) why severance payments would apply to someone who left the company on her own accord. Along with the details of the severance agreement, Grassley is asking for Kelly’s complete pay history while at AIG.

Based upon the information that I have, it is unclear to me why Ms. Kelly’s voluntary resignation ought to entitle her to a multi-million dollar windfall from a severance agreement entered into by a company receiving so much federal taxpayer support. At 2010 salary levels, $2.8 million in severance amounts to almost six years of pay. $3.8 million in severance would amount to almost eight years of pay. Regardless of whether her severance is $2.8 million or $3.8 million, this raises serious questions about whether you believe the payment meets “appropriate standards for executive compensation” at a TARP recipient like AIG.

That Ms. Kelly feels entitled to the cash even after AIG was bailed out to the tune of $182 billion goes a long way to explain the populist anger directed at Wall Street.

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