Friday, October 10, 2008

Mr.Willumstad and the Art of Ignorance.

Top AIG officials were questioned early this week by the House Oversight Committee members (read Congressional members) for their role in the financial crisis. What was striking in this hearing was the fact that Mr.Willumstad (ex chairman and ex CEO of AIG) must have answered 10% of all the questions posed to him on top of the fact that less than 10% of the questions were even addressed to him.
At the hearing he pleaded ignorance on most of the questions put to him. According to him, he was the CEO of the company for a brief period of 2 months or so and was therefore unable to anwser any questions accurately. How preposterous is that!! As per public reports filed by the company, he has been an 'ex-officio' member of ALL the board committees at AIG.(audit committee, finance committee, regulatory and legal compliance committee, public policy committee, nominating and governance, compensation committee etc.).On top of that he had been chairman of the AIG board since November 2006.
Oh and by the way, he made an extra $200,000 each year that he was the chairman of the Board of AIG. This is of course on top of the $75,000 per anum that he made just for being on the Board. His total compensation for 2007 was $434,443.For that amount, he should have at least made an effort to know what was going on at AIG. It was a little strange to see one Congresswoman praise Mr. Willumstad for giving up his severance package while completely ignoring all his prior years' earnings or the role that he might have or should have played in this financial crisis.

The severance package that he voluntarily decided to forego was valued at $22 million. What kind of compensation metrics do these public companies use to compensate somebody who has been a CEO for a couple of months and that too an ignorant one at that (by his own admission).
As chairman of the Board at AIG he had a fiduciary responsibility which it seems he completely managed to wash his hands off of. Will somebody let the general public know what is the official responsibility for members of the Board for public companies? Are they allowed to plead ignorance or does their membership to the Board mean something?

Here's a recorded video of the hearing...4 hours long if you have not seen it before.
AIG Congressional Hearings

More to follow....

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