Subprime Forces More Insurer CEO Pay Cuts Than Storms (Update1)

[Joanne98]

April 11 (Bloomberg) -- Subprime mortgages have proved to be a bigger catastrophe for captains of the insurance industry than any natural disaster.

American International Group Inc. cut the 2007 cash bonus for Chief Executive Officer Martin Sullivan by 42 percent as the world's largest insurer reported its biggest quarterly loss in 89 years. Ambac Financial Group Inc. denied Robert Genader any bonus, slashed his cash compensation by 71 percent and then replaced him in January. The reduction was the most of any insurer in the Standard & Poor's 500 Insurance Index.

Boards are holding CEOs accountable for $38 billion of subprime losses by slicing their salaries and bonuses by an average 20 percent, according to regulatory filings from companies in the S&P insurance index. That compares with an average 8.2 percent increase for the CEOs in 2005, when directors excused them for $41.1 billion of costs from Hurricane Katrina, the most expensive disaster in U.S. history.

``Fewer and fewer companies are willing to pay bonuses in a bad year,'' said Richard Furniss, an executive compensation consultant at Stamford, Connecticut-based Towers Perrin, who tracks insurance companies. ``There's too much liability, too many red faces, and too much bad publicity for the directors if they do that.''
http://www.bloomberg.com/apps/news?pid=20601109&sid=a5E881LWL8ig&refer=home

[Kat45]

1. As they should.

It's about time some companies are doing something right.

[EvolveOrConvolve]

2. Big fucking deal

These guys are making millions - 20% sounds like a lot to us, but most of these guys and gals have enough money already for 10 lifetimes that this won't hurt anything but their feelings.