How Much Pay is Too Much?

With the recent news that the new CEO of AIG is going to receive $7 million in salary, the topic of executive compensation is back in the headlines.  Some people believe that the pay package of incoming CEO Robert Benmosche is a sign that Wall Street is still out of touch with reality, and that the CEO of a company that is majority owned by the government should not be paid such a high salary.  However, given that Benmosche is scheduled to receive $3 million in cash and $4 million in stock, he has a vested interest in turning around the failed insurer and preserving the equity of the existing shareholders (other than the U.S. government).  Also, the pay package was approved by the government’s “pay czar”, Kenneth Feinberg, and is below the average salary of $10.4 million that was paid to CEOs of companies in the S&P 500.  As a U.S. taxpayer, I don’t feel that this pay package is excessive, especially with the large amount of compensation issued in stock.