When $1 Buys More Than $100 Million

Jaw-dropping executive-compensation data points of the day:

American International Group said its chief executive agreed to reduce his salary to $1. A.I.G. also said that the C.E.O.'s top seven lieutenants would forsake all bonuses and raises through 2009, and that the 50 next-highest-ranking executives would go without raises and would accept restrictions on their bonuses, severance pay, and retention awards.

In return, C.E.O. Edward M. Liddy, who joined A.I.G. in September, and his team will struggle to right the foundering insurance company, which is on the hook to the federal government for more than $100 billion.

"We believe these actions demonstrate that we are focused on overcoming our financial challenges so A.I.G. can return value to taxpayers and shareholders," Liddy said.

Meanwhile, Wachovia discreetly disclosed that its chairman, Lanty L. Smith, and its 10 most senior executives may reap a windfall of more than $100 million if Wells Fargo completes its takeover of the failing bank by December 31, as planned.

Most of the payments -- a bit more than $98 million -- would come in the form of severance payments to the executives. In addition, the merger would trigger the vesting of stock-based awards worth another $2.5 million, the bank said.

In return, the men would leave Wachovia, having led it to a staggering $23.9 billion loss in the third quarter and driven down its share price by 90 percent over the last two years.

A buck a year (and, admittedly, some serious equity if he succeeds) to fix a financial giant versus $100 million for blowing another one up? Does any of this make sense?

by Mark Stein