Confronted With Hotel Bills, AIG Says, "This Is Totally Normal!" And "We're Having Another One!"

AIG says that the “retreat” that ABC News reported on the other day was really just an event for AIG’s top independent agents — and that only 10 employees were present out of 100 attendees. Here’s how they explain in a press release:

The event, mischaracterized as an “Executive Retreat,” was held by one of AIG’s insurance subsidiaries for independent life insurance agents, not for AIG employees. These agents were top business producers for the company, and of the more than 100 attendees, only 10 were employees of the AIG subsidiary who were there to represent their company. No AIG executives from headquarters attended. The meeting was planned months before the Federal Reserve Bank of New York’s loan to AIG.

AIG went on to say that they are reevaluating their costs, but stressed that business must continue as usual.

“AIG is focused on doing what is necessary to address our capital structure, repay the Fed credit facility and emerge as a healthy global insurer. In the meantime, our insurance businesses continue to operate normally and satisfy the needs of our policy holders.”

To that end, AIG will be holding another event for brokers at a Ritz-Carlton hotel in northern California (shown above).

Bloomberg says:

The event, in Half Moon Bay in northern California, is designed to “motivate and educate” about 150 independent agents that sell AIG coverage to high-end clients, spokesman Nicholas Ashooh said. “These sorts of sales meetings are an essential function,” he said. “We have them around the world all the time.”

About 50 AIG employees will also attend the meeting. Ashooh said he didn’t know the cost of the event or whether the agents AIG is hosting would stay overnight.

Rep. Henry Waxman, who chaired the hearings on AIG and objected to the expenditures has not responded to AIG.

If you’re interested in looking over the receipts from the first event, The Smoking Gun has them.

AIG plans meeting at California Ritz-Carlton Resort [Bloomberg]
AIG clarifies agent meeting [AIG]
Rock Out With Your Bailout [The Smoking Gun]

Comments

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  1. crazyasianman says:

    blah blah excuses, the fact still remains that it was an AIG subsidiary (and therefore part of AIG) that held the event. big deal, it was planned in advance. think it would have happened if AIG had gone belly up? no, you say? thanks a bunch for my tax money, douchebags.

    • agnamus says:

      @crazyasianman: If they’re right, this was a bonus/fringe benefit to rank and file salespeople. Now I can understand complaining about golden parachutes and multi-million dollar salaries, but this was something different. This was pay to the rank and file. You gonna complain about Christmas bonuses when they come out?

      • howie_in_az says:

        @agnamus: You gonna complain about Christmas bonuses when they come out?

        Yes, because it’s my money. Maybe if the heads at AIG hadn’t screwed up they could afford to give out Christmas bonuses. But guess what? They did screw up, and now that Christmas bonus is coming out of my paycheck.

        • ExGC says:

          @howie_in_az: These are not analogous to Christmas bonuses. This is an element of the agent’s overall compensation. The best producers get trips, whether insurance agents, car dealers, brokers, whatever. If you don’t provide it, they walk to the next employer without a second glance and the business is hurt – and then you never get your money back.

          • Stickarm says:

            @ExGC: “This is an element of the agent’s overall compensation..”

            Anybody want to see second prize? Second prize is a set of steak knives. Third prize is you’re fired.

      • samurailynn says:

        @agnamus: Actually, yes, I would complain if they gave out Christmas bonuses. If it were sole proprietorship that just needed to borrow billions of dollars to stay afloat, I can assure you that no employees would be receiving bonuses that year. However, it’s a corporation (meaning that the people who work there aren’t personally responsible for the loss of money) and now it’s backed by tax dollars.

        • alice_bunnie says:

          @samurailynn:

          What if you were hired by someone and they said, “And as part of your compensation you get X no matter what” You count that as income, right? That was part of your compensation package. Now, if something happened with another division that had nothing to do with what yours is doing, and the company all the sudden said, “Oh, and by the way, you don’t get what we promised you” How would you feel?

          This is a totally different division… it’s like saying if a military jet had an accident you should ground all civilian jets because they’re made by the same company.

          • feline says:

            @alice_bunnie: “Now, if something happened with another division that had nothing to do with what yours is doing, and the company all the sudden said, “Oh, and by the way, you don’t get what we promised you” How would you feel?”

            Like I did last year. And the year before. That’s how it has been routinely done in companies where I have worked. “Oh, the so-and-so division didn’t make its numbers so it will impact raises in our division.” “No bonuses this year. So-and-so division didn’t make their numbers.”

            Sorry, AIG’s management did Bad Things, and rank and file shouldn’t get rewarded for it.

            • ohenry says:

              @felineslade: Yeah, and I’m sure you didn’t like it a whole lot when that happened to you, did it? Just because it happened to you means it should happen to others, too?

              It’s like someone else said, these are things that high profile insurance agents get. It’s part of being an employee there, not different in most senses than wages. Keeping these people happy with retreats like this are going to make back the $400,000 tenfold or more.

              It’s the same thing with the money that they’ll be spending for the training session later. If they can get the people to effectively sell insurance to the high end clients, whatever money they spend putting on this event be brought back to them many times over with how much insurance they can sell.

              Not to mention that I seriousely, seriousely doubt that ANY of the money from the loan the feds gave AIG went toward this vacation, so let’s not get all uppity about “Well, I’M paying for this vacation, I dont support it”. I don’t have the figures to back this up, but chances are that most of that money went into claims surplus funds, and toward liquidating the subprime mortgages that were purchased.

            • ohenry says:

              @felineslade: Edit: One thing I forgot to point out specifically: these aren’t “rank and file” people, these are the highest selling insurance angents in the company. And in a company like AIG, that’s no small feat.

          • samurailynn says:

            @alice_bunnie: I didn’t know that things like bonuses were considered part of your promised compensation. At companies where I have worked, bonuses and retreats are things that are given out when the company is doing well and can afford to give away these things.

            Yes, if AIG stops doing expensive retreats, they may lose some of their salespeople. But you know what, even if they don’t quit doing it, they’ll probably lose some of their salespeople. Who wants to be with a company that seems to be in great danger of shutting down? Besides that, the economy is down, and unemployment is up. Their people aren’t all that likely to leave unless they have somewhere else to go.

      • Nofsdad says:

        @agnamus: You’re damned right I’m going to bitch ANY time a damned company who had to be handed billions of taxpayer dollars just to stay in flipping business hands out these kind of “bonuses and I don’t give a rat’s ass WHO they’re handing them out to.

        You wanna throw parties for your freaking insurance agent, fine, use YOUR money. In cases like this, maybe you’d best stay the hell out of the faces of the people paying the bill.

    • JPinCLE says:

      @agnamus:

      Hell yes, I’m pissed. It’s called tightening your belt a little bit. AIG and their independent agents basically said, “fuck all you working stiffs that are hurting right now, but thanks for your money.”

      It’s ridiculous. Continuing to do business is one thing, but if you’re the recipient of an enormous taxpayer-funded bailout, you say to your top performers, “Hey look… we need to tone this down – big time.”

      And, the reasonable humans among them say, “You know, that’s a great idea.”

      TRAIN AND MOTIVATE? Anyone that needs a Ritz to be motivated or trained needs a reality check.

      • SadSam says:

        @JPinCLE:

        Its totally bad form regardless of who attends or where the money came from.

        I was with an org. that merged with another org. some people lost their job and I was in charge of planning a cocktail event to celebrate the merger the same day people were being laid off. I was sending e-mails about the celebratory cocktails the same time as people were laid off or their friends/coworkers were laid off. It was dumb and bad form.

  2. ChrisC1234 says:

    Wasn’t it “business as usual” that screwed us all over like this to begin with?

    • y2julio says:

      @ChrisC1234: I agree.

    • ludwigk says:

      @ChrisC1234: Wait, you reward your “top business producers” with a $440k vacation, after you all collectively drove the business into the ground? Damn, I’m working at the wrong company.

      Spectacular failure + government bailout = open bar and spa treatments!!

      And, god forbid we upset our standard operating procedures, the very same ones that lead to this catastrophe.

    • wee0x1B says:

      @ChrisC1234: Yeah, my thoughts exactly. Perhaps “business as usual” isn’t the right way to go if you’ve had to receive gov’t aid. But then again, lessons paid for are lessons learned. And AIG has paid for anything, so I doubt they’ll learn much. next time they get into trouble because of their greed, they’ll just come back and grab a little more of our money.

  3. crazyasianman says:

    “In the meantime, our insurance businesses continue to operate normally”

    and that’s exactly what got you into the hole to begin with

    • Colage says:

      @crazyasianman: The insurance side of the business wasn’t the problem. Not that anyone here bothered to find out what happened to AIG, once they found a white guy with a suit they figured that some kind of satanic rituals were obviously going on there.

      • TracyHamandEggs says:

        @Colage: The company wasn’t even in trouble till the rating agencies screwed them. Suddenly they needed a massive influx of cash or they would go under. Their “Business as usual” was actually working just fine.

      • jwinston2 says:

        @Colage:

        I am sorry but this is not correct. Even though they try not to characterize it as so they insured, via credit default swaps, the packaged loans that Lehman, Goldman, JP Morgan and etc whored out with an AAA rating, even though they knew it was junk. The insurance side of the business is directly responsible for the mess they are in, regardless if you try and claim it is a different department.

  4. Kuonji says:

    That’s the Half Moon Bay Ritz Carlton. I lived right down the street from it for 3 years. Awesome.

  5. ViperBorg says:

    I want my money back.

  6. Burgandy says:

    So, since this is basically tax payer money, and I am a tax payer, I am tempted to call the hotel and cancel this event since *my* bduget doesn’t allow for this. Anyone got the phone #?

  7. ThickSkinned says:

    When most businesses are in financial trouble, they cut back on things like this. While I understand the purpose of the function, the location is asinine considering their current situation. Instead of the Ritz, how about the banquet room at a Holiday Inn?

    • ExGC says:

      @ThickSkinned: No business with any hope of surviving would ever cut back on stuff like this – it keeps their revenue producers there and happy. They stop, the salesman leave and the business crashes.

  8. cf27 says:

    Let’s put this in context. AIG, among other things, sells insurance. If you sell a lot of AIG insurance, you get invited to a big fancy party.

    For whatever reason, salespeople are actually motivated by crap like this. The fact that the US Government now owns part of AIG does not mean that AIG should stop motivating its salespeople. If it did, then those salespeople would stop selling AIG products. And, that would be bad for AIG’s stockholders. Since the government owns AIG stock, that would be bad for me.

    • m4ximusprim3 says:

      @cf27: How about, since we own 80% of the company, we come up with a new incentive plan. Instead of “if you sell lots of insurance, we’ll give you a half million dollar vacation”, lets try “if you don’t sell lots of insurance, we’ll remove your left testicle through your shoulder. And then fire your ass.”

      • lightaugust says:

        @m4ximusprim3: OK, let’s put it in context… incentives are one thing. Even realistic, non sarcastic incentives. Weekend at the Ritz Carlton Half Moon Bay is another. I think you’re right, sales incentives are nice and they work, but you’re also right, let’s keep it in context, and this is absolutely ridiculous.

        And as incentives go, if your company is in the shape that AIG is in, I’m willing to bet you haven’t earned it.

      • lightaugust says:

        @m4ximusprim3: Sorry, that was directed at the above comment.

    • dragonfire81 says:

      @cf27: You can have a “Big fancy” party without going to some resort miles away from where you live, just book out a hotel in town or better yet, offer the reps tickets to some games or shows they might want to see.

      It’d be a hell of a lot cheaper than a “retreat”

      • Heyubrando says:

        @dragonfire81:

        Seriously, if you sold something for a company and they told everyone, “Hey everyone, remember that sales incentive retreat we agreed to send you on before you sold all these . Well yea, now it’s at the Holiday Inn down the road.” …would YOU be inclined to bust your butt for that company during the next financial quarter? I highly doubt it.

        CF27, I agree… in the long run, this is better for all Americans. It’s a fact that their insurance subsidiaries are functioning well and in no danger. Don’t you want the only good portions of the company working as hard as they can to prop up the parent company… I sure do! What about morale? If you worked for a subsidiary and you didn’t quite understand the economics of the situation I’d jump at anything to boost morale and motive my sales.

        Enough said.

        • godlyfrog says:

          @Heyubrando: Salespeople aren’t children. If you tell them that the retreat has been canceled because the company isn’t doing well, they will understand, even if they don’t like it. They should even take into consideration the fact that they still have jobs, because no matter how well they were doing as a division, they would also be suffering if we hadn’t bailed AIG out. Sure, they very likely would have been purchased by a competitor, but you can bet that if that were the case, the retreat would have been canceled to make the division look as valuable as possible.

          In the regular corporate world, this would actually happen if one division was meeting its projected earnings for the year, especially if this was part of the budget, but in most of those cases, these things are hidden. The fact that AIG was *just* bailed out by the government makes this a huge PR disaster that any member of management with any intelligence should have been able to foresee and avoid. Regardless of its legitimacy, this event should have been postponed or canceled altogether.

          • Valhawk says:

            @godlyfrog: If you tell them the retreats been canceled they will sue for breach of contract, and AIG has to waste an equivalent amount or more in legal fees, plus deal with the loss of revenue from the inevitable loss of past of its sales force.

            • TracyHamandEggs says:

              @Valhawk: The funny part is that if they had cut each of those salespeople a check for 5k this wouldnt be a story.

              Salespeople (at least the good ones) love shit like this. They are motivated not just by money but by being better then everyone else and being rewarded for it. Its amazing how much harder salespeople work when something extra is on the line.

              When I had my sales team with one company most of them made 80k+ a year, but a $50 prize could keep half of them working 2-3 hours of overtime.

            • johnnya2 says:

              @Valhawk: Having worked under sales incentives, any company worth a shit has a clause that says management reserves the right to change at its discretion. Remember it is a BONUS, not taking away their commissions.
              For those who say fire them, obviously have no clue what “an independent agent” is. AIG, the US government, or whomever has no authority over them. Independent agents sell multiple lines of products (good ones sell the best for their clients, but these sales incentives cause everybody to pay more for insurance). The government should actually ban these types of sales incentives to agents from any company.

              • u1itn0w2day says:

                @johnnya2: They might be independent agents or contractors but AIG could simply say we no longer want you handling our product or pull any perks or advantages which is basically firing them

                If no one has authority over independent agents who licenses them or authorizes them to sell those policies ? Who trains them ? I’ve called companies or agents up and have gotten replies like ‘we don’t deal with them or we don’t write them’-are they pushing one company or is it just not worth it.

                Do these agents require training for each company they sell or write?

                I agree incentives like this comeout from the premium payers and should be regulated.Since most states mandate insurance of somekind they should mandate cost controls.

          • madanthony says:

            @godlyfrog: They may “understand”, but they are also probably going to start looking for new jobs. Good salespeople, even in bad economic times, can jump from job to job, and will. And AIG losing their best salespeople doesn’t benefit the company in the long run, nor the taxpayers underwriting the bailout.

            As far as canceling it because of potential bad PR, my guess is this was so far below the radar nobody thought about it until it blew up. And since it was planned in advance, they probably would have had to pay a not-insubstantial amount to cancel it. contracts and all.

        • howie_in_az says:

          @Heyubrando: Seriously, if you sold something for a company and they told everyone, “Hey everyone, remember that sales incentive retreat we agreed to send you on before you sold all these . Well yea, now it’s at the Holiday Inn down the road.” …would YOU be inclined to bust your butt for that company during the next financial quarter? I highly doubt it.

          Yes, because as a salesperson I’d know that the only way I’m going to see money is by making sales and earning a commission. The lack of a ritzy-glitzy company party really has no effect on commission and thusly does not matter all that much.

          If anything I’d expect salespeople to be more worried about how the bailout is going to effect the AIG image and whether or not they’ll be able to convince others to buy insurance through AIG.

        • SabyneWired says:

          @Heyubrando: I like to think that many “average” American workers would be understanding when told the economy is in the gutter, and perks will be cut as a result. It would likely be disappointing as hell, but they would likely understand the circumstances. If they didn’t, well, good luck finding a new job in this economy.

        • dragonfire81 says:

          @Heyubrando: The thing is, the last company I worked for. Only the VERY top tier of salespeople got to go on the retreats. There were plenty of guys making great money that didn’t go. A retreat is a bonus, a commission laden paycheck is not.

          Instead of cancelling the retreat just say its postponed.

    • QuiteSpunky says:

      @cf27: Since the taxpayers now own AIG, we’re adding a little something to this month’s sales contest. First place is a Cadillac El Dorado. Second place is a set of steak knives. Third place is “You’re fired.”

    • chemicalx9 says:

      @cf27:

      Heres a motivation tool…sell or youll be out of a job. When did having a job become a right and not a privelage to work hard for?

      • cf27 says:

        @chemicalx9: And, if I were an independent salesperson, my response would be “Ok. F*** you.” and I would start looking for another job.

        Remember, only the TOP sales people were invited to this event. If, like most companies, sales efforts comply with the 80/20 rule (20% of the sales force makes 80% of the sales), then pissing these people off is the LAST thing AIG should do.

        In any case, the fact that we are even having this discussion at all shows why the federal government shouldn’t be investing in private companies — invariably, the politicians will start trying to dictate how the company is run. And, politicians generally have their heads up their butts. Think AIG was run poorly? at least it hasn’t run up a $10T national debt.

  9. lightaugust says:

    I’ve been there. I couldn’t afford the fucking PARKING! This lame excuse has everything but the idea that they are taking it seriously. I work for a school and we have our meetings at a Friday’s, for crying out loud, and pay for it ourselves. If there’s not a protest there for this event, then Northern California just ain’t what it used to be.

  10. OletheaEurystheus says:

    BTW latest news, AIG is asking for 37.8 BILLION dollars more as of today (Wednesday.)

  11. ideagirl says:

    I would love to show up and spend my share of the party $$ on some spa services, but I know that will only get me the boot. Hardly seems fair…I get my nails done at the beauty school for $7, and those douche bags are being pampered at a high-end resort on my dime. F*****ers.

    • Colage says:

      @ideagirl: Well, I suppose it might get you the boot, but seeing as how if you divide the bill among all US taxpayers, you come out to about 3/10ths of a cent, you probably won’t get anywhere near the spa.

  12. Trick says:

    100 people spent $4400 for a week? Wow… I guess this is something that can’t be done at a Marriott with a conference room, huh?

    Or without the golf.

    Or expensive food & drinks?

    Noway… these are the privileged few who have worked so hard making AIG money. They deserve such lavish accommodations!

  13. MyPetFly says:

    When I first saw the image of the invoice, I could have sworn the first column was labeled “deception,” not “description.” Seriously.

  14. Heyubrando says:

    Does anyone care to be reasonable when commenting on this story? I, too am annoyed and mad about the taxpayers bailing out AIG, however, what most people seem to forget is that the insurance subsidiary of AIG is not the portion that is in distress. Let them continue business as usual… they’re good at it! If you question that fact, go look it up for yourself. The parent company had to ask for permission to tap the assets of their insurance arm. Don’t forget how regulated that industry is. It amazes me how many people fail to be objective and jump on the band wagon! How many of your companies reward their top sales people and send them on retreats?

    Just be objective… check your facts!

    • Colage says:

      @Heyubrando: You’re on the wrong website. On Consumerist, if a company has shareholders, they’re the scum of the earth and reasoning goes out the window.

      But yes, thank you for bringing that up.

    • OletheaEurystheus says:

      @Heyubrando: It doesn’t matter… as a company with a division falling apart at the seems that has become one of many figureheads for the destruction of the world economy, regardless of the divisions of said company it is completely and wholly irresponsible to assume its “business as usual” for ANY division of the company after asking for a taxpayer subsidized multi BILLION dollar bailout.

      • Valhawk says:

        @OletheaEurystheus: The problem with your argument is that the insurance portion of AIG was actually profitable. So the profitable portion should keep doing what it has been doing. If it isn’t broken don’t fix it.

        • OletheaEurystheus says:

          @Valhawk: But is it? The way things looked their main company was profitable to where they not?

          all it takes is 1-2 bad disasters and forget it.

        • RedwoodFlyer says:

          @Valhawk:

          Except there wouldn’t be one without the other….Gilette’s blades are profitable, but the handles usually aren’t..but if you allow the handle division to bite the dust, “business as usual” isn’t the best course of action for the blade division..

      • bonzombiekitty says:

        @OletheaEurystheus:

        It’s not a division, it’s a subsidiary. There is a difference. My company is a wholly owned subsidiary of a much larger corporation. If overall, the larger company is having financial trouble, we’re not affected much provided my company is making a good profit. We might see a slight decrease in our bonuses (as part of our bonuses are tied to how our parent company does as a whole). But that’s about it. They’re not going to change how we run things and risk losing our profitability.

        I can see AIG’s point. They have certain people which make the subsidiary a large amount of money. In order to keep them on, they give them special bonuses. If they suddenly do away with the special bonuses, then they risk losing their top performers. Would you rather they spend $10,000 in bonuses on an employee that brings in $40,000 in profit or would you rather they do something that looks good to the public and forgo the bonus causing that performer to leave and be replaced with someone who only brings in $20,000 of profit?

        Yes the expense looks bad to the public. But business is more complicated than the general public sees it as. As was said earlier, it’s a subsidary that is making a large profit. Why risk changing what isn’t broken?

    • godlyfrog says:

      @Heyubrando: You don’t get it; the problem isn’t that you’re wrong, the problem is that they spent a little under half a million dollars right after the government very publicly loaned them $85 billion. From a finance standpoint, there’s nothing wrong with what they did, because the books are separate, and the reasons for AIG needing the loan have nothing to do with their insurance arm, but from a PR standpoint, they might as well have lined every American up and slapped them in the face.

      Regardless of whether they can defend the expense or not, the general American public sees the entire company as one unit, and expects them to be on their hands and knees thanking us for keeping them in business. Instead, this expense makes it look like they grabbed the check, cashed it, then screamed, “SUCKERS!” and now we’re stuck with no power to do anything about it.

    • Hobz says:

      @Heyubrando: I guess my whole beef is that the failing division was not bailed out by the profitable division, it was bailed out by the taxpayers. Any other company in America would have shifted capital or sold off the bad division or failed.

      I’ll bet that if the profitable division did lend the failing end any capital, that the failing division will use some of the bailout to pay them back…

      • lowercase says:

        @Hobz:

        Don’t forget that the bailout was a loan. AIG is to sell off it’s subsidiaries to repay the taxpayers and do it within 2 years. They have stated that they’re going to sell off some of their property-casualty insurance subsidiaries, so business as usual, even if it involves perks, means a higher selling price and better repayment for you.

        Full disclosure- I work in the insurance industry but not for AIG. Oh, and big reward trips for producers are standard in every company, like it or not. Same thing happens in every other sales industry.

        • @lowercase: That’s the argument I was looking for. As an AIG competitor I’d love to see all of the businesses cancel these events for those that generate their income. As a taxpayer, it is tough to admit that these need to continue. If the company cannot continue to show that they are capable of continuing business, they will not be able to generate the dollars necessary via sales of business units or other revenue to pay off the $85 billion loan.

          Remember that it stands to benefit the government – AIG is paying over 11 points of interest on this loan – if AIG is able to repay it on the terms offered. It behooves everyone if they are able to do so, and continuing these events for top brokers is a must to maintain broker and customer faith in the company.

  15. bohemian says:

    They need to end the expensive parties even if they are for agents. The company was saved by us from collapse with our money. They do not have to have reward parties right now, their agents will understand. If they don’t too farking bad. Real life sucks sometimes.

    Someone with the fed who is involved in overseeing the AIG bailout needs to stop this crap NOW.

    Someone in good old northern CA needs to plan a massive protest at that resort. Maybe invite the anarchists that showed up at the party conventions. Given enough bad stuff potentially happening the resort may cancel for them.

  16. RandomHookup says:

    Just give your top producers a book of coupons for 10 free blow jobs and call it a day. Everyone will be happy (except for the ladies).

  17. Heyubrando says:

    …for those too lazy to do their own research.

    [www.businessinsurance.com]

    • OletheaEurystheus says:

      @Heyubrando: Point still stands, you DO NOT REGARDLESS OF DIVISION OF THE COMPANY go galavanting around blowing wads of cash on executives after your parent company asks for billions of dollars of public help.

      YOU DO NOT DO IT.

      Make excuses or reason why all you want, you will not be able to explain it away.

      Lets explain WHY your wrong though. Lets say AIG folds, which since they are asking for another 35 billion is quite a possibility, AIG insurance will need to break away or risk being pulled under. Where are they going to get that money? Its going to have to come from their coffers, but if they are blowing it on executive perks, guess how much LESS money they are going to have. The insurance group going to go asking for a bailout next if god forbid AIG proper folds?

      • Colage says:

        @OletheaEurystheus: You obviously didn’t get 4 lines into the post or else you would have seen this:

        The event, mischaracterized as an “Executive Retreat” …

        Nor, obviously, did you read the link that was posted.

        It was not an executive perk, it was for agents. This is something that increases profitability. I saw an AIG commercial the other day (one that likely cost far more than $440,000), should we expect them to stop those too? How do you expect to get paid back?

        Maybe before you sprain your caps lock finger you should read about what happened instead of offering up an uninformed opinion.

        • BrianDaBrain says:

          @Colage: You’re missing the point here. This is not about what people within AIG got the perks. Executives, agents, whoever. This is about how much money AIG spent giving out the perks. Spending $440,000 or 100 employees is more than a little ridiculous. It’s not something you can explain away by saying “well, it wasn’t executives that were there”. It doesn’t matter. They still blew $440,000 of taxpayers’ money on a weekend retreat.

          AIG commercials are necessary, because they have to let people know they (still) exist. No commercials = no publicity = no customers. However, your comparison of commercials to retreats is way out of line. A retreat this expensive does nothing increase the visibility of this company (except perhaps the negative PR that comes from people finding out about it). I am all for company-sponsored activities that benefit a company’s front line employees. What I am not all for is AIG, who’s every expenditure is essentially being paid for by you and me and every other American, spending $440,000 on one. Spending $4,400 per employee for a vacation is utterly unacceptable.

          You can throw all the articles and technicalities at this post that you want. It doesn’t change the fact that AIG’s gross spending on this one is exactly the opposite of what they need to be doing.

          • Colage says:

            @BrianDaBrain: Spending $440,000 on 100 employees is a little ridiculous by your standards, you mean.

            The comparison to the commercials aren’t at all out of line. According to the article, 90 of the 100 people didn’t work for AIG, which would point to their being independent agents – and if they’re sending independent agents to these retreats, it’s a marketing tool.

            So, with due respect, you’re not in a place to lecture me when you’re coming from an ignorant position. If stories like this weren’t around to get everyone’s pants in a wad and for people to cry “They’re spending my money” (they’re not) “on a vacation” (it’s not). This is (most likely) being paid out of a marketing budget with, at worst, a loan from the government – not a grant.

            • BrianDaBrain says:

              @Colage: Perhaps you’d care to explain how a $23,000 spa bill is a marketing tool and not a vacation. $150,000 on food. More marketing? Maybe those independent agents are going to run out and get some people to sign up for insurance by telling their potential customers all about the great perks for working at AIG?

              Like I said before, it doesn’t matter how many of the hundred people worked directly for AIG. The simple fact of the matter is they took 100 people – who are connected to the company – on a lavish, week-long getaway and racked up a very large check for a company that is already up shit creek. Please note the extra money they were just granted today, $37.8 billion. The company, AIG as a whole, obviously doesn’t have much extra money to throw around (based on facts and not my “ignorant” opinion), therefore they need to stop spending money like this, when they can just as easily hold a “marketing seminar” at any number of far cheaper locations.

              For the record, yes, it is taxpayer money that they are spending on these things. Without their first $85B bailout (taxpayers’ money), they would be bankrupt. No AIG means no AIG retreats. Because of my tax dollars keeping that company afloat (again, company as a whole), this retreat was possible, funded with those same dollars that I am providing them. Obviously, their business as usual stance is not working, or they wouldn’t have needed an extra $37.8B to continue doing business. Now, I’m not saying that they aren’t responsible for paying that money back, but if they keep losing all the money the government is loaning them, the fed will stop loaning them money, and the company goes bankrupt anyways. Who loses in that deal? Taxpayers. And yes, that is ridiculous by my standards.

              • ExGC says:

                @BrianDaBrain: Sorry Brian, you are wrong. Without the loan, these guys would be going about doing their business. The insurance subsidiaries of AIG are separately capitalized companies and the parent corporation is prohibited from accessing their assets without the permission of the NY state insurance regulators. Those assets are not available to creditors either. And it was not these guys’ “business as usual” that caused the problem.

              • Colage says:

                @BrianDaBrain: If you make AIG a lot of money, you get to go on this vacation. If you’re an independent agent and there’s this perk from AIG, or a (say) $3000 perk from Hartford for the very, very high volume producers, you’re going to push the AIG insurance because of the better perk. They need to give incentives for people to push their product and not someone else’s – that would fall under marketing. It’s not a marketing seminar, it’s a reward, and I imagine one that was well publicized to independent agents that deal with AIG well beforehand.

                As for whose money it is…I don’t know if this particular arm used any of the loaned funds, but it’s immaterial in any case. If I walk into Best Buy and buy a TV with my American Express card, they don’t get to tell me which room I put it in. They can if I don’t pay them, but I think it’s a little premature to start assuming that a company that controls a trillion dollars in assets isn’t going to be able to pay back that loan.

                So, really, if someone pulls in tens, or hundreds, of thousands of dollars in profits for your company, it’s not unreasonable to send them on a $5000 vacation. These are the people that are making the company money and if they want to keep doing that, they need to keep them happy.

                As far as how much money they have to throw around, I don’t know if the fact that they borrowed ca. $40bn tells you much about how their business is doing other than the fact that they needed $40bn this week. For all you know, they have $50bn in accounts receivable, so I’d be careful about what you’re trotting out as “facts.”

  18. fergthecat says:

    I’m pretty sure that if I were in bankruptcy that business would NOT continue as usual. I seriously want my damn “bailout” money back.

  19. SGriswold says:

    I think the vast majority of you are not understanding a lot of the facts:

    1) This is AIG’s personal life insurance arm. The profitable one. This section of the company has nearly nothing to do with the other parts of the company in dire straits. This is the most financially stable part of AIG. They can afford this with or without the bailout.

    2) Compensation for top producers like this is par for the course, legal, and taken into account on a yearly basis. EVERY SINGLE insurance company with an independent agent base has incentives like this. Of course, they could just bump high producers into a higher commission bracket so the hoi polloi won’t tut-tut them via comments on a finance blog, but it doesn’t “incentivize” as well as a weekend convention.

    3) You have to sell METRIC ASSLOADS of premium to get invited to these things. Meaning, you’re already making tens (or hundreds) of thousands of dollars a year in commissions. Tell me, when receiving a gift, would you rather have cash, or something extraordinary that you would never buy for yourself? Take into account you already have made tons of money.

    4) Find me a commission-based sales industry that DOESN’T reward high performers. There isn’t. Just because AIG as a whole is under scrutiny doesn’t mean this needs to be dragged out and beaten. Have you seen the fucking parties that i-banks throw?

    Disclaimer:
    Yes, I am an insurance agent. No, I have never qualified for these getaways.

  20. Colage says:

    This makes my brain hurt:

    - AIG got a large line of credit. They have an estimated $1tn in assets.
    - In exchange for the funds, the Federal Government got control of 80% of the company and thus the ability to replace the management and spin off parts of the company.
    - AIG Insurance wasn’t the problem and is still rather profitable.

    This is not the Government giving AIG a check and telling them to run with it. There’s going to be repayment with a lot of interest (LIBOR +850). Maybe we shoukd stop lighting our hair on fire over something that I’m guessing 97% of the country knows nothing about.

  21. gbroiles says:

    Can you imagine the whining if the event had been cancelled, and an AIG employee/salesperson had posted the story to Consumerist instead?

    “I worked really hard all year long because my company promised me that person selling the most insurance in every office would get to go to a sweet weeklong event at a spa with makeovers and massages and stuff – but then they cancelled it a week before it was supposed to happen, and gave us all $25 Starbucks gift cards instead! My trip would have been worth almost $5K and I worked like a maniac because I believed they’d give me what they promised me, and now because some government a**hole and some corporate a**hole made some deal, I get screwed out of my bonus trip. WTF!?!?!?! Can you guys EECB them for me, and tell them to give me what I earned?”

    It’s fun to get all worked up about how unethical and irresponsible someone else is, it’s a lot tougher to come up with a real solution. If this trip really was for AIG executives, you’re right, they should have had their “retreat” in a Holiday Inn down the road. But if this was intended/promised as an incentive/compensation, taking it away is likely to harm the company, making it LESS likely to pay back what they borrow. Would you be excited about going to work for a company laboring under a strict “nothing nice is allowed to happen” policy? That’s a good way to end up with only sad, desperate people who can’t get any other work and/or people who are counting the days until retirement .. which leads to crappy customer service, which is likely to lead to yet another round of complaining on the Consumerist.

    If the employees hate the company, pretty soon the customers will, too. And if the employees and the customers hate the company, it’ll die (leaving loans unpaid), or end up sucking up billions more in subsidies.

    • Grive says:

      @gbroiles: There is a HUGE area between “nothing nice will ever happen” and “giving a $4,400 per person” retreat.

      I hope you can appreciate the difference.

      • D-Bo says:

        @Grive: And that really is the central issue, the scale and lavishness of this type of reward. Had AIG not been involved in the bailout no one would have heard about this and no one would have cared. The fact that they were involved gives people cause for concern (justified or not based on your personal opinion). This type of reward is quite extravagant and not something average Americans have come to expect as part of their compensation from work (even those in sales).

        Like others have said even if this was wholly appropriate (which is debatable) the average American sees it as a slap in the face and the management involved in this retreat should have recognized this. Perception becomes reality and it makes AIG look bad. Postpone it a few months and it’s no longer the outrage of the day.

    • jwinston2 says:

      @gbroiles:

      One word, bankruptcy.

      What type of retreat would it have been if the government let them go under?

      If the employees feel they are getting screwed they can leave, good luck finding work in this type of market. They should feel lucky they still have a job, many people are beginning to lose the ones they have.

    • SabyneWired says:

      @gbroiles: My question is, why would someone need a $5K vacation, paid for entirely by their company? I could see giving the top few salespeople a pair of plane tickets or a weekend at a resort, but a whole freaking vacation? All expenses covered by the company? That makes no sense.

      Were it a business trip, I could understand it (though I doubt spa treatments are covered in business trips, but I could be wrong), but this was a damn pleasure trip for this lot. A pleasure trip that came right after the parent company went sniveling to the government asking for a handout. MY tax dollars, and those of every other honest, taxpaying citizen, went toward that handout, and it ticks me off that these idiots can’t get it right.

  22. thetango says:

    … and now they’re asking for an additional $37,800,000,000.00 more.

    [money.cnn.com]

  23. u1itn0w2day says:

    If this was for top sales people-oh well-SELLING is YOUR job with or without incentives.If you don’t like AIGs pay structure leave.if AIG doesn’t like somebody’s sales performance fire their ass.We’re supposed to be free here and not chasing rewards like dog fetching a ball for a treat.

    One would assume that commissions alone would be enough:the more you sell the more you make.

    And then the CEOs are all playing the blame including the ex ceo punk Hank Greenberg who basically called in sick for his scheduled testimony but he did say the consumers and shareholders would have been better without a government bailout-is that because you recently cashed in 5 million shares HANK? Shareholders don’t get squat in most bankruptcies you lying kniving piece of shit.

    Tell us HANK,why are YOU under investigation for FRAUD in NY since 2005 and have yet to clear things up-HANK.Tell us HANK-whose idea was General Re in France,what did you accuse Warren Buffet of?-HUH-who’s idea was it to falsify revenue from that transaction?

    Tell us HANK,why did you put alot of your stock awards from a couple of years ago in your wife’s name.Were YOU afraid YOU did something wrong that the company would want it back?

    How did you con the kiddies at CNBC to become guest commentator?

    And forgetting the last month,WTF would AIG have done if they were the major insurer in a disaster-aren’t you supposed to have CASH RESERVES for normal routine business.WTF!

  24. razremytuxbuddy says:

    AIG just b*tch-slapped every American taxpayer, and every elected official who voted for the bailout. AIG is stupid if it thinks this retreat is going to bring in more business. Why would anyone buy insurance from AIG now that has so badly mismanaged its business?

  25. bohemian says:

    So what happens if everyone who has AIG insurance or other services turns around tomorrow and cancels or moves them in retaliation?

  26. katbur2 says:

    Business as usual is what got us in this mess to begin with. I hate to be rude but FUCK the expected trip. I think it might be time to remind the top salespeople that the only reason they are still employed is because of the bail out.

    • armour says:

      @katbur2: Ahh they are independent sales people and will jump ship at the drop of a hat they are not employed because of tha bail out they are working for them selfs and will push ANY product that pays them the most and gives the most perks.

    • richcreamerybutter says:

      @katbur2: And with all due respect to insurance salespeople, they’re insurance salespeople. They aren’t teaching kids, finding cures for cancer, or fighting fires. There are plenty of others who would shit themselves for the privilege of replacing these people at their normal commission rate, even without these incentives.

      • bonzombiekitty says:

        @richcreamerybutter: Maybe. But will those people sell as well as those who left?

        • richcreamerybutter says:

          @bonzombiekitty: You can ask the same of any industry that reduces bonuses or incentives. I also know that regardless of sales prowess, a lot of people will go to an insurance company based on word-of-mouth recommendations, or through a work/school discount or other promotion.

          In fact, I can’t remember the last time I was convinced to buy anything based on a salesperson alone. I tend to go to the salespeople with specific questions and make my decision afterward. If the person becomes irritable when I don’t buy on the spot, I know where not to spend my money.

  27. mewyn dyner says:

    UGH!!!! And this just in

    [money.cnn.com]

    All I’ve got to say is when will the madness end!

  28. mcdonaldave says:

    This is totally sickening to me as a member of society who lost his job due to these scum bags who are living high class with my hard earned money. When is the american people going to stop these criminals from stealing from our pockets?

  29. kathyl says:

    You know, when most businesses find themselves failing instead of succeeding, they proceed a little more conservatively, and would find themselves bankrupted if they wasted a bunch of money “motivating” employees and clients who should be “motivated” by keeping their jobs and staying out of the poorhouse instead of drinking champagne out of the hotel mini-bar.

    Of course, most businesses don’t get multi-billion dollar bailouts by the federal government when their inept and corrupt business practices push them past the point when most institutions would have to declare bankruptcy.

    We basically told them it was okay to eff off and waste a bunch of money because they’re too important to fail, so why are we surprised when that’s precisely what they did?

  30. u1itn0w2day says:

    Hopefully these sales people didn’t sell the insurance the way these mortgage people sold their STUFFFFF.

    Questions-could this type of award or bonus be taxed,I know they tax bonuses and that’s what this basically is.

  31. SanguinePony says:

    Seriously people, enough with all the self-righteous “I’m a taxpayer” indignation. Just because the government gave them a loan, does not make you a shareholder.

  32. Seriously, is it time for mutiny yet? I don’t drive, but if someone wants to pick me up we can go visit one of those douchebag CEO’s – you know one of the ones who took home a few hundred million bucks in “bonuses” – and get some of our money back…

    Seriously.

  33. infecto says:

    This makes much better sense and is completely fine. To those of you criticizing continuing “business as usual” you should really educated yourself on the situation. It was only one part of AIG that took the whole company down….AIG Financials Group.

  34. Valhawk says:

    Apparently, Senator Obama needs to get some fact checking done. He mentioned this in last nights debate, although when I think about it 90% of people will never find out what actually happened here so it was probably on purpose.

    Also regardless of how this looks to the taxpayer, people need to remember that reguardless of whether your company is in the shitter or not you still need to honor contracts with your employees. Since the insurance arm, which this retreat is for, it actually in the black they have no reason to fix was isn’t broken

  35. Red_Eye says:

    Nice, so not only did we taxpayers save the retards who screwed up the companies, we are paying to motivate those left behind watching the golden parachutes drift by. Awesome!

  36. stuny says:

    I am confused! Isn’t this the same website that mocks Circuit City for flushing their business down the drain?! They did it by getting rid of their best sales people and replacing them with lower-skilled (read cheaper) staff.

    The salesforce is the lifeblood of any company and you need to motivate and reward your best ones. Do you think at a time when business is at its worst, AIG should allow REVENUE to decline!?

    Its very easy to criticize companies for spending money on perks and high-paid execs, but isn’t that why you work, to get paid as well as possible? If you do a good job, you expect to get paid more. If you aren’t happy with your pay, you walk across the street to the competitor.

    AIG is a hugely successful Trillion Dollar company. Yes, there were a lot of screw ups, but do you think these top performing salespeople are what killed the company, or what is keeping it alive?

  37. stuny says:

    Hey Consumerist,

    I think your headline was misleading and unfair considering AIG offered a very reasonable answer and explanation.

    Yes, you may choose not to believe it, but if you do, you should give them equal time.

  38. armour says:

    Some of you would be very bad at business. If an independent sales person has multiple insurance products to push which one do you thing they are going to plug? The one that makes them the most money or the least?

    These independent sales people bring in probably over a 100 X profit then what the shelled out on them for that trip. People need to remember that these independent sales people are the ones that are still brining in the revenue streams and are even more important at this time, piss them off and they will drop pushing AIG products and go to the ones that make THEM the most money.

    In a business people are a cost except select people they are revenue generators. The top sales people for the company are not direct employees then you have a bigger problem if you can’t retain them in this troubled period and keep them happy and generating money.

    This wasn’t a party for executives or managers this is a party for the money makers of the company don’t know about you but any one that makes me money for my company I’m going to treat well.

    • OletheaEurystheus says:

      @armour: Treat well is one thing, give a almost 5000 dollar paid vacation, I dont know of ANY legitimate business who can reasonably claim that kind of outlay for the pleasure of a few employees as a operating expense, especially when their home company is on the brink of failure.

      And while people keep trying to say no executives went, 10 did, so that is not even a remotely accurate claim.

      • bonzombiekitty says:

        @OletheaEurystheus: I used to work for a large pharma company. I remember helping execs approve expense reports for rewards for well performing sales people, $5000 was nothing special.

        Again, if spending $X on bonuses keeps $X + $Y in revenue, then it makes sense to keep spending that $X.

  39. armour says:

    Well I do know I gave a person that worked for me a new car because they made me over 70,000 profit (that’s profit after their pay and expenses) I was extremely grateful as they were a key person in the success and growth of my small business. People that MAKE YOU MONEY are worth spending money on. I don’t regret that expense at all because since they have proven them self time and time again. Sure I could have greatly used that money else where in the business as I was still in my first year but you know what that cost was paid back 10 folds since.

    The amount of 4g’s per person of a High performer doesn’t surprise me these are 6 figure sales people and you need to get your head out of the mind set that every one is a $34,000 a year drone and that 4,000 is a lot of money. It’s not when the people are getting it and generating millions.

    • econobiker says:

      @armour: As you said about the high performers. No one here has understood the following:

      “The event, in Half Moon Bay in northern California, is designed to “motivate and educate” about 150 independent agents that sell AIG coverage to high-end clients,…”

      which means that the “high end clients” are the type to hang out at such places. You don’t ask people who sell to multi-millionaires to have a retreat in a blue collar vacation area and be able to connect with their clients. It happens like this: Agent A says to customer Z “I was just out at Half-Moon Bay hanging out and golfing.” Customer Z thinks “This guy is like me and shares my rich guy values.” Agent A sells policy to Customer Z makes profit and hopefully bails the taxpayers out of owning AIG.

  40. axiomatic says:

    I’m more mad at my government for bailing AIG out in the first place than I am about this costly retreat.

  41. OldSpinDoc says:

    Armour is absolutely correct. If anything, given AIG’s current circumstances, holding these events are essential if they are to keep the faith of their indie agents…

  42. BrianDaBrain says:

    Yet more reasons that Americans generally opposed the bailout. Instead of cutting back unnecessary spending (and this is unnecessary, regardless of the excuses they use) so they can pay the taxpayers back for so generously rescuing them from their self-induced capsizing, they go balls to the wall with spending. Sure, company retreats may drive business in the long run, but it is not necessary to hold such events at ridiculously overpriced places like Ritz-Carlton. The Ramada right across the street from where I work has conference centers that would work just as well without running up a $440,000+ tab.

    It’s good to see my tax dollars so hard at work. Thanks, Congress!!!

  43. I’ve been in high-dollar sales before of services…and let me say that…no sales meeting like they describe is ever an “essential function”.

    Try having a webinar, folks.

  44. frodo_35 says:

    To all you exec types we lower class types (30,000 to 50,000) get it. We under stand that this is how it works spend it to make it. We are not stupid so you don’t need to shake your head and explain to us poor hicks. You are the ones that don’t get it. The problem is this is how it works. We see the upper 6 figure types getting over with the old boy network and we know that mostly its who you know and not what you know that lands you there. While you let a few of us lower types up to the table we know who owns the table. What you are missing is there are alot more of us then you and we have alot more guns. I am by no means wanting a melt down of this country but the wealthy need to back off some or else we just might see history replay. No one in there right mind wants this but it can happen. You can call it class warfare or whatever you want to but I wonder how many French were wondering WTF when they lost there heads.