Backlash: Outrage Forces AIG To Cancel Second Pricey Hotel Party
AIG has decided to cancel a second pricey hotel party for their brokers after receiving another loan from the Federal Reserve for $37.8 billion dollars. AIG defended throwing a $400,000 week long bash for its top independent insurance agents and some AIG employees immediately after the bailout -- claiming that these events were "standard industry practice" and that they must continue. They announced that they would go ahead with another event at the Half Moon Bay Ritz-Carlton in northern California. 50 AIG employees were expected to attend.
At least one member of Congress was pleased at the news:
"I am somewhat relieved to hear that AIG has canceled their Ritz-Carlton conference, which was nothing less than a slap in the face of the American people," said Rep. Elijah Cummings (D-MD). "I cannot fathom how in the same day—the very same day—that AIG asked the government for another $37.8 billion loan, the company would even consider moving forward with plans to host another large conference at another luxury resort."
AIG's spokesperson said that the company will have to pay some cancellation fees, but admitted that the era of fancy conferences and $23,000 spa bills seemed to be over.
"We'll certainly lose some money in cancellation fees, but it's just beyond the point of trying to conduct these meetings given the uncertainty that's taking place," said Ashooh.
Outrage Leads AIG To Cancel Second Luxury Retreat [ABCNews](Thanks, WiglyWorm!)
Lorem ipsum dolor sit amet, consectetur adipiscing elit. Nam malesuada commodo erat et molestie. Duis pellentesque aliquam bibendum. Suspendisse venenatis lobortis eleifend. Mauris id est sed lectus convallis aliquam.
Post a comment
Comments:
Good this crap was making me sick.
How noble of them. *Rolls Eyes*
This is great news! To tell you the truth, I would not have been upset if they had kept one night of reservations and donated them to a charity (Make a Wish?) to treat someone who would otherwise never have had the chance to enjoy such a luxury. Regardless, I'm really pleased they proceeded this way, even if it was due to public outrage.
I've got some "standard industry practices" I'd like to show them. My Uncle Carmine used to tell stories about them.
According to the invoice found by The Smoking Gun, $402,701.04 of the earlier AIG party cost was a deposit, paid for before the bailout. And chances are the vast majority was paid for before this division was even aware of AIG's financial troubles, since the financial troubles came from a 377 person office in London (AIG has about 160,000 employees total).
While the move was in poor taste, and spurs on a sort of blood lust among many, I would hope Consumerist readers would recognize it would be far stupider to throw away a $400,000 deposit.
As for the more recent news, if it was planned and paid for after AIG's financial troubles were clear, then yes, it was inappropriate.
How do you expect AIG to pay us (the tax payer) back if they can not continue to do business, yes their "business" practices got us into this, I know. They do things like to to sometimes reward people who are continuing to sell their product which is what needs to get done. You also have to remember that other people benefit from this as well, employees at these places need companies to fill their halls or they'll get laid off too. We need to look at the bigger picture.
@bigdave914: I wish we could edit comments =) I ment to say "they do things like this to sometimes reward....
Hey, when you were a private company, you were free to do what you want. Now that you've go 350 million owners, you might get a little bloback.
@savvy999: You don't bite the hand that feeds you...or should I say the hand that pays big into your campaigns and gets you elected.
@spinfire: I disagree, the $400K is a sunk cost. It's gone, period. There is no such thing as throwing a depost away. Proceeding with the "party" incurs more direct costs while cancelling does not.
"but it's just beyond the point of trying to conduct these meetings given the uncertainty that's taking place"
God, what a way to spin it. Complete zero-sum argument. "If we can't have our meeting in an extravagant setting, then we won't have our meeting. Na na nana na!"
No one, absolutely no one is even suggesting that meetings should not take place. We just don't think they should be held in places costing hundreds of thousands of dollars.
However, it's quite clear that AIG's spokesperson's admission that the meeting will not go forward indicates that it was not necessary in the first place.
Wow, so, I definitely hadn't heard that they needed another loan. That kinda makes the post I made in the original thread about the upcoming resort stay a bit irrelevant. I'm with Mr. Cummings on this one, if they need another loan that badly just to continue, these probably aren't a real good idea.
One loan is one thing. There were plenty of things that needed fixing, which I felt at the time didn't include things like this. But if you're still asking for more money after a loan of that magnitude, then cuts need to be made.
@bigdave914: Sometimes? Sounds like it's an every other week thing to me.
The fat days are over, let them Motel 6 and Putt Putt.
They had damn well better not be doing any more of this or they might end up being victims of a good old fashioned lynching.
@richcreamerybutter: Donating one night (or a weekend) at this resort to charity would have been a wonderful option, honestly.
@bigdave914: None of my employers ever sent me to a $400,000 seaside party, yet somehow they continued to do business. You can't spin this as somehow essential to AIG's business model. They're acting like Internet companies did in the late 1990s -- they're used to living high on the hog and they haven't caught on yet that the party's over.
@dragonfire81: Bingo. The "OMG! AMERICA IS TURNING SOCIALIST! BOOO UNIVERSAL HEALTHCARE!!!" crowd screams and rants about the government interfering in the market all the time. They never once stop to consider how Big Business has already infected the government with their sleazy, kick-backing claws.
Ignorant masses: 1
Reason: 0
@ohenry: Yeah, that's what I'm taking away from this, too. What's a $400k party compared to the ADDITIONAL $37.8 billion?
@GMFish: That part doesn't even compare to him pointing out that they'll lose the cancellation fees. Almost as if he's hoping we'll change our minds when we know that there's money already spent on it.
See, if we bail them out, they don't have to get it.
Assholes...
Anyone else agree that any other company who has received a significant amount of bailout money or loans from the government should have their entire executive staff sent to Guantamano Bay should they try and pull this crap again?
It's not that hard to call them domestic terrorists at this point, right?
About damn time!!
Well, standard industry practice got them into their big fuckin mess to begin with, so maybe rethinking and canceling the trip is a good idea.
time to revamp standard industry practice too, huh?
AIG execs could have headed all of this negative press off at the pass.
Execs: "in light of certain circumstances regarding our balance sheet, and on the other hand our desire to reward our top talent, we've decided to pay for this week long jaunt out of our own personal expenses. We will use no tax payer money for these reward programs until we have fully paid back any loans from the american tax payer".
Of course that would set a dangerous precedent of an executive that actually has a personal stake in the success of a company......so never mind.
@savvy999: because the corporate executives officially own America.
-------->
So the first one is still on, right?
@bigdave914: Oh geez...not the trickle down defenders.
They're broke. They were saved from failure - bankrutcy. It is NOT business as usual.
Let's look at it this way. I screw up and run up my credit card to $15,000. I realize, crap, I can't pay this back. I call my parents and beg for a bailout. They cut me a check for $10,000. I spend $3000 of that on a weekend in Cancun. I was planning on going anyway.
I can't imagine that AIG doesn't have a conference or auditorium in one of their own headquarters. Microsoft does. I'm sure they can borrow an auditorium from a local university for this type of business conference. Guess what? They need to cut back on their extravagant expenses. No one is saying they can't conduct business, but Ritz Carlton is inappropriate when you were just saved from bankruptcy, plus asked for another loan because $85 billion wasn't enough.
If an average American just declared bankruptcy, then bought a $3000 designer handbag because that was the 'lifestyle they were accustomed to', you'd call this person the biggest, clueless deadbeat.
Still does not compare to paying the fired CEO, sorry forced out CEO, $1 million a month for "consulting fees."
To side with the devil on this matter, I used to sell insurance. These comp plans were what we looked forward to. Trips to Chicago, cruises, a week's paid vacation at a spa. We worked 90+ hour weeks to bust our asses to hit our numbers, and were aptly rewarded. Not going to say going on this trip is the smartest thing AIG could have planned, but as far as the rank and file are concerned, I'd throw a shitfit if a trip I had banked on and earned was pulled out from under me. Especially since they usually didn't give a cash bonus because of the trip, if the cancelled the trip, they still wouldn't give a cash bonus. Then I'd leave, and a good insurance salesperson is not exactly an easy position to fill. Then they'd need more money to cover the income they don't have from me, a never ending cycle. Cancel a few of these trips, and you'd lose probably more than half your staff to competitors.
Thank god I'm not in the insurance industry anymore, but you do have to realize there are 2 sides to every story.
@testsicles: As I see it, the other 99.675% of the company is now subsidizing the failed decisions of the tiny Financial Products division, and for the remaining cost of $40k they can keep their promises to their employees about a bonus program (it was a retreat for sales people who had beat targets). Those same employees are the ones who are making money in all this, and subsidizing the Financial Products division just like the taxpayers are. If they leave, or stop selling effectively, the company will certainly fail and take the government's investment with it - not to mention lost tax revenue and the overall cost to the economy with 116,000 (I said 160k before, 116k is the correct number but I cannot edit my comment...) jobs lost.
My heart goes out to the thieving bastages.
Yeah right.
SO I guess the real loser out of this deal is the Ritz-Carlton.
@Vhalkyrie: Adding to that... I'm sure there are many hard working people out there who would gladly step in to take the place of a "top performer" who requires THAT level of retention perks to stay.
"Bill is annoyed that his $50,000 European vacation perk has been cut."
"Tell Bill he's being replaced with Mike, who will gladly take $5000 and an extra week of vacation time. We just saved $45k."
@papahoth: And he was actually associated with the failed AIG Financial Products division, which is what brought the company down, not the insurance business units targeted here. In other words, while people work their panties in a knot about this, they're ignoring the fact that AIG is paying out $1M a *month* directly to the one person who is arguably more to blame than anyone else.
@DemolitionMan: How would you have felt if AIG just went bankrupt and you'd be out of a job anyway? These guys should have felt lucky to be employed, not entitled. If you were pissed and quit, what company would you be sending your resume to? This isn't an employee's market at the moment because there isn't exactly free flowing cash to hire. Especially these days with the Feds looming over balance sheets.
Maybe its time to revise those Standard Operating Procedures there AIG?
By the way AIG, you owe me money.
@Vhalkyrie: Given that these people are part of a profitable division that is subsidizing the failed parts of AIG, and they had no part in its collapse, I'd say they deserve sympathy.
Lets go after the CEO who PRESIDED OVER THE FAILED DIVISION and is STILL BEING PAID $1 Million per MONTH, and make sure that these sales people continue selling because otherwise all 116,000 AIG employees are going to be looking for jobs.
Your right that it's not the meetings themselves, it's spending this kind of way after you borrowed cash from taxpayers. It's like the brother-in-law who borrows $1k to pay rent and then next week goes and buys a plasma TV.
@spinfire: I agree with your assesment but maybe after receiving several billion dollars, it might be a good idea to shelve the bonuses for a few months. It doesn't matter which section was more profitable, the bailout saved the entire company. People are without jobs and everyone working for AIG had their job saved by the Government. Regardless of good business decisions, I can see how that might make a few waves. If the bailout is going to go to bonuses and perks, than I'm sure people would have much preferred the bailout never to happen. And I agree, go after that CEO asshole.
@spinfire: You'll get no sympathy from me here. I used to work for Worldcom. My division had nothing to do with the failures either, and we barely got a living severance.
How come Congress didn't write into the loan, something like a 30% pay cut across the board for all AIG execs, VP-level and above? Discuss...