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]
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Comments:
Wasn't it "business as usual" that screwed us all over like this to begin with?
"In the meantime, our insurance businesses continue to operate normally"
and that's exactly what got you into the hole to begin with
That's the Half Moon Bay Ritz Carlton. I lived right down the street from it for 3 years. Awesome.
I want my money back.
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 #?
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?
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.
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.
@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."
@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.
BTW latest news, AIG is asking for 37.8 BILLION dollars more as of today (Wednesday.)
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.
@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.
@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"
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!
@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.
When I first saw the image of the invoice, I could have sworn the first column was labeled "deception," not "description." Seriously.
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!
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.
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).
@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.
@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.
@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.
@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?
@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.
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.
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.
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.
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.
@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."
@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.
@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?
@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.
@Colage: You can sell your Apple stock anytime you want... I can't quit paying taxes unless I want to risk going to jail.
@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.
@Colage:
Maybe we shoukd stop lighting our hair on fire over something that I'm guessing 97% of the country knows nothing about.
Heh, maybe that explains Jim Cramer's recent outburst...
@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.
@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.
@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.
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.
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.