AIG Swaps "Retention Bonuses" For Annual Bonuses
In order to get a giant honking bailout from Congress, AIG pledged it would give up executives annual bonuses, but guess what? They found a way to give them anyway.
Instead, they're giving 130 managers "cash awards" to stick around. Retirement services chief Jay Wintrob will get $3 million in retention bonus pay.
“The expectation from the public and Congress was that they weren’t getting bonuses, not that they’d be pushed off by several months,” said David Schmidt, a consultant at executive pay firm James F. Reda & Associates. “That clearly violates the spirit of AIG saying they’ll forgo their bonuses.”
AIG defended the action, saying it was necessary to encourage the guys to remain while buyers were found for the various units.
AIG Gives ‘Retention’ Pay After Scrapping Bonuses [Bloomberg] (Thanks to Myung!) (Photo: Marc oh)
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Of course, its standard operating procedure to give out retention bonuses when a company is floundering so that the smart leadership sticks around to lead the company back to profits. In this case, you are paying the same bone heads retention bonuses who swamped the ship in the first place. And if these executives want to jump ship where the heck are they going to go??? Its not like there are a ton of other financial services jobs for overpaid failures out there.
Where can I find a list of all the politicians who voted for the bailout? I want to be sure not to vote for them in the next election.
A little more annual retentiveness is exactly what this company needs. Turnover would probably just make things worse.
Congress just needs to step up and say:
"You f-ed around too much with our money. From now on you will no longer get a single dollar from us unless you either fire the entire executive staff or place the current executive staff on a government pay scale with a maximum of $200,000 pay [Total including bonuses and compensation] until you guys get back into profitability."
LMFAO!! Now THAT is funny. I can see "normal" expenses. You know, keeping the independant agents happy. Rewarding those who bring IN money. But seriously, any higher up AIG executive _______ who has designed the company's method to fail can properly leave. No bonus. BTW..."buyers for various units"? I thought our tax dollars was helping them "revise" the way they work and "fix" their company. Now they're looking to kill off the dying limbs? Wouldn't this have saved BILLIONS of taxpayer dollars to do this at a reduced cost, for quicker selloff, in the first place? Just possibly?
I hate to say I told you so...
I said it. They won't give them a bonus, they'll get a "sunob".
@startertan: The chance has already passed. The whole of the House and 1/3 of the Senate was up for re-election this year. Almost every one of the thieves was re-elected. The simple solution would have been to not vote for ANY incumbent. Or to have voted for neither Republican or Democrat.
@The Name's Ash78, Housewares: Maybe these executives needed some anal rententiveness about how they conducted business!
These people are going NOWHERE! They won't leave. Will where they go? LMAO!
Wow. When is someone going to step in and do something about this? For all the things that we know are happening, I wonder how much underhanded crap is going on without our knowledge. There needs to be an investigation into AIG and how the funds are being used and assess fines and penalties as necessary. There seems to be no oversight into how the bailout money is to be spent by companies requesting the assistance, and to me that is troubling.
Or, if there *is* oversight, it isn't being utilized at all.
Does anyone see the problem with paying a "retention bonus" to keep the sad SOB's that got AIG into the whole mess in the first place around?
Isn't that like shooting yourself in the foot then paying the doctor to NOT remove the bullet and let your foot go all gangreeny and fall off?
@Fuzz: Well, what happened is more analogous to shooting yourself in the foot, then going to the Dr., but he's a really crappy Dr., and b/c of his god awful mishandling of your foot, you lose it.
@vastrightwing: Zurich, ACE, XL, Gen Re, Liberty, Allianz, Axis, Arch or any other number of large multi-national insurance companies.
These are highly knowledgable people that are in demand. AIG biggest asset on the insurance side of the house is it's people. If they lose the people, their ability to tell a good deal from a bad one diminishes. Skilled positions aren't easily replaced by anyone, especially when the company's future is in question.
@Fuzz: More like some random guy in the street shooting you in the foot, then paying the same guy to remove it.
@Fuzz:
Greed overpowers many things...
That's what you get when the people who run the company also decide how much money they should give themselves.
@Fuzz: My thoughts exactly. I never know to laugh or cry when I see a company in trouble say that they have to increase the pay in order to keep the same execs that caused the problem in the first place.
Cutting Pay and Firing responsible parties - Great
Cutting Pay and Keeping responsible parties - okay
Increasing Pay and Firing responsible parties - okay
Increasing Pay and Keeping responsible parties - Stupidly Bad.
@G99: I'll do you one better: Congress should hold on to the money for them. They have to come and justify every single dollar before a congressional panel if they want it.
@Fuzz: It's not like we have a wonderful financial/insurance services job market right now where people can jump ship easily...
Yay greed wins out again.
I get why they don't want tons of turnover, but is anyone really dying to give high-paying executive jobs to these bozos? Is it necessary to make sure they aren't lured away?
@WiglyWorm: I dunno if that's a good idea. The Panel gave them the money in the first place. Its probably going to bail out the big 3 today as well, even though its the HUGE overhead and Union that is choking them, in addition to their stupid marketing decisions.
"The plan unveiled by New York-based AIG includes no 2008 annual bonuses and no salary increases through 2009 for AIG's top seven officer leadership group and no salary increases through 2009 for the 50 next highest paid executives, in addition to other bonuses, severance and retention award restrictions.
The insurer is also developing a funding structure to ensure that no taxpayer dollars are used for annual bonus or future cash performance awards as part of AIG's "Senior Partners," the top 60 members of management."
From:
Why is it that the government continues to give these asses money when they just flaunt how much they are going to WASTE it, but they won't give a measly $25 billion loan to the auto industry, which actually produces PRODUCTS and supports MILLIONS of jobs in the US???
Once again, we're not differentiating between the profitable units and the unprofitable units of AIG. These bonuses are to keep good people who are running good units. So it's somewhat justifiable.
But frankly, even I don't think it's a good idea. At the most, they should offer them deferred bonuses, payable if and when their units get sold or the company as a whole returns to profit. So you offer the carrot if you need to, keep the good people in place, but don't blow more cash on these bonuses until they finish their jobs and things stabilize.
This makes me absolutely furious... these AIG execs are absolute assholes.
You want someone to blame, then blame congress for letting these assholes have more money on top of the money they already gave them that they lied about how they were going to use.
Of course none of the congress members are going anywhere over this, people will just piss and moan about it for awhile and then not do anything.
I think its time to move to Antarctica.
@SadSam: "In this case, you are paying the same bone heads retention bonuses who swamped the ship in the first place."
Not necessarily. Remember, AIG is made up of several branches, most of which are profitable. To my knowledge, there was one particular branch of the company that is the root cause of the company's financial woes. That one branch lost AIG a crapton of money. So the "bone headedness" is not a problem throughout AIG, the problem is with the branch of the company that caused the problems and all the executives above it that allowed it to happen.
As an example in the OP, the retirement service chief is getting a retention bonus. Is retirement services a profitable part of the company? Does the guy do his job well? If yes (and I don't know the answer to those questions), then it's unfair to label the guy as a bone head just because he happens to be an executive with AIG.
Someone should wait outside their door and stomp them as they exit. Just saying.
*** disclaimer **
I am not a Walmart customer and do not officially condone stomping.
@lowercase: I'm mostly with you on this one. People are getting hysterical about how the company is spending money. AIG executive != One of the people responsible for AIG losing money. The executives getting the bonuses could very well be manging very profitable parts of the business and then it makes sense to keep them around.
At that sort of executive level, people can fairly easily move to another company, especially if they perform well. Simply keeping their job isn't much of an incentive to stay at the company. Retention bonuses such as these are a part of business.
@Clare116: Depending on the executive, yes people do want them. A lot of executives at AIG are running very profitable parts of the business.
AIG didn't lose all it's money because all of the parts of the business performed poorly. They have high performing parts of the business, decently performing parts of the business, and more or less one part of the business that was an abysmal failure. The latter was so bad that it dealt a huge blow to the company.
In order to recover from that blow, the WORST thing to do is to allow the people that are making the company money go elsewhere.
AIG's retirement services group is very profitable - yes, even still - so it's appropriate for that guy to get paid. The firm is being sold off in chunks, and loss of top leadership will make an already-difficult process impossible.
That said, that doesn't give the guys running the successful divisions of AIG the right to extort taxpayers. But since these guys are the IP behind a lot of the more successful subsidiaries/divisions that AIG is charged with selling off, they can demand payment to stay. It's indefensible, ethically, but then again these guys have all the leverage - to a man, they could walk away tomorrow and work just about anywhere else or simply sit on the largesse of years past.
@tmlfan81: Why waste millions or billions more investigating them. SHUT them down. Screw wall street
@Fuzz: It's a bit more like a doctor at one hospital shooting you and paying a good doctor who works at the same hospital to try and save your life, and then your health insurance starts going crazy over the fact that the doctor who treated you works at the same hospital as the doctor who shot you.
Now, I'm all for stopping bonuses and getting rid of executives. But it has to be for those that are responsible for the current mess. When you start dealing with the people who are not responsible for the current mess, a pragmatic approach needs to be taken. Don't demand that AIG cut off its nose to spite its face.
Retention? Cash rewards? For what? Failing? How many times has a CEO gotten into a company...driven it into the ground, then left with like 10 million in his pocket? Hell, I could do that, and would save taxpayers tons of money. Just give me 1 million and I will take a company from profitable to failure in a few months.
@Oranges w/ Cheese: True, but some oversight is better than none. There would still be issues but you can rest assured that no politician would have authorized dollars for renamed bonuses designed to keep the Captain at the helm of the Titanic.
As far as the auto makers go, we have a tough choice there. Yeah they do have a lot of overhead that hurts them, and maybe bankrupcy would be the best solution. But bankrupcy tends to hurt consumer confidence. Who's going to buy a care from the big 3 if they're bankrupt?
Personally, I'd like to flip the bird to the "Big 3" and give their $25 bnillion to companies like Tesla and other companies that have had the vision to produce the cars we're going to be using in the future.
Although while we are on bailouts...I got a notice my citibank card was going from 11% interest to 19%. Now, I've had this card for around 12 years now, and also have like a 780 credit score. So I called them up to complain, and the girl said "well you can either cancel the card or opt out and you will no longer be a customer when your card expires". Wow...no retention policy? No apologies, counteroffers or anything? My first 2 options right off the bat is to take my business elsewhere? So I told her right then and there I'll opt out. She said, ok, anything else I can do for you today? She sure seemed bright and cheerful to be driving away a 12 year customer in a matter of minutes. I said nope, I think that does it. And our tax dollars are going to be bailing out these business failures?
Your American congress was in on it the whole time. They knew what was going to happen when they gave the bailout money. Are we forgetting all those smaller bills your congressmen tacked on to the bailout for thier own self serving greedy purposes? Your whole government is corrupt. Everything they tell you is lies used to placate the people so you all dont go nuts and revolt against what is really going on.
@weakdome: Really, I think that if it involves AIG spending unnecessary money onits executives, we can count AIG in. Idiots. :)
Personally, I'd like to flip the bird to the "Big 3" and give their $25 bnillion to companies like Tesla and other companies that have had the vision to produce the cars we're going to be using in the future.
You realize that Tesla epitomizes the kind of no-profit, false, fake bullshit company that caused the 2000-2002 market collapse? Their whole business model was constructed on getting venture capitalists and wealthy friends to give them cash to burn, not on building cars. I guarantee they will never fill the orders they've taken for those damn cars.
@G99: Sounds great if you want all of the executives to leave. Are we going to start putting salary caps on everyone who has anything to do with government money? Why don't you just confiscate any net wealth over $1m while you're at it?
@ADismalScience: Actually... they already have entered production and are filling orders. It's not a lot, and they just asked for more cash to help keep them going, but they are serious about producing cars.
I think you underestimate how much capital it takes to start an auto company. That's why they're only making one super-performance vehicle right now. They'd hemorage money if they tried to compete with the civic.
@Erwos: There's a big difference here. We're not hiring AIG to perform a task for us. We OWN AIG. And you know what? Maybe we do want most of the execs to jump ship. Bring in a CEO who specializes in cutting costs and righting sinking ships.
It's very nice : bonuses paid by your tax money!
It would be acceptable, only if an average taxpayer would receive similar bonuses on the work. But 3 millions? That's insane.
I still think, that this company should have been left to sink.
@ADismalScience: Well, since USA does not negotiate with terrorists, I don't see why it should negotiate with greedy upper management.
Let them quit, and hire someone else.
@bonzombiekitty: If they are so profitable, then why are they hiding it? Why rename a bonus, then? Why not make it clear, that bonuses are reserved for profitable parts of the company?
If those bonuses were legit, AIG wouldn't hide behind words.
@morganlh85: That could be an idea, let AIG sink, and transfer money to auto industry.
That way auto industry will have to behave, since it would know, that the government can always take back the money.
LOL.
How many of us called this one?