AIG Asks Federal Permission To Pay $2.4 Million In Executive Bonuses
A hush fell over the AIG conference room on the day that their Worst Company in America 2009 trophy was unveiled. The eyes of every executive in the room sparkled with just a bit of pride. "Well done, everyone," said the man at the head of the table. "But we mustn't rest on our gilded-feces laurels. It's time to begin our work for next year's competition."
That's how I imagine the meeting went where AIG decided to award more bonuses to executives next week.
You may recall that their previous round of bonuses were wildly unpopular with the public. This next round are actually bonuses delayed from 2008, seeing how 2008 was such a banner year for AIG.
In November, AIG's top seven executives, including Chairman Edward M. Liddy, agreed to forgo their bonuses through 2009. Then, in March, facing pressure from Treasury Secretary Timothy F. Geithner and other government officials, the company restructured its corporate bonus plans for the remaining top 50 executives. As part of this agreement, the senior executives were to receive half their 2008 bonuses — which totaled $9.6 million — in the spring, with another quarter disbursed on July 15 and the rest on Sept. 15. The last two payments would depend on whether the company made progress in revamping its business and paying back bailout money to taxpayers.
AIG plans to run the bonuses by Kenneth Feinberg, the Obama administration's compensation czar. Even though they don't technically need to. Maybe they're afraid of more taxpayers with torches if they don't.
AIG Seeks Clearance For More Bonuses [Washington Post]
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It occurs to me, as I poke my fork into my sad bowl of medium-grain rice and black beans, that these people are completely out of touch. Ok, this isn't news to me, or anyone for that matter, but for Merlin's sake, this is ridiculous. It boggles my mind, and I'm afraid it's so boggled that I've pretty much the reached the extent to which I can contribute to this discussion.
They're just providing extra proof that they deserved to win the turd. Great job guys.
Since when has AIG cared about anyone but themselves? They wouldn't be in this much trouble in the first place had they cared about their stockholders, and they continue to screw the taxpayers over so they can go home with more money. I know I'm spewing the same old stuff, but I mean, at what point is the line drawn? Something definitive needs to be done quickly before there's a riot.
In the words of Ronald Reagan:
"Here we go again"
Business Executives do exactly WHAT to earn all of this god damned money? Seriously, I want to know why their jobs require them to be paid these absolutely ridiculous salaries for doing what, as far as I can tell, is a job a monkey can do. They're paper pushers, are they not? Accountants? Lawyers? They keep track of numbers, push around excel documents, and probably own a large percentage of stock in the company, right?
What does any of that have to do with them earning this much money?
Everyone NEEDS to read [www.vanityfair.com] an incredible article in Vanity Fair this monthon AIG. This follows a 3 part look at Bernie Madoff, another expose last month on Sanford, and even a "whoa is me" diatribe on the property owners in the Hamptons. All people out of touch with the real world. The best reporting is not on the tube or in your dailies (or what is left of them) but online.
@dragonfire81: While I share your anger toward AIG, I believe it to be misplaced.
Remember that AIG, just like any other capitalistic company, exists to profit and grow. Honestly I don't blame AIG for taking free money with no strings attached. I don't even blame them for giving extravagant bonuses. Sure, the system is messed up, but it's a *corporation*, and this isn't the first company to act like this.
I blame the people that GAVE AIG THE MONEY IN THE FIRST PLACE. I can't understand why people rail at AIG so much and fail to question the actions of the Congress who shelled out billions of dollars of our money for nothing. THAT is who I'm mad at.
Let's direct our anger to the right entity, people.
That was pure gold, Laura.
Be that as it may, AIG is still giving the big fat middle finger to the American public by even daring to ask for excessive executive bonuses in the middle of an economic crisis. They deserve a big chunk of the blame too.
@Girtych: How do you know they're excessive? Maybe these executives earn 5% commission on new accounts and this $2.4 million payout is the result of $48 million in new business they drummed up. The article has no details on the nature of the bonuses or who specifically they are going to so your accusation is completely baseless. Like it or not we've got a stake in seeing this company return to profitability and that means appropriate incentives need to be provided to the people who can make that happen.
@GuinevereRucker: Yeah congress effed up, but AIG ought to be on an austerity budget after needing tax dollars to stay in business instead of giving bonuses to people who helped to run it into the ground. Sorry, but we taxpayers get to be pissed. So yeah, FUCK AIG.
@dragonfire81: No "Fuck you" to Congress for bailing them out in the first place?
Wouldn't it be a great "fuck you" to let AIG go bankrupt?
Aren't bonuses tied to performance? It seems to me these turds should be getting invoices, not checks.
Let AIG fail.
@doctor_cos: Yeah, last I checked you get bonuses when the company is doing well and staying afloat on its own merit. Bonuses are for earners and so far, the only thing this company has earned is a big pile of poo.
Some of those people deserve their bonuses for business they pulled into AIG... Blame your US Gov't for giving them the money...
Wow. Someone please correct me if I am wrong, but didn't I hear something about the current administration blocking or attempting to block legislation that would enact retroactive limits on executive compensation, which in turn, allowed these bonuses?
Here's an idea for ya: how about a "Best Company in America" competition? I'd be very curious as to who is out there doing good; it seems too easy to pile on to what we don't like. If this went on for a few years, it would also be interesting to see who's improving or declining.
NEW YORK (Dow Jones)--There's a significant chance that American International Group Inc.'s (AIG) equity may be worthless, a Citigroup analyst said Thursday. (7/9/09)
Analyst Joshua Shanker wrote in a research note that there's a 70% chance that AIG's equity is worthless due to more losses on credit default swaps, and "management's increased openness to disposing of businesses at low valuations."
An AIG spokeswoman wasn't immediately available to comment.
AIG shares have lost more than half their value since the stock underwent a reverse stock split at the end of June.
So AIG did a reverse split, the executives probably got rid of their stock right after that, then they probably shorted the hell out of the stock to help recoup their losses.
It must be nice to be the one pulling the strings instead of being the marionette.
So, please don't flame me too badly for this question, but what happens if these executives were to just quit? If they said "No pay? No work. Peace!" Who runs the taxpayer investment then? Do we just trot out another sucker to work for a buck and fend off the taxpayer torches and pitchforks? Is Ed Liddy the first in a long line of suckers who had the misfortune to say "yes" when asked to oversee the AIG mess?
These people had bonuses tied into their contracts, meaning they were basically guaranteed them regardless of performance. They aren't really bonuses at all, just extra income that is taxes at a higher rate.
@dragonfire81: Let me add a DOUBLE FUCK YOU, AIG along with a TRIPLE FUCK YOU to all of the people who are getting those bonuses. I hope of of you are very proud of yourselves for stealing from our families. May whatever is left of your souls go straight to hell.
@MooseOfReason: It would be even better if those responsible for the problems were sent to jail for the rest of their sorry existence.
@ngc6027: It's far past the time. We should have gone after those scum-bags when this bonus crap started.
@Atheist Jew: They're usually paid for their connections and not necessarily their performance. Look at Siemens AG. Up till the last few years they were bribing government officials with BILLIONS of dollars worth of kickbacks. Its the connections, otherwise you wont know who to bribe. You gotta pay the well-connected to keep bribing.
@GuinevereRucker: you're incorrect in that AIG hasn't been GIVEN anything. they've been LENT money, and it's expected to be repaid with interest. Right now AIG is having a fire sale of their businesses in order to pay the government.
@MooseOfReason: so you want the government, and by extension the American taxpayer, to lose their investment? not very bright. Personally I'd prefer AIG stay in business and repay the gov't within two years as is currently planned, but if you'd rather lose money out of spite than that's up to you.
@NotChoinski: I think other publications/news organizations have this covered. See Money Magazine or Fortune.
@Prole: No bonus is a lot different than no pay. A bonus implies that something is being done above and beyond to require extra incentive.
@Prole: Is it voted on by the consumer? The same consumers that read this site? I'd like to see what Consumerist readers think.
I am sure that there are plenty of 'fast track mbas' who are fresh out of college and who are unemployed that could work at AIG for maybe 100k a year and be happy. Heck give em a 10k bonus.
These scum are nothing. I have worked with and seen this kind of good ol boy crap. They play golf and sit around yakkin on the phone acting like they work. Its a game. Once they are in they just park. What positive impact have any of them caused? Any new additions or "wow he saved the company" folks?
Just look at HP and GM for inspiration.
V
@Prole:
Who runs the taxpayer investment then
I suspect it would be someone who would be interested in seeing the taxpayer investment succeed. All too often corporations are run by people more interested in the short-term performance of the company stock or quarterly profit (because that is their true source of compensation) than the long term prosperity and quality of the company or the product produced.
@Smashville: As I understood it, the executive pay is low and is supplemented by bonus checks regardless of performance. Why this pay scheme was adopted is beyond me, but it seems to be par for the course for most companies.
@Prole: If the government is backing all of AIG's insurance claims, there is no reason for AIG to exist anyway. Any administration can be picked up by the SEC, IRS, etc., and I'm those bureaucrats would enjoy a little work for a change to kill the boredom.
@Prole: I'm a bit with Prole on this one.
Talent goes where the money is. Refusing to pay a competitive wage for a job is the same as saying, "You know, we'd really like to get someone in here who can turn this company around, someone adept and capable with a proven track record of accomplishing such things. So let's hire someone mediocre."
Don't let wealth envy cloud your judgment. If you really want AIG to turn around and perform for the consumers, then you want someone capable running the show.
Most (if not all) of these bonuses are tied to contractual obligations that companies MUST obey. Because it's in a legally-binding contract. In one of the most litigious countries on the planet. You follow?
The "Golden Parachute" is in existence so it helps execs take risks they wouldn't usually take in such a place. Risk v. Reward is the overarching idea in business. If you were making 700k a year, and you had the option of taking a risk that may end up getting you voted out of your position, would you want to take that risk? Probably not, unless you knew that if failures would abound because of it, you'd still get a nice parting gift.
Yawn.
Sometimes I wish I was part of the "typical American populace", and didn't actually think these things out, so I could get real angry and post on Consumerist about how no one cares about the average American individual anymore.
@aikimann:
Talent goes where the money is.
executive pay is low and is supplemented by bonus checks regardless of performance.
Except in this case the system is broken. Talent does not seem to be arbiter of compensation. Its like a restauraunt that adds a non-negotiable gratuity to your bill even if the service was terrible.
@craptastico: AIG and their buddies at Wall Street have come to expect the bonuses regardless of how the company, or they themselves, actually perform. Really, the whole pay system (for executives) really needs to be redone from the ground up. If you've got managers doing a great job, but the CEO is running the company into the ground, then their bonus should come from the CEO pay/perks, and the CEO should not get a "golden parachute" but a foot in the ass out the door like any other employee who didn't do their job. If these guys are sinking the company, then they don't deserve raises/bonuses and sure as hell don't want to retain their services. If they think the grass is greener elsewhere, then let them go... (in this job market) they may actually learn to appreciate the fact that they have a job and learn to make some sacrifices like the auto workers did. Also, why were the auto workers asked to make sacrifices as conditions of their loans, but these Wall Street guys are basically loaned the money with no conditions and then they have the nerve to complain that they aren't getting bonuses. I have my 401K with AIG and believe me, I want them to succeed just as much, or more, than anyone else here, but to ask for bonuses in this job market after you basically ran your company into the ground and almost took the whole financial system with it? That takes some brass balls. Two years is not that long to ask people to wait for their bonus (after repaying the loans), and it's not like there are lots of other jobs out there giving big bonuses.
@Laura Northrup: That was my first thought, too.
@dragonfire81: Yes, but, to me, they're more of a 'print magazine with an online presence' than an 'online news source'. That distinction is fading, but it's still important, especially with the death of print and all. It's nice to see reporting that can do some heavy lifting, and hopefully the online-onlys will be able to adopt it more often. Or maybe the magazines will hang on?
@craptastico: AIG will sorta repay the government. It is a loan that they kinda have to repay and there is no interest. Just look to the auto industry bailouts of the 1970's for wonderful examples of how our government gets repaid. Remember they always have to "to big to fail" card to play. Also even if through some act of god they did repay the government, the tax payers are definitely not going to see a penny of it, ever.
Is there AIG stock in your portfolio after the bailout? No. You do not own any part of that company.
@KeepingTheForeName_GitEmSteveDave: Say it ain't so. It's not Barack's fault. It couldn't be. Clearly it's the greedy fat cats at AIG.
Dear AIG,
FUCK YOU.
Sincerely,
American Taxpayers.