Czar Tells AIG Not To Hand Out As Many Bazillions More In Bonuses Come March
Not content with just one Worst Company in America victory, AIG is going for back-to-back titles by trying to give out $198 million in bonuses in March.
The White House, being the buzzkill that it is, is telling the bailed-out company to trim those back a bit, the Washington Post reports:
Kenneth Feinberg, the U.S. Treasury's point man for compensation, has indicated he wants future retention payments reduced at the troubled AIG Financial Products unit, according to a new report from the special inspector general overseeing the government's financial rescue program.
A public furor erupted earlier this year when AIG paid about $168 million in retention bonuses to employees at Financial Products, the unit whose complex deals nearly wrecked the insurance giant last fall. The same contracts that guaranteed those awards also promised similar payments in March 2010, and for months AIG has been scrambling to redraw those agreements in hopes of preventing another public debacle.
What sucks here is that AIG employees obviously deserve these retention bonuses, what with every other corporation in America that aspires to Worst Company status falling all over one another to recruit them away. If AIG wants to keep its magic going, the company — and the taxpayers — needs to pay the hefty price tag to keep those miracle workers under the AIG banner.
AIG Advised to Limit Its Next Round of Bonuses [Washington Post]
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Comments:
...and what happens if they pay them anyway? Oooohhh, a strongly worded letter expressing disappointment.
Retention bonuses? They should be thanking their lucky stars (or charms for the hungry ones) that we bailed them out and they still have jobs.
Go ahead, let them walk. It's not like the company can do any worse without them.
Oh come on people. You don't think they deserve these bonuses? They worked hard to make sure their failure would be one of the most epic failures in the history books.
Screwing up is easy. Forming an epic failure at one of the largest insurance giants and almost crippling the company entirely? THAT takes talent.
@Mknzybsofh: I agree. Pay them whatever they are contractually bound to get (and if the amount is not explicitly stated, give them $1). Nothing more, nothing less.
Well, maybe not. If a division is making money, give them $2.
Laissez-Faire! Laissez-Faire!
I'd be pissed if I didn't get my bonus this year.
To quote former CEO Hank Greenberg:
Never in my wildest dreams did I imagine this could happen at AIG.
These are the people you want to give bonuses to?
What if bonuses are for divisions that are making money and didn't contribute to the AIG failure?
I'm sure paying them nothing is the right way to go..since..you know..we all should work for free.
@Mknzybsofh: Yeah, screw contractual obligations! Screw people who had nothing to do with the financial meltdown! Populist rage FTW!
@HIV 2 Elway: Except this isn't a performance bonus, it's a retention bonus. With unemployment as high as it is, the notion of a bonus for not quitting is crazy.
wait "nearly wrecked"? I'm pretty sure they actually wrecked it - to the tune of $122 billion.
@Traveshamockery: You don't think the people in the AIG Financial Products division had anything to do with the financial meltdown?
As for the contractual obligations, this is why we need to let companies go bankrupt and then swoop in. If the company had gone out of business, there would be no retention bonuses.
Let them walk. AIG should not continue to exist as a company. Or they should hire monkeys, who surely can't do any worse than their human employees have.
Who care how much people made for them, they shouldn't get no fucking bonus.
As long as I've worked I never once received a bonus, why the hell should these people get a bonus for?
Do you think secretaries gonna get a bonus, no. Do you think the people who work in the mail room gonna get a bonus, no. Do you think the janitors are gonna get a bonus, no.
The people that needs it, who make minimum wage are not gonna get one, but the people who make hundreds of thousands of dollars are gonna get it, and for what, for almost putting the company out of business. How the hell does that make sense?
@PunditGuy: Or other insurance companies, banks, food that doesn't come from a can in your bunker, etc.
@TuxthePenguin: So basically what you are saying is that those within AIG who are much more accountable than others for the meltdown should get the bonuses while the little guys who had nothing to do with it get jack shit because they just happened to not have a contract.
Sorry, but if it wasn't for the bailout then no one, regardless of contract, would be getting anything right now. They owe the tax payers. It's plain and simple.
@Colonel Jack O'Neill: You will rarely see a secretary or janitor get a bonus because they are only tangentially connected to the success or failure of the company. The idea of a performance bonus is okay, assuming they actually before.
The point of a retention bonus is to keep from having to retrain their successor. Say it costs $15,000 to hire a new employee (recruiting, interview, training, etc). If your average employee stays for, say, five years, you'd be willing to pay up to $3000 a year or so to keep the person there. And that doesn't take into account the ramp up of learning the company and the process...
There is some logic underneath it. But that logic has sense far been surpassed.
@HIV 2 Elway: My company might not do bonuses this year, but I'm ok with that because I'd rather have my salary than a bonus.
@skipjack: This is a RETENTION BONUS. Meaning, we're so afraid of these wildly talented people going to another company that we must pay them a bonus. Except, there's no need for it because they economy sucks and they're lucky they even have a job.
As much as it pains me to see these people get paid a bonus, we have ZERO control over this.
Let's use a hypothetical. let's say they screw up again. They want to pay bonus's. Our brilliant government decides to give them more money. We STILL have no say in this process. They are a private entity with stockholders who agreed to their bonus structure. Love it or hate it, it's a contract that must be followed.
You don't want them to get a bonus, call up you congressman or senator, and tell them "FUCK NO" to lending them money to survive. This nation created bancruptcy for a reason. No-one is too big to fail.
Thanks for reading the article...given that the Fin. Products division was single-handedly responsible for the near-failure of the entire company.
Tell me, why do conservatives fight tooth and nail to preserve the contractual obligations made to those on Wall Street, but balk at those made to teacher's unions and auto workers?
@67alecto:
I agree. You think there will be a mass exodus of these "professionals" if they weren't paid huge retention bonuses? Give them all salary, get rid of these idiotic "you scratch my back, I'll scratch yours" bonuses. These guys should be in the UNEMPLOYMENT line like 10% of Americans IMO.
@ARP: I'm sure their job prospects are incredible. "Let's see... good education, references... AIG? Where's my shredder?"
@DollaValueLIFO: I don't balk at either of those.
First, a contract is a contract. Whether it is the Constitution or a Credit Card Receipt, this is still a nation where the rule of law takes precedence.
Second, AIG AND the auto companies should have failed. We already have a process in place to handle either a) restructuring current debts and commitments because of financial insolvency or b) going tango-uniform and sorting the wheat from the chaff.
Third, if you make a contract with an employee or a collective bargaining unit (union) that does not enforce accountability, or even discourages it, then woe to you, your customers and the employees that actually perform.
@ARP: believe it or not, some AIG employees were good at what they do. if you lose them the company will never come back, which is bad for the US since we're basically part owner. also a lot of financial firms are hiring. not all of them are in trouble and the better ones are cherry picking the top talent, so yes, retention bonuses can be necessary. i'm not saying i agree with all of these bonuses, but to say that none of them are valid is not fair either.
@Colonel Jack O'Neill:
This is a class warfare argument. "I don't get something, so why should he?" and "He already makes enough money, why should he make more?"
Yeah I'm going to have to agree. My company has not offered raises in the last five years. I think its time these "contracted" AIG fat cats (deserved or not) feel the burn as well.
@chaoss13: One of the rules of the internets is that an epic fail can be so epic that it can be win.
Oh good.
The government is trying to micromanage corporate America (again).
Newsflash for Mr. Feinberg: There is NO company in this country that is worse managed than the US government. I find it extraordinarily rich that a government with $12T in debt would seek to lecture AIG. And keep in mind that if the government were required to report financials the same way that AIG is, that $12T debt would be more like $50T.
Ummmm... is ANYBODY else on this board even REMOTELY worried that our government has a position touts as "U.S. Treasury's point man for compensation".
Why isn't anyone worried that there is someone in government which now has a say over how much a citizen of the US is paid by a company?
They can criticize all they want but when they begin to mandate that is WAAAAAAAAYYYYY over the line.
Something I've never fully understood about these - are these 'bonuses' specifically listed in the employment contracts? If so, are the exact amounts specified? "Bonus" to me usually implies something that is above what one has traditionally been promised by way of salary. If that's the case here, there's simply no possible justification for handing out these "bonuses".
@srh: Have you been asleep for a year and a half? Or are you just really, really good at holding your fingers in your ears and screaming. "NANANANANA?
@jayphat: I see what you're saying, but it's not like rescission isn't happening elsewhere. I think an argument can be made for it to happen here.
@rushevents: He doesn't have any say about compensation in companies that received no federal monies.
I think it's pretty reasonable for public funds to come with strings attached. Feinberg's a string.
@Esquire99:
I see it as more of the 'I'm actually doing something, while that guy's acting as a sort of mobile chair warmer. Why does he get a bonus while I have to work part-time at McDonalds?" argument.
Class warfare? Maybe. But 'class warfare' is the finest tradition of capitalism. Considering the ultimate goal of capitalism is to BECOME a highly paid, mobile chair warmer.
@floraposte:
I agree to some extent, though the strings should have come pre-attached, not something the govt. glued on after the companies took the money.
@craptastico: Agreed, but this smells like an excuse to continue to overpay people for no good reason and without proper analysis. Now, if they could justify each of these bonuses (and the amount), I may begrudgingly agree with them.
@jayphat: Yes, they are, when you don't have proper government proceedures and powers in place to isolate that company so they don't cause a systemic domino effect to our banking system. We shouldn't have let them get this big in the first place, but of course that would mean regulations and all regulations are bad.
@rewind:
I'm still trying to figure out the part of your post where you explained the love Republicans give Wall Street with the hate they have for the NEA and the UAW.
@srh: hyperbole and overgeneralization much?
You know that without the US government, that AIG wouldn't even exist to "micromanage."
You realize that Reagan-Bush-Bush create a vast majority of that debt,right? Granted, Obama is doing his part. Then again, according to Cheney, "deficits don't matter." Why do the suddenly matter now? Where were you when Bush was funding tax cuts with deficits?
@Traveshamockery: AIG can pay whatever bonuses they like. The government should merely "claw back" the money in excess of what it thinks is fair. Problem solved?
It's pretty sad that everyone is dogging on these employees. They were given these contracts to get them to stay and fix AIGs problems, knowing they'd only be working until they were fixed. Contrary to common belief, smart, skilled people are still in high demand and no one's going to stick around and intentionally make their own jobs redundant unless you compensate them.
@Esquire99: We've already seen that the rich IS at war with the middle class, with their sweetheart tax cuts and drivel about creating jobs (they don't mention that the jobs they create are all overseas jobs), all the while, the working people are the ones who are footing the bills and keeping their sorry asses employed. Turnabout is fair play.
Gee it's simple. Don't pay them. If they threaten to walk, offer them a box to carry their stuff with as they leave. After all in this job market they will have a new job in what? 1 to 2 years tops?