AIG Bonuses!

[dennis in se pa]

Supposedly they have to hand them out to their executives or they get sued due to a contract? What kind of contract rewards performance failure?

[Rick V]

Yup when some of us are wondering where we are going to get the money to pay our health insurance theses clowns get to line their pockets with tax payer money. Gotta love it.

[turbo6bar]

Somebody buy the damn company with bailout bux and execute the executives if they refuse to relinquish the boni. Sometimes it is better to skip the 'day in court' and start slashing throats. Outsource the work to the Chinese, if need be. They are experts at fixing problems.

[fingpilot]

Originally Posted by dennis in se pa

Supposedly they have to hand them out to their executives or they get sued due to a contract? What kind of contract rewards performance failure?

An airtight one, obviously.

[artplumber]

Originally Posted by dennis in se pa

Supposedly they have to hand them out to their executives or they get sued due to a contract? What kind of contract rewards performance failure?

Take back the money, let the company go insolvent and then see if they(receivers of the bonuses) want to get paid bonuses or have a salary at all.

[jyl]

Hard to say without knowing how airtight the contracts are, who they are being paid to, and how this compares to AIG's "normal" rate of bonus). But clearly an unpleasant thing to see.

Seems to me the Financial Products part of AIG is dispensable and could or should be shut down, so these bonuses really should be the minimum ones permitted by contract and should be accompanied with pink slips.

As for the rest of AIG, including the profitable insurance businesses, I don't think people should get "zero" bonuses if they've contributed a whole lot, but the overall bonus pool should be far, far smaller than they'd be in ordinary times.

[tchanson]

Originally Posted by jyl

As for the rest of AIG, including the profitable insurance businesses, I don't think people should get "zero" bonuses if they've contributed a whole lot, but the overall bonus pool should be far, far smaller than they'd be in ordinary times.

Smaller indeed. The P&C and General Insurance side of the house is being driven into the toilet as well. The combined ratio jumped from a very profitable 90 in 2007 by almost 20 points(!) to over 109 in 2008. Expense ratio also jumped by more than 8 points from 24 to more than 32 last year.

With those numbers, I fail to see why anyone on the insurance side merits a bonus.

AIGFP is the poster boy, but the insurance guys have nothing to crow about either.







Tim

[mikester]

If the government is willing to force Banks to redo Mortgage contracts - what is the big problem for them to force these contracts to be rewritten as well? What is their reason for holding back here?

I'm not saying I agree with rewriting any valid contract like mortgages or these employment contracts but they have already shown that they DO agree with the idea - why stop just short of these contracts?

I definitely do not believe these bonuses should be paid if they are performance driven, my suspicion however is that they are not performance driven in the slightest.

[Jeff Higgins]

Executive "bonuses" are handled in the same manner at my company. They are virtually guaranteed payouts that are written into each and every individual exec's compensation contract. They have little, if anything, to do with company performance. "Bonus" is really a misnomer; it is simply a part of their pay.

Which leads to the next obvious question - do they even deserve their pay, or any sort of compensation whatsoever, for their performance? Methinks (hope Nader doesn't see that...) not.

[onewhippedpuppy]

Further proof that some people simply don't get it.

[turbo6bar]

care to expand, puppy? Who are the 'some people?'

[onewhippedpuppy]

care to expand, puppy? Who are the 'some people?'

Senior executives that sit "on high" and do what is best for theirselves first. Let's face facts, these guys are making incredible money merely on their base salaries. Can you imagine the boost to employee morale, as well as positive PR, if these guys were to forgo their bonuses?

Myself, I would have a very hard time accepting a bonus if my company was losing money, accepting government money, and laying off employees.

[TechnoViking]

As for the rest of AIG, including the profitable insurance businesses, I don't think people should get "zero" bonuses if they've contributed a whole lot, but the overall bonus pool should be far, far smaller than they'd be in ordinary times.

I'm tired of hearing about how those in "other" divisions of these companies deserve to be treated differently. For crying out loud I don't work anywhere near the finance sector and I'm looking at a pay cut over this goddamn mess. F 'em. That's life in the big city. Or at least it would be if we had a government that wasn't run by lobbyists.

[mikester]

Originally Posted by onewhippedpuppy

Senior executives that sit "on high" and do what is best for theirselves first. Let's face facts, these guys are making incredible money merely on their base salaries. Can you imagine the boost to employee morale, as well as positive PR, if these guys were to forgo their bonuses?

Myself, I would have a very hard time accepting a bonus if my company was losing money, accepting government money, and laying off employees.

I work for a company whose executives said just that - they would not be taking any bonuses this year. They also said that nobody in the company would be receiving bonuses or merit increases due to the economy. Then part of our organization sat in with an employee update for one of the more autonomous sections of the company headed by a VP (the previous statements were made by the CEO himself) that they, since they were actually profitable would be getting bonuses.

The Executive levels not taking bonuses did not do much for my moral, it didn't lower it basically. It did impress some confidence in their convictions and ethics (our company pushes ethics very hard), so I guess maybe it did positively impact my opinion of them. The other announcement that the other organization would however be getting theirs blew all of that out of the water.

[Hugh R]

The CEO/CFO and others at my employer aren't going to get much in the way of stock options or bonuses this year. Their target price is something like $20/share and we're trading around 17.

[Noah930]

LA Times had some front page story on this, today. The article's explanation was along the lines of how it would be more expensive to deny these "bonuses" and face the inevitable lawsuits (as they were contractually guaranteed), rather than simply to pay them out now. Additionally, those denied their bonuses might then jump ship, thereby making it impossible to unravel the mess that AIG is right now. So these people are vital to the righting of AIG's ship. A company too big to fail, run by individuals too vital to terminate. How's that for job security?

Sickening, isn't it?

[turbo6bar]

Originally Posted by Noah930

Sickening, isn't it?

Don't worry. Money don't buy you karma.

[onewhippedpuppy]

Originally Posted by Noah930

So these people are vital to the righting of AIG's ship.

Everyone seems to accept that notion. I call BS. The company would be insolvent if the government hadn't stepped in. These guys led them there. Vital? It seems to me that some new blood at the top is absolutely required.

Personally, I think the myth of the game-changing corporate executive is exactly that, a myth. There's such an aura of prestige and priviledge surrounding these people that we forget who they really are. Most are simply middle managers who kissed the right ass, knew the right people, or had low enough morals to make it to the top. I refuse to believe that any of these people are irreplaceable, especially when you consider the performance of the companies they are leading. In reality, many of the worker bees with highly specialized skill-sets are far more difficult to replace.

[MichiganMat]

[KFC911]

Originally Posted by onewhippedpuppy

Everyone seems to accept that notion. I call BS. The company would be insolvent if the government hadn't stepped in. These guys led them there. Vital? It seems to me that some new blood at the top is absolutely required.

Personally, I think the myth of the game-changing corporate executive is exactly that, a myth. There's such an aura of prestige and priviledge surrounding these people that we forget who they really are. Most are simply middle managers who kissed the right ass, knew the right people, or had low enough morals to make it to the top. I refuse to believe that any of these people are irreplaceable, especially when you consider the performance of the companies they are leading. In reality, many of the worker bees with highly specialized skill-sets are far more difficult to replace.

I'm just following Matt around doing "+1s" today .