AIG gets taxpayer bailout...BONUS?

[sasvermont]

I didn't have high hopes or good feelings about this AIG bailout to begin with, let alone now. Since I am not an expert on financial matters, I hardly know the answers to their problems. That's why they pay the executives the big bucks, yes?

I do know that when a company performs poorly, bonuses are not a good move. I don't know about where you work, but where I have always worked, we knew on a monthly basis, where the company stood. I think it is called accounting, yes? No money, no bonuses or Christmas parties.

Contracts are broken all the time and hey, if they don't have the money, then how would they have paid the bonuses then.... but with the bailout, then its OK? I don't get that part. I know that when you pool your money, including loans and pay off bad debts, it may leave you with enough (for the moment) to pay salaries and bonuses. They should be made to defer all bonuses until the loan and debts are paid back to the government and not a second sooner.

Hell, what would happen with the company you work for? I bet, bonuses would be set aside until the company was again viable. Duh. It is not rocket science, is it?

Stowe, Vermont, a ski area not TOO far from where I live, has a huge, I mean really huge, construction (development) in near completion, and OWNED by AIG. There were talks in place about selling the project, but who would buy it? And with what? I have driven in the area, looked at the golf course etc. etc. and boy, they must have a ton of money tied up in the project. I don't want to see the place go down in flames, but maybe AIG should sell it, and soon. There must be a Warren Buffet out there somewhere, with millions to spare.

I did see the article written by David Cho and it made me sick. I believe he is with the NYT.

I think Obama et al may need to take a nasty step with AIG before they (AIG)GET IT. AIG is making fools of all of us. I wouldn't be surprised if the public begins to seek out the employees, any of them, to make them feel guilty about the company and how it operates.

If I thought there was a way to boycott AIG, I would. I also have no desire to hurt the folks who work there and have nothing to do with these bonuses.

I am so pi$$ed off right now. I truly hope someone comes up with a way to avoid this misuse of funds to pay bonuses. One person I heard, Barney Frank, I do believe, suggested that the bonuses go forward and then fire them so that they have no job! Hmmmmmmmm. An interesting alternative.
I suggest that they defer the bonuses until the company is profitable.

[sparks19]

this is outrageous and obama better put a stop to it.

I wonder how many other companies that the government has given all this bail out money to are doing the same sort of thing.

The fact that they NEEDED to be bailed out shows they don't know how or care to manage their money responsibly...so WHY are we giving them more to bail them out of a mess they created themselves. lets give them MORE money so they can p!ss THAT down the drain too.

Now whenever the next bail out check is written for the next company I hope people remember this.

[moosmom]

AMEN Sparks19 and SasVermont!!!

[momoffuzzyfaces]

You know, AIG may think it's too big to fail but it seems to be determined to anyway no matter what. Anyone with the sense of a two year old would know you can't keep paying bonuses with money you don't have in the first place. What would they do if they had not received any bailout money?

This is just disgraceful!!!

Maybe the government should audit the books of any company who claims to need a bailout and see if they really need one of just need new management. Heck there are plenty of good honest people out there who could do a better job of running some of those companies than the over paid, stuffed shirts who are getting fat on other people's money.

[carole]

I saw Obama being interviewed this morning regarding this, he was so furious, he was all choked up with anger and said as much.

Gosh my hubbys life insurance is with AIG, i wonder if i should change, they keep re-assuring us it is ok down under, but who really knows eh?

yes i have heard that we don't want to let this company go under either, would be devastating, but to read this makes my blood boil too.

Donna i am with you, everyday i feel depressed and scared just hearing all the bad news about the economy, it is all you see on the news and things like how safe is your job? etc etc, i am sick of it too,we all know it is not good, but why concentrate on the bad stuff all the time, let us hear the good news stories for once,yep i want to be an ostrich too right now.

[moosmom]

Carole,

Come on over girl, I share some sand with you!!!

Then there's the Octomom who was on Dr. Phil this morning. She has NO CLUE!!!! Her father bought a house and it's being renovated for the safety of the kids. The neighbors are up in arms about all the news trucks and paparazzi hanging out. Can't blame them.

Speaking of her head being in the sand, she's showed not one ounce of gratefulness to a group who is helping her get situated and will help with the 14 kids for 18 months. UGH!!! Someone needs to biatch slap this idiot. Poor kids.

Oh yeah, and while I'm on my soapbox, the college she wants to return to is "making arrangements" for her to drag her 8 babies to class with her!!!! I see tuition going up as we speak. Too bad my baby making days are over. I'd be rich!!

*stepping down off the box and walking away shaking head*

[sasvermont]

Bailout King AIG Still to Pay Millions In Bonuses
Geithner Gets Firm To Make Revisions
By David Cho and Brady Dennis
Washington Post Staff Writers
Sunday, March 15, 2009; A01

Insurance giant American International Group will award hundreds of millions of dollars in employee bonuses and retention pay despite a confrontation Wednesday between the chief executive and Treasury Secretary Timothy F. Geithner.

But the company agreed to revise some executive payments after what AIG's leader, Edward M. Liddy, called a "difficult" conversation.

The bonuses and other payments have been exasperating government officials, who have committed $170 billion to keep the company afloat -- far more than has been offered to any other financial firm.

The issue came to a head when Geithner called Liddy and told him the payments were unacceptable and had to be renegotiated, said an administration official who was not authorized to comment on the Geithner conversation.

In a letter to Geithner yesterday, Liddy agreed to restructure some of the payments. But Liddy said he had "grave concerns" about the impact on the firm's ability to retain talented staff "if employees believe that their compensation is subject to continued and arbitrary adjustment by the U.S. Treasury."

Lawyers at both the Treasury Department and AIG have concluded that the firm would risk a lawsuit if it scrapped the retention payments at the AIG Financial Products subsidiary, whose troublesome derivative trading nearly sank AIG. The company promised before the government started bailing out the firm in September that employees would be awarded more than $400 million in retention pay this year and next.

"I do not like these arrangements and find it distasteful and difficult to recommend to you that we must proceed with them," Liddy wrote.

At the same time, the company said in documents provided to the Treasury, any steps that encourage specialists at AIG Financial Products to leave could open the U.S. government to further risk because of the hazards still posed by the $1.6 trillion portfolio of complex derivatives those employees are working to dispose.

AIG's top seven executives, including Liddy, already agreed in November to forgo their bonuses through this year. Last week, AIG agreed to restructure bonuses for the next 43 highest ranking officers at the company, who are to receive half of their bonuses -- which total $9.6 million -- immediately, the administration official said. Another quarter of that would be disbursed on July 15 and the rest on Sept. 15. But these last two payments would depend on whether the company makes progress in restructuring its business and paying back taxpayers.

In addition, federal officials plan to recoup some of this bonus and retention pay in restructuring the company, an administration official said.

Officials at the Treasury Department and the Federal Reserve took over AIG in the fall, fearing one of the world's most successful conglomerates had grown so intertwined with the global economy that the firm's impending failure could have disastrous consequences.

In return for the bailout, the government took an 80 percent ownership stake in the company. Liddy was recruited by former Treasury secretary Henry M. Paulson Jr. to run the company. Since then, the rescue package has ballooned. But both the Bush and Obama administrations have been reluctant to completely and explicitly nationalize the company, though this could have avoided the current flap over bonus payments, first reported by The Washington Post.

AIG officials said debate over the bonuses and retention pay has been simmering for months. During the past year, the company has repeatedly disclosed these payments in public financial filings. But as lawmakers increasingly clamored for details of their size, outrage grew in Congress and beyond.

Although the AIG Financial Products unit is proceeding with the payments, Liddy said the company would try to reduce future retention pay by at least 30 percent. In addition, the 25 highest-paid employees at Financial Products have agreed to reduce their salary to $1 for the remainder of 2009, Liddy wrote. Salaries for the rest of the firm's employees will be cut by 10 percent.

The Obama administration has been sensitive to how companies receiving government bailout money indulge their employees. Spending on jets, extravagant office furniture and bonus checks -- while not always a significant portion of corporate spending -- sours the public's view of the financial rescue effort at a time when the administration is considering asking Congress for billions of dollars more to help banks.

AIG officials say that some of the upcoming bonuses are relatively modest once they are divided among employees. About 4,700 people in the company's global insurance units are receiving $600 million in retention pay. In addition, about $121 million in corporate bonuses will go to more than 6,400 people, for an average payout of about $19,000, according to AIG.

"These are not Wall Street bonuses," said one AIG executive, who was not authorized to speak on the record. "This is an insurance company." That executive also noted that the retention bonuses at AIG Financial Products were put in place in early 2008 at a time when it hadn't yet melted down. "They knew that the book was running into trouble," the executive said. "They thought they could weather the storm. But they thought they needed to keep people in their seats. They were worried."

Then, of course, everything changed. Financial Products kept posting bigger and bigger losses, burying AIG under a cash crunch from which it has not recovered.

Since that collapse, company officials say, many Financial Products employees have lost nearly two-thirds of their compensation under the firm's deferred payment plan, in which bonuses are doled out over several years based on the firm's profitability.

The new cutbacks raise the risk that more employees will depart before the firm can be wound down and closed.

"These employees are highly specialized and/or are part of businesses that control billions of dollars of revenue and value that will be needed to repay the U.S. taxpayer," Liddy wrote in a letter last month. "Our competitors understand how valuable our top executives are, and we are acutely aware that they would like to siphon off our most talented leaders."

Over time, both the amount of retention pay and the number of recipients throughout AIG have grown.

Since taking over the rescue effort of AIG, the Obama administration has imposed stricter compensation rules, banning golden parachute payments for executives leaving firms and barring executive compensation above $500,000, except in the form of stock that cannot be cashed in until the government's loans are paid back.

But the government could not revoke bonuses promised before the government's rescue efforts began, officials said.

Sen. Christopher J. Dodd (D-Conn.), a leading critic of excessive executive compensation, backed a measure earlier this year to curb the practices but it included an exception for bonuses agreed to before Feb. 11, 2009.

[moosmom]

I agree that maybe the feds SHOULD audit some of the big company's books. I smell a fish.