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Posts Tagged ‘bonus payments at AIG’

AIG Bonuses and Lockups: Add Another $454 Million!!

Posted by Larry Doyle on May 5th, 2009 7:35 PM |

Do the letters AIG make you nauseous? Recall the uproar over AIG paying $165 million in bonuses last year? Well, get the barf bag ready because Reuters just reported that AIG also paid the following in bonuses in 2008, along with commitments in 2009:

. . . paid some $454 million in previously undisclosed performance bonuses to employees for 2008, the company said in answers to questions from a U.S. lawmaker that released on Tuesday.

Why were these bonuses not previously disclosed? AIG is a government owned entity!! What’s going on? Where’s the transparency and accountability?

. . . about $120 million corporate bonus pool designated for holding company employees and executives at subsidiary companies.

Why? Is this what government work pays these days? Where do I apply?

 The payments are separate from $1 billion in retention payments to entice employees to stay with the company.

Are you kidding me? With unemployment in the financial industry off the charts, and this firm having cost the government billions, the idea of paying retention bonuses is APPALLING!!!

Lastly, what is up with Reuters final statement:

The company also told Cummings [Representative Elijah Cummings, a Maryland Democrat] AIG’s bonus plans for 2009 were under development, “in consultation with the Federal Reserve and Treasury.”

What am I missing? What consultation is necessary? The consultation should be nothing more than, “when the company returns to profitability and Uncle Sam gets a return on his capital, we may consider paying bonuses. That may not happen anytime soon. Please get back to work . . . oh, have a nice day.”

Shouldn’t take more than 20 seconds, maybe 30.

What am I missing? What is America missing? Who is accountable?


AIG Contracts a Brain Freeze

Posted by Larry Doyle on March 17th, 2009 9:27 AM |

Given the public outrage over the millions in bonus payments at AIG, is there any doubt that there has been a massive failure to perform by all involved?

When AIG was on the verge of bankruptcy last September, I am willing to bet the topic of employment contracts was not the lead item on the agenda. In fairly short order, though, as AIG was moving ahead with its attempt to sell divisions and repay the government loan, I have to believe outstanding liabilities, such as employment contracts, became a topic of discussion.  

Let’s bring the main players at that point in the process back to the table. What does Hank Paulson have to say? How about Robert Willumstad, former AIG CEO? How about current AIG CEO, Edward Liddy?

Make no mistake, both the government and AIG executives could have imposed their will to renegotiate – if not outright dismiss – any outstanding contracts. How? When an entity such as the government takes over a company, a change of control occurs. That change of control does not unilaterally extinguish outstanding liabilities, but it certainly opens them for renegotiation. The fact that these contracts were not seriously renegotiated is a massive failure to perform on behalf of the government officials and AIG executives. (more…)

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