AIG pays out huge bonuses but plan to scale back in future

March 15, 2009

(ChattahBox) — The American International Group, which has already received more than $170 billion in taxpayer bailout money, has just paid out about $165 million in bonuses to executives in the same business unit that brought the company to the brink of collapse last year.  In other words they have rewarded the vary people that had a big hand in halting our economy. According to the NY times payments to AIG’s financial products unit are in addition to $121 million in previously scheduled bonuses for the company’s senior executives and 6,400 employees across the huge corporation.

Treasury Secretary Timothy F. Geithner told the firm that the bonuses were unacceptable and demanded they be renegotiated. But the bonuses will go forward anyway because lawyers said the firm was contractually obligated to pay them. Maybe that should have been changed before we gave the company any bailout money?  Mr. Geithner last week pressured AIG to cut the $9.6 million going to the top 50 executives in half and tie the rest to performance. In a letter to Geithner, Edward Liddy, AIG’s government-appointed chairman, justified the bonuses by arguing that AIG would have trouble attracting and retaining talent “if employees believe their compensation is subject to continued and arbitrary adjustment by the U.S. Treasury.”  One wonders how tying bonuses to performance is thought to be so arbitrary?  It’s standard practice in most sane businesses.

Ironically if AIG’s executives did seek employment elsewhere, many would probably end up at one of the firm’s trading partners. These companies are very likely only still in business thanks to the government’s rescue of AIG AND despite repeated inquiries from Congress, the government can’t or won’t say which companies received bailout money via AIG.

Perhaps feeling the heat, AIG’s Chairman Edward Liddy wrote in a letter to Geithner, that bonuses for top executives will be sharply cut in 2009.


Comments

17 Responses to “AIG pays out huge bonuses but plan to scale back in future”

  1. Phil on March 15th, 2009 9:04 am

    What do they do to these people in China!!
    They Execute them!!

  2. Bil Boeckenhaupt on March 15th, 2009 9:17 am

    AIG is paying out bonuses, are not the people who are getting these bonuses the same people who got the Company in trouble in the first place? So let them leave, maybe they can bankrup you competitors. Do you have any Job openings?

  3. a edwards on March 15th, 2009 9:25 am

    They say they must legally pay these bonuses, if we had let thme go backfupt or had not given them the 170 bil, they would not be paying them. We the USA are nutts to give these idiots another dime, please get our money back and let AIG go away. It is making me sick,

  4. Ron on March 15th, 2009 10:32 am

    When a troubled company applies for a loan from a bank in a commercial setting, the terms of the lending agreement often include limits on executive compensation until the debt is paid down. These are the conditions under which the loan is granted, hang the contracts.

    What is so hard about that? The people we entrusted with our money are not competent.

  5. chiro on March 15th, 2009 11:29 am

    It is interesting saying about the financial position. Take nice steps to solve the problem.

  6. jax on March 15th, 2009 1:05 pm

    This is sick. Why in the world are we helping these companies that keep sending millions to people who do not know how to run a company? They cry yet get paid millions on the “average joes” taxes. Furthermore, I fear this is just the tip of the iceberg. Look what Enterprise rent-a-car did to get bailout funds:

    http://www.butasforme.com/2009/02/25/alert-enterprise-rent-a-car-may-have-fired-employees-as-fake-evidence-when-lobbing-for-bailout-money/

  7. Jose Davila on March 15th, 2009 2:16 pm

    it’s sad that we could not get this information about bonuses in contracts before we gave them the money. It’s truly amazing how much smarter the white collar Businesmen are then our congress and the entire system that asked the wrong questions. I probably would have done the same thing if they were my friends. they all know each other, please don’t try telling me otherwise. Legal swindling, bait and switch, coming in cars instead of private aircraft. they all know each other and look out for each other as well. sometimes not as well as others Madoff made off with Billions. He got “busted” because unlike the govt. these investors were not having any of it. I’m poor so I lose nothing.

  8. Becky on March 15th, 2009 2:22 pm

    K.I.S.S. Keep it simple stupid – There is always more than one way to skin a cat. If the bonus makers are not willing to forego their bonuses – which would be the American thing to do – then our government should deduct the amount of millions from the bail out amount. AIG can’t have it both ways. Contracts be damned. We’re talking about fairness. Those operatives who think they’ve earned their bonuses are living in la-la land and should be in jail – not in the drivers seat.

  9. Ivan on March 15th, 2009 2:38 pm

    Rewards for criminal activities is now officially the American way, folks. From the chimp, cheney and that gang getting away with murder + billions of dollars from the illegal war in Iraq to the greedy monsters who ruined America’s economy., we are witnessing crooked capitalism run amuck.
    Poor Mr. Obama! I know you are up against more morons who are around even now, who fail to be even slightly contrite, yet stand in the way of our first real chance to forge ahead and rebuild what was almost lost.
    Godspeed, Sir!

  10. gerry power on March 15th, 2009 2:54 pm

    They have allowed the foxes to look after the chicken coop. Instead of getting rid of the foxes, they got more chickens. Only in America.

  11. Caroline on March 15th, 2009 3:01 pm

    I am so mad I can’t see straight. I am so tired of giving these fools our money to waste. Let them go bankrupt like they deserve or let them get rid of all these bozos they think need bonuses. It’s time for those folks to find out what not having a job means .

  12. Dan Bishop on March 15th, 2009 3:34 pm

    Congress can fix this with legislation and should do so immediately. Among points to be included for all companies taking government monies (until fully repaid):
    1. All salaries reduced by 10% across the board and frozen at that level.
    2. Staffing frozen at current levels.
    3. No bonuses for management (highest 20% of salaries + benefits).
    4. Bonus monies capped at 2% of salary for the top 21 to 50% of salary + benefits earners.
    5. Bonus monies capped at 4% for lowest 50% of earners.

    Bailout money is the equivalent of bankruptcy but allows the company to continue operations. It is a myth that those that work there will flee their jobs if these bonuses are not paid. In that industry, they know they are extremely lucky to have jobs.

  13. GivemyMoneyBack on March 15th, 2009 4:07 pm

    I think those who accept the bonuses should be convicted of theft from the public and assessed the death penalty immediately. I dont want my money robbed. The govt should send out death squads to get rid of those people who accept them. Each individual due bonuses can always refuse knowing the situation, and if they refuse, they are outright stealing from us. We have the right to get rid of theives, especially on that grand of a scale.

  14. Dariel on March 15th, 2009 4:49 pm

    It would be nice if Congress would fix this scam, but who do you think owns our representitives? If I the congressional capacity, I would be screeming at the top of my lungs to the Americam people about which Congress Reps were not behind me. Unusual Little Ross Perot said it the best, “make them accountable”. They allowed it to happen.

  15. Pam Raby on March 15th, 2009 5:38 pm

    Are you also outraged by the AIG bonus payments? Let their board know:
    boardofdirectors@aig.com

  16. PJF on March 15th, 2009 5:40 pm

    Not only would I demand the $ back but fire the whole top management of that company. No golden parachutes, no nothing for them.

  17. Lorne on March 15th, 2009 7:50 pm

    This is the result, when owners and managers are completely different people with no mutual bounds. AIG was one of the most respected insurers, but now, they are doing their best to destroy even the last remains of some reputation. And reputation is extremely important in insurance business, it will take decades to restore it. Luckily, Canadian branch of AIG was sold recently…

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