Sunday, March 15, 2009
They still don't get it. AIG's CEO who was brought in after the government took over an 80% stake in AIG is continuing to pay bonuses and "retention pay" to people who have virtually destroyed the global economy -- almost single-handedly. AIG will pay its executives, including the folks at Financial Products who created the mess that would have killed the world's largest insurance company, over $720 million dollars in bonuses and "retention pay." Lawyers have concluded that the firm would risk a lawsuit if AIG reneged on the agreed upon retention payments of about $600 million, only $400 million of which was agreed upon before the government started bailing out AIG in September.
AIG has agreed to eliminate bonuses to the top 7 executives and defer 1/2 of the bonuses to another 42 top executives with the other 1/2 to be paid based on performance. Nonetheless 4,700 people in AIG's global insurance units are receiving $600 million in retention pay and $121 million in corporate bonuses will go to more than 6,400 people. That means, on top of salaries, the 4700 people are getting an average of $127,000 worth of retention pay + those people and others are also getting $19,000 worth of bonuses.
All of that for these.....people on top of what I'm sure are handsome salaries to begin with. Let's see. I'm in the 95-99th percentile of taxpayers. These four million taxpayers pay something in excess of 20% of all federal income taxes. So, folks in my group will be paying each be paying just a small amount of bonus (about $ 40 each) to AIG employees who have probably cost each of us on the order of $100,000 - $ 250,000 this year. I'd rather be able to sue them for the money than pay them a dime of bonus!
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.