Dear A.I.G., I Quit!

[Bobblehead]

Originally Posted by MarchHare

So AIG was paying this guy $750K after taxes (so that's what, like $1.5M pre-tax?) regardless of his and the company's performance just because he didn't quit?

How many O&G retention bonuses have been paid around here until recently?


He was probably asked to work for $1, and if he stuck around for the year he would be paid as a retention bonus. Maybe it should have been called back pay.

But to have a gov't bill passed specifically to claw back an amount that was contracted before any of this mess ever began just strikes me as unjust.

[Titan]

Originally Posted by VladtheImpaler

Exactly. If you are good at what you do, perhaps one day you will get a contract like that. When the market was hot in Calgary law firms were payng $10-15K bonuses to stay until Nov. 1 of the year (or whatever date).

Also, oil companies in the midst of a takeover need the people to stay, even if there is uncertainty their job will be there after the merger. Can you Sunoco / Petro-Can. If I worked in HR my resume would be out. If they offered me $20k if I am still there in March 2010, then I weigh my options.

What does the company want? For people to stay. So they offer retention bonuses. Again, that is how the system works.

[VladtheImpaler]

Originally Posted by Daradon

Yeah, cause every college grad gets a million dollar a year bonus...

Lots of the little people DID go to school. And many of them aren't in trouble cause of credit card debt. What about the people who lost their savings in failed banks?

What happened to this guy surely sucks, but at least he can probably pay his bills, keep his house etc.

All I'm saying is a company that is sucking up billions of dollars, from the very people who lost money in lots of these investments, should not be paying crazy bonuses.

I've had companies go under on me, miss payments to me. What makes this guy so special?

It's crappy yeah, but it's far better than what's happening to millions of others.

Don't you see the difference? This guys is just getting whatever he is owed under his work contract. And some aholes named Obama, Reid and Pelosi are trying to steal his money. Again, THE FED COULD HAVE IMPOSED CONDITIONS WHEN IT BAILED AIG OUT. IT DID NOT. THEREFORE, THIS IS THE FAULT OF THE FED, NOT AIG EMPLOYEES.

[Bobblehead]

Originally Posted by Jedi Ninja

I agree that AIG gets somewhat picked on in this situation... however, I think the AIG incident has drawn badly needed attention to the issue of executive and bonus compensation as a whole.

I agree with that. I think it is outrageous what CEOs are being paid. I'm shocked how a CEO with poor performance seems to be able to hop from company to company.

But I don't think you can retroactively, unilaterally change a contract.

[Daradon]

Originally Posted by Bobblehead

How many O&G retention bonuses have been paid around here until recently?


He was probably asked to work for $1, and if he stuck around for the year he would be paid as a retention bonus. Maybe it should have been called back pay.

But to have a gov't bill passed specifically to claw back an amount that was contracted before any of this mess ever began just strikes me as unjust.

The government DID screw the pooch on the handling of it for sure, I can agree with that. And it has made things more complicated and in some instances unfair.

But IMO a company that is being bailed out has no right to be paying that kind of money in bonuses (or salaries for that matter) when they are the company in the middle of the problem. It doesn't matter what department it is. The company screwed up. The company ROYALLY screwed up. We're not talking a small mistake. We're talking a mistake with international ramifications! Too bad for it's employees.

Maybe the government should have just let it die.

[Titan]

Originally Posted by Jedi Ninja

I agree that AIG gets somewhat picked on in this situation... however, I think the AIG incident has drawn badly needed attention to the issue of executive and bonus compensation as a whole.

• Executive compensation has grown at astromical levels. The problem is that upper managers pretty much have control over the boards of directors and therefore set their own pay. Some shareholder rights groups have tried to draw attention to this situation, but the problem is the large number of absentee shareholders allows the system to continue.
• Behavioural research has shown that the link between bonuses and performance is, if anything, negative.
• Economic research has shown that executive compensation correlates to the size of the organization, but not to profit or other performance based measures.
• Close to 100% of traders and potfolio managers receive some sort of bonus even though fewer than 50% of them beat the market.

I agree completely. But that is a different issue than whether contractually guranteed payments should be made or clawed back.

[Igottago]

Originally Posted by VladtheImpaler

I guess the "little people" should have gone to school, been more successful and not run up their credit cards to $45,000. In fact it's the little people who DO get bailed out - foreclosure protection (why should responsible people pay for idiots/speculators?), job-protection schemes, "Buy American", etc. Just because this guys is successful doesn't mean he shouldn't get what he is entitled to.

He's not successful, the company who he's been working so hard for is in the toilet. Its all relative anyways, the have's want to keep what they have, the have nots think the have's don't deserve what they have, and everyone thinks they work harder and are more deserving of "success" than everyone else. In times like this, guys like the above are gonna feel screwed, the "little" people feel like they got bent over...everyone's simply scrambling to salvage what they can.

[Titan]

Originally Posted by Daradon

What about the people who lost their savings in failed banks?

.

Actually, the FDIC insures deposits up to $250k so no one is losing their money from failed banks. Investments yes, lost deposits, no. 60 minutes just did a report on this. No need to scare people unnecessarily.

[Tron_fdc]

hmmm I wonder if any AIG employees will have the balls to sue if they're shirked out of their contracts.

I wonder how much that would cost........

[VladtheImpaler]

Originally Posted by Daradon

The government DID screw the pooch on the handling of it for sure, I can agree with that. And it has made things more complicated and in some instances unfair.

But IMO a company that is being bailed out has no right to be paying that kind of money in bonuses (or salaries for that matter) when they are the company in the middle of the problem. It doesn't matter what department it is. The company screwed up. The company ROYALLY screwed up. We're not talking a small mistake. We're talking a mistake with international ramifications! Too bad for it's employees.

Maybe the government should have just let it die.

The company is just paying whatever it was supposed to be paying, including retention bonuses. There is no "right" or "wrong" - they pay what they are contractually obligated to pay. They did get the guy to take $1 in salary instead of the $1M or whatever he would have otherwise gotten.

[VladtheImpaler]

Originally Posted by Tron_fdc

hmmm I wonder if any AIG employees will have the balls to sue if they're shirked out of their contracts.

I wonder how much that would cost........

I'm pretty sure the government cannot retroactively tax away these retention bonuses, though not familiar with US Constitution, so hell yeah, I hope they sue. The politicians are just lowlife posturing populist scum playing to the lowest common denominator. I lost all respect for Obama after this - he could have easily taken a measured approach, instead of pandering.

[Daradon]

Originally Posted by VladtheImpaler

Don't you see the difference? This guys is just getting whatever he is owed under his work contract. And some aholes named Obama, Reid and Pelosi are trying to steal his money. Again, THE FED COULD HAVE IMPOSED CONDITIONS WHEN IT BAILED AIG OUT. IT DID NOT. THEREFORE, THIS IS THE FAULT OF THE FED, NOT AIG EMPLOYEES.

Your misreading what I've said. I've already said it probably wasn't this guys fault.

Your also not understanding my argument. I know he's losing earned money, but just about EVERYONE is in different circumstances.

As I've mentioned, people have lost jobs, salaries, savings, across the board. Often under contract. It happens.

And as I was writing when you were, I understand how the government mishandled this too. I always did, I just wasn't arguing a point that I felt it was relavent to in my previous posts.

Because my point is this. AIG screwed up. And as I've written, they screwed up BIG. He has reason to be mad at them. Heck, he probably has reason to dislike the governments plan. But it's still unfair for taxpayers to pay his bonus, wage, salary, whatever. Grossly unfair. AIG doesn't have the right to use the taxpayers to pay what they promised their employees, especially given the circumstances surrounding what happened. I know that is what the bailout was for, but I don't know how anyone in their right mind can justify compensation like that when it comes directly from the taxpayers. Taxpayers who are also losing things due to this crisis which the financial sector is responsible for.

Yes the government mishandled it. (From the news I've read it seems one member in particular really screwed up, I forget his name) But I think they weren't expecting the company to be paying out such bonuses during this tight time. Maybe they just didn't understand the company or the industry sector.

No need to yell man...

[Daradon]

Originally Posted by VladtheImpaler

The company is just paying whatever it was supposed to be paying, including retention bonuses. There is no "right" or "wrong" - they pay what they are contractually obligated to pay. They did get the guy to take $1 in salary instead of the $1M or whatever he would have otherwise gotten.

But the alternative is the company going under and all jobs being lost (as well with most pay I would imagine seeing as they were hugely in debt). I would suggest that does add an element of right and wrong to it. At least an element of what is truly necessary.

[Azure]

Originally Posted by Daradon

Really, how can a company justify such big bonuses (in any department) after getting bailed out as much as they have?

The bonuses were handed out long before any bailout occurred. AIG is responsible to fulfill the contracts they signed, despite the governments 'outrage.'

Its hilarious how people are up in arms over 1/10 of 1% of the money AIG got.

[MarchHare]

Originally Posted by Bobblehead

He was probably asked to work for $1, and if he stuck around for the year he would be paid as a retention bonus. Maybe it should have been called back pay.

Again, I have zero sympathy for this guy because he never should have agreed to a $1 salary. If I worked for a failing company and was asked to stick around for $1 while they try to right the ship, I'd tell them to shove it and find a new job. Last I checked, he wasn't held at gunpoint and forced to accept those conditions.

[Azure]

Originally Posted by Locke

At the end of the day though, no, he shouldnt get what his contract stated he would, the reason being that the money isnt coming from the original source anymore. AIG isnt paying him with their corporate earnings, the Federal Government is paying him with taxpayer dollars.

And the Federal Government had the chance to restrict the bonus contracts, and they didn't.

Too frickin' bad.

The contracts need to be fulfilled, regardless of how outraged the idiots on Capital Hill are.

[Igottago]

Originally Posted by VladtheImpaler

The company is just paying whatever it was supposed to be paying, including retention bonuses. There is no "right" or "wrong" - they pay what they are contractually obligated to pay. They did get the guy to take $1 in salary instead of the $1M or whatever he would have otherwise gotten.

Correct me if im wrong, but i dont think these contracts were written up under the assumption that government (taxpayer) bailout money would be used to pay them. Conditions have changed, the source of the money has changed, the company wouldn't be able to honour the contracts without the bailout anyways, so should the contracts still be honoured the same way?

[Titan]

Originally Posted by MarchHare

Again, I have zero sympathy for this guy because he never should have agreed to a $1 salary. If I worked for a failing company and was asked to stick around for $1 while they try to right the ship, I'd tell them to shove it and find a new job. Last I checked, he wasn't held at gunpoint and forced to accept those conditions.

The opposite of a gun, a contract. On the basis of the agreement he stayed and tried to help. Maybe a bad call in hindsight but definately a reasonable one.

[Azure]

Originally Posted by HotHotHeat

Because they're retention bonuses! Retention! Non performance based bonuses should not be given out. Ever.

A retention bonus he SIGNED, as a contract, to stay on.....provided he gets paid at a certain time.

Again, the Federal Government had a chance to do something about these bonuses, and they didn't.

Some of you really ought to take a look at contract law. You can't just NOT pay these people money they are obligated to receive by LAW. That is why the government either had to tax them for it, or 'ask' them to give it back.

They can't FORCE them. Because forcing them would be a breach of contract.

EDIT: And a remedy for a breach of contract is usually in the form of the guy who got screwed over getting his money anyways.

[Locke]

Originally Posted by VladtheImpaler

Dead wrong. Why should the guy work for $1? I'm sure he would have been happier to quit. Again, the Fed had the option to impose conditions when it bailed AIG out; the Fed neglected to, so AIG is simply abiding by its contractual obligations.

He could have not been working. Your question is its own answer, why should the guy work for a $1? I'd argue that he shouldnt. I'd also argue that the Fed either should have imposed restrictions or let AIG fail and let buddy here find another job where he'd get paid more and been happpier or whatever.

Clearly, he seems fairly confident that he'll find said job, and, seeing as how hes donating his money to whoever, he doesnt seem need the cash that bad.

I think the general point is that you dont splurge on bonuses when government money is the only difference between staying as an active concern and insolvency.