Unless you were completely into the NCAA stuff over the weekend, you should have heard the story of AIG paying their top employees $165 million bonuses for 2008. Yes, that AIG, the one that has to rely on taxpayer bailout totaling 180 BILLION dollars to just stay afloat.
Without the bonuses, “We cannot attract and retain the best and the brightest talent to lead and staff the A.I.G. businesses,” according to its Chairman. It is worth mentioning that the bonuses cover AIG’s Financial Products Division, the unit that bet on toxic mortgages which got AIG in such a big hole in the first place.
“Outrageous!” shouted politicians and government officials.
Why are they acting so surprised? Are you trying to tell me that when they handed out billion-dollar checks, they never saw this day coming? They never discussed the recipient’s financials such as executive compensation, which is what, the basic accounting stuff? They knew AIG needed the money to survive, but didn’t know how they would spent it? If they knew all along, why wait until the week of payment to bring it up?
If you listen to their emotional speeches, most politicians are saying the same things:
- The bonuses were already in the employees’ contracts;
- If AIG doesn’t pay, or pay less, those employees are likely to file lawsuits;
- AIG and government officials will do everything to stop this from happening again in the future.
I don’t know about you, but this is even more ridiculous than their acting on screen.
- Are the cozy contracts worded in such a way that employees would earn their bonuses regardless of their performance? Are they worded in such a way that as long as they don’t lose more than $100 billion a year, they will be rewarded?
- The government shouldn’t simply break private contracts. So why didn’t it occur to anyone that they were in a good position to re-negotiate these contracts before delivering the checks? Without the bailouts AIG would have disappeared by now, along with the sweet bonuses.
- What is an example of that “everything” you will do in the future, but you can’t do right now, or couldn’t do three months ago?
$165 million bonuses! Maybe it doesn’t sound that much compared to CEO compensations we are all so used to, but it is the total yearly income of 2000 hard-working families making $80K. And the sad part, they had to cut a slice of their paycheck, so the government can come up with that $165 million.