AIG bonus outrage has employees living in fear

[sweeps]

FAIRFIELD, Connecticut - Pillars of the community are now pariahs fearing for their safety in a ritzy area of Connecticut home to many executives at American International Group Inc., hit with a backlash over bonuses it paid to top brass even as it accepted federal bailout money.

Article

[disneysteve]

The whole bonus thing is so out of hand. AIG is a huge company with many different divisions, lots of which have continued to be very profitable and successful. Employees who have done nothing wrong and earned lots of money for the company are falling victim to bad PR and being forced to forfeit bonuses that they are contracted to receive and worked hard to earn. And if they do get the bonuses, there is a chance (though I don't think it will actually pass) that the government may suck it all back by a targeted special tax.

The whole thing really stinks all around. If the government was so concerned about these bonuses, that should have been addressed and settled BEFORE handing out any bailout money. Uncle Sam could have gone to AIG and said, "Look, we'll help you out but you need to make some concessions, like getting employees to accept reductions in the bonuses they are due to receive because it will look really bad if we give you a ton of money and you turn around and hand out over $200 million in bonuses."

What the government is trying to do now simply shouldn't be happening. It is too late. The time to establish how the bailout money was to be used was before giving it out, not after the fact.

[supercheap]

Originally Posted by disneysteve

The whole bonus thing is so out of hand. AIG is a huge company with many different divisions, lots of which have continued to be very profitable and successful. Employees who have done nothing wrong and earned lots of money for the company are falling victim to bad PR and being forced to forfeit bonuses that they are contracted to receive and worked hard to earn. And if they do get the bonuses, there is a chance (though I don't think it will actually pass) that the government may suck it all back by a targeted special tax.

The whole thing really stinks all around. If the government was so concerned about these bonuses, that should have been addressed and settled BEFORE handing out any bailout money. Uncle Sam could have gone to AIG and said, "Look, we'll help you out but you need to make some concessions, like getting employees to accept reductions in the bonuses they are due to receive because it will look really bad if we give you a ton of money and you turn around and hand out over $200 million in bonuses."

What the government is trying to do now simply shouldn't be happening. It is too late. The time to establish how the bailout money was to be used was before giving it out, not after the fact.

I agree DS. Our system of government is great but was never intended to have career politicians running it. We really do need term limits. The people we have in there today seem to be bought and paid for. One thing is for sure and that is they haven't been working for the American people for a long long time.

[Ima saver]

I agree with disneysteve also!

[SnoopyCool]

I also agree!

[Marikam]

How times have changed! It used to be you got a bonus when you achieved your personal objectives (within your job) AND the company made a certain level of profit. Now it seems your company can lose billions (and don't tell me you didn't have a small part to play) and you can still qualify for a bonus.

I'm proud to have read some of those employees awarded large bonuses have agreed to pay it back. Alas, my faith in my felow Americans is restored.

[disneysteve]

Originally Posted by Marikam

How times have changed! It used to be you got a bonus when you achieved your personal objectives (within your job) AND the company made a certain level of profit. Now it seems your company can lose billions (and don't tell me you didn't have a small part to play) and you can still qualify for a bonus.

I disagree. A bonus is often based on personal performance, not corporate performance. When I first went into practice, my contract very specifically spelled out what I had to do to earn a bonus. It was based on how much income I generated for the practice. It had absolutely nothing to do with how the practice was doing overall. The practice could have been losing money but as long as I made my numbers, I would still have gotten the bonus.

Of course, other times, bonuses are based on company performance. That is more of a profit-sharing type of bonus than a personal performance bonus.

With AIG, they have various divisions that have been successful and profitable. Why should those employees be penalized?

[cptacek]

Here is a perspective from one of the employees that got the bonus:
http://www.nytimes.com/2009/03/25/op...pagewanted=all

[Marikam]

Regarding the perspective from one of the employees who got a bonus: I'm sorry but when did a job like his warrant an after tax bonus of $742,000? The only profession that deserves bonuses of any magnitude is the health profession .....where they actually save lives, rather than fatten the wallets of a select few.

As for DisneySteve, you need to go back to the basics. A job is worth only so much money. You are expected to do a good job to earn that money. If you don't do a good job you should be fired. If you do an outstanding job, should you get rewarded.....perhaps......but only within what the job is worth. That's why there are salary ranges by job classification.

Unless you are an owner in the company, there is no risk/reward scenerio. Why should employees be "entitled" to bonuses (the reward side) whe they take no risk?

[disneysteve]

Originally Posted by Marikam

As for DisneySteve, you need to go back to the basics. A job is worth only so much money. You are expected to do a good job to earn that money. If you don't do a good job you should be fired. If you do an outstanding job, should you get rewarded.....perhaps......but only within what the job is worth. That's why there are salary ranges by job classification.

Who determines what a job is worth?

My first employer decided that my job was worth a certain amount based on the revenue he expected me to generate. That is the amount that I was paid. However, he also wrote into my contract a bonus provision so that if I generated more than that anticipated amount, I would be entitled to higher compensation. Theoretically, the amount of money I could have earned was unlimited. There was no cap on the bonus I could earn.

I don't see a problem with a system like that. If you perform exceptionally well, you can earn an exceptional amount.

[boosami]

Originally Posted by Marikam

A job is worth only so much money.

I don't have a cap on the overtime, commission, or bonuses I can receive. If I put forth extra effort, I get rewarded, simple as that. My extra effort benefits my company, and part of that benefit is passed on to me. I'm sure some would say I'm overcompensated and am earning more than my job is traditionally "worth," but that worth really comes from the effort and performance I put in, not my title or the company's industry.

[mom-from-missouri]

I don't think much of this company at all.
I have been trying to cancel a policy from AIG. It came as an offer through our credit union. It was a free policy for 6 months, then if I decided to keep it, I was to pay, if not, I could cancel. That was 2 years ago and they still bill me for it. It got to the point the credit union had to change my account number to avoid it being drafted out. Now they have turned me over to a collection agency and are STILL billing me--they refuse to cancel the policy. I call and can not get to an American. I have written letter after letter, sent them regular and certified mail. NO luck.

Last week the credit union told me that they have had over 30 customers now tell them they are still being billed for these policies that were cancelled--so it isn't just me.

[simpletron]

his unit generated over 100 million in profits, so giving back 1% as a bonus doesn't seem like much unless you look at it in absolute term because a million is a alot of money.

an interesting quote from the article - "Some might argue that members of my profession have been overpaid, and I wouldn’t disagree."

for the last 6 month, he wasn't working to fatten the wallets of a selective few, put the taxpayer. the more profitable his unit is the more the government is going to get back when they sell it off, so he was fatten your wallet(or in reality just lower your share of the national debt).

[EEinNJ]

Originally Posted by mom-from-missouri

I don't think much of this company at all.
I have been trying to cancel a policy from AIG. It came as an offer through our credit union. It was a free policy for 6 months, then if I decided to keep it, I was to pay, if not, I could cancel. That was 2 years ago and they still bill me for it. It got to the point the credit union had to change my account number to avoid it being drafted out. Now they have turned me over to a collection agency and are STILL billing me--they refuse to cancel the policy. I call and can not get to an American. I have written letter after letter, sent them regular and certified mail. NO luck.

Last week the credit union told me that they have had over 30 customers now tell them they are still being billed for these policies that were cancelled--so it isn't just me.

This story doesn't surprise me. Companies like AIG, Citi, BoA, are vampires. They get their teeth in customers and try to keep on sucking blood. They won't stop until the lights are shined on them. Now they are getting help from their minions, the Treasury and Congress.

I applaud the work of Elizabeth Warren and Shield Bair, who are not beholden as elected officials, but rather seem to be advocating for the consumer and the public.

[casinoroyale]

the only thing that sucks is that if they don't give them the bonus that can just sue them later because it is a bindding contract.

[cptacek]

Originally Posted by Marikam

I'm sorry but when did a job like his warrant an after tax bonus of $742,000?

This was a before tax bonus, and he only got paid $1 for his salary for the year.

[disneysteve]

Originally Posted by casinoroyale

the only thing that sucks is that if they don't give them the bonus that can just sue them later because it is a bindding contract.

Why is that bad? Do you think your employer should not be legally obligated to observe the conditions in your employment contract? Do we really want to start making employment contracts just suggestions of what might happen?

[financialnut]

I would be livid if I were one of these guys NOT getting what was due to me. If you contract with somebody, you better pay up. The government got involved and seemed to "overlook" those contracts.

If you're going to purchase 80% of a company, you better know what's going on. And if there are contracts in place already, do something about it before you buy.

You bought those contracts. You better honor them.

I think it's unfair. That's what the government gets (and us as taxpayers) when you hurry something like buying AIG.

[cptacek]

Originally Posted by financialnut

The government got involved and seemed to "overlook" those contracts.

Wrong. The government got involved and specifically put in the stimulus package that these contracts would be honored.

Senate Banking committee Chairman Christopher Dodd told CNN Wednesday that he was responsible for language added to the federal stimulus bill to make sure that already-existing contracts for bonuses at companies receiving federal bailout money were honored.

Source: Dodd: Administration pushed for language protecting bonuses - CNN.com

[EEinNJ]

Contracts get re-negotiated unilaterally all the time. Companies change health insurers, or raise your contribution. They might stop contributing to your 401K. You took the job with one deal, and they changed it. Oh Well, so quit. How about utilities, like cable companies changing your rates or channel line-up, or power company rates. They don't ask you, they ask the Government-why? Because they are REGULATED- (and you are nobody).