AIG to pay $165 million in bonuses

Associated Press ^ | March 15, 2009 | MARTIN CRUTSINGER, AP Economics Writer

[dvan]

WASHINGTON – American International Group is giving its executives tens of millions of dollars in new bonuses even though it received a taxpayer bailout of more than $170 billion dollars.

AIG is paying out the executive bonuses to meet a Sunday deadline, but the troubled insurance giant has agreed to administration requests to restrain future payments.

The Treasury Department determined that the government did not have the legal authority to block the current payments by the company. AIG declared earlier this month that it had suffered a loss of $61.7 billion for the fourth quarter of last year, the largest corporate loss in history.

Treasury Secretary Timothy Geithner has asked that the company scale back future bonus payments where legally possible, an administration official said Saturday.

[Lynda]

AIG is paying out the executive bonuses to meet a Sunday deadline, but the troubled insurance giant has agreed to administration requests to restrain future payments.

Makes sense to me. They are only following Obama signing the omnibus bill with all the earmarks, and insisting this has to stop in the future.

[Arguendo]

But, let's say that taxpayer's money was not involved at all. Why would the executives of a company that LOST $61.7 billion in a single quarter be giving out $165 million of shareholder's money to themselves as "bonuses"?

Compensation of this sort is typical in the financial services industry. Notice that this is going to hundreds of employees, not just the top few executives.

In all likelihood AIG's losses are coming from old contracts still on their books, while the bonuses have to do with particular incentive targets individual employees met in their personal performances. Still, it wouldn't surprise me if the bonus contracts were poorly written and don't really account for the possibility of losses at the company.

[Arguendo]

Selling an instrument and then not living up to the terms of that instrument is fraud.

Companies break contracts all the time when they become financially distressed and declare bankruptcy. It's not fraud unless they knew they would be unable to meet the obligation when they made the agreement. And naive optimism is not fraud.

Maybe the FBI would be able to find some evidence of knowing fraud, but I highly doubt it and your claims are purely speculative.

[Polybius]

...suffered a loss of $61.7 billion for the fourth quarter of last year, the largest corporate loss in history .... Article

"1/10th of 1 percent of the bailout $buck$. .... Once the feds gave them the $$$, they should not be micromanaging the AIG daily operations."

If you just capitalized a company as a shareholder and the executives LOSE 36% of your entire investment IN A SINGLE QUARTER and they then turn around and gave themselves BONUSES worth 1/10th of 1 percent of your entire investment, you'd be okay with that?

You would be O.K. with your executives awarding themselves ANY bonuses for "the largest corporate loss in history"?

The people who work for you must looooove you.

Objecting to ANY bonus for such an abysmal performance is not "micromanaging". It is common sense.

[org.whodat]

Now that is true!!!!

[Oldexpat]

Guess they told Timmy to go pound sand.

[Polybius]

Moreover, AIG doesn’t want to lose its possible best people...

"Best people"?

" ..... suffered a loss of $61.7 billion for the fourth quarter of last year, the largest corporate loss in history." ..... Article

[Rebelbase]

Bonus incentives are a fact of life for a lot of salaried, exempt employess. A job is worth X amount. Companies pay less than X as a base salary and the bonus is only paid out for performance above and beyond a set baseline. More often than not the bonus money pro-rated for hours worked to achieve it is less than the base pay per hour.

Do away with bonuses and productivity decreases and top talent leaves.

[chiefqc]

Wake up and smell the roses, the only way to get the attention of the elected arrogant theives is to throw them out of office.

Seeing how the voters are to lazy to even read what is going on, I don,t see any end in site until we all wake up one day with little or no liberities left and a goverment that is appointed by a select group with no voice from the voters who are no longer needed.

[jeffc]

What did individual employees do for business performance that may have merited the bonuses

I have no problem with people getting bonuses, having been the recipient of some pretty nice ones myself, but the report says "executives", people not normally involved with actually bringing money into company (i.e. selling a product).
I am focusing on the fact that they are paying bonuses to executives when the company lost money. Who in their right mind would write a contract allowing a bonus if the company lost money? It just stands to reason that if the company is losing money, than the "executives" are not doing their job correctly.

[ican'tbelieveit]

These bonuses being reported on are not going to sales forces:

The large bulk of the payments at issue cover AIG Financial Products, the unit of the company that sold credit default swaps, the risky contracts that caused massive losses for the insurer.

AIG also pledged to Geithner that it would also restructure $9.6 million in bonuses scheduled to go a group that covers the top 50 executives. Liddy and six other executives have agreed to forgo bonuses.

Yes, some of the bonuses are retention bonuses, apparantly for sales performance. But right there in the article, these sales were of "risky contracts that caused massive losses for the insurer."

When a company is losing money, how can they justify taking my tax money and turning it over to the executives of this failing company? I really need that money to pay my bills, put my kids through college.

[The KG9 Kid]

Chief Senate Banking Fairy Bawney Fwank said this morning of the AIG bailout, and I quote:

"Cweawwy dis was a mistake!"

[Polybius]

Companies pay less than X as a base salary and the bonus is only paid out for performance above and beyond a set baseline.

But, since "bonuses" are also given as a payoff for simply being a member of the "Insider's Club" whether you actually performed or lost your shareholders milions or billions, AIG should document that these bonuses were actually given to employees "for performance above and beyond a set baseline".

Northwest Airlines' top two executives received $450,000 in performance bonuses between them in 2002 as the airline lost $798 million.

Do away with bonuses and productivity decreases and top talent leaves.

At AIG, that migh be a GOOD thing.

"AIG declared earlier this month that it had suffered a loss of $61.7 billion for the fourth quarter of last year, the largest corporate loss in history." .... Article

[what's up]

that AIG had contractual obligations to make the bonus payments and could face lawsuits if it did not do so.

If they don't keep their contracts, how will that entice new talent which would otherwise come in to help the company, but will not because their contracts might be set aside? And is it better to have taxpayer money used to fight lawsuits about negating contracts then used to fulfill promised contracts made in early '08?

[mountainlion]

I have read that lie before but to date I have seen on proof.

Business Week had the original article and it has been pulled and for what reason? Congressional retirements are not insured by AIG. Teacher involvement in AIG is massive. Just do a search. CONgress has to protect the union thugs.
Pelosi wants to give us windfall profits tax on our 401K’s. She should be liable for massive Windfall profits!

[org.whodat]

They pulled it because the part about the teachers retirements was bunk. The part about pelosi and congress was not in your original statement, I have no idea what reference point is.

[Tempest]

Most hard working Americans are facing job losses and paycuts. Forget about takl of a bonus. but these already over paid A-holes still want their bonuses after losing billions and stealing billions more from the Americaan tax payer.

F-U Wall Street! F-U AIG!

[org.whodat]

Do away with bonuses and productivity decreases and top talent leaves.

You could put all the top talent at AIG on the head of a stick pin.

[Tempest]

When are you going to stop kissing the butts of wall street crooks. Or is that your own butt you’re kissing?

[truthguy]

Do away with bonuses and productivity decreases and top talent leaves.

And goes where?