AIG gives $160 million to the people who ran the company into the ground

[editor]

http://www.nytimes.com/2009/03/15/business...p;th&emc=th

The American International Group, which has received more than $170 billion in taxpayer bailout money from the Treasury and Federal Reserve, plans to pay about $165 million in bonuses by Sunday to executives in the same business unit that brought the company to the brink of collapse last year.

Word of the bonuses last week stirred such deep consternation inside the Obama administration that Treasury Secretary Timothy F. Geithner told the firm they were unacceptable and demanded they be renegotiated, a senior administration official said. But the bonuses will go forward because lawyers said the firm was contractually obligated to pay them.

I understand the whole theory behind paying the leaders of big companies big bonuses in order to attract and retain the best talent. I don't agree that it's true, because history shows you can attract talented leaders with more reasonable salaries as well. Regardless, if you fail at your task you do not deserve to be rewarded for it. The whole point of a "bonus" isn't that you've done the minimum, or somehow stayed in your job. The point of a "bonus" is to reward people for jobs well done. In the case of AIG, these were jobs poorly done. Bankrupting a company is the very definition of failure as a leader.

In a letter to Mr. Geithner, Edward M. Liddy, the government-appointed chairman of A.I.G., said at least some bonuses were needed to keep the most skilled executives.

If they're so skilled, why is AIG bankrupt? Employees who don't get the job done should be fired, whether they're on a factory floor or in a corporate boardroom.

How about this -- how about the stimulus money going to Texas (or wherever AIG is headquartered, I always thought it was Houston) be reduced by the amount of compensation given to these executives. American tax dollars have already stimulated their local economy to the tune of $9.6 million, plus this $160 million is even more stimulus for the executives' local economy.

I don't buy the argument that there is a contractual obligation to make these payments, either. AIG was also contractually obligated to pay its debtors, and it's not going that, either. And when a company is in bankruptcy the law is that you pay your largest debts first. Well, that would be the United States Government, which AIG owes $170 BILLION to.

It's like the people running AIG know that getting these bonuses doesn't sit well with the wider American public or the politicians in Washington, but they're going it anyway -- getting theirs while they can before the rules are tightened, leaving the other companies to suffer for their greed.

I know there are a bunch of AIG employees on HAIF. If one of you could get this note across, it would be great:

"It's an insurance company. Not a slot machine."

[TheNiche]

We've already got a discussion going on about this topic in the larger Bailout thread.