After Rescue, Bonuses Still Flow At AIG

The Early Show: Insurance Giant Offers Top Employees "Retention Payments" To Keep Them

(CBS)  Insurance giant AIG was given $152 billion in bailout money by the federal government since nearly collapsing in September. Now the company is planning to take millions of that money and hand it over to employees in a program that sounds a lot like bonuses.

AIG's new CEO is only taking a single dollar for his compensation this year and the top 60 executives won't be getting bonuses. But that hasn't stopped AIG from finding a creative way to keep some of their top employees in what they're calling "retention payments," reports CBS News correspondent Priya David.

To some it seems like business-as-usual end-of-the-year bonuses.

On Wednesday, lawmakers grilled Assistant Treasury Secretary Neel Kashkari about AIG's bonus plan. Rep. Donald Manzullo, R-Ill., asked if a $3 million bonus was too much.

"It is excessive for a failing institution, yes," said Kashkari.

But so far, no one's stopping AIG from paying millions to some employees in its new retention program. The company has told 168 employees they'll receive between $92,500 and $4 million per individual if they stay with the company for one year. That angers some on Capitol Hill.

"These so-called retention payments are nothing less than bonuses," Rep. Elijah E. Cummings, D-Md., told CBS News. He sent letters to AIG, demanding details of the retention program.

"No one is indispensable, particularly when you've got tens of thousands of people being laid off from Wall Street and financial firms every day," Cummings said.

Nicholas Ashooh, AIG's senior vice president of communication, acknowledges that the perception of his company has taken a hit.

"Oh, it's terrible, it's terrible," he told CBS News.

Ashooh said the retention program does not include anyone in the firm's financial products business, the tiny arm of the company that torpedoed AIG with its high-risk, bad loans.

"We know that this is not a popular thing. A lot of people just won't accept it, but if you think about it, it's a calculated decision to keep businesses intact so that we can sell them and pay back taxpayers what we owe them," he said.

Whatever you call it, it's still money in the pocket of AIG managers.

"It's very unfortunate, but a culture of entitlement has emerged among Wall Street executives," said Peter Morici, a University of Maryland economist. "They're paid far too much money and they're trying to find ways around the rules."

Even though there are more layoffs every month, AIG says its top talent is being recruited to rival companies. In fact, the company says two of its top people just left this week, despite being offered big retention payments. AIG says it needs its best people to keep its healthy businesses profitable until it can sell them and the company plans to sell 65 percent of its businesses to repay its federal loan and get back on track.

[boyrideworld]

Its all ****** up. What our America is coming to seem as is a fat man sitting at the dinner-table, too fat to see his plate and the fact that he has eaten all his food. So now as he reaches for the food on his plate, greed tells him theres always more even though the plate is scraped clean. So the greedy, hungry, fat man eats the plate, the table, and the chair he is sitting on.

America will fall just like The Great Roman Empire. But this fall could trigger the end of all things as we know it. America is crumbling at its foundation of equal opportunity, freedom, and care for the fellow man. And tearing at the seems in modesty, honesty, and morals.

This is not the America that was envisioned for us and our posterity to come.

Will you change it?

[RikRak0901]

OK, if upper-management was guaranteed large bonuses and AIG is concerned about having to pay twice as much if they don't pay the bonuses, where is the reasonability clause? Meaning there has to be legal recourse for management that ran AIG into the ground, right? Don't pay based simply on failure to perform!! Get a Grip!!

[mangosalsa]

Do these people have to accept the bonuses? Under the circumstances would
any good American accept this money? Would you? What kind of people are they?
We need to work together not hide behind a contract. Shame on them.

[sheyuli325]

I propose that AIG be nationalized

[maj_mojo]

How can the government accept the excuses that AIG must comply with contracts that will award executives hundreds of millions of dollars. Why then were workers covered under collective bargained contracts stripped of pensions, pay, and benefits? Contracts can be amended when circumstances change. Some airlines took federal assistance and then proceeded both in and out of courts to strip pay and benefits from their workers while richly rewarding the managers with bonuses in the millions. Why were the workers in Detroit with the auto companies forced to renegotiate their contracts, prior to the amendable date, in light of horrible economic conditions at their companies? It's time to tell the executives at the financial firms, that made horrible decisions, that their compensation contracts need to be renegotiated or eliminated if they want ANY federal funds! It these executives are the "top talent" that put their companies and our economy at risk then they need to be fired not rewarded with retention bonuses!

[jwalpolejr]

quoted Snippets courtesy of Daily News.

Liddy actually wrote Geithner, "We cannot attract the best and brightest talent to lead and staff the AIG businesses...if employees believe their compensation is subject to continued change and arbitrary adjustment..."

Well, duh. compensate means to make up for something that was done and bonuses are adjustable based on performance.

And if we are paying these bonuses with our money to "the best and brightest talent", I want a refund. These are the same undeserving morons that got us here. I guess I should go to my boss and ask for a bonus after screwing up!

That seems to be the way things are going. They should all be fired and locked up for stealing from the American people based on the fact that they are recieving bonuses for a job poorly done. "Those contracts were null and void once they took the $170 Billion bailout money.."

Oh by the way, I am still waiting for a response from the government on my financial bailout bonus, i mean package!

[ristvin]

Who are the people that received these bonuses? I want their names to put them on my lists of most greediest and non-patriotic Americans. I think that they should refuse the bonuses so that we know that they are basically honest at heart. Even some of the banks are returning their bailouts. What's the matter with people that know they are at the root of our financial problems, yet expect to be highly compensated for their role in America's downturn?

[Nihonniirugaijin]

I also agree that Cosmostopper's suggestion is agood one. I have already contacted my Senators and Congressperson about it.

[Nihonniirugaijin]

Instead of the Feds giving all these billions to these companies to **** away on executive bonuses, corporate jets, and failed business plans, why don't they just divide up that money among every American who makes less than say $200K a year, and send each of them a check for their share? Wouldn't that have the effect of stimulating the economy? Also, these folks would use some of that money to pay their mortgages and pay off their credit card debt, which would help the banks. I would be interested to hear from any economists out there whether they think this plan would work.

[flowers99]

So Many American people loosing their homes and jobs ... these AIG Leaches raping the American taxpayers should be ashamed of their thoughtless acceptance of blood money!

[Gerrymander33]

I guess that AIG has the mistaken idea that only those people who caused the problem up can now fix the problem. If they are legally bound to pay the so called "retention bonuses" then they should pay them and then cut "our" losses by giving them their "pink slips" at the same time.

Only in the financial industry are these people are high up on the intelligence ladder and thus irreplaceable. An engineer versed in control theory and instability of systems would do far better in avoiding the risks that required us to bail out AIG.

[canon_mutant]

There are those that feel we are helpless to do anything about the pre-existing contracts at AIG and elsewhere resulting in these huge bonuses being paid during times of extreme malfeasance amongst the financial and stock market sectors when we are losing our jobs, our benefits, and our raises/bonuses to keep our companies afloat. Well, there is. It's called the 2009 minimum tax fairness act. You want to pay your top executives outrageous bonuses during times of catastrophic corporate mismanagement and failure due to "pre-existing contractual obligations to do so" fine, We the People are going to take 98% of it in taxes in 2010. This policy will continue across the board in our nation's financial and stock market institutions until such time as a sound legal policy of bonus regulation of these institutions can be implemented.

[politicswatcher]

I read on another site that AIG said (without these bonuses) "We cannot attract and retain the best and the brightest talent to lead and staff the A.I.G. businesses...." If these 'best and brightest' contributed to the near collapse of the organization and required an XXX billion bail-out, why are they still around? Fire them! Doesn't sound like the best and the brightest to me.

[jsehoule]

Here it is, March. Now they need another bailout. If my company was doing bad. I would stop all packages. If they need to buy these people. I say. Let them get another job. There are other good people out there. If you wanna give a $100k bonus. Give it to the people. Like me. One bonus like that would set me up for life. Mortgage free. I am the type of person who will spend the cash. It seems to me. If all of these companies gave the money back to the people. The people would have more to spend. Some of these multi million $$ bonuses could help 100's of family. If a family had no mortgage. What would they do.

[car-ins-guy]

Retention payments, bonuses, bad mortgage bets, private expensive parties. Aren''t bad choices what got AIG here in the first place?

As majority owner of AIG, why won''t the gov call an emergency "shareholder" meeting, in order to protect it''s investment?

Oh I forgot, the US Gov has no place in the car, banking, insurance, mortgage, or any other business.

I.E. FNMA & FREEDIE MAC.

Joe Casey

[hofkurz]

Since AIG is adamant in spending my tax dollars in retreats and retention payments, I vote that they cease doing so at once. Why work at retaining them? Where would they go anyway?

As far as the big 3? If only they had paid attention to the writing on the wall 30 years ago and bucked big oil. However, I feel sorry for the workers. It is the management that ran things into the ditch and they are the ones that should work for $1 a year until they make things right.

[cjs_cnet_xyz]

As a government-owned entity, doesn''t that mean that government-scale salaries apply? If that were so, these crooks would be limited to what real Americans actually earn. This "retention payments" fiasco is just one more scam imposed on the taxpayers. The people who created such payments should be charged with fraud and locked up.

[klewt]

cosmotopper7 Your windfall tax suggestion is one of the few really good ideas I''ve ever read in these comments sections. YES! I''m writing my congressmen and senators to push for this.

[cosmotopper]

The big question is where are these executives going that they''re being offered comparable compensation?


It would be entirely appropriate for Congress to pass a 2-year "Windfall Compensation Tax" on ordinary income in excess of $1-million from any company which has received public assistance either in the form of loan guarantees or stock purchases. I would recommend an incremental tax of 90% on all amounts above the threshold. This same approach was used during WWII when major industrial corporations (such as GM) were reaping huge profits from war contracts.

[chyenna-2009]

It''s never going to stop. Is it?