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AOL CEO Tim Armstrong apologizes for "distressed babies" remarks

AOL CEO backtracks after benefits comments backlash 02:17

For AOL, it was the ultimate instant message -- and the company's CEO got it loud and clear.

AOL is dealing with a national backlash against some controversial comments about the cost of employee benefits.

AOL announced its best earnings in a decade last week. But the news was overshadowed by the explanation CEO Tim Armstrong gave employees about delaying company contributions to retirement accounts.

He blamed higher health care costs and then said:  "We had two AOLers that had distressed babies that were born that we paid $1 million each to make sure those babies were OK in general."

"People started asking my husband, 'Isn't that your baby that he's talking about?'" said Deanna Fei.

AOL CEO backtracks after controversial remarks 03:17
 Fei's husband works for AOL. Their daughter is a healthy 16-month-old now, but she was born four months premature and spent three months in a neonatal I intensive care unit.

"The suggestion that her very existence could be called into question and blamed for corporate cost-cutting made me really furious," Fei said.

It also angered many at AOL, who were disgusted by Armstrong’s examples, and the idea of receiving retirement fund contributions once a year instead of on pay day. Delaying AOL's contributions to employee stock plans would it allow it to keep more cash on hand, but over time could deny employees better returns. 

The backlash at AOL was so severe that Armstrong revered the policy and called the Fei family to apologize.

Armstrong and AOL declined CBS News' requests for an interview. In an email to employees, Armstrong wrote: "We heard you on this topic."

Deanna Fei, whose husband works at AOL, says her daughter was one of the "distressed babies" Armstrong cited in his controversial comments. CBS News
 He added, "On a personal note, I made a mistake and I apologize for my comments."

"I just hope that in the future we'll be more careful about reducing human life to a monetary figure," Fei said.

Armstrong was at the center of controversy last summer when he fired an employee in front of 1,000 people. He later apologized.
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