News AIG bonus outrage has employees living in fear

[humanino]

Reminds me a bit of the Republicans who were claiming that the economy is just fine even as the market was beginning to crash.

I was referring to the current administration. I will not raise a polemic on whether those bonuses fit well in the global strategy adopted by the previous administration.

 

[Ivan Seeking]

I was referring to the current administration. I will not raise a polemic on whether those bonuses fit well in the global strategy adopted by the previous administration.

Yes, the Obamas certainly know it what it means to be poor.

There has been a bit of discussion about how the Obamas may be the most normal first family that we have seen in a very long time. But a depression of the sort threatened would take things to a level never seen in this country in modern times. Any spark is capable of starting a fire.

 

[gmax137]

I understand AIG got 170 Billion USD, and these bonuses total 165 million. Does anyone else wonder what was done with the other $169,835,000,000 ?? Was that spent 'wisely'? 'effectively'? ??

 

[signerror]

A damning editorial will appear in the Times today. By an A.I.G. executive who just resigned.

http://www.nytimes.com/2009/03/25/opinion/25desantis.html?pagewanted=all

 

[LowlyPion]

A damning editorial will appear in the Times today. By an A.I.G. executive who just resigned.

http://www.nytimes.com/2009/03/25/opinion/25desantis.html?pagewanted=all

It is instructive that the writer has received the bonus and is not instead choosing to simply return it. Apparently 15 of the top 20 have made that choice.

Absent from his apparently noble posturing and self-serving statement is recognition that the company failed, so spectacularly, to the extent that it would no longer exist even, were it not for public monies and that his bonus would never have been paid in the first place. Absent is his recognition that his efforts how ever well intentioned, how ever assiduously performed has led to failure. His expectation that he would expect to benefit then when the country is footing the bill for the failure he has participated in is a trifle presumptuous.

When the waiter spills dinner in your lap, surely he doesn't expect a tip still.

 

[gmax137]

lowlypion, nothing in your comments suggests that you have even read the letter. Or do you really believe that all of the thousands of people who worked in any of the AIG divisions are equally responsible?

 

[LowlyPion]

lowlypion, nothing in your comments suggests that you have even read the letter. Or do you really believe that all of the thousands of people who worked in any of the AIG divisions are equally responsible?

I don't see the letter as speaking for all AIG employees. I see the letter as a self serving piece for the executive involved to feel better about himself and appear on the public stage in noble pose. I think it's great that he worked for $1. But he chose to take a gamble and maybe see an out-sized return in the event that AIG had smelled like a rose this year, as opposed to a pigsty.

I don't see him taking personal responsibility for his choices and the fact that his gamble to reap a bigger compensation didn't payoff. Maybe he should have taken a lesser but more certain salary? But he didn't. He gambled. He lost.

The company but for Federal Money would not have survived to pay any bonuses at all. Salaries apparently it would have paid. If AIG would have paid off at double the rate this year if things went well would he have refused more than he got? Salary is salary, and bonus is bonus and is at risk. He lost and he should get over it.

Moreover his offer to contribute to a charity serves no useful purpose, when agreeing as others have to return the bonus would make a surer statement, though not drawing attention to himself, and still leave his hands clean.

 

[gmax137]

So, when this guys writes,
" I was in no way involved in — or responsible for — the credit default swap transactions that have hamstrung A.I.G. Nor were more than a handful of the 400 current employees of A.I.G.-F.P. Most of those responsible have left the company and have conspicuously escaped the public outrage."

You don't believe him? Or you think everyone who worked at AIG is "guilty?" Which is it?

Or is it just the notion of a 'bonus' that burns you up? What about all the hourly employees at GM that we (the taxpayers) are now paying to take retirement? Is that OK? Why should I pay someone a bonus to *stop* working, really?

 

[Evo]

Moreover his offer to contribute to a charity serves no useful purpose, when agreeing as others have to return the bonus would make a surer statement, though not drawing attention to himself, and still leave his hands clean.

Not to mention that he'll be able to get a tidy tax deduction for contributing it to a charity. I wonder what charity?

 

[Astronuc]

If the government had a problem with the bonuses, then they should have withheld the amount from the money given to AIG, and not threatened the individuals with a 90% tax that was essentially punitive.

I don't see Jake DeSantis's letter as being self-serving. He simply lies it out as he sees it. Those bonuses are nothing compared to what other companies have paid out, and it was norm until this quarter. DeSantis makes the point that none of those receiving the bonuses were responsible for the Credit Default Swaps that brought AIG down.

Should DeSantis and others be held accountable for what others did within the company, especially when they were not involved or responsible? Most companies are so compartmentalized that one group certainly doesn't know what another group is doing. They learn about it as information trickles in from others or management.

Are the bonuses excessive? Well some will say yes and others no.

When the waiter spills dinner in your lap, surely he doesn't expect a tip still.

I'm not sure this is relevant. It's more like another waiter or customer spill water, and your waiter does the best he can to address the situation.

 

[LowlyPion]

If the government had a problem with the bonuses, then they should have withheld the amount from the money given to AIG, and not threatened the individuals with a 90% tax that was essentially punitive.

I agree. The government missed that. But then again the bonuses aren't that big a deal in the global scheme of the monies they are tossing around in such a short period of time. I'm sure they are all under great pressure, and they are undoubtedly not helped by bad actors slipping in their own pet agendas. I don't trust Dodd any more than Paulson, and likely any number of others that have had their fingers in the Public Treasury nominally trying to put out this recession fire.

I don't see Jake DeSantis's letter as being self-serving. He simply lies it out as he sees it. Those bonuses are nothing compared to what other companies have paid out, and it was norm until this quarter. DeSantis makes the point that none of those receiving the bonuses were responsible for the Credit Default Swaps that brought AIG down.

Should DeSantis and others be held accountable for what others did within the company, especially when they were not involved or responsible? Most companies are so compartmentalized that one group certainly doesn't know what another group is doing. They learn about it as information trickles in from others or management.

Are the bonuses excessive? Well some will say yes and others no.

The point is that DeSantis chose to take his compensation as bonus. It doesn't matter to me that he wasn't to blame for credit default swapping. The real issue is that he deferred compensation in the hopes of capturing a risk premium when things went well. But things didn't go well. His fault or not, he took a gamble and lost. He got the wrong side of the risk coin. So pay the cashier. If he couldn't afford to gamble, then he shouldn't.

Is it fair? Maybe he made a bad choice. And I guess it is bad luck. But publicly bellyaching about it in the Op-Ed, looks to me to be a further bad choice aimed at drawing attention to himself for whatever gain he might hope to reap from the notoriety. If he really offered value to AIG, I'd think he would be better advised to negotiate a new arrangement with them based on what he could do for them going forward, instead of burning bridges and throwing stones as the company continues to burn around him.

 

[TheStatutoryApe]

Not to mention that he'll be able to get a tidy tax deduction for contributing it to a charity. I wonder what charity?

A nice tax deduction on his one dollar salary?

The point is that DeSantis chose to take his compensation as bonus. It doesn't matter to me that he wasn't to blame for credit default swapping. The real issue is that he deferred compensation in the hopes of capturing a risk premium when things went well. But things didn't go well. His fault or not, he took a gamble and lost. He got the wrong side of the risk coin. So pay the cashier. If he couldn't afford to gamble, then he shouldn't.

Is it fair? Maybe he made a bad choice. And I guess it is bad luck. But publicly bellyaching about it in the Op-Ed, looks to me to be a further bad choice aimed at drawing attention to himself for whatever gain he might hope to reap from the notoriety. If he really offered value to AIG, I'd think he would be better advised to negotiate a new arrangement with them based on what he could do for them going forward, instead of burning bridges and throwing stones as the company continues to burn around him.

I believe he said that he and others stayed and took pay cuts to help out when they could have easily left and gone elsewhere because they were assured that they would be receiving their bonuses. Just how many people do you think are out there that are willing to clean up someone elses mess for little to nothing? To work their butts off for a year and when they are rewarded get called greedy dirtbags who ought to be hanged?

 

[gmax137]

I think all the vitriol over this is because they (whoever they are) started off by calling this a "bonus." Most people equate the notion of a bonus with "extra pay." Notice how it is compared to a "tip" above. So, it appears that they are getting extra rewards for screwing up.

To me, these payments aren't much different than a salary, to the extent that these guys are getting this money regardless of the hours they put in (ie, it isn't a "wage" in the sense of so many $ per hour). Especially if their salary is $1 per year. Also, I suspect these guys have been putting in 60 or 80 hours a week on the job (I don't know that for a fact, but from what I have seen in other companies, that's how you get into similar postions of authority and responsibility). So it's really more like an annual paycheck than what you or I might consider a "bonus."

 

[OmCheeto]

So it's really more like an annual paycheck...

There's your clue.

I think it is difficult for the average American to comprehend being paid once a year. But if Mr. DeSantis was making a million a year for 11 years then he's probably socked away more than most of us will make in about 10 lifetimes working 80 hour weeks.

I was trying to find some background on the fellow and found a blog where someone posted the following:

http://neveryetmelted.com/2009/03/25/jake-desantis-shrugged/"
25 Mar 2009 um 10:54 am
Buh-bye, Jakie. And take all your arrested-development adolescent shruggers with you.
...
Maybe all you Rand cultists didn’t notice, but the crony capitalists in Atlas Shrugged were villains. The heroes actually made useful durable goods. Now go, raise your own kobe beef, build your own mansions, mow your own golf courses, roll your own cohibas, whatever. Just go. Go now. Before we get the guillotines out.

Of course, it was the last line that had me rolling on the floor.

I believe he said that he and others stayed and took pay cuts to help out when they could have easily left and gone elsewhere because they were assured that they would be receiving their bonuses. Just how many people do you think are out there that are willing to clean up someone elses mess for little to nothing?

Compared to Mr. DeSantis's salary over the past decade? Every average American...

To work their butts off for a year and when they are rewarded get called greedy dirtbags who ought to be hanged?

It's just the mood of the nation right now. And we're only using him as a scapegoat.

I, along with everyone else I know, used to love to watch that TV show; "Lifestyles of the Rich and Famous". It was fun. We could live vicariously, without having to go through all the backstabbing, and behind licking involved with the climb of the corporate ladder. It's just something most of us find distasteful. Now if the corporate boys had played their cards right, and not pushed us into the bubble in the first place, then everything would still be ok. But they didn't. And as Humanino alluded to, they, and we, are lucky to be living in this country.

http://www.imf.org/external/pubs/ft/fandd/2000/03/jarvis.htm
The pyramid scheme phenomenon in Albania is important because its scale relative to the size of the economy was unprecedented, and because the political and social consequences of the collapse of the pyramid schemes were profound. At their peak, the nominal value of the pyramid schemes' liabilities amounted to almost half of the country's GDP. Many Albanians—about two-thirds of the population—invested in them. When the schemes collapsed, there was uncontained rioting, the government fell, and the country descended into anarchy and a near civil war in which some 2,000 people were killed. Albania's experience has significant implications for other countries in which conditions are similar to those that led to the schemes' rise in Albania, and others can learn from the way the Albanian authorities handled—and mishandled—the crisis.

Not to say that that is going to happen here. Although I've heard people say it will, and we need to buy guns and stock up on "non-genetically enhanced seeds" to ward off the impending famine, etc. etc.. But I brush these people off as imbeciles, with little comprehension of life outside of pop hysteria media.

It is unfortunate that innocent people at AIG are being maligned. I know someone who worked for Arthur Anderson as an accountant during the Enron fiasco. Guess who still doesn't have a job. As far as I know, she was not involved with Enron whatsoever.

But I think the pitchfork waving is necessary. Corporate America needs to know that they wouldn't exist without our consent.

One day very soon, we will all get over this, http://www.youtube.com/watch?v=p3MiD_U4CHQ", and get back to dreaming about being in bed with the rich people again. Kum Ba Yah...

 

[LowlyPion]

I believe he said that he and others stayed and took pay cuts to help out when they could have easily left and gone elsewhere because they were assured that they would be receiving their bonuses. Just how many people do you think are out there that are willing to clean up someone elses mess for little to nothing? To work their butts off for a year and when they are rewarded get called greedy dirtbags who ought to be hanged?

I'm not going to pretend to know what representations were made to him, except to note that he was choosing to take a bonus in lieu of salary. I will presume that he accepted such an arrangement because he felt he would get a greater return. Unfortunately bonus isn't exactly as sure a thing under the law as salary, and he must be sophisticated enough (given the magnitude of his bonus) to know the difference.

If his position is crucial, then his continuing labor there has value. If he was worth it, a way would be found to keep him. I can empathize with him just as I can with the auto workers thrown out of a lifetime of knowing nothing else, not through any fault of their work, though maybe their union and their benefit demands have contributed - but ... still and all the economy is pretty rocky out there, and I think there are a lot of innocent body counts among the "reductions in force" all over most every industry.

 

[Al68]

Unfortunately bonus isn't exactly as sure a thing under the law as salary

It is exactly the same legally. A promise to pay a retention bonus is the same as a promise to pay salary or an hourly wage. Especially after the terms are met. It would be despicable for a company to promise an hourly wage, then not pay it after the fact.

It's equally despicable to promise a retention bonus in exchange for not switching to another company during a specified time, then not paying it after the fact. That's what AIG tried to do, and trying to not honor a contract isn't exactly the best advertisement for a company that needs the trust of its clients. They should have just been left to fail.