News AIG bonus outrage has employees living in fear

[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.