I have not said much about the AIG bonus hullabaloo. Frankly, I thought the outrage was ill-informed and silly. AIG wanted to keep some people around to help fix the mess it was in. Any sensible person would have one foot out the door of AIG looking around for a more stable employment opportunity. So AIG did what companies in bankruptcy typically do. They offered retention bonuses to entice people to stick around.
I understand it looks bad that taxpayer money is going to bonuses for a company at the epicenter of the financial meltdown. But a company is only as good as its employees.
I assume the bad idea of taxing these bonuses passed by the House of Representatives will die in the more sensible Senate discussions. (The Senate may also have read the Constitution and noticed that section prohibiting Bills of Attainder.)
If you still have a pitchfork in your hand and want the AIG bonuses revoked, take a look at this letter of resignation from Jake DeSantis: Dear A.I.G., I Quit!. It was published in the Op-Ed Section of the New York Times.
I take this action after 11 years of dedicated, honorable service to A.I.G. I can no longer effectively perform my duties in this dysfunctional environment, nor am I being paid to do so. Like you, I was asked to work for an annual salary of $1, and I agreed out of a sense of duty to the company and to the public officials who have come to its aid. Having now been let down by both, I can no longer justify spending 10, 12, 14 hours a day away from my family for the benefit of those who have let me down.
Does that sound like a guy who is “stealing” taxpayer money?
See:
- Dear A.I.G., I Quit! by Jake DeSantis in the New York Times OP-ED
- Bill of Attainder from Wikipedia
- Bill of Attainder? Communist Revolution? Fire Bad? from Above The Law
- United States Constitution from Cornell University Law School
- Say on Pay by David Childers of EhticsPoint
- Drive to Tax AIG Bonuses Slows by Greg Hitt in the Wall Street Journal
- A.I.G. Bonuses, Ethics, and the Rule of Law from The Business Ethics Blog, by Chris MacDonald
- An Act to impose an additional tax on bonuses received from certain TARP recipients (H.R. 1586)
I’m hardly a “rabble-rouser” but the AIG bonuses touch a deep vein of disgust more and more Americans have with people they feel, rightly or wrongly, represent a sense of entitlement. The resignation letter is honest and heartfelt, but I have no sympathy. There are plenty of unemployed professionals who would take that job for a 100K/year and benefits. If you don’t want to work 60-hour weeks…don’t.
The idea that we have to pay a premium for the “best,” is problematic because I thought we already had “the best.” The “best” were best at working the system to their advantage. Maybe we need a different concept of “best” that does not come with a six-plus-figure price tag.
Dave –
There are two separate issues. One is the huge compensation demanded by investment professionals. We may not like it, but that is what the market bears. (You can make the same argument about Manny’s salary as well.) Like it or not, I would assume that many of those AIG people could have gotten similar compensation elsewhere.
The other issue is the real substantive one. (Adjust the zeroes as needed). Most people bail out of failing companies and look for opportunities at companies that are not going down the drain. You always see retention bonuses at bankrupt companies. You also see it retail liquidators. Those folks at Circuit City were getting paid relatively well, knowing the job could go “poof!” at any moment.
Even if you think the bonuses were excessive, you need to look at AIG’s ability to attract and retain employees.
Would you have taken a job at AIG six months ago?
Would you take a job at AIG now?
Personally, I would have been very hesitant to take a job at AIG and there is no way I would go there now. I don’t want people protesting on my front lawn!
I think it appalling that employees of this bankrupt organisation think that their renumeraton should continue as normal. It is a fallacy that these unwarranted bonuses are required to retain essential employees.
If the government didn’t bail them out, then these essential employees would be unemployed and would not be getting any renumeration or entitlements owing.
They should be grateful that they have been bailed out. The average Joe on the street has no such safety net in their job. If I was a headhunter or recruiter for a financial products company, any CV with AIG as a previous employer would make me think twice.
Just an opinion from the great “unwashed”
Roland –
There are lots of opinions on this issue and I completely understand your position.
I think you need to separate the company from the employees. AIG was a train wreck and the employees are trying to fix past mistakes.
As I said in the reply to Dave, would you want to work at AIG right now? I would guess that these attacks have made it really, really hard for AIG to hire people.