OK, So let’s say I’m an AIG guy in line for one of these substantial bonuses, six to seven figures.
Now, with all that’s going on, wouldn’t you walk in the bathroom, look yourself in the mirror and say, “Dude, this is a lot of cash, but I just gotta let this one go. I made it this time… I’ll make it again. The timing just wasn’t right. It wasn’t in the cards. This was one of those things my MBA didn’t teach me…”
With all the negative press, and with the capability to make it again possibly- wouldn’t you just walk away from this. What about Karma here?
I understand these men and women that earn these bonuses work very, very hard, take huge risks and have impressive, difficult to get qualifications. I understand they likely *earned *these bonuses. I understand that.
But in this case, I wonder… What *is *the right thing to do? The best thing to do?
It’s amazing what a person can justify under the right set of circumstances. For instance to use your example, if you knew that your share of the bonus was then gong to get split up and sent to all of your colleagues would you still turn it down? If you knew it would go back to the company then that would be a pretty easy decision, but I would bet that isnt’ the case.
Kind of like at my company. I have targets for my performance, the team performance, corporate performance and my project margin. Say I hit three of those four, but the fourth one is terrible because some idiots in part of the company screwed the pooch. As part of my contract, I’m supposed to get paid out for hitting my targets. Legally, I could sue to get that payment. Obviously, I miss out on the bonus for the area that failed.
Of course, my bonus might be 1% of what their execs might be. But if you add up thousands of people getting small bonuses, the payout will still be large.
For the most part, I think the 2008 bonuses should be paid out, mostly because of the potential for lawsuit. But the 2009 bonuses better be restructured to deal with the changed situation.
The right thing…the BESt thing…is to take one for the team!! I’m beyond fed up with the people in this world that cry out “but I deserve ‘xyz’”… Perhaps they do, but when it comes to my back pocket paying out ‘their deservences’ give me a friggn’ break! I would like to rally up all these SOB’s that ‘deserve’ their bonus into one room with about 100 of us that are paying for it and see what they say then. They want it and will ask for it, why?! Because they know they can get it, and get it easily! I’m amazed…AMAZED at the sheer greed in the world.
So using that logic, exactly why are we bailing out homeowners who took out adjustable rate mortages or bought homes during the boom and are now under water?
“For the most part, I think the 2008 bonuses should be paid out, mostly because of the potential for lawsuit. But the 2009 bonuses better be restructured to deal with the changed situation.”
That is likely the best measured response as it honors the agreements already in place but also provides for some of the potential (perceived) issues that may have contributed to this.
I abosolutely don’t think we should bail out anyone. For the people that made stupid financial decisions it’s their responsiblity to take care of themselves, not mine.
These bonuses are being paid under legal contracts that were drawn up before the AIG bailout.
Here is the problem: Wall Street and much of corporate America for that matter, have compensation structures in the form of legal contracts drawn up that reward them with lavish bonuses - whether they succeed or fail. In this case, the contracts reward AIG execs in the face of even catastrophic failure. Ridiculous compensation structures without incentives to succeed are a big problem that needs to be fixed across the corporate landscape.
Now, do these people have a conscience not to take money? Since they are the ones that helped get us into this mess, my guess is no.
My company is restructuring/downsizing. We are in the manufacturing and distribution sector and business is way down. We have closed entire sales offices and even a major division. Revenue has gone from $300M to less than $100M in a little over a year. RIFs have reduced us to less than 50% of previous personnel levels.
I was approached last year with an offer similar to many of the AIG bonuses… a retention bonus. While not 6 or 7 figures, my bonus would have kept 1 more person employed for a year. However, I took the bonus anyway. A couple of reasons:
I did my job and the down fall of the company has nothing to do with my area. I must have done it well for them to consider me valuable enough to them to warrant the offer.
I may be on the street soon if things continue to slide and I need to look out for number one.
Nope…as you said, they earned those bonuses. What I’d be a lot more concerned about is whether some of the high performing sales executives are going to look at this and wonder whether their compensation isn’t at risk and decide to take their talents to the open market. What would that going to do for our “investment” in AIG?
My response is based upon your facts about them actually working hard and earning their bonuses.
In that case, I take the money and I don’t think twice about it. Do you actually think that the company has any loyalty to them. There is nothing to insure that they won’t be unemployed tomorrow. That bonus maybe the thing that keeps their family from suffering financial ruin if the company decides to bail on them tomorrow.
The only time I think it would be right to pass on it is if they truly didn’t earn the bonus.
Here is the problem: Wall Street and much of corporate America for that matter, have compensation structures in the form of legal contracts drawn up that reward them with lavish bonuses - whether they succeed or fail. In this case, the contracts reward AIG execs in the face of even catastrophic failure. Ridiculous compensation structures without incentives to succeed are a big problem that needs to be fixed across the corporate landscape.
Do you KNOW that all of the people at AIG fall under this sweeping generalization? My understanding is that a lot of these bonuses are retention bonuses to keep the best and the brightest from bolting for the door and going to other more stable companies.
Also, it is my understanding that most bonus structures are set up with a personal, team and corporate element and that if you are an outperformer and do everything asked of you then you are not screwed if others at the top mess up.
Is the failure of AIG the fault of EVERY AIG employee? I think it is easy to demonize AIG and its employees and play the populist card as is being done right now. The reality is that many of these decisions to award bonus are in the better long term interest of the holders of AIG, namely the government and taxpayers.
This titanic has been going down by the stern for a while now. If you were there at AIG and are now in charge of the main pump, are you going to leave it knowing that you’re more then likely never going to get another job because your name is now forever attached to this AIG mess. Then because of all the folks on the unemployment line from wall street already the prospects of getting a job in the financial sector is bad enough without the name AIG attached to you.
The question that has been going through my mind this weekend when I heard, is that, the Government owns 80% of the company. How was this a surprise to the Government when the company was spending almost a half billion dollars? The President has called for more oversight of the financial process and markets, but we own the freaken company and no one in the government is taking any leadership in seeing that the company is doing anything other then getting the first class passangers to the life rafts and leaving us stearage passengers in the engine room.
You can’t expect people to not accept money. People want to be up in arms about execs being greedy, but have labor union been any less greedy over the years? They have played a huge part in helping to destroy some of America’s proudest companies.
BTW - In most of these cases, I really think they are stretching the term “executive” way beyond reason.
**Do you KNOW that all of the people at AIG fall under this sweeping generalization? My understanding is that a lot of these bonuses are retention bonuses to keep the best and the brightest from bolting for the door and going to other more stable companies. **
I’m not saying this applies to all AIG employees, most who probably aren’t getting any bonus. Andrew Cuomo has asked for a list of all the employees who got the bonuses. I’m sure there are some of the “best and brightest” that didn’t work in the division that brought the entire company down. Those execs who led the division of AIG into the excessive risky behavior which doomed the entire company to failure should be fired, if they haven’t been already. But it looks like they are going to get their bonuses anyway. It will be interesting to see who is on the list.
Bottom line: most executive compensation packages are voted on by board members, who in many cases are good buddies with those who get the excessive pay packages. It is a “you scratch my back, I’ll scratch yours, good ole’ boy” system at its best.
If the taxpayer hadn’t stepped in last year, AIG wouldn’t exist. No bonuses, let alone salaries, would be getting paid right now. But because the gov’t bailed them out (b/c they created such a huge mess), they suddenly deserve to keep all of these perks? I don’t know what the law says, or what the gov’t can or can’t do. But common sense tells me that the entitlements went away the day the government saved the company from complete annihilation.
The business philosophy that a person who accomplishes something should get the full financial benefit that results from that accomplishment.
—eat-what-you-kill The feds were very naive not to see this.Buyers beware!!!
First** **I have no problem with the bonuses. Yes I think they are ridiculous and I’m not sure I could live with myself taking them but they are legal contracts, signed sealed and delivered no differently than the rest of us receiving a check on Friday…cept with a few more zeros.
I’d be pissed off as hell and probably sue if I worked for a year and then my employer came back and said “Well thanks for working but we’ve decided not to pay you”. That’s not going to fly.
My understanding is that a lot of these bonuses are retention bonuses to keep the best and the brightest from bolting for the door and going to other more stable companies.
Two points here keeping the above in mind. The bonuses are around 1% of the amount being given to the companies for bailout monies. I’m sorry but that’s big money which means either a lot of people are getting a lot of money or a few are getting a WHOLE lot of money. In either case they are either not all that bright or not bright enough to override everyone else that is apparently not so bright. So the “Best and brightest” doesn’t fly with me in a failing company. Next, where they going to go and wherever they go they aren’t going to make that kind of cash anymore. at least we can hope.
Is the failure of AIG the fault of EVERY AIG employee?
Yes. Obviously to varying degrees, but yes. Those varying degrees will likely go up the more the person makes and thus the people getting these bonuses are probably far more to blame than many in the rest of the company. I doubt they are paying the janitors any bonuses.
**The reality is that many of these decisions to award bonus are in the better long term interest of the holders of AIG, namely the government and taxpayers. **
Actually I completely disagree. The decision to pay these bonueses is purely filling a contractual obligation. The fact that it was a very bad contract has not been addressed. Anytime a person gets paid tons of money in bonuses and that bonus does not reflect the success of the company it is not in the best interest of the company or it’s shareholders, mainly the taxpayers at this point.
The people getting “Bonuses” have done so on a false premis and in the mean time have not performed in a method that benefits the company, obviously.