"Insurance Giant AIG to Pay $165 million in Bonuses"

Source: http://news.yahoo.com/s/ap/20090315/ap_on_bi_ge/aig_bonuses


Where the fuck can I get a job that rewards incompetence, failure, and criminal action with a monetary incentive (that's paid for with bailout money)?

And to think, all this time I was getting fired for doing things like that. Who knew?

What the fuck does this have to do with capitalism?

This is but merely "trickle down" Capitalism at its best.

A "bonus" on Wall Street is different than what is called a "bonus" elsewhere.

A "bonus" in most places is essentially payment for work results well above the norm, beyond expectation, etc. Average work doesn't warrant a "bonus", much less poor results.

The word means something different on Wall Street. There are two parts to their pay: the "base pay", which is set _before_ the work year begins, and the "bonus" which is calculated _after_ the work year ends. A "bonus" isn't payment for exceptional results: it's the part of the pay that's computed & paid after the year ends. It's the ultimate opposite of a union thing where the paycheck never changes no matter how lazy you are or how hard you work: on Wall Street you can affect your pay *right now* by working harder rather than waiting if/when for a raise.

How the "bonus" will be calculated is set in rules before the year starts. Workers may not know how much it will be ahead of time but they do know how it will be calculated.

For those lower down the food chain the performance of their group, as well as their personal performance, is likely to be the majority of the formula. For senior guys on top of the heap their formula is likely to be more of how the overall business does.

A key point is that this "bonus" is part of the pay, not an extra, and doesn't start at zero the way a regular bonus does. There is a sliding scale with "100%" meaning you get the projected amount, and more or less if you do well, the division does well, the company does well, etc.

The problem now is that the "bonus" formula is a binding contract that can't be changed. Wall Street companies can't cancel or reduce the "bonus" now any more than your boss can decide at the end of the week to reduce your pay for last week. The formula _must_ be followed, exactly as your boss is legally required to pay you the amount in force at the start of the workweek.

This results in a "bonus" being non-zero for several reasons:

1. Nobody ever imagined a case where you want to pay zero when the company hasn't literally gone bankrupt. If the company is operating, in business & alive then the "corporate profit" part of the bonus might go to zero but not the rest. This zombie half-alive bailed-out state of things wasn't even imagined ahead of time.

2. The "bonus" formula is going to have a big component for how the employee's division does. Some parts of the company have cratered but others did fine. That "bonus" formula is a contract and if your division did well they have to pay you as agreed.

3. Likewise a big part of it is individual performance. If you're a stockbroker paid to trade stocks you may have done pretty well - I wouldn't be shocked if a lot of guys did much better than 100% here (better than projected bonus).

4. "base pay" is not the big part of the pay package. The "base" pay may be enough to live on in a dumpy one-room New Jersey apartment but not more. The majority of pay is in the "bonus" part, and if the "bonus" is zero you might not be able to pay your mortgage. If the "bonus" is zero a lot of people *will* quit, not just to get more money elsewhere but to get enough money to just pay the bills.

One irony is that the fact that AIG and others can't eliminate the "bonus" pay is due to laws the Democrats and unions put in place to protect workers years ago. Pretty much if pay is promised it must be paid, and no funny business, even if things go bad in the meantime. It's likely the only way AIG and others can avoid paying the "bonus" is to declare bankruptcy, which makes employees unsecured creditors.

PS. The real mistake in my opinion is that the top executives weren't simply fired outright, for cause, for losing $100B+ dollars. I don't care about the CEO's bonus: why is he still employed at all?

Uh, because they can be fired only by the same boards that hired morons like Pandit, O'Neal, Lewis in the first place. In a capitalist society those banks would be bankrupt and replaced by companies that can actually make money instead of losing them. Alas, they are "too big to fail".

You should thank the war criminal that just left office for handing out cash with no string attached... Here ya go.. have a billion.. and we are sure you know the best way to use it.. or why would you need it?

I made an error - the CEO of AIG was fired in September in the first bail-out (government requirement of the bail-out). The current CEO of AIG was brought in then.

Yes...I noticed that too....nytimes.com wrote....

Word of the bonuses last week stirred such deep consternation inside the Obama administration that Treasury Secretary Timothy F. Geithner told the firm they were unacceptable and demanded they be renegotiated, a senior administration official said. But the bonuses will go forward because lawyers said the firm was contractually obligated to pay them .

I think taxpayers should be contractually obligated to know who received them...such as names and addresses

Then at least in Madoff fashion we can let them know just how happy we are by tp their beach house, keying their car....whatever....anyway....they WILL have to pay someone to fix it or clean it up....thus it will reinvigorate the economy and end up being that final stimulus that everyone has demanded.

Further...if they want any further US taxpayer appropriations....the rules then need to be changed again....as to wit....no more bonuses are to be dispersed internally by any entity until such entity that is receiving TARP funds have not only repaid in full all TARP funds received with interest but have also had 4 consecutive quarters of profits also. This must be shared with their common stock shareholders.

Now I'm not sure what this money is. It appears these aren't Wall Street "bonuses" (ordinary compensation) or even regular bonuses at all, but something called "retention payments". I have no idea what they are. Media reports calling them bonuses don't appear correct.

I was a bit upset in my last post....and yes the media may be wrong in their appraisal of the situation but the fact remains....aren’t we shelling out MORE money to them to HELP them stay afloat???

Yahoo News-
WASHINGTON – President Barack Obama declared Monday that insurance giant American International Group is in financial straits because of "recklessness and greed" and said he intends to stop it from paying out millions in executive bonuses.

"It's hard to understand how derivative traders at AIG warranted any bonuses, much less $165 million in extra pay," Obama said at the outset of an appearance to announce help for small businesses hurt by the deep recession.

"How do they justify this outrage to the taxpayers who are keeping the company afloat," the president said.


I was wrong....so allow me to retract my original statement and reclarify. Let them have what the media has called them as “bonuses”...with the stipulation that if they get these TAPR funds they must immediately reinvest the entire amount of their bonuses back into the company...stock preferably....and the next rule is they can get rid of the stock for 4 years (no loopholes in that statement…they are locked in) minimum...that would give these executives motivation to make the company "profitable".

This would include "retention payments" as well.....

too much FREE cash running around wall st......and way too many families homeless due to the housing bubble.

NY Atty Gen to Probe AIG Bonuses for Fraud

"New York Attorney General Andrew Cuomo told American International Group he wanted a list on his desk by the end of the day of employees set to receive millions of dollars in bonuses.

Cuomo said his office will investigate whether the employees were involved in the insurance giant's near-collapse and whether the $165 million in bonus payments are fraudulent under state law. AIG reported this month that it lost $61.7 billion in the fourth quarter of last year, the largest corporate loss in history.

Cuomo said he would issue subpoenas at 4 p.m. if he didn't get the names plus information about their work and contracts.

President Barack Obama noted earlier in the day that the giant insurance company had received "received substantial sums" of federal aid and said he asked Treasury Secretary Timothy Geithner "to use that leverage and pursue every legal avenue to block these bonuses and make the American taxpayers whole."

Representatives of AIG did not immediately respond to requests for comment.

In a letter Monday to AIG chief executive Edward Liddy, Cuomo said he has been investigating AIG compensation arrangements since last fall and he was disturbed to learn during the weekend of its plans to pay millions in bonuses to members of its Financial Products subsidiary.

In addition to the list of people set to receive bonuses, Cuomo demanded details about who developed the bonus plans and a status report on whether payments have been made.

"Covering up the details of these payments breeds further cynicism and distrust in our already shaken financial system," Cuomo wrote.

The $165 million was payable to executives by Sunday and was part of a larger total payout reportedly valued at $450 million. The company has benefited from more than $170 billion in a federal rescue."

Source: http://news.yahoo.com/s/ap/20090316/ap_on_bi_ge/aig_cuomo

Cuomo, the next Governor of the great state of New York

In the good old days, when a society was being pushed this far the populaces rage would be focused into revolutionary action. But instead of these plutocratic tyrants being publicly lynched in times square, the plebs, no mater what their capacity for general violence, are too placated by amerikan idol and lost reruns to give much of a shit how hard they are being fucked in the ass. Instead of victory gin we have ryan seacrest to numb away the reality.

You tell 'em, RT. Right on.

-Chuck, Vegetarian fanboy

Bad Habit, I was thinking the same exact thing.


"Who doesn't think" it "isn't broken"? I mean, what could be more clear!


You must be a successful attorney!

^^ Sorry this went above your head. Everyone else seemed to get it without a problem. Next time I'll try to post at a 3rd grade reading level so you can participate.

Not only that, but you were trying to lampoon the stuffed shirts at Dictionary.com when you talked about "back peddling". You're like Andy Kauffman! Only you know when you're kidding!