# Bonuses For AIG **URL:** \ **Category:** The BBQ Pit\ **Created:** [March 15, 2009, 6:11pm UTC](https://boards.straightdope.com/t/bonuses-for-aig/489541 "2009-03-15T18:11:24Z")\ **Posts on this page:** 20\ **Page:** 5
**Author:** ![Green\_Cymbeline](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/green_cymbeline/32/9244_2.png) [@Green\_Cymbeline](https://boards.straightdope.com/u/Green_Cymbeline)\ **Post date:** [March 16, 2009, 6:18am UTC](https://boards.straightdope.com/t/bonuses-for-aig/489541/81 "2009-03-16T06:18:44Z")
> [@SteveG1](#): > > Maybe I’m just dense, but humor me. > > Contract or not, shouldn’t these execs be fired for nonperformance, instead of being rewarded? My thoughts exactly. Why weren’t these people fired? The scenario goes that they were promised to get Y for doing X. But what was X? Surely, X would have to be something positive for the company, right? And clearly X never happened. So why would they be getting paid for X when they never did X? If there are all these AIG execs out there who did a such a superb job and are well deserving of their bonuses, I am hoping that the media will uncover these stories and set us straight. Surely, AIG would want to publicize these great success stories, right? Where are they? Why are they hiding if they feel they did such a good job and really deserve a reward?? ---
**Author:** ![Green\_Cymbeline](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/green_cymbeline/32/9244_2.png) [@Green\_Cymbeline](https://boards.straightdope.com/u/Green_Cymbeline)\ **Post date:** [March 16, 2009, 6:27am UTC](https://boards.straightdope.com/t/bonuses-for-aig/489541/82 "2009-03-16T06:27:54Z")
[quote=“1920s Style “Death Ray”, post:75, topic:489541”] As someone who receives a retention bonus, I’d be right pissed off if I discovered I wouldn’t be getting it and the company wasn’t filing for bankruptcy. It really doesn’t matter what these people who’re receiving bonuses may or may not have done, as long as they’ve fulfilled the terms of their contract then they must be paid in accordance with their contract. If you think the contract sucks then fine but there is really no reason why anyone should not get paid what they signed up for unless they’ve not met their own obligations. [/QUOTE] But in this case, were the “terms of their contract” to TRASH the company? Make unconscionable bets? Surely that can’t be. In what kind of bizarro world would a contract reward someone for trashing a company?? I don’t want to go too over the top, but what about an analogy: A Nazi soldier who works at a concentration camp has a contract that says he gets a bonus if he kills more than 1,000 Jews in the gas chamber, terms which he meets. The Americans then come in and take over the camp and rescue the surviving prisoners, and the Nazi soldier still insists that the Americans pay him his bonus. Please tell me how I am wrong. ---
**Author:** ![Measure\_for\_Measure](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/measure_for_measure/32/557_2.png) [@Measure\_for\_Measure](https://boards.straightdope.com/u/Measure_for_Measure)\ **Post date:** [March 16, 2009, 6:36am UTC](https://boards.straightdope.com/t/bonuses-for-aig/489541/83 "2009-03-16T06:36:16Z")
> [@nyctea scandiaca](#): > > I don’t want to go too over the top, but what about an analogy: A Nazi soldier… > > Please tell me how I am wrong. Well, Godwinizing a strictly pecuniary discussion is almost always bad form. The questions in nyctea’s first paragraph remain relevant though. ---
**Author:** ![Ocean\_Annie](https://avatars.discourse-cdn.com/v4/letter/o/8797f3/32.png) [@Ocean\_Annie](https://boards.straightdope.com/u/Ocean_Annie)\ **Post date:** [March 16, 2009, 7:02am UTC](https://boards.straightdope.com/t/bonuses-for-aig/489541/84 "2009-03-16T07:02:57Z")
[quote=“1920s Style “Death Ray”, post:75, topic:489541”] As someone who receives a retention bonus, I’d be right pissed off if I discovered I wouldn’t be getting it and the company wasn’t filing for bankruptcy. [/QUOTE] The problem is that the retention bonus scheme was cooked up after the government essentially nationalized the company. Last September, when the taxpayers became AIG’s largest shareholder, there was public outrage over excessive pay and large bonuses for AIG executives on the public dole. In response, AIG announced that top executives would forgo the large bonuses, and in true martyrdom, they were willing to get paid one dollar for the year. The sacrifice didn’t last long; within months, AIG announced the large retention program for top executives and more retention non bonus bonus plans came later. All of these bonuses were crafted and paid while AIG posted huge losses for taxpayers. The company lost 64 million last quarter. ---
**Author:** ![Green\_Cymbeline](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/green_cymbeline/32/9244_2.png) [@Green\_Cymbeline](https://boards.straightdope.com/u/Green_Cymbeline)\ **Post date:** [March 16, 2009, 7:03am UTC](https://boards.straightdope.com/t/bonuses-for-aig/489541/85 "2009-03-16T07:03:25Z")
> [@Measure\_for\_Measure](#): > > Well, Godwinizing a strictly pecuniary discussion is almost always bad form. > > The questions in nyctea’s first paragraph remain relevant though. [I learned something new, thank you!](http://en.wikipedia.org/wiki/Godwin%27s_Law) Yes that was a lazy analogy, but my point was pretty clear, wasn’t it? Can someone help me create a more relevant analogy? ---
**Author:** ![Robot\_Arm](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/robot_arm/32/18280_2.png) [@Robot\_Arm](https://boards.straightdope.com/u/Robot_Arm)\ **Post date:** [March 16, 2009, 12:10pm UTC](https://boards.straightdope.com/t/bonuses-for-aig/489541/86 "2009-03-16T12:10:36Z")
> [@nyctea scandiaca](#): > > The scenario goes that they were promised to get Y for doing X. But what was X? Surely, X would have to be something positive for the company, right? And clearly X never happened. So why would they be getting paid for X when they never did X? I was going to offer a guess, but I have to admit I don’t know. Someone in the press needs to start digging and find out what the actual terms were. I have no faith that that will happen. If the company is contractually obligated to pay these bonuses, do we know that those contracts were negotiated in good faith? Maybe everybody saw what was coming and agreed to performance benchmarks that would ensure them one last suckle. **Voyager** made the point that bonus plans are often contingent on the company achieving a certain overall level of performance, why weren’t these? What were the terms, and who set them? This whole story should just be beginning. ---
**Author:** ![aruvqan](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/aruvqan/32/2891_2.png) [@aruvqan](https://boards.straightdope.com/u/aruvqan)\ **Post date:** [March 16, 2009, 12:36pm UTC](https://boards.straightdope.com/t/bonuses-for-aig/489541/87 "2009-03-16T12:36:54Z")
> [@fruitbat](#): > > Bonuses can actually be perfectly justified, both among the rank and file and among the executive leadership. I am not commenting on this case, but from an objective standpoint they are probably necessary. What you have to realize is that AIG is a conglomeration of separate companies, each largely independent from the other with separate goals and expectations. Performance based compensation is vital to reward success and attract talent. > > So, picture yourself as the guy who heads their retail life insurance arm. As your parent company gets wave after wave of negative publicity, you continue to lead and find ways to compete and increase life insurance sales in your division. You are probably already looking around to see if you should be leaving the company. Most everyone here seems to think they should cut everyone’s pay, eliminate their bonuses and cancel the annual conference at a nice resort. That is fine, and I understand that emotional reaction, but as this company struggles to survive it won’t help that their best employees have little reason to stay on board. > > I am quite certain that on this board there is little mileage in the fairness argument, but at the end of the day it was one part of AIG that blew up the rest of the company. For those people, and anyone in a postiion to know what they were doing to get bonuses is outrageous. To take bonuses away from the leaders of their other successful divisions that met their goals, had nothing to do with what happened to AIG and were profitable is unfair and destructive of the government’s interest. They own 80% of the thing after all. > > Your bailout money is going to pay salaries and benefits and paper to print AIG’s brochures. Bonuses based on performance standards are not fundamentally different from those things, especially in divisions that had nothing to do with the meltdown. I sgree, I can really get pissed off at my money going to pay bailouts for people and companies but I definitely feel for the generic cannon fodder employee. I am an accountant with my company, I dont set policy, I dont make huge decisions, I simply sort out vendor invoices, I match money from our client to the vendor who actually picked up their trash and recyclables. I actually deal with a category of trouble/issue invoices so it can be tricky BUT I dont decide to waste the company money paying invoices that are not accurate or dont exist. I dont just hand over money to someone who says they did something with no documentation … and I dont just randomly decide who gets paid what. I get seriously offended that people could just apparently make huge financial decisions based on whim. I really get upset when I am told that I cant get a raise or bonus because of the financial crisis when someone in one of the companies that blew it IS getting their planned bonus/raise. It doesnt matter that that person probably had no say in the whole thing, but it is the little inner monkey that is jumping up and down and flinging poo … I want MY fucking bonus and annual raise… ---
**Author:** ![Fear\_Itself](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/fear_itself/32/19637_2.png) [@Fear\_Itself](https://boards.straightdope.com/u/Fear_Itself)\ **Post date:** [March 16, 2009, 12:51pm UTC](https://boards.straightdope.com/t/bonuses-for-aig/489541/88 "2009-03-16T12:51:32Z")
Has any AIG executive lost their bonus due to non-performance? ---
**Author:** ![Richard\_Pearse](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/richard_pearse/32/13144_2.png) [@Richard\_Pearse](https://boards.straightdope.com/u/Richard_Pearse)\ **Post date:** [March 16, 2009, 1:54pm UTC](https://boards.straightdope.com/t/bonuses-for-aig/489541/89 "2009-03-16T13:54:58Z")
> [@Measure\_for\_Measure](#): > > So if your division pushed your company into insolvency, but the company was rescued at the last minute from bankruptcy by the taxpayer, you think you deserve your _performance bonus_? If I have fulfilled the terms of my contract then I should be paid what was signed for. If I haven’t then don’t pay it. The problem here is that none of you know what the contracts say. It may well be that the company got screwed over yet many people still fulfilled the letter of their contract, as long as the company is not bankrupt then they should be paid. My own bonus is a pure retention bonus, provided I don’t leave the company by the end of 2009 I get paid the bonus. If I stay till 2010 I get paid another, larger, bonus. If the company is going down the tubes, I still get the bonus if they have the money to pay it. Edit: I’m not an executive or anything, but the principle remains. > [@nyctea scandiaca](#): > > I don’t want to go too over the top, but what about an analogy: A Nazi soldier who works at a concentration camp has a contract that says he gets a bonus if he kills more than 1,000 Jews in the gas chamber, terms which he meets. The Americans then come in and take over the camp and rescue the surviving prisoners, and the Nazi soldier still insists that the Americans pay him his bonus. > > Please tell me how I am wrong. The Nazi soldier is not working for, and did not have a contract with, the Americans. The AIG employees are still working for the company they have their contracts with. This is no different than having an investor come in with a cash injection to keep the company running. And I agree with your comment that the contracts couldn’t possibly allow the company to fail spectularly and still require the bonuses, but maybe they did. Or maybe the bonuses are based on last year’s performance. I don’t have the answers, but railing against the world because some people are getting bonuses doesn’t achieve anything and I think it’s misdirected anger. The real problem here is that the company is getting bailed out. The company should be allowed to fail and a smaller, leaner, more successful company can take its place. But so long as it’s propped up, people’s contracts need to be respected. [Conspiracy Theory]Perhaps what’s really happening is that the ones getting the bonuses know too much about the ones signing off on the bonuses. Perhaps it’s silence money.[/CT] ---
**Author:** ![LurkMeister](https://avatars.discourse-cdn.com/v4/letter/l/3da27b/32.png) [@LurkMeister](https://boards.straightdope.com/u/LurkMeister)\ **Post date:** [March 16, 2009, 2:00pm UTC](https://boards.straightdope.com/t/bonuses-for-aig/489541/90 "2009-03-16T14:00:18Z")
> [@Fear\_Itself](#): > > Has any AIG executive lost their bonus due to non-performance? Come to think of it, has _any_ top executive for _any_ company ever lost a bonus foe non-performance? Every time I hear about CEOs or other high-level executives pay and bonuses, the bonuses seem to be a condition of their employment, not something they have to earn. ---
**Author:** ![Bricker](https://avatars.discourse-cdn.com/v4/letter/b/977dab/32.png) [@Bricker](https://boards.straightdope.com/u/Bricker)\ **Post date:** [March 16, 2009, 2:10pm UTC](https://boards.straightdope.com/t/bonuses-for-aig/489541/91 "2009-03-16T14:10:34Z")
> [@The\_Tao\_s\_Revenge](#): > > If you were one of folks responsible for trashing our country’s economy, as statistically you would be, according to [Rubstreak\*\*'s cite, you’d be an even more hateful person for accepting it. > > let them get their bonus, taxed at 110%. Congress could pass a law right quick. I’m going to decline your invitation to shift the debate from whether the bonus could be rescinded to how “hateful” a person who accepts the bonus is. Don’t think I don’t appreciate it – after all, a debate about how hateful something is can go on for pages and pages, since neither side can really cite binding authority on the issue. But I think I’d rather continue to discuss **elucidator** ’s apparent plan that AIG simply not pay. Was your “110% tax” proposal serious? > [@The\_Tao\_s\_Revenge](#): > > Yes because these execs deserve to be paid for raping our economy and taxes with their incompetence. I’m also going to decline your invitation to discuss an esoteric definition of “deserve” that apparently weighs factors beyond “Did the company have an agreement to pay them this money.” ---
**Author:** ![Bricker](https://avatars.discourse-cdn.com/v4/letter/b/977dab/32.png) [@Bricker](https://boards.straightdope.com/u/Bricker)\ **Post date:** [March 16, 2009, 2:20pm UTC](https://boards.straightdope.com/t/bonuses-for-aig/489541/92 "2009-03-16T14:20:38Z")
> [@Voyager](#): > > I have been in many bonus plans, and the deal in all of them is that bonuses are contingent on the company as a whole achieving certain goals. Once that is done, individual divisions/people might get more money, based on certain formulas. This is done partially to not enrage stockholders who might be unhappy that employees are getting bonuses when the company is missing its objectives, and partially to encourage employees to work for the good of the company, and not optimize locally. There are plenty of people meeting their goals and doing a good job in a money losing company. It is accepted that those are the breaks. There are also plenty of good people losing their jobs due to the market turmoil caused in large part by AIG. Agreed. Now, if the bonus plan at issue here is contingent upon some corporate-wide goals that were not met, then I absolutely agree the bonuses should be withheld. Um… is it? > [@](#): > > It seems very clear that they are under a legal obligation to pay. Apparently not. > [@](#): > > My objection is to the idiots who wrote the bonus requirements so that the obligation remains even under present circumstances, to those taking the money even after they destroyed the company and most of the economy, and to the typical “retention” argument. It appears that many companies (not only in the financial industry) are stuck on an argument for bonuses that made a lot more sense when the company was apparently doing well and there were lots of available jobs in the industry. I’d hope that any highly placed exec in AIGs Financial Services Division would be poison. Agreed completely. I’ve been thinking a lot about this problem: by bailing out AIG, we essentially ratify the horrible practices that led to their needing to be bailed out. We can’t NOT PAY; and if we don’t bail them out, they fail, the first domino in a line of failure we don’t want to happen. They’re the morbidly obese guy in the inflatable life raft who happens to be armed with a spear gun: we let him stay on the raft and we start to founder, but if we kick him off, the spear gun shoots a hole in the boat anyway. So we keep him on, muttering all the while about how his poor nutrition habits are now causing trouble for all of us, even those who kept in shape all along. ---
**Author:** ![MichaelQReilly](https://avatars.discourse-cdn.com/v4/letter/m/df705f/32.png) [@MichaelQReilly](https://boards.straightdope.com/u/MichaelQReilly)\ **Post date:** [March 16, 2009, 2:53pm UTC](https://boards.straightdope.com/t/bonuses-for-aig/489541/93 "2009-03-16T14:53:36Z")
[quote=“1920s Style “Death Ray”, post:89, topic:489541”] If I have fulfilled the terms of my contract then I should be paid what was signed for. If I haven’t then don’t pay it. The problem here is that none of you know what the contracts say. It may well be that the company got screwed over yet many people still fulfilled the letter of their contract, as long as the company is not bankrupt then they should be paid. My own bonus is a pure retention bonus, provided I don’t leave the company by the end of 2009 I get paid the bonus. If I stay till 2010 I get paid another, larger, bonus. If the company is going down the tubes, I still get the bonus if they have the money to pay it. Edit: I’m not an executive or anything, but the principle remains. [/QUOTE] I’m sympathetic to your argument, but the fatal flaw with it is that the only reason these people aren’t chasing AIG for their salaries in Bankruptcy Court (where they would get nothing), is because the U.S. bailed out AIG. So to claim that AIG is just another company that has a contractual obligation to its employees is disingenuous at best. ---
**Author:** ![Bricker](https://avatars.discourse-cdn.com/v4/letter/b/977dab/32.png) [@Bricker](https://boards.straightdope.com/u/Bricker)\ **Post date:** [March 16, 2009, 3:08pm UTC](https://boards.straightdope.com/t/bonuses-for-aig/489541/94 "2009-03-16T15:08:06Z")
> [@MichaelQReilly](#): > > I’m sympathetic to your argument, but the fatal flaw with it is that the only reason these people aren’t chasing AIG for their salaries in Bankruptcy Court (where they would get nothing), is because the U.S. bailed out AIG. True. > [@](#): > > So to claim that AIG is just another company that has a contractual obligation to its employees is disingenuous at best. Why? I mean, your first statement is true, but then you follow it up with this “So, …” as though it’s a conclusion that naturally follows. Yes, the government bailed out the company, for the purpose of enabling the company to NOT go into bankruptcy – that is, to meet its contractual obligations. If anything, this compels the conclusion that they MUST meet their contractual obligations. ---
**Author:** ![elucidator](https://avatars.discourse-cdn.com/v4/letter/e/8edcca/32.png) [@elucidator](https://boards.straightdope.com/u/elucidator)\ **Post date:** [March 16, 2009, 3:40pm UTC](https://boards.straightdope.com/t/bonuses-for-aig/489541/95 "2009-03-16T15:40:45Z")
> [@Bricker](#): > > …But I think I’d rather continue to discuss **elucidator** ’s apparent plan that AIG simply not pay… I have a plan? I didn’t know that, I really must try and keep up. When did I get this plan? > [@](#): > > …I’m also going to decline your invitation to discuss an esoteric definition of “deserve” that apparently weighs factors beyond “Did the company have an agreement to pay them this money.” OK with you is some of the rest of us do? A lot of us lefty types are really into such questions like the value of labor and the social contract. We might even be tempted to compare these fellows to the lazy, overpaid union autoworkers , who are so disgracefully overcompensated, the scoundrels! Though I’d probably be willing to pass on a debate about how much the liberals and dirty hippies are responsible for undermining the morality of our financial industry. ---
**Author:** ![Bricker](https://avatars.discourse-cdn.com/v4/letter/b/977dab/32.png) [@Bricker](https://boards.straightdope.com/u/Bricker)\ **Post date:** [March 16, 2009, 4:20pm UTC](https://boards.straightdope.com/t/bonuses-for-aig/489541/96 "2009-03-16T16:20:18Z")
> [@elucidator](#): > > I have a plan? I didn’t know that, I really must try and keep up. When did I get this plan? Well, to refresh your recollection, you posted the following text: > [@](#): > > Heaven knows, I don’t want to seem radical in my views, but it occurs to me that some action might well be taken, a stern talking-to is certainly in order here, perhaps even…dare I say it?..a suggestion to willing ears that perhaps some of that money might be returned? No doubt, they simply weren’t aware of these facts, but now that they know, they will blush with shame and insist on returning the money. I took that to be your plan. > [@](#): > > OK with you is some of the rest of us do? A lot of us lefty types are really into such questions like the value of labor and the social contract. We might even be tempted to compare these fellows to the lazy, overpaid union autoworkers , who are so disgracefully overcompensated, the scoundrels! Sure, discuss away how to place value on future work. I’m all ears. (Well, “eyes,” actually, this being a written medium.) But I don’t want to have that discussion somehow substituted for the other one, the one about how to get the money back that’s already been agreed-to. ---
**Author:** ![elucidator](https://avatars.discourse-cdn.com/v4/letter/e/8edcca/32.png) [@elucidator](https://boards.straightdope.com/u/elucidator)\ **Post date:** [March 16, 2009, 4:52pm UTC](https://boards.straightdope.com/t/bonuses-for-aig/489541/97 "2009-03-16T16:52:43Z")
First off, let me assure you that quite a lot of that “plan” may fairly be considered sarcastic. For instance, I have little faith that a “stern talking-to” will have any positive effect. As well as my suggestion that the looters and pillagers were unaware of the facts at hand and “but now that they know, they will blush with shame and insist on returning the money.” Frankly, I rather doubt that. A lot. Hence, the sarcasm. > [@](#): > > …the one about how to get the money back that’s already been agreed-to… I see. In my deluded state, I insist on talking about “returning the money” whereas you, with your clear grasp of the situation, want to discuss “how to get the money back”. This sort of sophisticated semantic parsing is too many for me. I fold. ---
**Author:** ![Snowboarder\_Bo](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/snowboarder_bo/32/229_2.png) [@Snowboarder\_Bo](https://boards.straightdope.com/u/Snowboarder_Bo)\ **Post date:** [March 16, 2009, 4:54pm UTC](https://boards.straightdope.com/t/bonuses-for-aig/489541/98 "2009-03-16T16:54:55Z")
> [@MichaelQReilly](#): > > I’m sympathetic to your argument, but the fatal flaw with it is that the only reason these people aren’t chasing AIG for their salaries in Bankruptcy Court (where they would get nothing), is because the U.S. bailed out AIG. So to claim that AIG is just another company that has a contractual obligation to its employees is disingenuous at best. In other words, circumstances have changed, and a taxpayer bailout is akin to a new owner taking control of the company, at the request of the management. All old ways of doing business should be declared null & void when necessary, all current contracts to be re-examined at the discretion of the new owners: the American taxpaying public. If they don’t like the new deal, they are free to take their “talents” elsewhere and ruin some other company. ---
**Author:** ![eleanorigby](https://avatars.discourse-cdn.com/v4/letter/e/ee7513/32.png) [@eleanorigby](https://boards.straightdope.com/u/eleanorigby)\ **Post date:** [March 16, 2009, 5:01pm UTC](https://boards.straightdope.com/t/bonuses-for-aig/489541/99 "2009-03-16T17:01:34Z")
All I hope for at this point is that AIG stands as a shining example of business unfettered by pesky regulation. I hope it becomes the response to those who clamor (and they will) for less regulation in future. By no means do I want regs to throttle capitalism, but unregulated capitalism is no different from outright thievery dressed up in “respectable” clothes. Perhaps these mongers are lawyered up to get their bonuses precisely because they are un-hirable at this point. May they all succumb to some other ghastly gambling habit and lose it all. I won’t cry. ---
**Author:** ![amarone](https://avatars.discourse-cdn.com/v4/letter/a/e0b2c6/32.png) [@amarone](https://boards.straightdope.com/u/amarone)\ **Post date:** [March 16, 2009, 5:05pm UTC](https://boards.straightdope.com/t/bonuses-for-aig/489541/100 "2009-03-16T17:05:32Z")
> [@LurkMeister](#): > > Come to think of it, has _any_ top executive for _any_ company ever lost a bonus foe non-performance? Every time I hear about CEOs or other high-level executives pay and bonuses, the bonuses seem to be a condition of their employment, not something they have to earn. Interesting way of putting it: “lost a bonus” rather than “not achieved a bonus”. But to answer your question, yes, of course there have been many executives who have not performed at a sufficient level to be paid their bonus. While I do not work for a Fortune 500 company, down at my level ($10m company), I have never known an executive miss target but still be paid their bonus. [Previous page](https://boards.straightdope.com/t/bonuses-for-aig/489541.md?page=4) [Next page](https://boards.straightdope.com/t/bonuses-for-aig/489541.md?page=6)