# The AIG taxpayer bailout well spent **URL:** \ **Category:** The BBQ Pit\ **Created:** [October 7, 2008, 7:45pm UTC](https://boards.straightdope.com/t/the-aig-taxpayer-bailout-well-spent/466891 "2008-10-07T19:45:17Z")\ **Posts on this page:** 14\ **Page:** 11
**Author:** ![Sitnam](https://avatars.discourse-cdn.com/v4/letter/s/6a8cbe/32.png) [@Sitnam](https://boards.straightdope.com/u/Sitnam)\ **Post date:** [October 10, 2008, 3:19am UTC](https://boards.straightdope.com/t/the-aig-taxpayer-bailout-well-spent/466891/201 "2008-10-10T03:19:12Z")
> [@gonzomax](#): > > It was tax payer money. Now it is theirs. they apparently will treat it just like they treated the money they had before. Huge bonuses and salaries ,vacations whatever they feel like. They do not demonstrate that they have learned the errors of their ways.That is not how you earn the trust of the people. Whoa, hey, settle down. I started this Pit thread. I already hate the bastards. You pointed out they already spent the money, I assumed that was what they were supposed to do with it. ---
**Author:** ![Ruby](https://avatars.discourse-cdn.com/v4/letter/r/13edae/32.png) [@Ruby](https://boards.straightdope.com/u/Ruby)\ **Post date:** [October 10, 2008, 4:43am UTC](https://boards.straightdope.com/t/the-aig-taxpayer-bailout-well-spent/466891/202 "2008-10-10T04:43:46Z")
> [@Euphonious\_Polemic](#): > > I just read in today’s paper that the execs had a plan to take out full page ads in major papers to explain why they did the $400,000 retreat. A P.R. person had to explain to them (using small words, I expect) that it would be a Really Bad Idea to spend taxpayers money on expensive advertisements that defend them spending taxpayers money on spa treatments. I think these guys are just clueless. Think Dilbert-pointy-haired-boss clueless. > > One interesting thought I had… we just cannot grasp the amount of money involved. When numbers get up into the billions, our brains just tend to go “bwah?” > > So here’s an analogy - note that I’m not defending the buffoons at AIG. > > \*Your brother in laws business is floundering. He comes to you begging for a loan. His line of credit is toast, and he needs cash now to avoid going under. Some of your friends work for him, and they’ll be out of work if he goes out of business. > > You discuss this with your wife. “Bob needs $87,000 - we could get a loan and give him the money in exchange for a share of his business” > “Okay” says your wife, “but I need new appliances, so lets get a bit bigger loan”. > “new X-Box!” says your son > “Clothes!” says the daughter > “Hmmm… New golf clubs for me…” you think. So you go ahead and get a $95,000 loan, and give $87,000 to your BIL > > The next day - you see your BIL in the store. He’s buying groceries, and in his order is… Some jelly beans! YES! \*\*40 cents worth of bulk jelly beans! \*\* The bastard! He’s taking your borrowed money and blowing it on jelly beans! To make it worse, they are the gourmet kind, that cost **2.3 cents MORE** per pound! > > You confront him. “You prick! - why are you buying jelly beans with MY MONEY!” > > “Err… I promised a treat for my employees?” he ventures… > > “NO EXCUSES!” you shout.\* > So… That’s what $87 BILLION dollars is like. I know you’ve denounced this analagy but I just wanted to mention that this is very much like how some rather large charities get people to donate. “Only 49 cents a day and you can sponsor an entire village including a goat and a chicken.” It’s not real money. No one saves 49 cents a day. $15.00 a month or $180 a year makes more sense but you’re not likely to get people to donate that much. ---
**Author:** ![SpoilerVirgin](https://avatars.discourse-cdn.com/v4/letter/s/4491bb/32.png) [@SpoilerVirgin](https://boards.straightdope.com/u/SpoilerVirgin)\ **Post date:** [October 11, 2008, 12:01am UTC](https://boards.straightdope.com/t/the-aig-taxpayer-bailout-well-spent/466891/203 "2008-10-11T00:01:22Z")
> [@featherlou](#): > > The high-level executives have A LOT of stocks in the company. They make tasty salaries, but they also have stocks that perform better when the company performs better. The executives make decisions that put more money in THEIR pockets, but because the company is employee-owned, their decisions also put more money in the EMPLOYEE pockets. > > This is the kind of scenario I’d like to see more of; CEO income being tied to their decisions primarily, and everyone else’s secondarily (so that they also benefit when the CEOs benefit, and the CEOs have good motivation to benefit everyone). Unfortunately, this is one of many things that caused horrible problems at Enron among others. When you incent CEOs with the stock price, they are motivated to drive the stock price up by any means necessary. Money-hungry CEOs end up lying, stealing, and cheating in all manner of ways to make the stock price higher, even as the company and its products collapse under them. Tying CEO compensation to stock prices was a major reform effort of the 1990’s, but it’s been largely discredited now due to the many opportunities it afforded for stock manipulation and dirty dealings. ---
**Author:** ![DanBlather](https://avatars.discourse-cdn.com/v4/letter/d/f4b2a3/32.png) [@DanBlather](https://boards.straightdope.com/u/DanBlather)\ **Post date:** [October 11, 2008, 1:15am UTC](https://boards.straightdope.com/t/the-aig-taxpayer-bailout-well-spent/466891/204 "2008-10-11T01:15:33Z")
> [@SpoilerVirgin](#): > > Unfortunately, this is one of many things that caused horrible problems at Enron among others. When you incent CEOs with the stock price, they are motivated to drive the stock price up by any means necessary. Money-hungry CEOs end up lying, stealing, and cheating in all manner of ways to make the stock price higher, even as the company and its products collapse under them. Tying CEO compensation to stock prices was a major reform effort of the 1990’s, but it’s been largely discredited now due to the many opportunities it afforded for stock manipulation and dirty dealings. I think it goes even further. More and more corporations are driven by stock prices rather than the bottom line of earnings and return on investment. At one time people owned stocks for the dividend as much or more so than the potential capital gain. This is what drove the Internet bubble. ---
**Author:** ![Cat\_Whisperer](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/cat_whisperer/32/4839_2.png) [@Cat\_Whisperer](https://boards.straightdope.com/u/Cat_Whisperer)\ **Post date:** [October 11, 2008, 6:52pm UTC](https://boards.straightdope.com/t/the-aig-taxpayer-bailout-well-spent/466891/205 "2008-10-11T18:52:28Z")
> [@SpoilerVirgin](#): > > Unfortunately, this is one of many things that caused horrible problems at Enron among others. When you incent CEOs with the stock price, they are motivated to drive the stock price up by any means necessary. Money-hungry CEOs end up lying, stealing, and cheating in all manner of ways to make the stock price higher, even as the company and its products collapse under them. Tying CEO compensation to stock prices was a major reform effort of the 1990’s, but it’s been largely discredited now due to the many opportunities it afforded for stock manipulation and dirty dealings. I see what you mean, but the company being 100% employee owned somewhat short-circuits this form of greed; there is no pay-out outside the company, and no external input on how to run the company. It seems to be a slight difference, but significant enough that the CEOs of this company buy into the idea that doing things the right way makes everyone more money. I would go so far as to say that this fully employee-owned company is an example of capitalism done right - the ultimate goal is still to make money and no one gets a free ride, but everyone benefits. I don’t have any idea if this model would work for everyone, but it is working like crazy for this particular company. ---
**Author:** ![Ale](https://avatars.discourse-cdn.com/v4/letter/a/f19dbf/32.png) [@Ale](https://boards.straightdope.com/u/Ale)\ **Post date:** [October 12, 2008, 4:29am UTC](https://boards.straightdope.com/t/the-aig-taxpayer-bailout-well-spent/466891/206 "2008-10-12T04:29:34Z")
> [@featherlou](#): > > I would go so far as to say that this fully employee-owned company is an example of capitalism done right - the ultimate goal is still to make money and no one gets a free ride, but everyone benefits. I don’t have any idea if this model would work for everyone, but it is working like crazy for this particular company. Nooooo!, the proletariat owning the means of production?, you Marxist fiend! :dubious: ---
**Author:** ![UnwrittenNocturne](https://avatars.discourse-cdn.com/v4/letter/u/6de8d8/32.png) [@UnwrittenNocturne](https://boards.straightdope.com/u/UnwrittenNocturne)\ **Post date:** [October 12, 2008, 5:19am UTC](https://boards.straightdope.com/t/the-aig-taxpayer-bailout-well-spent/466891/207 "2008-10-12T05:19:53Z")
> [@featherlou](#): > > I would go so far as to say that this fully employee-owned company is an example of capitalism done right - the ultimate goal is still to make money and no one gets a free ride, but everyone benefits. I don’t have any idea if this model would work for everyone, but it is working like crazy for this particular company. You’re talking like an anarchist. I applaud you. ---
**Author:** ![Cat\_Whisperer](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/cat_whisperer/32/4839_2.png) [@Cat\_Whisperer](https://boards.straightdope.com/u/Cat_Whisperer)\ **Post date:** [October 12, 2008, 5:44am UTC](https://boards.straightdope.com/t/the-aig-taxpayer-bailout-well-spent/466891/208 "2008-10-12T05:44:05Z")
> [@UnwrittenNocturne](#): > > You’re talking like an anarchist. I applaud you. Dammit! I thought I was hiding that better! ---
**Author:** ![Dread\_Pirate\_Jimbo](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/dread_pirate_jimbo/32/3897_2.png) [@Dread\_Pirate\_Jimbo](https://boards.straightdope.com/u/Dread_Pirate_Jimbo)\ **Post date:** [October 12, 2008, 7:27am UTC](https://boards.straightdope.com/t/the-aig-taxpayer-bailout-well-spent/466891/209 "2008-10-12T07:27:43Z")
> [@SpoilerVirgin](#): > > Unfortunately, this is one of many things that caused horrible problems at Enron among others. When you incent CEOs with the stock price, they are motivated to drive the stock price up by any means necessary. Money-hungry CEOs end up lying, stealing, and cheating in all manner of ways to make the stock price higher, even as the company and its products collapse under them. Tying CEO compensation to stock prices was a major reform effort of the 1990’s, but it’s been largely discredited now due to the many opportunities it afforded for stock manipulation and dirty dealings. I’m the hubby **featherlou** mentioned, working for the big-ass, privately owned corporation. A little background on the company: We’re over a century old, by far the largest construction management company in Canada, seventh largest in the United States, and 100% employee-owned. As mentioned, I think the key difference between my company and someone like Enron is the privately owned element. Share values are determined by the company, based on our profitability, not on whether speculators are buying or selling stock. Dividends from those stocks are based purely on the bottom line and are little more than an incentive bonus for everyone in the company – the company doesn’t need the operating capital generated by share sales and so the company’s viability in the marketplace is not tied to share value or overall investment. Ultimately, in our case, the shares are simply a motivator for every employee to do their level best to consistently add value to the company. So all motivation created by our stocks is to improve the company and do what is best from a business standpoint, not simply what will keep the shareholders and the CEO getting paid. Everybody wins, or everybody loses, depending on what everyone does. Does that make any sense? P.S. Last year’s dividend came out to right around 60% ROI. Even for someone in my lowly station within the company, that meant a substantial, very sweet windfall. Just sayin’ 🙂 ---
**Author:** ![Szlater](https://avatars.discourse-cdn.com/v4/letter/s/90ced4/32.png) [@Szlater](https://boards.straightdope.com/u/Szlater)\ **Post date:** [October 12, 2008, 10:40am UTC](https://boards.straightdope.com/t/the-aig-taxpayer-bailout-well-spent/466891/210 "2008-10-12T10:40:18Z")
> [@Dread\_Pirate\_Jimbo](#): > > I’m the hubby **featherlou** mentioned, working for the big-ass, privately owned corporation. Are the shares part of your salary, or do you have to purchase them? Do you get to vote on things at the company AGM? ---
**Author:** ![Dread\_Pirate\_Jimbo](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/dread_pirate_jimbo/32/3897_2.png) [@Dread\_Pirate\_Jimbo](https://boards.straightdope.com/u/Dread_Pirate_Jimbo)\ **Post date:** [October 12, 2008, 6:50pm UTC](https://boards.straightdope.com/t/the-aig-taxpayer-bailout-well-spent/466891/211 "2008-10-12T18:50:53Z")
> [@Szlater](#): > > Are the shares part of your salary, or do you have to purchase them? Do you get to vote on things at the company AGM? You have to purchase them. There is a share offering once a year for all employees, every spring, the amount of which is tied to your relative position on the corporate totem pole and the availability of shares. You can buy none, some, or all of the offering, with no pressure one way or the other. As you move up the ladder, you are eligible to purchase voting shares (although I’m not currently at that level). So the deck is still stacked in favour of the top dogs, but from my standpoint it’s still much more equitable than your typical corporate model. ---
**Author:** ![Szlater](https://avatars.discourse-cdn.com/v4/letter/s/90ced4/32.png) [@Szlater](https://boards.straightdope.com/u/Szlater)\ **Post date:** [October 12, 2008, 7:06pm UTC](https://boards.straightdope.com/t/the-aig-taxpayer-bailout-well-spent/466891/212 "2008-10-12T19:06:44Z")
> [@Dread\_Pirate\_Jimbo](#): > > You have to purchase them. There is a share offering once a year for all employees, every spring, the amount of which is tied to your relative position on the corporate totem pole and the availability of shares. You can buy none, some, or all of the offering, with no pressure one way or the other. As you move up the ladder, you are eligible to purchase voting shares (although I’m not currently at that level). So the deck is still stacked in favour of the top dogs, but from my standpoint it’s still much more equitable than your typical corporate model. Can you sell your shares at any time to whom ever you like? How does your salary compare to the salary of someone with a similar position at another company? What is the money generated by the annual share issue used for? Who has access to the data on share ownership? Could it conceivably be used in a prejudicial manner with regards to your post? I’m not trying to rubbish the idea, I’m just curious as to how it works. I very much like the idea of the means of production being owned by the workers. ---
**Author:** ![eulalia](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/eulalia/32/457_2.png) [@eulalia](https://boards.straightdope.com/u/eulalia)\ **Post date:** [October 12, 2008, 7:36pm UTC](https://boards.straightdope.com/t/the-aig-taxpayer-bailout-well-spent/466891/213 "2008-10-12T19:36:06Z")
> [@Fish](#): > > It’s my curse. I can see **why** these short-timer CEOs want a golden parachute. > > “I’m not responsible for these toxic loans, made before I arrived,” they could say. “It is unfair to compensate me based on the company’s value in stock, which can change due to decisions I never made. You are asking me to take responsibility for billions of dollars in investments approved by a predecessor, which I cannot properly value. If I am to steward your company,” they could say, “I wish to be compensated for my efforts without being penalized for the actions taken by the company before my arrival.” > > Now, of course, once they have accepted compensation on those terms, they should have _fixed the fucking problem._ But once you make a deal like that there’s no incentive to, really. Shame. So, the way to change that, it would seem to me, is to pay them mostly in stock that doesn’t vest for at least a couple of years. That would do a lot to extend the horizons for their planning beyond the next quarter, and possibly smooth out the bumps in the whole economy if everyone did it that way. Then there would be some incentive to manage conservatively instead of just lobbying/voting conservatively. As one who lives conservative and votes liberal, I like the idea of that. ---
**Author:** ![Dread\_Pirate\_Jimbo](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/dread_pirate_jimbo/32/3897_2.png) [@Dread\_Pirate\_Jimbo](https://boards.straightdope.com/u/Dread_Pirate_Jimbo)\ **Post date:** [October 13, 2008, 12:02am UTC](https://boards.straightdope.com/t/the-aig-taxpayer-bailout-well-spent/466891/214 "2008-10-13T00:02:44Z")
> [@Szlater](#): > > Can you sell your shares at any time to whom ever you like? > > How does your salary compare to the salary of someone with a similar position at another company? > > What is the money generated by the annual share issue used for? > > Who has access to the data on share ownership? Could it conceivably be used in a prejudicial manner with regards to your post? > > I’m not trying to rubbish the idea, I’m just curious as to how it works. I very much like the idea of the means of production being owned by the workers. You can sell your shares back to the company at any time, for whatever the current market value is, but you can’t deal them to another employee or a non-employee. Salaries are competitive with the market, but not at the top of the scale. The popular adage around the office is that no one works here for salary, but for the dividends. The money rolls into the company’s general resource pool and becomes part of our operating capital, but our annual numbers pretty clearly demonstrate that if everyone sold all their shares tomorrow, the company would still have more than enough operating capital to continue on with nary a slowdown. As far as I am aware, all the financial figures are a matter of public record. For example, I saw a bunch of the numbers bandied about in a newspaper article comparing our business strategy with that of one of our publicly owned competitors. Finding out exactly how many shares each and every employee owns might be tough to locate, but share value and dividend values are all relatively easy information to get – it’s essentially part of the attraction of working for the company and a means for luring the best and brightest employees to us. All very good questions! Feel free to pick my brains further, if you have any other questions. 🙂 As another example of doing things the right way, which I only know of anecdotally, a former employer of mine was frequently talking about a textile company he had heard about in the United States which hadn’t increased hourly wages in over 50 years. This particular company apparently paid everyone minimum wage and then cut every employee a profit-sharing cheque each month, based on seniority. The profit-sharing money was apparently so good that the workers never felt the need to demand higher base wages. But, again, I can neither confirm nor deny the existence of this company, except that I heard the story many times (ironically, that particular boss, who was so high on the concept of profit-sharing, never did implement such a program at his business, even though he thought it was a better way to operate). [Previous page](https://boards.straightdope.com/t/the-aig-taxpayer-bailout-well-spent/466891.md?page=10)