An Ol' Broad's Ramblings
Retention Bonuses?
As was discussed in this post, and headlining all of the news, AIG has paid $165 million dollars in bonuses…what they call retention bonuses. But now we find out that 11 of the executives who were paid those bonuses no longer work for AIG.
AIG paid 73 employees bonuses of more than $1 million, New York Attorney General Andrew Cuomo informed Congress in a letter Tuesday.
Cuomo also wrote that 11 of the employees no longer work for the company. The largest bonus paid was $6.4 million and seven more people received more than $4 million each.
“Until we obtain the names of these individuals, it is impossible to determine when and why they left the firm and how it is that they received these payments,” Cuomo wrote to a congressional committee.
So what exactly were they “retaining”? The argument is that those bonuses needed to be paid to attract and retain the best and brightest talent . I offered my opinion on that particular statement in the last post. But if they were indeed paid to “retain” the best and the brightest, why are they no longer working for AIG? How many more will leave? After all, they have their golden parachute…what’s to keep them from leaving? I’m assuming they’re not “contractually obligated” to stay.
I’ll be curious to see how this shakes out. Who left, when, and how much were they paid?
OK, taking a deep breath, there are a couple of explanations that could explain how this happened.
First, “retain” doesn’t mean forever. There is usually a date that these people need to be around for. Sometimes it is just to help with a transition i.e. not to leave a leadership vacuum in a difficult time. It’s possible, especially with the gubmint putting a new CEO in who would have needed to assess and put a plan in, that the time frame for “retain” could have been relatively short i.e. early this year.
The second way this could have happened is that when the new CEO came in, he decided some of these folks were no longer needed or wanted. It is not unusual in those situations to say “good bye” but leave promised bonuses in place.
My point is that under “normal” business circumstances the behavior that we see is not unheard of as many hyperventilating people want to make it sound like. The issue is that the government got snookered and is pissed. The answer for that is not to blame the people who played by the rules that government set (or didn’t set) but to get government the heck out of these things or get some folks in government folks who are smarter than the bottom 10 percentile of the population.
Points well taken. My real issue is that the government IS involved, and those are my dollars…and I believe there could have been something done to stop this. This administration, and the treasury secretary in particular, are quickly demonstrating that they are very inexperienced, and, in my humble opinion, in way over thier heads…
Couldn’t agree more. It’s like having Otter, Bluto, Pony and the rest running the government. I wish we had a double secret probation we could put them on!
They’re too busy having toga parties (and appearing on Leno) to give a rat’s behind…