An AIG employee who reads the Campaign Spot writes in to offer the perspective from within the organization:
I’m a longtime reader, inspired to write for the first time by the latest AIG news. I’m an AIG employee who is fast becoming disgruntled, not so much with the company (I work for the property and casualty insurance operation and we’re kicking along just fine), but with the incessant media firestorm and the outrageous grandstanding by our political leaders.
Were the bonus payments a bad idea? Absolutely. Was the whole issue handled badly from the beginning? Clearly. But it’s been pretty well established by this point that AIGFP entered into contractual agreements with key employees nearly a year ago (and several CEOs ago) that they were obligated to honor. Alternatives likely would have involved lawsuits, resulting in increased payments to these executives, not to mention the fact that those employees would have left and there would most certainly been work stoppage while replacements were found and brought up to speed (and potential replacements would have been able to negotiate salaries equal to a king’s ransom . . . good people aren’t banging down the door to work here at the moment) – I’d like to see someone explain how these alternatives better serve U.S. taxpayer interest.
And the idea that AIG made the decision alone that they would honor these contracts shows an appalling ignorance, or willful blindness, by politicians and news media alike. This is not something AIG would have moved forward on without discussing all the ramifications and alternatives with the Treasury Department, the Fed, Congressional leaders, and others. In fact administration officials are finally admitting that they have known about the issue for months. So for President Obama and others to scream “outrage” now is laughable, and indeed, dishonest. Although perhaps if Obama would trouble himself to staff his Cabinet, he might find himself better informed of important issues.
Also lost amid the public caterwauling are the changes to these retention bonuses going forward (i.e. the only place AIG can do anything about it), the salaries that are being renegotiated and reduced, the number of executives who have voluntarily accepted a 2009 salary of $1. Not to mention the sales of businesses that have already been completed, the impending spin-off of the P&C insurance business into a separate entity, or perhaps most importantly, all of the employees who go to work every day and continue to meet the needs of our customers, despite being subject to abuse from all angles — policyholders calling with concerns; the media propagating one half-truth after another in their attempt to make us the only bad guy in this mess; congressmen calling for mass suicides at AIG headquarters or at the very least, mass resignations.
AIG’s current CEO, Ed Liddy, has been unwavering in his determination to untangle the AIG conglomerate and sell off businesses so that every penny of federal funding we have received is repaid. The first time he spoke to employees, during his first week in the toughest job in America, he spoke with anticipation of the day he can walk into the Federal Reserve and pay off the last dollar of this loan. I have not met a single co-worker (or taxpayer, for that matter) who is not anxious for the same thing.
But the ONLY way that will happen is if we are left alone to do our jobs and continue to bring business through the door. There are many extremely profitable businesses within AIG — there’s a reason we had such status in the industry for so many decades — and it is from these businesses that the government will be repaid. But every single time there is a flare-up in the news like this, it reduces the number of times my phone rings in a day, it reduces my chance of writing a new piece of business this week, it makes it harder for me to retain key accounts. We are working our butts off over here to keep these businesses afloat, ultimately for the good of the taxpayer and quite frankly, the global economy, and all everyone else does is bitch and moan.
I am largely sympathetic with this bonusless AIG employee. Having said that, the bailouts — of AIG, of the banks through TARP, of the Big Three two of the Big Three automakers — were all justified as being necessary because these massive corporate entities were at death’s door. “Help them or they collapse and take the economy down with them” was the argument. In light of that argument, one would expect those companies to start behaving differently. They might try to get out of a 20-year deal for the naming rights to the Mets’ stadium, or sponsoring other events, or try to cut any expenditure not absolutely vital to the survival of the company.
Instead, we’re seeing companies behave pretty much the same way they did before they took billions in taxpayer money — and that warrants the metaphorical pitchforks and torches.
Liddy’s saying the right things, but as Steven Pearlstein notes, he could have pushed to renegotiate these bonuses, noting that they endangered all of AIG. At the very least, I don’t understand why the company was contractually obligated to pay a “retention bonus” to 11 folks who left the company.
UPDATE: A reader helps explain a point on the retention bonuses: “Typically, these are not structured as ‘Here’s X dollars, stay here two years,’ but as ‘If you stay two years, you will at that time earn X dollars, payable on Y date.’ In other words, the bonus is paid at the END of the retention period, not the beginning. So the 11 folks who left the company in all likelihood DID earn those retention bonuses. They stayed with AIG for the required amount of time, and even if they left the firm, AIG was obligated to pay them the bonus.”
ANOTHER UPDATE: A reader notes that while Ford was involved in early discussions of a federal bailout, it has not taken any bailout money.