Photo from CNN
Meet Edward Liddy, Chairman of AIG, the insurance giant that is fast becoming the poster child for the blunders in the current financial crisis.
The company remarkably announced today its intention to pay out $165 million in bonuses and compensation after taking more than $170 billion in federal bailout money. Hello?
The company recently had announced losing $62 billion in the fourth quarter of 2008. I’m not a financial guru, but I’ve written up my share of incentive-compensation plans, and this does not add up. Sure, some star performers could be meeting numbers while the overall company struggles, but portions of bonus plans should always be tied to the profit of the company. That’s just common sense management. $165 million?!
AIG is failing. I’ve lost all confidence in Liddy and his management team.
In a letter Sunday to Treasury Secretary Timothy Geithner, U.S. Sen. Russ Feingold urged the Obama administration to explore “legal options” to prevent the millions in AIG payouts.
“I write to ask why any bonuses would be legally required, given the company’s abysmal performance,” says Feingold, D-Wisconsin.
Feingold asked whether the bonuses could be canceled or recouped from recipients, and whether the administration will sue AIG executives for breaching their duties to shareholders.
Let’s hold these executives accountable to the shareholders, which includes us taxpayers. This bonus and compensation payout is a gross breach of their duties to their shareholders.
We don’t need to over-analysis this. It’s obvious in plain sight. Liddy says that without the bonuses, AIG will lose competent talent needed to compete. Really? If they have such competent people, why did they lose $62 billion last quarter? Liddy and his management team are not competent. Their compensation structures are out-dated. We cannot allow these companies to operate business as usual. Their business outlook is obsolete. We need new thinkers and a new mindset. I often think about JAL’s CEO & President Haruka Nishimatsu and his unique perspective on executive management during these difficult economic times.
The White House officials and members of Congress reacted with outrage. Liddy has agreed to cut 2009 bonuses about 30%. I’m lost for words. Where’s the accountability to the shareholders?
Also Sunday, CBS’ “60 Minutes” aired an interview with Federal Reserve Chairman Ben Bernanke, who said the AIG bailout rankled him. “Of all the events and all of the things we’ve done in the last 18 months, the single one that makes me the angriest, that gives me the most angst, is the intervention with AIG,” he said.
Today’s announcement was just salt on the wounds for all of us. OUCH!
AIG = Allowing Irreversible Greed.
AIG = All in Greed.
AIG = Arn’t I Greedy.
AIG = A$#holes, in general.
This is sick. Why in the world are we helping these companies that keep sending millions to people who do not know how to run a company? They cry yet get paid millions on the “average joes” taxes. Furthermore, I fear this is just the tip of the iceberg. Look what Enterprise rent-a-car did to get bailout funds:
http://www.butasforme.com/2009/02/25/alert-enterprise-rent-a-car-may-have-fired-employees-as-fake-evidence-when-lobbing-for-bailout-money/
Not to make excuses for these people, but the bailouts are making crooks out of everyone that touches the money.
I can assure you that as an AIG “rank and file” worker I am NOT the recipient of any bonus or even a Merit raise this year. I work hard for this company both before and after the crisis and will receive NOTHING. I am however, the recipient of the daily stress of wondering when I will be laid off! My review wasn’t even administered to me – it was emailed. While I try to understand someof the nuances of what is happening and WHY I can’t help but feel more and more let down and disgusted as the days wear on.
AIG is blind horse with four broken legs…….no one in Washington DC has the courage to pull the trigger.
The US treasury should seize control and completely dissolve the company.
At this point we have nothing to loose…except more bouneses.
AIG is a blind horse with four broken legs…….no one in Washington DC has the courage to pull the trigger.
The US treasury should seize control and completely dissolve the company.
At this point we have nothing to lose…except more bonuses.
When AIG was questioned about the federal assistance they received, what part of the question had anything to do with who else got help? IDo they follow outing techniques from who they lrespect the most. Congress knows (should know) who received help and should not be insulted by deceptive answers from this now indebted to the federal government company.
Hi John, insightful post. However, before we go accusing executives of a breach of their “fiduciary” duty, let’s please understand that fiduciary means a legal relationship of confidence or trust, such as between a trustee and a beneficiary.
On the surface, it appears a breach because the company accepted money from the government and then paid it out. However, if the individuals receiving these payments have a legal right to the payments, and the company maintains a legal obligation for payment, then not paying them is a willful breach of contract. To not pay them, if the employees have certain rights to property (ie. money) under the agreements, would also be a breach of duty.
My experience with the press is that they rarely get the true story right. I don’t think anyone is truly telling the whole story here, we just see how it makes news. How many times were you interviewed by the press, John, and what was written wasn’t what you said? Let’s not linch the executives or the employees who have rights; let’s not ask our government to throw out the 5th amendment; let’s let cooler heads prevail and demand that our government make sense of our investments.
Let freedom ring!
I like your content on your page, but it appears as though your RSS feed is getting a 404 error? Maybe it has something to do with your host. I just thought from webmaster to webmaster I would warn you of this problem so you don’t miss out on potential subscribers! If it still works for you have a friend try it, could be blocking external connections.
Thanks Matthew. I’ve had others test it and things seem to be in working order. Can you try again?
Cheers!