AIG Still Paying Bonuses to Top Execs
I guess the folks at AIG, the insurance company that has gotten tens of billions of dollars from the government to keep it afloat, didn’t listen very closely the other day when President-elect Barack Obama mentioned in an interview that top business executives should forgo their bonuses in troubled times.
Via Naked Capitalism, the Financial Times reports that on the day before Thanksgiving, AIG revealed it will give millions of dollars in “retention bonuses” to 130 key executives. The timing gets even more peculiar: It came one day after AIG said that it would restrict salary and bonuses for top executives.
From the Financial Times:
An AIG spokesman said on Wednesday that retention bonuses were different from the annual bonuses included in Tuesday’s statement … The company said at the time that retention bonuses would be necessary to maintain continuity and value at various AIG units.
“Retention bonuses are a better alternative for the repricing of option awards so long as they are reasonable, fully disclosed and truly needed to retain talent,” said Richard Ferlauto, director of corporate governance and pension investment at the American Federation of State, County and Municipal Employees union.
“But in this market we don’t see much clamor for executives who made big bets, cannot make risk and were paid more than they are worth,” he added.
Yves Smith at Naked Capitalism agreed;
Do you really believe, with massive deleveraging and all sorts of big financial firms, including insurers, teetering, that AIG executives have great employment prospects these days? But the bigger issue, as far as I am concerned, is the misrepresentation, trying to claim that AIG was forgoing significant senior level comp, only to learn that they define terms a bit differently than the rest of the world does.
I suspect this little development isn’t going to go unnoticed. AIG may have a very Black Friday ahead.