Despite Its Troubles, AIG Still Employs the Blog Police
Felix Salmon at Portfolio brings up something I’ve been meaning to mention as well: AIG, the giant insurance company bailed out by government to the tune of $150 billion so far, has a Blog Relations department.
It’s true. Someone from this crucial function at AIG apparently emails bloggers to complain about what the company considers inaccuracies in press coverage. Salmon got one related to the Wall Street Journal’s piece on AIG having made $10 billion in speculative bets gone bad. AIG seemed a bit touchy about this news, as well it should have. As the Journal explained, the firm hadn’t quite explained all those risky trades to investors.
Salmon said the blog relations folks were writing to set the record straight. But their efforts didn’t exactly turn out that way. Salmon looked into the matter, and sided with the Journal. Here’s how he summed up the Blog Relations department’s approach:
Unfortunately, they seem incapable of writing in English, and even if you do try to decipher what they’re saying, it seems to be little more than “this isn’t news, it was on page 117 of our 10-Q”.
I also heard from the Blog Relations people, after blogging about Naked Capitalism’s coverage of the “retention bonuses” the company offered to 130 top executives, a day after saying publicly it intended to forgo bonuses for senior executives.
I just don’t get it, the Blog Relations folks essentially wrote to me. AIG wants to pay the government back for all that money, and to do so, it needs to sell off some of its high quality businesses. The people who run those businesses are the best in their fields and everybody else wants to hire them. If AIG can’t keep them, they won’t be able to sell those businesses for as much money, and they won’t be able to pay back the government as quickly. We’ll all suffer if those executives don’t get those bonuses!
This could be a reasonable argument, but if so, why did AIG wait to reveal the retention bonuses until the day after announcing the firm was canceling bonuses for top executives? And why did AIG also choose to reveal the news on the day before Thanksgiving, when it was most likely not to get noticed
Here’s how Yves Smith at Naked Capitalism, who has been following AIG closely, initially responded to all this
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.
This story only gets better. On Tuesday, Bloomberg reported that AIG acknowledged it had handed out even more non-bonus bonuses than previously revealed. From Bloomberg:
American International Group Inc., the insurer whose bonuses and perks are under fire from U.S. lawmakers, offered cash awards to another 38 executives in a retention program with payments of as much as $4 million.
The incentives range from $92,500 to $4 million for employees earning salaries between $160,000 and $1 million, Chief Executive Officer Edward Liddy said in a letter dated Dec. 5 to Representative Elijah Cummings. The New York-based insurer had previously disclosed that 130 managers would get the awards and that one executive would get $3 million.
Of course, Yves Smith had plenty to say about this:
It turns out that AIG was less than forthcoming in its pre-holiday revelation, and is now having to admit to more bonus payments during a busier news period. Did AIG really not have a good count two weeks ago, or did it think it could get cute and not admit to the full scope of executive largess? Or perhaps it decided, not having gotten as much flack as it feared, to expand the program.
Uh oh, looks like the Blog Relations department better get busy again!
I’m just wondering why a company in so much trouble, and with so much owed to the American taxpayer, even has the time and money to spend on a Blog Relations department. I guess we’re the ones paying for it now.