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| Home Front: Politix |
| Dear A.I.G., I quit |
| 2009-03-26 |
| The following is a letter sent on Tuesday by Jake DeSantis, an executive vice president of the American International Group's financial products unit, to Edward M. Liddy, the chief executive of A.I.G. Well worth reading the whole thing. |
| Posted by:trailing wife |
| #24 Not bad. $1M+ for 6 month's work. Let's use the professional sports as an anology. People like to complain about the "big money" pros make. Sure. Let's have tryouts just like the athletes. Open it up, let the candidates show their stuff and find the real supply/demand balance. Instead the US system has become a closed "royal" system of hiring relatives, buddies and sons of buddies. We have an elite who buy political servants and ensconce themselves in rent seeking enterprises and crooked gambling with trillions of made up money. Where winnings accrue to themselves and losses (and what losses!) become a terrible burden on 200 million taxpayers and citizens retirement accounts. So now America is in a situation where in the last 30 years, the top 1% have tripled their income and the bottom 50% have remained flat (actually, the bottom 80% incomes have been doing worse than the economy's growth rate). We have income and wealth distribution that looks very much like that right at the dawn of the Great Depression. Then US got FDR (at least his allegiance was American), a World War and 20 years of socialism. Today America has fragmented multicultural fiefdoms, a very pissed off majority, a Marxist Obama and the trauma is just beginning. Ignoramus indeed. |
| Posted by: ed 2009-03-26 23:54 |
| #23 Most of the money we spent ended up there. It is my understanding (and granted, most of this stuff is well beyond my understanding) that the European banks and financial institutions were even deeper into the obscure money-eaters than the American firms were. So it seems to me that the money they received from AIG likely passed immediately through to wherever it was owed. Quite possibly it will eventually makes its way back home, clearing line items in various books along the way. Mr. Wife and I have been arguing about the bonus thing. It is his contention - and his own approach to the bonus portion of his salary - that anything labelled "bonus" is completely at risk to the company situation at the time it is to be paid out... and CEO Liddy should have known that, regardless what promises might have been made to him, regardless by whom, some DC politician would be unable to resist grandstanding, and then all would be toast. As, indeed, events did unfold. Perhaps Mr. Liddy should have gotten the promises in writing; that would have made the Senate inquiry quite interesting. |
| Posted by: trailing wife 2009-03-26 20:56 |
| #22 as a devoted worshipper at the church of snark, I think Sea was making a donation |
| Posted by: Frank G 2009-03-26 18:52 |
| #21 Seafarious - and the US taxpayer should care about feckless Europeans because????? |
| Posted by: 3dc 2009-03-26 18:40 |
| #20 A retention 'bonus', in spite of the name, is money paid to keep an employee around either for a fixed time period or until a specific task is finished. It does not depend on the company's profitability. The issue here is that the government is attempting to interfere with a private contract and is doing so via an ex-post facto law - something rather unconstitutional, if I recall ninth grade civics correctly. |
| Posted by: SteveS 2009-03-26 17:48 |
| #19 With reference to Sea's comment, this isn't the first time we've bailed out Europe. We'll likely do so again in the not-too-distant future. |
| Posted by: Steve White 2009-03-26 15:17 |
| #18 Not bad. $1M+ for 6 month's work. Let's use the professional sports as an anology. People like to complain about the "big money" pros make. Say 50 million people are physically able to play a sport. Of that 10 percent or 5 million actually play it at a level where they can play it at a lower academic level. Of that, maybe five percent or 250,000 can play at the higher acedemic level. Of that, 1 percent or 2,500 can play professionally. Of that, maybe 5% or 125 play at a level that allows them to dictate terms under which they'll play. Still think the big money is unfair? Perhaps executive VP jobs should be put out for bidding on an open market. Sure, if executive VPs with the necessary qualifications and proven track records were as numerous as the ignoramuses that have commented on Rantburg lately. |
| Posted by: Pappy 2009-03-26 15:10 |
| #17 I am far, far more outraged that Congress and various Attorneys General have seen fit to use thug tactics to get the money out of these guys. |
| Posted by: Grenter, Protector of the Geats 2009-03-26 14:56 |
| #16 call it what u want. Bottomline, congress legislated these "bonuses" - then crowed about it and basically intimated putting forth a pseudo bill of attainder on private citizens in order to get the money back - even when those citizens did nothing illegal in the first place. Liddy is a coward, most of congress is corrupt and feckless, Obama is in way over his big head. This will not end well. |
| Posted by: Andy Ulusoque aka Broadhead6 2009-03-26 12:33 |
| #15 The other unspoken issue is that (as I understand it) the sudden and total failure of AIG would have taken out Europe. Most of the money we spent ended up there. Yay us. |
| Posted by: Seafarious 2009-03-26 10:58 |
| #14 Did this guy get screwed? Yes. Do many companies use the bait of discretionary bonuses to cynically short-change millions of hardworking employees? Yes. Do semantics matter? Yes. Will this all end well? Probably not. |
| Posted by: Scooter McGruder 2009-03-26 09:42 |
| #13 Not bad. $1M+ for 6 month's work. Perhaps executive VP jobs should be put out for bidding on an open market. |
| Posted by: ed 2009-03-26 09:40 |
| #12 The semantics are all that matters to some. I worked for a company as a consultant where ~33% of my income came from "bonuses". This was paid on the basis of a formula where the key variable was the number of hours that I billed. If the companies other lines of business were not performing well, but I worked well over the "bonus" cut-off should I lose everything? If you get hung up on the word bonus think of it as variable salary. Ball players often have incentives written into the contracts where if they play in x number of games they get paid more. Is that a "bonus"? |
| Posted by: AlanC 2009-03-26 09:34 |
| #11 How does a guy with a title of Executive Vice President never meet the CEO of the company? |
| Posted by: Penguin 2009-03-26 09:23 |
| #10 Lets not forget that the guy was assured, over and over again, that the 'bonus' would be paid - even after A.I.G. took them money from the Feds. This isn't a case of 'you take money from the FEDs - you should consider your contract renegociated'. The CEO put in place by the FED - as well as The Obama Administration and Congress (by law no less - they did put that part in the bailout bill - and Bambi did sign it) assured them that they was going to receive their bonuses. |
| Posted by: CrazyFool 2009-03-26 09:20 |
| #9 I misread your comment. I apologize. We will be without AIG in the future. The question is whether it is dismantled in an orderly fashion that preserves as much value as possible or just demolished in a day with no regard for the consequences to insureds, markets or creditors. The easy way is bankruptcy. But it's messy, long, and contentious. The alternative is the FDIC model for supporting a failed bank. That is what Geitner is tryinig to pull of with AIG. But the laws aren't in place to allow him to do it, so he's bending them like crazy. The retention bonuses were put in place, probably with his knowledge as President of the NY Fed, to keep the necessary players on board. |
| Posted by: Nimble Spemble 2009-03-26 09:19 |
| #8 Nimble, are you taking a shot at me? Your comment seems neither civil, nor well-reasoned. Putting aside bonus for a moment, how do I misunderstand the meaning of salary or commission?? Back to AIG, I think most taxpayers would agree that paying a competitive salary to key employees should guarantee a reasonable level of professional responsibility. The legal, financial and semantic games of these "bonuses" seem very suspicious, and if there is no other way for the company to function, we're probably better off without it. |
| Posted by: Scooter McGruder 2009-03-26 09:08 |
| #7 Better than not understanding what a commission, bonus or salary are. |
| Posted by: Nimble Spemble 2009-03-26 08:49 |
| #6 Yes Nimble, it IS a semantic problem. And obviously a pretty big one. And BTW, you're right -- I've never had to run a failing company. I suspect not many people have. |
| Posted by: Scooter McGruder 2009-03-26 08:46 |
| #5 Words do have meanings. Not since 1984. |
| Posted by: g(r)omgoru 2009-03-26 08:41 |
| #4 The very idea of a failed company like AIG paying multi-million dollar, taxpayer-funded, "bonuses" is simply offensive to any rational person. Then you've never had to run a failing company. If the company is going in the tank, why should they hang around? They can always get a good job for a good wage. It's the beauzeaux who will hang on till the last paycheck because they know how hard it is going to be for them to find a job. The way you deal with it is to tell good people, we need you to stay till date x. If you're still here on date x you get a bonus for hanging around. If you leave or get fired for significant cause, you get nothing. It's an incentive to stay on board a sinking ship to make sure it goes down gracefully. If you don't like the word bonus, that's a semantic problem. The incentive is commonly called a retention bonus. |
| Posted by: Nimble Spemble 2009-03-26 08:34 |
| #3 The word "bonus" implies extra money based on performance. Every job I've ever had has dangled the promise of "bonus" money if I work extra hard. And every year I worked extra hard but when payout time came the company always would make some kind of excuse about how they couldn't afford to pay any "bonus" that year. I think most people have had this experience. The very idea of a failed company like AIG paying multi-million dollar, taxpayer-funded, "bonuses" is simply offensive to any rational person. If someone is guaranteed a certain income, then it's not a "bonus". If this smart guy accepted a salary of $1, but was counting on a "bonus" gravy train from a failure like AIG, then he made a very bad decision and $1 is all that he's entitled to. A salary is what you're guaranteed. A bonus is optional, and can be rescinded at the whim of your employer. A commission is a share of profit based on actual performance. A bonus is not a commission, and this exec didn't sign up for commission-based compensation. If he didn't understand that, he's a fool who needs a dictionary. On the other hand, if a bonus is not a bonus, you need to use a different word. Words do have meanings. |
| Posted by: Scooter McGruder 2009-03-26 08:13 |
| #2 To a lesser extent the same thing was true for everyone who agreed to stay in exchange for those bonuses. The Atlases/John Galts are starting to shrug and I'm not at all sure that the mob who made a stink about the bonuses are prepared for the consequences. Not only in the finance side, but in DOD (uniformed and civilian) and elsewhere a small but increasing number of people who otherwise would work like crazy for the common good are getting fed up and walking away. |
| Posted by: lotp 2009-03-26 07:17 |
| #1 Interesting point; he was working for $1, expecting the company to follow through with what now sounds like a lump sum annual salary payout, previously identified to us in the general public as a bonus. That doesn't sound like a 'bonus' to me now. This may be a critical bit of information. |
| Posted by: Whiskey Mike 2009-03-26 06:03 |