Once again it’s been a month since my last stabby post, but I’ve found something that REALLY gets my goat. Get ready for it: more AIG bonuses. As you’ve probably heard, AIG is asking for permission to award yet more bonuses to the division that is at the center of the global financial collapse. I’m beginning to wonder how AIG defines “performance.”
Bonuses in the Real World
In the real world occupied by those of us outside the financial system, a bonus for performance is generally assumed to mean good performance. In this economy, even employees who are providing excellent service to their employers are not getting bonuses.
In fact, some executives and employees are taking pay cuts to keep their company afloat, regardless of performance. They certainly aren’t getting bonuses after losing the company money.
Bonuses in the AIG World
I could sort of understand bonuses paid to high-performing employees in other sectors of AIG’s business. Their regular insurance business is still healthy. The only sector of their vast business that went bad is the financial products division that sold insurance policies on derivatives based on imaginary numbers. So fine, if they want to pay bonuses to employees who genuinely did a good job in other sectors, I don’t necessarily take issue with that. Especially if it enables AIG to keep good employees in profitable divisions.
However, AIG seems intent on issuing “retention” bonuses to the very people who created this mess in the first place. Why do they want to retain these people?
Their first argument is that they need to keep the people who understand what they created so they can help undo it. It’s a faulty argument because clearly these people don’t understand what they created. If they did, they wouldn’t have done it!
Their second argument is that these people will be hired away by other large companies. Again, who would want to hire them right now? Here’s how I imagine that interview going:
“You worked for AIG’s financial products division?”
“How much money did you earn for AIG?”
“My deals cost the company $20 billion.”
“Get out of my office.”
I realize that these people will eventually be hired by other companies. We have only to look at Robert Nardelli to find proof of people failing upwards.
Are They Kidding?
Seriously. What are they thinking? These employees may have brought billions of dollars into AIG at some point, they have now cost the company over $100 billion. Billion. How can they possibly argue that paying them “retention bonuses” is a good use of money? I don’t care that it’s “only” $235 million. Part of that is my money. You want to give someone a bonus? Give it to me! Or how about using it to pay back what the government invested in you so we can start to pay down our massive federal debt, which is now more massive thanks to AIG?
There are lots of options besides paying “performance” bonuses to people who lost the company, and therefore taxpayers, gobs of money. Unless, of course, “performance” means “breathing.” In which case, woohoo! Bonuses for everyone!