BUSINESS
02/08/2014 08:25 pm ET | Updated Feb 08, 2014

AOL CEO Reverses Benefit Cuts, Apologizes For 'Distressed Babies' Comment

ASSOCIATED PRESS

AOL CEO Tim Armstrong announced Saturday that the company will reverse course on a controversial new 401(k) policy, a decision that followed an employee backlash against the change as well as comments he made while defending it.

AOL is the parent company of The Huffington Post.

In a letter to staff, Armstrong wrote:

"The leadership team and I listened to your feedback over the last week. We heard you on this topic. And as we discussed the matter over several days, with management and employees, we have decided to change the policy back to a per-pay-period matching contribution. The Human Resource team will be in contact with all employees over the next week to explain the change and to answer any other benefits related questions you might have."

The new 401(k) policy would no longer match contributions on a per-paycheck basis. Instead, matching contributions would be handed out in lump sum at the end of the year. Employees who left the company would not receive matching contributions for the year they departed.

Armstrong had cited Obamacare and two women who gave birth to "distressed babies" as reasons for the change. In his email to staffers today, Armstrong apologized for the remark about pregnancies.

"On a personal note, I made a mistake and I apologize for my comments last week at the town hall when I mentioned specific healthcare examples in trying to explain our decision making process around our employee benefit program."

Here's his full letter:

AOLers -

We began our journey together in 2009, and for the last four years have had an employee-first culture. As I have said before, the ability to change is a strategic advantage for us. With benefit costs increasing, we made a strategic, financial decision last year to revise our employee matching 401K program from a per-pay-period contribution to a yearly lump-sum contribution. We then communicated this decision in the fall through multiple channels to every AOL office in the US.

The leadership team and I listened to your feedback over the last week. We heard you on this topic. And as we discussed the matter over several days, with management and employees, we have decided to change the policy back to a per-pay-period matching contribution. The Human Resource team will be in contact with all employees over the next week to explain the change and to answer any other benefits related questions you might have. We are proud to provide AOLers with a robust benefits offering that spans from exceptional healthcare coverage to 401K's to AOL fitness programs and beyond. On a personal note, I made a mistake and I apologize for my comments last week at the town hall when I mentioned specific healthcare examples in trying to explain our decision making process around our employee benefit programs.

Thursday we announced an outstanding Q4 and end to our fiscal year. More importantly, it validated our strategy and the work we have done on it. AOL is positioned for future growth and our long-term strategy to be one of the world's leading media technology companies.

Now, as we begin 2014, let's keep up our momentum. Thank you for the great 2013 year and for your ongoing passion. And know that I am a passionate advocate for the AOL family – TA

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