AIG Pulls Fast One -- "Cash Awards" Going To Managers

When you are a pro at a scam--the definition of "scam" also can be found under the term "insurance industry" -- you know how to try to pull a fast one. And AIG is trying to pull one -- under cover of the holidays. Check this out.

You may remember that AIG -- which is afloat only thanks to a bailout by you, the taxpayer, to the tune of $152 billion and counting--made a whole lot of public relations when its top seven executives agreed not to take bonuses this year.

Well, on the eve of Thanksgiving, obviously knowing the markets would be closed on the holiday and obviously knowing that just before the holiday few people would pay attention, AIG actually notified regulators that, well, yes, bonuses would be given out, as Bloomberg News and The Financial Times reports today:

American International Group Inc., the insurer that said yesterday it scrapped bonuses for top executives after a U.S. bailout, will still pay 130 managers "cash awards" to stay with the firm, including $3 million to retirement services chief Jay Wintrob.

Wintrob, 51, will get the "retention" payment in two installments, the first in April 2009 and the rest a year later, New York-based AIG said today in a regulatory filing. The firm previously disclosed the program in a Sept. 26 filing and said today that Wintrob and Chief Financial Officer David Herzog elected to get the payments four months later than planned.

"The expectation from the public and Congress was that they weren't getting bonuses, not that they'd be pushed off by several months," said David Schmidt, a consultant at executive pay firm James F. Reda & Associates. "That clearly violates the spirit of AIG saying they'll forgo their bonuses."[emphasis added]

From the FT:

However, the UBS news comes just a day after it emerged AIG, which has received more than $150bn in bail-out financing from the US government, would still pay 130 managers "cash awards" to stay with the firm. AIG disclosed the bonuses in a regulatory filing on the evening before Thanksgiving, a day when US markets are closed. The insurer had previously said its seven top executives would forgo their bonuses for 2008.

They just can't help themselves, can they? Call it "retention pay" or "cash bonuses" or some other euphemism -- but the fact is that your tax dollars are going to reward people who are lucky to even have jobs. There should have been a housecleaning that swept the entire top level of managers out on their asses for playing a role in the financial crisis that is hurting millions of people.

I have not seen this reported in other mainline traditional media. But, this is a scam.

Comments

[shelsay]

These people just make me sick. I think those of us not getting a bonus this year, should be entitled to all of our tax money back. If they want their bonus, then they should have to foot the tax bill to pay for it - why should I?

[tomas0808]

And here's why. We've been taught that it's okay and we can get away with it.

http://news.yahoo.com/s/ap/20081130/ap_on_re_us/students_dishonesty

[Woodguy]

Here is a link to the members of the Congressional Oversight Committee, in case you want to contact any of the representatives directly to complain about this travesty:

http://oversight.house.gov/about/members.asp

Here is a link to the Committee's message center:

http://oversight.house.gov/contact/

Let our voices be heard!

[PhilipTaylor]

Thank YOU! Very Much!

[surlybird]

Thanks for the Addresses.
I like too put 'US Taxpayer and Registered Voter' under my name.

[DragonFly]

Thanks for the link 'Woodguy'.

I've just sent them an email, and here is the content of my message.

AIG said its top executives would forgo their bonuses for 2008, however, on the eve of Thanksgiving, AIG turned around and notified regulators that they will still pay 130 managers "cash awards" to stay with the firm, including $3 million to retirement services chief Jay Wintrob.

This clearly violates the spirit of AIG's original statement to regulators and the public.

The citizens of the USA are being forced to foot the bill for this scam, and we want to know what your committee intends to do about it.

The eyes of the nation are on you.

Respectfully,
_________

I encourage others to write to them as soon as possible.

[conniec]

Thanks for the link. I just sent an e-mail to Chairman Waxman. This stuff REALLY pi$$es me off!!!

[lebec]

thanks for the link! I sent a message saying that although I think it generally a bad idea for the government to exercize a right to vote with stock in the companies it takes an equity stake in, it needs to have the right to have a vote to keep management honest. So far, Pauson made it clear that the stock we get in the various companies is NOT voting stock.

[Sapphdia]

Thank you!

[2008CaliforniaFan]

I read this story last night and posed a few questions as to what all of us can do to show our disgust with AIG and also light a fire under the seat of the Congressional Oversight Committee. Someone gave me a link to the Oversight webpage and I emailed both.

My question is this : Would Huffingon Post sponsor a link or post it here to sign a petition to send to the Oversight Committee.
If not HP would the poster Jonathan Tasini do a follow-up post message with a petition that he could deliver to someone? There needs to be some outrage to this attitude at AIG.

We need to send a message with a LOT of signatures.

[Oonagh]

I feel the same way. We bail them out and they party with our money and then become creative in the give away to their execs. It is so maddening. A petition sounds like a good idea.

[kennyh]

I'll gladly sign it.

[spinns17]

lol what a joke.and our government sits by. and lets all these wall street hacks, run this country into the ground.

[PS4OBAMA]

that would be Bush and Paulson......I doubt, if Obama was in office, they would be able to do this crap.

[tkondaks]

I would first want to know whether the managers who were paid the bonuses are employees of AIG or one of their subsidiaries.
It makes a difference.
If AIG, then I agree with the author of this piece that it's a sham.
If it's one of their subsidiaries, then they are entitled to it.
Many of AIG's subsidiaries are separate entities; insurance companies that are thriving, viable enterprises whose only blemish is that they are owned in whole or in part by AIG. They did nothing wrong and if it is THEIR managers who are getting the bonuses, then it is perfectly legit.
I ask these questions because when it was announced a few months ago that AIG executives were taking that company-paid vacation at that luxury hotel in California, it turned out that it was independent insurance agents who were NOT employees of AIG who had won the trip as a bonus for production they did for a subsidiary.

[kennyh]

Aren't subsidiaries controlled by the parent? If the parent is bankrupt how viable can one of their companies ber. BULL****.

[gallimaufry03]

The retirement services division is a group of wholly incorporated companies all on their own. As such, AIG cannot take any assets from any of these companies to repay the loans. However, those subs can (and will) be sold to help repay the loan. Mr. Wintraub is over the retirement services division which was not party to any of the CDO purchases that have caused the problems. If anything, the subs are equally hurt because the people working for them are at risk of losing their jobs when the buyouts finally happen. Now, do I think the execs should get bonuses even when they didn't help cause the problem? No, not in the current climate. However, I do think that keeping the subs going with existing management will help us get sold quicker -- which will help the subs' branding (keeping selling good products) as well as the taxpayers (repay the loans). If that means paying them to keep them here, so be it. As for the guys that actually caused the problems, they've been named and are out. They're the ones that should be held as fully accountable as possible.

[kevin k]

>I don't understand how congress, the pundits, and yes some here at huffpo can stomach the notion
> that AIG deserved a bailout and not the auto industry.

I don't know that anyone used the word "deserved". The problem is that AIG was crippled by a one-time error that, if allowed to bring down a company with a trillion dollars in assets, would do far, far more damage to our economy than the disappearance of the "Big Three".

AIG's business (other than its foolish credit default swaps office) is - and was - solid. Letting it live through the costs that debacle incurred it will save far more than it cost.

On the other hand, US auto makers were broken even *before* the current debacle. Their overcapacity and crippling agreements with the UAW ensure that, even *with* a bailout, they'll be unprofitable in their current form.

That the Democrat Congress is trying to use this crisis to force Detroit - one of whose problems has been building cars people don't want to buy - to build cars that people will want even *less* - is so stupid as to be laughable.

> From my perspective, I would much rather have seen the $150B go to the auto industry rather
> than to the paper-pushers on wall street that produce nothing.

Whatever you think of the financial industry, AIG's failure would be far worse for everyone than the restructuring of the auto companies.

[smarternu]

Why are you bashing the unions and not the criminal executives who are walking away with millions. Why should one person be paid millions of dollars - but if a blue color worker makes 50, 60 or even 80K a year thats so horrible. Your logic is a bit twisted. Union workers do just that WORK - while executives are flying around in private jets. Hello

[eclecticdog]

What does AIG make? Nothing. A one-time mistake? Not for a disaster of this magnitude -- it took multiple layers of management and endless meetings/conferences/memos/e-mails/etc. to make the decisions that took AIG and the rest of us down the toilet. At least the auto manufacturers make a durable product with capital infrastruture. This country wasn't built on financial instruments of questionable quality or viability. This house of financial cards has been built before and it always crashes. Just ask President Andy Jackson.

I guess if a union member makes a six-figure income for part-time work instead of $40-50K per year for full-time work, but is married to a vice-presidential candidate, then everything is hunky-dory. The auto management is mostly to blame for their woes, but if they go bankrupt, guess who gets to cover (partially) the pensions and the unemployment benefits (fully)? It won't be AIG.

[mikekopac]

The media's job us to inform so as to provide citizens with the information to take action. You have provided us with the names of those at AIG who will now get bonuses. How about their addresses? Imagine hundreds, may be thousands of citizens out side of their houses protesting their taking of money while millions are suffering. Maybe there could be children of the forclosed at the front of the crowd. Then you could write about that, televise that, let their voices be heard. This outrage becomes part of a national dialogue and let's see if maybe we could stop these bonuses from happening.

You in the media, you with power and teams of investigative jouralists to exercise it, do you you chose to act? If not, aren't you a big part of this current unspeakable injustice.

[AtlantaBill]

I don't understand how congress, the pundits, and yes some here at huffpo can stomach the notion that AIG deserved a bailout and not the auto industry. From my perspective, I would much rather have seen the $150B go to the auto industry rather than to the paper-pushers on wall street that produce nothing. The whole few weeks have been a mystery to me when observing how congress has reacted to the auto industry as opposed to their reaction to the robber barrons of wall street. I can only hope that much of what they were doing was simply posturing and that they will be more "fair and balanced" in the end. It's simple, support white collar paper pusher or the millions of blue collar worker that make up the auto industry.

[cautionbug]

i don't think any of them should have gotten bailed out. What benefit will i see from my tax dollars going to any of these companies? My tax dollars are helping the credit lenders. Great, but can i get more credit to improve my house or buy a better car? Nope. Why? Because none of the lenders are actually doing what they were supposed to do with the new money supply: lend it!

As for the Big 3, what benefit do i see from my tax dollars going back into car companies that have had numerous opportunities to change their ways and provide cars that would help America's industry rather than crushing it under its own behemoth weight? Will a bailout really prevent them from laying off thousands of workers or closing more plants to move to Mexico? No. Sure, i'll let them continue to honor badly written contracts so that suppliers stay in business, but what does that ultimately solve? They will simply burn through their bailout trying to honor those contracts. In the mean time, their infrastructure doesn't change, their attitudes don't change, and America will be right back to bailing them out next year.

None of these bailouts should have happened.

[Oldtimer]

I second Cautionbug. The clear lesson is you must define yourself as too big and then
you can expect a free pass in America. If you are a small fry (a regular guy) you pay
for those who are "too big". Until we as Americans reconcile this I expect "big business"
to repeat the cycle of scams that reached an apex under King George W.

[kevin k]

Ok, nobody's going to like this post, but it's reality.

The part of AIG that destroyed the business was a tiny office in London dealing with credit derivative swaps. And they took stupid risks, and may have toppled a huge company. The people associated with that part of the business, as well as the higher-ups who didn't question their practices because of the revenue they brought, should get no performance-based 'extra' pay.

But for all the others making up the vast majority of AIG, they weren't involved in those poor decisions. And, while this may not be familiar to those of you not in the financial industry, bonus or incentive pay is part of your compensation. Depending on the firm, it may be completely discretionary or it may be contractually tied to personal or firm performance.

To slash the compensation of much of the staff of a company which is already on the ropes, resulting in a stampede of resignations, would be the nails in the coffin of the company.

[meemu]

Well, if they and their 'subsidiary' companies can afford all these bonuses, rewards or whatever word one wants to use, then they can afford to bail themselves out of their problems dam it!! That's the plain and simple truth.

[illinoisan]

Actually, the insurance subsidiaries are tightly regulated at the state/local level and their capitalization is not and never was available to the parent company for liquidity purposes. That money is reserved for meeting obligations to policyholders.

[want2trustagain]

I have a hammer and nails!

[doyle005]

Kevin_k, give up dude, all people see is AIG and they become incensed. They do not seem to understand that AIG is a HUGE company and not just one one office in NYC that ruined everything for everyone.

[MadeinAmericaProud]

Where is they get the money to issue 130 mgrs. bonus money?

If one penny was used from tax payers, they should not receive the bonus. If there was enough money to pay out it should have been used to pay back the bailout tax payers.

They have a job. Millions of Americans do not. When they do get a job, they will be facing a higher tax bill in the future for people who have jobs right now receiving bonuses. If the AIG employees want to keep a job, that money should have been invested back into the money. Greed is not good.

[maddmaxx]

I think we should get the names of everyone on the Oversight Committiee and thier email addresses and let them know that if something is not done about this AIG mess they will be looking for jobs come the next election. If we can come together to elect Obama then we can certainly come together to fire the people who fail to take action on our behalf and bring these criminals to justice. They are raping us and nobody is doing anything about it. I read a comment that someone was afraid that these people(whoever is getting bailed out) will completely drain the coffers by the time Our new President can take the oath of office and sadly it appears they may have a point. I voted straight across the board against anybody in office because of thier obvious failure to represent us. I don't think I am alone. The party system is a dismal failure.

[SWAMPCAT]

I concur, Maddmaxx. The government is hired to work for the people, yet the politicians are obviously ignoring the stated opinions of the people who hired them.

[Loki11467]

I beg to disagree with all you screaming meemies. If these managers jump ship which most are looking to do then good luck trying to get any of the $150bil back and most likely the cost will rise. Or maybe AIG should listen to you all and hire a bunch of fresh school grads with zero experience to run things and save that bonus money. In fact bonus money should be given to many more critical folks to keeps things running without a mass exodus of workers leaving an even bigger money pit.

[DocWylie]

Why in the world would you think the people that the same people who screwed this up so badly would EVER be able to fix it?? or for that matter, even admit that they ever needed to have done something different in the first place?
I guess you don't REALLY believe in the so called "Free market system" when the chips are down, do you???

[nyobserver]

"Critical folks who keep things running" is your description of the people who brought on this mess in the first place? I'm with those who'd say good riddance and be glad to be rid of them. It's how the free market works. By the way, I'm no "fresh school grad with zero experience to run things". I'm a small business owner whose business is still profitable, and with no help from the government, or you for that matter.

[Rmtns]

HuffPost's Pick

Good riddance to bad rubbish! They have shown by the track record that they have posted, that they are myopic, and incompetent to manage a McDonald's, much less a major corporation.
Let me give them some career coaching that will be of much help in their new careers, "please smile when you ask" would you like to supersize that order sir?".

[kennyh]

Right on!

[AtlantaBill]

Your argument makes about as much sense as arguing to keep a known arsonist at the fire department because he know a lot about putting out fires. These incompetents at AIG should be judged as any other manager on the basis of their past accomplishments.

[billyfitz]

You're talking as if there is an excellent job market right now - there isn't. Where are these execs going to go? Who is hiring? You make it sound like they have their choice of jobs. They don't.

The bottom line is they work for a company that got itself into trouble and is relying on the American public to rescue them. Whether or not it is their individual faults is incidental. They need to make sacrifices like everyone else in this country, or they can go look for other jobs. Good luck finding them.

If you are a crew member on a sinking ship, you either start bailing or you jump ship. You don't ask the captain for a raise, because you weren't the one who drove the ship onto the rocks.

[maddmaxx]

I would like someone to explain to me why these "White Collar" criminals are rewarded for total failure to do thier jobs? Us blue collar workers are fired for not doing ours. This is nothing more than pi**ing in our faces. Do they have some sort of immunity from prosecution that we are unaware of? Is this what we are to believe is success? Success for criminals. I say that these people are no more than embezzelers of our money and should be charged accordingly. This is getting ridiculus. Why won't anybody do sometrhing? This is further proof that we do not have a Justice department anymore but rather a Legal branch of government. I hate to sound cynical but what happened to the "Freedom and Justice for all" part that I grew up believing in?I am out of work and two house notes down and nobody's bailing me out.

[jkatt1]

There should be NO IFS,ANDS or BUTS.All AIG CEO's and those receiving bonuses should be GONE immediately.There are enough upper management personnel runninng around looking for work,replace those bastards!!!They should be treated worse than the auto makers,whats that old saying??shame on me,fool me once.........

[okeesub]

Here is a dumb idea, why not revolk the bailout money from the people who blatently misuse the funds and divide it up to the tax payers who are giving it out. I know if I got about $200,000 I could pay off my mortgage, bailing out the mortgage companies. Pay off 2 new vehicles, bailing out 2 of the big three, and boost the economy because since I would be debt free I would buy me a boat to spend time with my family on the weekends, instead of working 7 days a week just to make ends meet. I know they say they are getting stock interest or whatever but the incompotent managers of these companies are probably going to declare bankruptcy after our money dries up anyway. Just give us our money back and when we pay our debts everyone will be bailed out.

[feyangel]

Hmmm-- I want my money back. As an American taxpayer, one of those funding the bailout-- I think that it is only fair that if I don't feel good about how the money is being spent, I should be able to ask for my money back. We should all have the power to OBJECT to our money being spent to line FATCATS wallets even more than they are already lined. ALSO-- how much sense does it make to give bonuses to these execs to make sure they keep working for the failing bank? First--- where are they gonna go-- to another failing bank with no money to pay their exorbitant salaries?? Also-- they screwed up, they failed, they did miserable jobs-- so we REWARD them for that???? So we are rewarding them for failure?? How much sense does that make??

I am thinking maybe the "regulators" should FIRE all of them-- with no huge severance packages-- and start all over again with a group of bright financial thinkers who would be grateful for having a job to do well in these hard times.

What kind of reasoning are the folks in charge of these banks and this bailout using?? Not very sound reasoning, from what I can see.