Dear AIG, I’ve Solved Your Bonus Problem!

Sun, March 15, 2009

Uncategorized

I don’t practice law anymore, but after having contract law in my head for over 15 years, there are still a few tidbits bouncing around in there. Maybe I’d be better off if that wasn’t the case, because then this whole crapola story about AIG not being able to get out of paying $165 million in bonuses to its employees wouldn’t keep me up at night.

As a recovering attorney, I know full well people break contracts every day — that’s why lawyers have jobs! It’s not a question of whether you can break the deal or not, it’s a matter of whether one is prepared to live with the consequences of breaching a contract. So if AIG just said, ‘We know we agreed under other circumstances that we’d pay big bonuses, but we’re not paying because things are drastically different,’ what then?

Poor AIG says it has no alternative. Woe to the insurance giant. It’s stuck.

Or they’re crying wolf.

They’re worried about keeping the “best and the brightest?” Well, if the purported best and the brightest got us into our economic mess, maybe we’d all be better off if AIG and the other financial corporations let them go. And if they don’t get their millions, what are they going to do, quit? It’s not like there are tons of jobs out there at the moment. 600,000 people are losing their jobs every month and I don’t think the financial sector is really in a hiring mode at the moment.

And if they don’t pay the bonuses, those employees have something they can do — they can renegotiate or they can sue AIG! I am SO not worried about whether there will be a run on employees suing AIG if they don’t get their bonuses. Is there really a jury in the country that would side with them? Is there an attorney in the land who would take on those cases? Maybe one, but he’s a smidge busy with Bernie Madoff.

And there are plenty of other sectors where employers are saying if employees want to keep their paycheck and health benefits, they need to take a salary cut. So, in light of all that, what is the government afraid of if it pushes AIG to make the same kind of decision many other employers are, especially since they’re doing it with our money?!

I wish I had the real answer to that question. Something just doesn’t feel right. President Obama’s person was on the Sunday talk shows claiming that the fundamentals of our economy are sound and we ought to be buying cars. Larry Summers was almost speechless when asked why AIG and the other banks can’t give us the details of where the money has gone. When was the last time you saw Larry Summers speechless?

I have absolutely no confidence that anyone is telling the real story when it comes to fixing the economy, whether it’s our new administration or the corrupt financiers who made their deals with the devil and now want the rest of us to tell Beelzebub that they didn’t really mean to sell their souls AND ours with crazy loans and credit default swaps that are the equivalent of gambling.

The answer to the problem at the moment is simple — the government tells lenders and the likes of AIG that if they took bailout money they can’t pay bonuses to people. Period.

Why is Uncle Sam so afraid of such an easy solution?

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23 Responses to “Dear AIG, I’ve Solved Your Bonus Problem!”

  1. IzzyMom Says:

    I had many of the same thoughts. Mad that you’re not getting a bonus, AIG employees? Quit. And good luck getting another job.

    Thinking of suing AIG if you don’t get your bonuses? Good luck KEEPING your job.

    It’s absurd to think a huge corporation that surely makes sport of getting around laws and out of contracts all the time would expect us to believe their hands are tied on this one.

    I? Am calling BULLSHIT. Let’s see of the Obama Admnistration has the cajones to do the same.

  2. Jennifer H Says:

    Exactly. Their argument that they have to pay those bonuses just doesn’t hold up. And I was thinking the same thing about the statement re: how to attract the best and brightest. Because, really, who’s hiring right now? Besides, I find it hard to believe that it’s easy for these people to make their resumes shine right now. Would take a lot of spin.

  3. Daisy Says:

    My job is secure for the moment, but my workload is increasing by leaps and bounds. Bonus? LOL!! We took a cut in benefits in order to prevent a pay cut.

  4. winecat Says:

    I’ll just say AMEN SISTER and leave it at that.

  5. Chookooloonks Says:

    Yeah, another lawyer here (although recently nonpracticing). I just quit my job as in-house counsel in a corporation, so colour me a little skeptical about the “we have a contractual obligation to pay these bonuses.” In my experience, executive bonus packages require executives TO PERFORM THEIR JOBS ADMIRABLY in order to EARN the bonus. On what planet will it be said that they’ve performed their jobs in a way worthy of payment?

    This whole situation is just unreal. UNREAL.

  6. April Says:

    The big mistake was not attaching any sort of obligations with AIG’s bail-out money. I completely agree that AIG is just plain making excuses, but I do believe that the Administration isn’t able to do anything legally about it.

  7. Mom101 Says:

    BLARGHHHHHH!

    That’s really all I can manage to get out right now. The whole thing is utterly confounding.

  8. anniegirl1138 Says:

    I’m nobody, but it seems to me that the people at the top are preparing for some disaster yet to be revealed to ensure their survival at our expense and that, maybe our government knows it too.

    This ain’t over yet.

  9. Brown Man Says:

    Amen!

    The GOVERNMENT breaks its own damn contracts when it wants to.

    Thank you Pundit Mom!

  10. Ron Says:

    I would guess many of these bonuses may go to commissioned sales people. There were AIG business units that did ok, and there were some sales guys that did exceedingly well. However, I’m 100% in agreement with your pov.

    I’m wondering why there was so little upset over the AIG is the risk sustemic document that was sent to the treasury and selected govt officials and then leaked last week. ABC news had a 1 day story on it, and it died. To me, its a lot more condemning than the bonus deal.

  11. Sarah Says:

    Damn straight! Maybe AIG Employees need to be told what I tell my 2-yr-old…You get what you get and you don’t get upset.

  12. Andrea Says:

    Absolutely! If the best and brightest got us into this mess we are really in trouble. I can’t believe they think people will really believe that argument.

  13. PunditMom Says:

    Hm. Performing their jobs adequately, or more, to get the bonuses. Shocking idea, isn’t it?

  14. Gwynne Says:

    It’s “funny” that people are all up in the grill of labor to renegotiate CONTRACTS, but somehow when the issues are at the top end of the pay scale there are legal barriers. Thanks punditmom for telling the truth! Oooh, am so mad as hell on this one.

  15. Professor Kim Says:

    Excellent. Thanks for this.

  16. Jeni Says:

    I so very much agree, wholeheartedly, with your assessment of the Bailout money, AIG and the government!
    I don’t understand the whole bonus business to begin with though. Most of us -granted the lowly, usually quite underpaid -working segment of society, if we screw up, we get canned, end of story. No golden parachutes there, people. When these yahoos screw up and they did a bang-up job of that too I do believe, where is the logic in paying them mega bucks to get rid of someone who totally mucked up the works in the first place? I know economics and such was never my forte in college, obviously I was a human services major and not labor relations or business management, but I just don’t comprehend how it is good business to contract with someone and then, protect them in the event things go south due in part or mainly to that protected persons actions. Can someone explain the logic of that practice being in the best interests of buiness -be it big or small?

  17. Jonathan Bert Says:

    I pretty much agree with Andrea. If AIG is so loaded with the best and brightest, how did they screw up so bad? The so-so and mediocre could have done better.

  18. Kelley Irish Says:

    Here’s my thought. Since the tax payers now own 80% of AIG ( that means us) I propose WE FIRE anyone who accepts a bonus from AIG. Or if they accept the bonus it is on the condition they post a sign in their yard that says, “I’m a Greedy Bas***”

    If AIG went bankrupt there would be no bonuses-Right NOw the government should walk in sease the company and put some of those pit bulls from the IRS in charge.

  19. BAC Says:

    And the hits just keep coming! Another excellent post!

    BAC

  20. BAC Says:

    I hope you don’t mind that I’ve been promoting this everywhere! Thanks for being on Culture Shocks with Barry Lynn today. If you haven’t met him, I think you will like him. He’s great!

    BAC

  21. Smiling Mama Says:

    I’m a little late to the party here, but this is a really great post. Of course! What about those auto workers and their contracts? What about all the employees who will have to take furloughs this year? I’ve never worked for a place that gave bonuses, and guess what? I’ve worked with some pretty talented people!

  22. vancouver real estate agent Says:

    Dear PunditMom,
    On one hand I have to fully agree with you. I do not support to pay huge amounts of money to those who didn’t earn them by honest hard work. On the other hand these bonuses are not what people usually imagine. I found a nice explanation of what this really is here: http://seclaw.blogspot.com/2009/03/congressional-pandering-and-100-income.html.

    Take care,
    Jay

  23. fav.or.it Says:

    This guy was working for a year for 1 dollar. Who among you would do that? Who among you would go to work for AIG? How are we going to get our money back if we don’t give the workers a reason to work hard or to stay? That is why you need retention bonuses. You need to give them a reason to stay and to do a good job. If Liddy left, what type of CEO would go to work for a struggling company for little pay, public scrutiny and no opportunity for a reward (bonus) if you do good? Why would you?

    sent from: fav.or.it


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