Impact

[spence]

Originally Posted by RIJIMMY

Ok - I will (but seriously, i think you're smart enough to know this)
As a profitable leader in AIG, his work was determined to be essential to unwrapping the business to position it to sell off its components.
As a gesture, he , and others did not take an annual salary. In return, the company had to "secure" him so that he did not get up and leave. Why would he stay at a company that is folding? Beleive it or not, he has to pay his bills and his kid's college expenses too. So the company offered retention bonues. The gist - stay here and clean this mess up and you will get paid. Not uncommon in any takeover or restructuring effort.
When the "outrage" started, the head of AIG did not stand up for the emplyees, He showed no balls and did not explain the contracts, did not commend his employees for their hard work, did nothing.
Read the WSJ, people are getting death threats. Employees are huddlied in conference rooms trying to figure out what to do. How is any of this helpful to turning around AIG?

I understand all of that.

My point is, if I agree to work for a dollar, knowing that at the end of the year I'm going to get a bonus of a million...Am I not working for a $1,000,001 with a lump sum payout at the end of the year?

Why not just pay them a million a year with no bonus? Or give them a bonus in deferred compensation.

It just sounds like they're playing games with semantics.

As for death threats...not much can be said about that other than it's wrong.

-spence

[RIJIMMY]

Originally Posted by spence

I understand all of that.

My point is, if I agree to work for a dollar, knowing that at the end of the year I'm going to get a bonus of a million...Am I not working for a $1,000,001 with a lump sum payout at the end of the year?

Why not just pay them a million a year with no bonus? Or give them a bonus in deferred compensation.

It just sounds like they're playing games with semantics.

As for death threats...not much can be said about that other than it's wrong.

-spence

I think its a gesture. he probabaly had a base of 400k and got a 1M bonus in a good year. It appears that is what many of the execs are doing at other financial companies , dropping the salary

[spence]

Originally Posted by RIJIMMY

I think its a gesture. he probabaly had a base of 400k and got a 1M bonus in a good year. It appears that is what many of the execs are doing at other financial companies , dropping the salary

From what I understand they were given a guaranteed 2008 bonus equal to their 2007 bonus as a retention incentive.

The idea being, you made us a lot of money in 2007, but we know 2008 is going to be rough, so regardless of what happens we're going to treat you like times are good so you don't jump ship.

Then they take a 99.999% cut of their base pay, knowing that they're still going to make a lot of money at the end of the year. I don't think for a moment your average finance exec is going to work for free out of a sense of altruism.

Now the economy really tanks and AIG is going to go bust without government help. If AIG folds they probably don't see their bonus.

The government steps in and backs the money truck up to the front door. Taxpayers then fund the bonuses guaranteed to the execs to have retained them for the past year.

Ultimately, it looks like the taxpayer has assumed the personal risk that these execs took by staying on with no salary.

The entire situation is wierd.

-spence