The American International Group (NYSE: AIG) bonuses controversy took a turn for the bizarre today, when The Financial Times reported that the company had paid $168 million in bonuses and retention payments to 400 employees in the troubled financial products unite between December 2008 and March 2009.And $7,700 of that amount went to a kitchen assistant.
Look: The point here is not to beat up on "the little guy" and in the grand scheme of AIG's malfeasance, $7,700 to a kitchen assistant isn't that big of a deal.
But here's why it matters: The purpose of retention bonuses is to keep instrumental employees who might jump ship for a less-troubled company. Given the unemployment rate among blue collar workers, there is no possible explanation for shelling out any kind of bonus to retain a kitchen assistant.
What it suggests is a level of cronyism where AIG was doling out bonuses to people as glorified gifts -- a pat on the back and a way of rewarding people who were well-liked. Bonuses were not tied to the interests of shareholders.
Pay czar Kenneth Feinberg wants AIG's upcoming bonus plans to be reduced -- but won't say by how much and it's not clear whether he or anyone else has the authority to compel AIG to do anything.
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Reader Comments (Page 1 of 1)
10-19-2009 @ 11:13PM
Allen said...
It is not the amount of the retention "bonus" paid to the kitchen assistant, but rather the fact that it was paid at all, which serves as proof that AIG is managed by blithering idiots - well, not really - the proof that AIG management is totally incompetent is the mind-numbing losses the company has sustained and will continue to sustain in future years. AIG has long been rotten to the core; the rot finally rose to the surface. The basic reality is that the use of taxpayer money to provide a corporate welfare program for AIG was and is a colossal mistake. It is time to call the notes and shut AIG down for good.
11-11-2009 @ 3:29PM
Joe said...
AIG is the most mis-managed company in the world right now. Why do the CEO's think they are the only smart people that can run that business when there are a lot of smarter people on the street willing to take half their pay?!?! For them to threaten to leave for more promising jobs -- ha -- let them go find them!