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AIG Financial Products interim chief operating officer Gerry Pasciucco told The Wall Street Journal on Monday that 20 of AIG FP's 370 employees quit amid the controversy over bonus payments at the very business unit that toppled the insurer due to the sale of credit default swaps and nearly brought the global financial system to its knees. Congress has pushed to tax recipients of AIG's $165 million bonus program 90% on their bounty. However, the legality of such an employment-contract-breaking measure was questioned by President Obama and has since stalled in Congress. In addition to facing a possible massive tax clawback, AIG bonus recipients have felt the wrath of New York Attorney General Andrew Cuomo, who holds the list of all AIG employees who received bonuses and is investigating whether AIG paid them fraudulently under New York law. As Cuomo dangled the bonus list, some AIG employees had received written death threats from a seething public. WSJ reported that AIG chief executive Edward Liddy has told Treasury Secretary Timothy Geithner that AIG would try to reduce its $230 million 2009 bonus package by at least 30%, that some employees would take a 10% pay cut and the 25 highest paid, active contract employees would cut their remaining 2009 salary to $1, in line with what Liddy himself stands to make this year. Also, 15 of the top 20 bonus recipients had agreed to return their bonuses worth about $30 million in cash, and $50 million has been paid in total. With Congress' vitriol fading for the time being, so have the death threats, but Pasciucco told the WSJ that the financial products staff still needs "certainty" about compensation as they are afraid their pay could again be placed under the congressional microscope. They want certainty? What about the lack of certainty that taxpayers will ever see the roughly $80 billion back that the Federal Reserve lent to AIG as part of its roughly $180 billion rescue package? Pasciucco told the WSJ that public and political attacks hurt employee morale and "stunned people" such that the wind-down of AIG FP's $1.6 trillion portfolio has slowed down, which could hurt the taxpayer in the end. Translation: Don't give them any more trouble, or they are going to let this thing explode. What ever happened to bonuses as a reward for performance? A $60 billion-plus loss for the fourth quarter, the largest recorded quarterly corporate loss, is not exactly bonus-worthy, is it? While the legality of tearing up employment contracts may be questionable and while we can not necessarily blame AIG FP employees for wanting what was promised to them, to whine about AIG employee morale is somewhat inadvisable from a public relations standpoint, especially in a situation in which your owner is the very entity you are whining to -- Uncle Sam. - Michael Rudnick See story from The Wall Street Journal
CategoriesComments
From: Mike,
What in the world is wrong with everyone? Fact is, AIG employees had contracts. If you dont want to pay them, then file Bankruptcy and reject the contracts. Then you can sit down and see if they want to stay and get things done with "retention contracts". They didnt ask to get bailed out. In fact, one could argue that they and the tax payer would have been much better off in BK. So everyone needs to relax and realize that they have no moral, ethical, or, frankly, contractual reason to work at AIG anymore. Management is correct. Without them, the tax payer is going to lose a whole lot more money.
Posted on:
April 13, 2009 4:40 PM
From: Erich Riesenberg,
If the good folks at AIG are doing such a good job, why does AIG keep getting more money from the FRB? And, the only reason the taxpayers could lose money at AIG is because the FRB keeps giving it to them. So, yes, the losers at AIG and the FRB are both to blame, as well as the politicians who are too stupid to understand what they have done.
Posted on:
April 14, 2009 7:16 AM
From: Erich Riesenberg,
Oh, and of course TARP requires employees to reject their employment agreements. So, while bankruptcy would have been a fine option, it was not the only option. Ultimately, it is the fault of the politicians, and the American people for not getting angry enough.
Posted on:
April 14, 2009 7:19 AM
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Employees at American International Group Inc.'s (NYSE:AIG) black sheep AIG Financial Products unit are holding the U.S. taxpayer hostage with a $1.6 trillion credit default swap bomb that could blow at any moment, and the only way to talk them down is with a hefty ransom payment. 
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All these AIG folk should quit and go get jobs at the American Enterprise Institute, where they can do something useful. And the US should stop giving money to AIG so we can stop hearing about how the kind folks at AIG are just trying to get motivated to pay us back.