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Monday, December 22, 2008

AIG boss defends $400M for bonuses

After U.S. Rep. Elijah Cummings questioned him from Congress, American International Group chief executive Edward Liddy, who's working for $1 a year, went on CNBC's Squawk Box this morning to defend spending $400 million in bonuses for 2,000 senior managers at his company, which is dependent on more than $140 billion in U.S. government financial support after Liddy's predecessors ran it into the ground with stupid financial investments.

"To pay back every single penny that has either been loaned to us or invested in us," Liddy said,"we have to sell 70% of our company." But to make those businesses saleable, "you have to keep the people in place.... If you don't use retention bonuses -- those people are some of the best in the insurance industry, they will go elsewhere and we won't have anything to sell ... and we can't pay back the federal government. We want to pay back the federal government.

"Now, with respect to a large bonus, there are not many of those, and that would go to a person probably running a business that generates $25 or $30 billion in revenue and makes between $2 and $4 billion a year. We want that person locked in place...

"We need to get back to being a public company, not be on the dole, if you will, from the federal government and we need to do that as quickly as possible. It is good for the taxpayer and the company."

 
Posted by Joseph N. DiStefano @ 3:30 PM  Permalink | 4 comments
Comments   
  • 0 like this / 0 don't   •   Posted 4:12 PM, 12/22/2008
    Dude...c'mon. The responsibility has to trickle down to all levels. If you as a company need my money "tax payer" money to fix mistakes then you should not give nor should the employees take any bonus until the comapny becomes profitable. It's as simple as that. I know if I don't do a good job I don't get any form of a bonus. Seems preety simple to me. I guess at that level the rules are different!
    — gimlethead
  • 0 like this / 0 don't   •   Posted 4:17 PM, 12/22/2008
    also - liddy said..."you have to keep the people in place.... If you don't use retention bonuses -- those people are some of the best in the insurance industry, they will go elsewhere and we won't have anything to sell ... if they are some of the best in the business - they did one heck of a job running the company into the ground...ged rid of them and find mre quailifed people. or if you have to give them a bonus...you should list each person, what the person's bonus is, what business group they belong to, how much profit or loss did that business unit make
    — gogglespaisano
  • 0 like this / 0 don't   •   Posted 4:32 PM, 12/22/2008
    and that is an average of $200,000 PER PERSON
    — gogglespaisano
  • 0 like this / 0 don't   •   Posted 8:06 AM, 12/23/2008
    AIG has mostly very profitable business lines and the vat majority were no way involved or had any knowledge of the foolish investments that were made. Likely many of these managers met individual goals that they were given. To not give them the performance bonuses that they were promised and then earned certainly could be considered breach of contract and sucessfully challenged legally. Not really what you want.
    — tr88


4 comments
About Joseph N. DiStefano
Joseph N. DiStefano writes this blog to feed his PhillyDeals column in the Philadelphia Inquirer. Joe has been a member of Bloomberg LP’s New York Finance Team, wrote the book “Comcasted,” taught writing at St. Joseph’s University, and studied economics and history at Penn. Reach Joe at 215-854-5194 and JoeD@phillynews.com
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