AIG and bonuses

Maybe I'm simple, but I don't understand how the AIG unit that brought the company into bankruptcy can pay out bonuses, huge bonuses.

I've heard the bonuses called "retention bonuses." I've also heard them called "performance bonuses."

Retention or performance, they ought not be paid.

Why?

Why would any business want to keep - retain - employees that led to its ruin? If I own a company and if you work for me and if you fail to perform, I'll fire you even if you ARE my wife's brother's second cousin. No retention question here.

Likewise, if you work for me and fail to make your quota, you failed to earn a performance bonus; miss it a couple of times and I'll replace you, even if you are my brother-in-law's nephew.

So why does our government permit this AIG unit to pay out millions in bonus bucks?

Yes, I understand that AIG is a (semi-)private company; "semi" in that we - taxpayers - still own much of the company. AIG still owes us millions of dollars.

Our government, the organization that is supposed to have as its highest priority protection of its citizens, fails to take any serious steps to prevent these payouts claiming the bonuses are "contractual obligations."

I will ask you

(a) If a company goes "belly up," do pre-bankruptcy contracts remain in force?

* The answer is "No"; that's how companies weasel out of pension plan payments and existing contract agreements with unions and individuals.

(b) If a bonus is based on performance and the required performance level is not reached, is the bonus paid?

* When was the last time YOU were paid a bonus for failing to meet your goal; likely as not your expected raise was less than anticipated, if there even was a raise.

(c) If a company is driven into bankruptcy by your incompetence, would you be paid a retention bonus; a bonus to keep you and your incompetence around longer?

* Fat chance!

If you have some reasoning that disagrees with the above, share it with me, either as a comment to this blog or in an email to Yohanon.Glenn @ gmail .com; I REALLY would like to know what I'm missing here.

Remember, the banks we (taxpayers) bailed out were prevented from paying big buck bonuses until they repaid the bailout loans.

What makes AIG different?

Why is AIG different?

With whom are AIG execs in bed? Which politicians?

Something is rotten in Denmark as the expression goes.

You might want to visit http://www.webslingerz.com/jhoffman/congress-email.html to find out how to contact your senators and representative; let them know what you think about AIG's bonus plan.

Yohanon Glenn
Yohanon.Glenn at gmail dot com