AIG bonuses

[alki_2008]

JoB – Contractual retention bonuses aren’t really “guaranteed” when the government ends up taxing them at 90%. The government can’t constitutionally target just AIG employees, which is why they use a criterion of ‘institutions that received more than $xyz of TARP money’. They can’t specify AIG, so several institutions will end up as “collateral damage”.

Severance packages are included when determining AGI, and it’s the employee’s total income (from all sources, not just their salary) that factors into the $250k limit. A lot of folks think that it’s just the high-paid executives that will be affected, but it’s just not true. The majority of folks that are getting laid-off this year from the no-longer-local bank will be affected by the bonus tax legislation. If the government had a better written bill that better targeted the ‘overcompensated executives’, then great…but they failed to account for these compensation packages when passing the bailout and now they’re failing in their attempts to address what they overlooked. Note: I don’t care if it’s democrats or republicans or whatever.

As for what wages we taxpayers are being asked to subsidize.. it isn’t the low income worker.. it’s AIG employees with incomes over $250,000 who were paid retention bonuses.

I’m guessing this comment is not about the bonus tax, but about TARP money going to AIG in the first place? If that’s the case, then I’m confused. The TARP money is going to all employees, not just the high-paid executives…they’re just getting more of the money.

I know it’s rough to be promised something that you don’t eventually get, but this is not some unique circumstance in our recent employment history… it just hits those with white collars and without unions this time.

Oh, I see…so it’s okay when white collar folks don’t get what they’re promised, but it’s NOT okay when blue collar folks don’t get what they’re promised? I thought two wrongs don’t make a right?

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[JoB]

alki_2008..

i think that your case for our contractual obligations to the AIG employees who received hefty bonuses would be a lot better if you were as concerned about the broken employment contracts of all workers.

What’s good for the goose is good for the gander and those in the financial sector have been fueling the shafting the goose has been getting for some time now all in the name of reducing employee costs.

I suspect they don’t feel the same about those reduced employee costs when it affects their paychecks.

I don’t blame them for feeling cheated.. but they certainly aren’t the first employee group to feel that.

At least they will walk away with whatever is left of their 401K. Those with busted pensions lost much more while the financial sector cheered.

As for local employees who could get tagged with the legislation i don’t think has passed… i haven’t seen any version of that bill that would tax the base income exceeding $250,000 just that which would tax the bonus at 90% (or some other percent) if the adjusted gross income exceeds $250,000.

Those employees whose personal adjusted income is lower than $250,000 but worry that their combined income would push them over the limits can always file as married filing singly, thereby limiting their burden..

Whatever they end up with, i am sure it will exceed the unemployment they would be collecting if their company had collapsed and they had become unemployed.

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[JoB]

rs261..

you are right, i didn’t phrase that well…

the average wage is what you get when you add the wages of all employees and then divide by the number of employees… and is generally higher than the median wage because the highs are very high while the lows only go as low as minimum wage.

the median wage is the wage in the middle… half the people employed make less and half the people employed make more…

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[alki_2008]

if you were as concerned about the broken employment contracts of all workers

What did I write that made you infer that I wasn’t concerned about “all workers”? Is this the Boeing thing again? I never said that their broken contracts didn’t count, just that if their broken contracts matter then so should the contracts of financial employees.

those in the financial sector have been fueling the shafting the goose has been getting for some time now

This is one of the things that really gets my goose…the notion that all employees of a financial company (regardless of their job role) should be punished because of the actions of their executives. Wouldn’t this also mean that manufacturing employees should be punished because of the actions of airline/automotive executives?

At least they will walk away with whatever is left of their 401K.

Do employees with pensions NOT have the option to contribute to a 401k? I thought all employed people were allowed to contribute to a 401k…is this not the case?

Financial employees don’t even HAVE “pensions”.

Those with busted pensions lost much more while the financial sector cheered.

Why is the “financial sector” so demonized? Do you really believe that ALL financial employees were thrilled about the busted pensions of whoever you’re referring to.

Whatever they end up with, i am sure it will exceed the unemployment they would be collecting if their company had collapsed and they had become unemployed.

So, in that case…it’s okay.

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[JoB]

Alki_2008..

i would bet there is one thing we could agree on. The American worker hasn’t been treated well.

I understand the anger of those who spent the time, effort and money getting educated and did everything “right” only to find that they won’t be getting the benefits they earned.

Hubby and i fit that profile… smart people, got educated, worked hard and doing ok… but we bounced through Minnesota to Seattle so hubby could stay employed. We thought we had earned at least some choice if not some financial security.. but find out our choice is employed or unemployed:(

Don’t get me wrong.. i am very happy to have landed in West Seattle and we are very happy hubby is employed… but a lifetime of excellent work hasn’t earned us the rewards we expected.

I’m sorry, but that is the same feeling every employee who had a busted contract feels… no matter how much or how little you may feel they invested to get there.

I am sorry for some AIG employees who may lose their bonuses, but that doesn’t mean i want to pay those bonuses as a taxpayer.

I’m sorry, you roll the dice you take your chances just like the rest of us… and i haven’t seen taxpayers lined up to pay anyone else.

It isn’t that i am demonizing financial sector employees… but i sure don’t think they deserve any special privileges either.

As for the idea that many of those who stand to have their bonuses taxed (if congress actually passes anything) are poor little peons who weren’t involved in creating this mess…

i think not. If you are netting $250,000 adjusted gross income in the financial sector.. after all deductions.. my guess is that you are part of management.

Last time i looked at wages in the financial sector they weren’t THAT good.

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[alki_2008]

If you are netting $250,000 adjusted gross income in the financial sector

Like I’ve said before…it’s total income that gets to that $250k. You could sell your house, have a dual income, have investment income (unlikely nowadays) and if ALL that amounts to $250k – then the proposed tax would kick in.

Also, the AGI includes severance and the bonus that ends up getting taxed. A “real” example is $80k salary + $40k retention bonus + $20k severance + $5k performance bonus + $70k spouse’s salary + $50k other income (home sale, interest income, etc). This would put them over $250k and so they’d lose 90% of %60k to bonus tax and 33% of the remaining $6k to regular income tax. I guess people think that’s fair and that their employment contracts deserve to be ‘essentially broken’ by new legislation enacted AFTER they entered into those contracts.

I think it’s fine if people with a “base salary” of $250k get some of their bonus taxed – but that’s not how the bills were written. It’s frightening that bills can be written so hastily and poorly, without the legislators taking the time to understand what the effects would be. Besides, the AIG folks are already clear, since those bonuses were in 2008 anyway – and half of the bonus money that was paid went offshore and can’t be recovered no matter what tax laws are passed.

A lot of the bonus money that financial employees get is going right back into their communities anyway…construction, remodeling, retail, etc. It all comes back around anyway. If the money went back to the government, then they’re just going to feed it back into more bailout bills.

that doesn’t mean i want to pay those bonuses as a taxpayer.

I’m sure there are taxpayers that don’t want to pay for the war, but that doesn’t mean we’re going to enact a spacial tax on soldiers’ because we don’t want to pay for what they’re doing. It’s the way the country works – people pay taxes and their government spends their tax money. Sometimes it’s spent the way taxpayers like, and sometimes it’s not.

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[JoB]

alki_2008

there is a simple solution for dual income families.. they file married filing separate and the spouse who didn’t get the bonus takes the tax hit on any investment income.

so someone with a real income of 80G would have his 80k salary + $40k retention bonus + $20k severance + $5k performance bonus for a taxable adjusted gross income of 141,000 assuming he had no other expenses to deduct and his personal exemption was 4,000… not a problem.

his wife would have her 70 plus 50 minus her 4… and any other deductions… total 116K max.

admitted, they would pay a small penalty for filing separately.. but still a long way from the 90% projected tax on bonuses.

BTW.. that’s $257,000 adjusted gross income which looks pretty good to a two income family, both of them lucky enough to make $10 an hour… without much in the way of benefits… who gross less than 41,600 after they pay social security … and may currently be trying to live on unemployment anyway.

let’s talk about that person with a base salary of $250,000.. they wouldn’t get all of their bonus taxed… they aren’t taxed on social security.. nor on money put into their retirement accounts… and on some benefits … and unless they had 0 tax write-offs … which isn’t so likely for someone with that base salary….

I am sure someone has done the math on how much a person would have to actually earn to end up paying the 90% tax.. but my conservative guess puts base salary at least a third above 250,000.

as for justifying the bonuses on the basis of the money those in the financial sector would put into their local economy for construction, remodeling, retail, etc…

i would like to point out that the union workers whose salaries were just “adjusted” as one of the conditions of their bailout would like to put their money back into their local economy too… for things like food, clothing and tuition…

and the communities those auto plants are located in really need every penny they can spend there.

if the government requires those in the auto industry to make wage concessions to get access to government funds, it’s not such a stretch to require the same of those in the financial industry.

The auto workers have already made their concessions and i didn’t hear one bit of anguish over their financial pain… or broken contracts.

in fact, i seem to have read that it was necessary employee cost control… to make the industry competitive.

So broken contracts are cost control for Auto workers but illegally broken contracts for those in the financial sector?

I don’t buy it.

btw… did that actually pass yet or are we just repeating the wailing the financial reporters are doing in advance trying to build public indignation so it won’t get passed or at least so that people won’t revolt if it doesn’t?

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[alki_2008]

At least the auto workers have a union and are able to have a say in their employment contracts. The financial employees have to wait-and-see what happens while others make the choices for them.

Also, some financial employees have heard that the AGI for singles (or married filing separately) might be set to $125k – so that people can’t use that “loophole”. Even though nothing has yet passed, there are still amendments and the potential for something to happen. There’s no definitive decision for financial employees to count on.

The auto workers have already made their concessions and i didn’t hear one bit of anguish over their financial pain…

I’m sure if this was the “West Detroit Blog”, then there might be more coverage of their anguish.

One difference is that their concessions mean that they get to keep their jobs. The retention bonuses for most financial employees (especially the non-executives) are going to people who will be losing their jobs in 2009.

Retail includes food and clothing, and construction/remodeling employs a lot of local folks.

Also, that over $250k example I posted. Most years, that couple would make $150k…it’s just in 2009 that they’d be over $250k (due to home sale, severance, bonus)…and 2010 will be more like $100k, since it’s tough for folks to compete with kids half their age for the few jobs that are out there.

I don’t understand why advocating the situation of financial employees is seen as denegrating the situation of auto worker or other union workers?

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[JoB]

alki_2008

LOL.. do you really believe that the individual auto workers had much say in the contract that was shoved down their throats?

i would venture that do this or we close you down is not much of a negotiating position… and the auto companies continue to close plants.. those jobs aren’t so secure either.

As for the financial workers, without the infusion of US cash they would have lost their jobs long ago… that’s what happens when your business fails…

Hubby worked for a company that just stopped paying him a few years ago… luckily the company who bought their product hired him… in Minnesota. it took another five years to be offered a position back in the NW.

Trust me, finishing the remodeling job on my dream home for the next buyer and taking a loss on what we knew would be a long term investment in the home we thought we would retire in was not exactly what i would call a choice. But off we went to Minnesota anyway.

Having lived this story, I’m sorry that it seems there is a possibility that this could happen to someone you care about, but they are just last in along line of people who have had their employment contracts busted.

Those who were on the inside at AIG and other financial institutions had to have known they were juggling in a house of cards… I have known for years and I didn’t work in the financial industry.

They chose to keep juggling.. many of them in the hopes that they could retire before it all collapsed. Bad luck for them that they didn’t get out soon enough.

But they had to know that accepting bonuses while their company was on the public dole wasn’t exactly going to be a popular position. Employment contracts are the first thing to go in reorganizations.

It’s funny about the media.. indignation over the idea that we should not honor the employment contracts of those companies in the financial industry who took TARP money percolates through the national financial media…

right along side the articles about union busting and containing employment costs.

Doesn’t that seem just a little hypocritical to you?

You can probably relax though…My guess is that the legislation is all posturing anyway. When push comes to shove they will get theirs first.. and we will pay for it.

It’s not fair.. but equal opportunity is more of a myth than most people are willing to admit anyway.

They are being singled out now because they are getting extraordinary treatment for employees in a failing business… they are getting bonuses while others employed by businesses in healthier condition lose their jobs and take pay cuts…

and… it’s the taxpayer’s money that is being spent for those bonuses.

but hey, welfare for the rich and for large corporations is good for America… at least that’s what we’ve been told.

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[alki_2008]

Those who were on the inside at AIG and other financial institutions had to have known they were juggling in a house of cards… I have known for years and I didn’t work in the financial industry

Well, there are plenty of folks working in financial companies that are not involved in finance roles.

equal opportunity is more of a myth than most people are willing to admit anyway

Yeah – seems like “equal” is all relative. Some things are more ‘equal’ than others. ;)

they are getting bonuses while others employed by businesses in healthier condition lose their jobs and take pay cuts…

If this refers to the auto industry, then I wouldn’t say it’s much “healthier”. American automakers have been behind the curve for years, and I’m sure the auto workers would’ve known that.

welfare for the rich and for large corporations is good for America… at least that’s what we’ve been told

Exactly the type of attitude that drives me nuts. “Rich” is also very relative…but I guess it’s acceptable to bash “rich” folks for having money, and to go and demonstrate outside their homes and scare their kids that have nothing to do with the situation.

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[JoB]

alki_2008..

if those at AIG who required retention bonuses to stay with the company weren’t in financial roles they evidently were aware that there were reasons they might not want to stay employed with AIG… otherwise there would have been no need of retention bonuses…

The auto workers aren’t the only American workers who are taking pay cuts right now. It seems some companies are economizing on employee costs because they can… and because the financial reporters love them when they do.

Have you noticed the local unemployment rates?

as for people demonstrating outside other people’s houses and scaring their kids.. i have no idea what you are talking about.. but i do know that as a parent if i had put my family in a position where there were likely to be demonstrations on my lawn.. my kids wouldn’t be home to see it…

it’s tough when the shoe is on the other foot.. isn’t it.

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[HMC Rich]

Interesting Thread.

JoB, I read that people were being bussed in to certain AIG executives neighborhoods and their homes were being picketed. I believe this was around the time the frenzy in the press was in high gear.

Public vs Private. Private citizens should not be harassed at their home. I am not too keen on public citizens being harassed at their homes either. I would rather demonstrations be in front of businesses or town squares.

I am not a lawyer. Seems to me if a contract is broken, people can sue? I know, a bit too simplistic, but isn’t this why Geithner and Dodd kept the bonuses available?

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[JoB]

i don’t suppose it’s surprising that people were bussed into certain AIG executives neighborhoods, though that is not something i would have done.

it’s ineffective… either the individuals involved were going to give the bonuses back or they weren’t.. and demonstrating outside their homes wasn’t going to change that.

besides, i bet they didn’t get far. There are guards manning the gates of gated neighborhoods where most of them live to prevent that kind of behavior…

i suspect they were picketing outside the gates:)

Picketing is not so different than the media frenzy that camps itself outside the homes of anyone who happens to find themselves in the midst of a public story and most of us don’t have security guards to restrict their access…

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[JoB]

The crux of the matter…

these websites say this better than i could…

the first two come from the AFL-CIO .. but go ahead and open them anyway since the individual essays are fairly well sourced…

ten CEO Pay Case Studies:

http://aflcio.org/corporatewatch/paywatch/retirementsecurity/index.cfm

check the compensation packages where you work:

http://aflcio.org/corporatewatch/paywatch/ceou/database.cfm

the last is the working man’s point of view.. and good entertainment:

Mount Fuji: a poet’s dream

many thanks to the two people who landed these in my personal inbox today:)

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[alki_2008]

Those who were on the inside at AIG and other financial institutions had to have known they were juggling in a house of cards

From the above statement, I thought you were referring to what employees should’ve known BEFORE the company failed…which would also be BEFORE retention contracts were offered.

From the following statement (em>if those at AIG who required retention bonuses to stay with the company weren’t in financial roles they evidently were aware that there were reasons they might not want to stay employed with AIG), it sounds like you’re referring to what employees should’ve known AFTER the company failed…in which case, I agree. I think both employees and non-employees knew the instability of their jobs AFTER the companies failed…which is why retention contracts were necessary to ensure essential employees wouldn’t leave. I guess I’m chronologically confused.

and because the financial reporters love them when they do.

When financial reporters love what a company does, then the Street also loves the company. When the Street loves a company, then shareholders are encouraged and share prices rise. When share prices rise, then investment portfolios holding those shares gain (or ‘regain’ the way things are now) their value. Investment portfolios belong to ‘rich’ people, ‘regular’ people, pension funds, 401k’s, mutual funds, etc.

as for people demonstrating outside other people’s houses and scaring their kids.. i have no idea what you are talking about

HMC Rich addressed this well. What I’ll add is that kids didn’t have to be home to be affected. Kids go to school, their friends hear things from their parents and talk about other kids. The world isn’t as isolated as it used to be.

Sorry for not including more details earlier…I assumed from your comments in this thread that you were already aware of the various happenings regarding AIG and the ‘demonstrating’ bus tour was well-covered in national media.

i suspect they were picketing outside the gates:)

They don’t all live in gated neighborhoods.

Picketing is not so different than the media frenzy that camps itself outside the homes of anyone who happens to find themselves in the midst of a public story

I don’t recall folks picketing outside the homes of Firestone employees when Firestone tires were falling apart and folks were dying.

I’m not sure what initiated the Boeing/Autoworkers vs financial comparison…but it seems like apples-to-oranges to me. Here’s how I see the difference (genericized to make it simple):

1/1/09: Company presents employment contract saying…Employee agrees to work from 1/1/09 to 6/1/09, Company will pay Employee $100 at 6/1/09. Employees disagree with contract and leave Company OR Employees agree with contract and stay.

6/1/09: Employee is paid $100.

Here’s where things are different…

Boeing/Autoworkers – Get their contracted payment and negotiate new contract for employment after 6/1/09.

Financial employees – Get their contracted payment, which gets cannibalized by legislation that passes AFTER they agreed to the contract…and their employment is terminated on 6/1/09.

Of course…both will pay regular income taxes, which is a moot point since income taxes could be anticipated at the time the contracts were presented.

And yes – the legislation hasn’t yet passed into law. Seems to me that it’s better to discuss the effects of potential legislation (of any type) BEFORE it becomes law, rather than AFTER…but that’s just me.

Haven’t read your links yet, will do that later tonight. :)

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[beachdrivegirl]

The “bus tour”, the harassment of children, death threats & the fact that clubs asked members to quit has led to at least 20 AIG financial unit employees (including Jake DeSantis the department’s executive Vice President) quitting over the past month. How is AIG going to be able to recruit QUALIFIED and EXPERIENCED employees to replace these positions? Not only has their name been tarnished but they have no funds to offer the bonuses needed to recruit & retain new employees. We, the taxpayers, needed AIG to retain these experienced, qualified, employees. They were the only ones familiar enough with the portfolio to maintain the hedges as it was “de-risked.” Prior to the departure of these employees the financial-products unit was on track to wind down by year end. With the departure of these key employees is anyone else concerned that this is going to stall and prolong this process? Is anyone else concerned by Gerry Pasciucco’s comment that this issue that has been dramatized by the media and public is going to cost the tax payers more money?

And for those of you out there that arent concerned like me feel free to read this:

http://nymag.com/daily/intel/2009/04/hi_aig_not_all_of_usa_hates_yo.html

In case you don’t follow the link, the link just reminds us all that even fourth graders understand that this isn’t these employees faults and even the biggest tantrum with kicking and screaming isn’t going to fix anything and is sure as heck not going to help anything. So let’s all take off the diapers and put on our panties.

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[JoB]

ok, this has turned into quite a ramble.. and this ws before i read beachdrivegirl’s comment… so unless you are really interested.. i would skip to the next shorter post:)

alki_2008…

If the employees at AIG and other financial institutions who were receiving bonuses in spite of profit losses didn’t know they were sitting on a house of cards before their companies began to fall they weren’t very good at their jobs.

It’s simple math.. if the assets guarantying a loan are too risky for the initiating mortgage company to hang onto.. then they are probably too risky for you no matter how they are repackaged.

When you depend upon another sucker down the line to take risky assets off your hands, it is pretty likely that at some point you will find yourself holding the proverbial bag…

When that sucker is the pension plans of most Americans.. (professionally managed captive asset plans … managed by those whose compensation in most cases was tied more to stock activity than long term investment success) .. it’s really easy for everyone who stands to benefit to turn a blind eye to ratings they know will never stand up and hope that the house of cards won’t fall.

That only works so long.. sooner or later the assets that back all of that paper have been mortgaged and remortgaged beyond their ability to recover.

Was it malicious? Probably not. They were just playing the financial game… but the consequences of that game have affected every sector of our nation.

there is no such reality as a zero impact financial game… not even zero sum fiancial games.

no matter how you justify it by calling it zero sum and pointing out that when someone wins.. someone else loses. Speculators aren’t the only losers in those financial transactions… feeding profit centers either lessens profits for those who produce or raises prices to customers. That’s reality.

And those inflated stock prices, the boon to our retirement programs.. don’t look so good once they have deflated beyond the original value of the investments.. which has happened to anyone young enough not to be able to liquidate and self manage their retirement assets…

I don’t know about anyone else, but we would have been significantly financially ahead to liquidate a year and a half ago in spite of having to pay a penalty and tax on them as income… as long as we didn’t invest those funds in property…

It’s a great game, but it is not a game without consequences… although those who play the game well seldom share the full consequences others pay.

I don’t think it’s so much to ask those who played the game to assume some of the burden… they haven’t been asked to make those they ruined whole.. just to forgo getting bonuses in the process.

As for the financial reporters…

When a company’s worth is measured in the financial press only by the price of their publicly traded stock and the price of that stock is manipulated by those who wish to earn profits from stock fluctuations … then CEOs whose compensation is tied to stock prices are going to indulge in dubious accounting practices to inflate their paper profile instead of investing in research and development and employees to guarantee long term success.

That’s what short term top management contracts backed by golden parachutes creates… especially when those CEOs can be assured the justice department is unlikely to hold them personally accountable for most failure.. the kind of failure we once called fraud.

As a nation, we have pushed the concept of short term success to it’s limits… and in the process financially rewarded those who built this house of cards disproportionately.

and our financial news media has had a lot to do with that process.

I am not a financial wizard.. although i do have some financial training.. but i saw this coming well over a decade ago.. and i was not alone.

If those of us on the outside could see the dangers so clearly, those on the inside had to have been aware of the speculative nature of their dealings… yet they thought it acceptable to gamble with the retirement incomes of their neighbors or to encourage others to do so.

that captive money from retirement funds really heated the stock market long after it would have cooled had it not had those assets continually churning.

I agree that there are some people caught in this mess who simply held jobs… but for the most part, those aren’t the people who benefited from the bonuses in question. Mostly, those are the employees currently standing in unemployment lines…

Those who benefited were smart enough to know that what they were involved in was dubious at best… but chose for one reason or another to overlook that.

I will admit that there is a lot of power in the culture at any business or in this case.. across the financial sector… but that doesn’t absolve personal responsibility.

What amazes me is that so many squawk so loudly about the mere possibility of losing bonuses they knew shouldn’t have been paid once the government stepped in to so heavily subsidize their salaries.

But say nothing about those who are currently losing homes or health care or other services after losing their jobs…

Most of the people who have just found themselves in that situation did everything they could right.. yet they didn’t benefit from the supposed financial success we have “all” been having and have lost a good portion of whatever retirement funds they had managed to save… AND will pay a 10% penalty plus tax if they use their remaining retirement funds to keep themselves housed, clothed, fed or receiving medical care now.

nope.. i don’t feel the pain of those who may lose the bonuses they weren’t noble enough to give back to their country…

i think they got off lucky… but are too blinded by their own self interest to realize it yet.

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[JoB]

beachdrivegirl..

i would assume the head of AIG’s fianancial products unit, Gerry Pasciucco has more than a little self interest in this matter…

it is also worth noting that 1/3 of those who have quit were in the London office where the majority of the problems originated and are not affected by any legislation that could be passed by congress…

i am sorry that this link won’t work as a direct link.. you have to copy and paste to get there… and i am still having difficulty making it work..

maybe you have to be signed into their site to get there?

anyway, this article cites the source of the comments in beachdrivegirl’s post…. Gerry Pasciucco, head of AIGs financial unit.

it was posted last night.

http://www.marketwatch.com/news/story/Bonus-outcry-hurt-taxpayers-AIG/story.aspx?guid={89B9EE78-3849-4608-BCE3-726AB4CDA507

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[alki_2008]

If the employees at AIG and other financial institutions who were receiving bonuses in spite of profit losses didn’t know they were sitting on a house of cards before their companies began to fall they weren’t very good at their jobs

There are plenty of folks that got bonuses both before and after the ‘failure’ that were not in financial roles and it wasn’t their job to know the ins and outs of the financial transactions. If you believe differently, then that’s fine. It takes a lot more than just financial folks to keep huge corporations functioning, especially in today’s high-tech world.

they haven’t been asked to make those they ruined whole.. just to forgo getting bonuses in the process.

A lot of the AIG folks DID repay some, or all, of their large bonuses…although I wouldn’t call the demonstrating and death threats “asking”, and I wouldn’t call bonus taxes “asking” either. They really had no legal obligation to repay.

I’ve never been against employees having their “performance” bonuses reduced if the company falters…as I mentioned at the end of post #46 (starts with JoB…sorry, this is a long one…). Performance bonuses for higher ranking employees are usually based on company performance, so poor company performance should result in poor performance bonuses. However, a “retention” bonus is whatever the contracts says irregardless of the company’s performance.

There’s a big difference between “performance” and “retention” bonuses…and the proposed bonus taxes make no distinction.

nope.. i don’t feel the pain of those who may lose the bonuses they weren’t noble enough to give back to their country…

i think they got off lucky… but are too blinded by their own self interest to realize it yet.

Oh geez. Seems to me that it’s just the size of the bonus, and the assumed class status of the employees receving them, that actually bothers you.

I forgot that you don’t care about the employment contracts of financial employees. My bad.

I’m going to go read the linked stuff from the past few posts now. :)

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[beachdrivegirl]

Yes, employees gave back nearly $50 million in bonuses that they had no legal obligation to return. Which is pretty remarkable if you ask me?

JoB you must have found similar article that I had read, but you didnt catch the right one… I didnt read anything from marketwatch. I am excited that so many people must be recognizigng the other side of this BIG issue. :)

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[beachdrivegirl]

JoB, your post in number 67 bothers me. I tried to find another word, and I apologize but I couldn’t. You are pointing the fingers in whatever ways you can so you can feel better about your losses in the financial market. And to be quite frank, it is childish. The entire financial market that you put your lively hood was built on the same notions that AIG was on. Everyone me, you, AIG, and every other major financial institution, insurance agency etc. bought into this “failed notion”. Yes it is very unfortunate but we cannot change it. So we need to accept responsibility & figure out how to fix it. IMO, fixing it is by hanging onto the experienced employees that know what the he** is going on. We are not going to find EXPERIENCED pro-bono financial employees to come in and save the day so bonus’ of these executives should not be questioned. And if you or anybody else has a problem with it we need to be pissed @ our elected officials. Our elected officials did not look out for our self interest. They did not protect our tax $. If they had protected our tax $ there would have been stipulations in the stimulus package.

I do have to ask, if you did see this coming why did you invest in it ? That would be as asinine as me saying I saw the plane I am on crashing but I am getting on it anyways. Just isn’t going to happen. And lastly, I have to disagree with your statement that “losing bonuses they knew shouldn’t have been paid once the government stepped in to so heavily subsidize their salaries.” If I had signed a contract with a bonus in it regardless of whether or not my company accepted money from the government. A great “real life” example is this: I work in sales. Someone signs a five year agreement with me. Even if they get bought out by another company, shockingly they are responsible to pay my company for those payments. It is a legal contract. Just trying to “dumb it down” so all the lurkers understand that this isn’t about what we wish to be true, but what is true. 

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[JoB]

beachdrivegirl…

i am not pointing fingers so i can feel better about my losses in the financial market. yes, we took some because i couldn’t persuade hubby that paying the 10% fine and the taxes would be cheaper than the alternative.. which wiped out nearly half our 401K…

he had more faith int he financial “experts” than I…

but we made our decisions and we have taken our lumps… like grown-ups.

what i am p….d about is those who aren’t willing to take their lumps along with the rest of us.

I am sorry.. but an employment contract is only as healthy as the company that makes it.

as with your sales example.. if someone buys the company, yes they buy the obligations.

but if the company goes under.. your company is left with the piece of the pie that the bankruptcy court awards them.

and either way, your company is under no obligation to continue to employ you for the full five years of that contract’s payback.

Perhaps you will be lucky enough to only work for companies that honor their employment contracts before all other financial obligations.. in some places that used to be the law..

but the chances of your lucking out that way are actually pretty slim these days.

As for our elected officials being responsible for what happened at AIG??? well.. they do have some responsibility for not insisting that the federal laws on the books were enforced…

but those really smart good guys you think we should bonus to hang around so they can figure out how to profit from the mess they made… are the guys who made the mess.

And quoting them protecting their self interests doesn’t change that at all.

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[JoB]

alki_2008..

a bonus is a bonus. if the employees who accepted retention bonuses had negotiated incentives instead, they would have been paid their money up front before the US taxpayer started subsidizing their salaries.

Clearly, that was not the case.

Once they did, as far as i am concerned, the company was in reorganization and all employee contracts were subject to renegotiation.. just like they are in every other company in reorganization.

I think the employees at AIG and other large financial institutions which had to accept government money to “sweeten” their asset/liability balance enough to forestall being closed down by federal regulators shouldn’t get treated any differently than the employees at any other failing company.

As for the employees at AIG who got retention bonuses but weren’t part of the finance division … i figure that if they knew enough to consider jumping ship before being offered retention bonuses, they knew enough to know exactly what they were getting into… they accepted the risk when they signed those contracts.

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[beachdrivegirl]

Job you may want to read it up, as of yet no laws have been broken. If you are going to talk passionately about something you may want to read up on the facts.

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[walfredo]

That is a pretty comical claim- that the employees who ran a perfectly healthy company into complete failure in the last 16 months are ENTITLED to their BONUSES because of the contracts that they signed…

Let’s see- that is borderline insane. The company- AIG- took obscene risks and did not practice any ethical or practical standards. They turned a short term profit- and increased share price. The people who did this were paid a lot for the short term gain- and benefited dramatically.

These risks exploded in there faces- and they left a steaming pile of shi* so big- they could never hope to repay it. It destroyed such a large cross section of businesses security that the government was forced to step in and provide hundreds of billions of dollars so the company would not go bankrupt.

So the wunderkinds- the geniuses that drove a large, too big to fail- profitable company- beyond bankruptcy in 18 months- they should #1- be absolutely without strings entitled to ever bonus dollar they had negotiated when they worked for an actual company with money to pay them. And they should #2- be retained at high salaries for their expertise?

My god if we didn’t have these talented people just think what could happen! They might go bankrupt? They might not be able to stay in business without complete subsidy by the federal government? The might take risks so insane they would destroy a 120 year old, profitable company in less then 2 years for modest short term gains?

These morons need to be fired- and prosecuted- and most of them put in jail or shot. Real jail or real bullets. Stealing $500 at a 7-11 is 5 years in prison- stealing $150 billion dollars and destroying an American institution is worth a bonus- and continued employment. All of us will be paying for these crooks for decades to come- and the bonuses aren’t even the tip of the iceburg.

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