Sat 29 Nov, 2008 10:01 am
Posted November 28, 2008
AIG Pulls Fast One -- "Cash Awards" Going To Managers
by Jonathan Tasini - Huffington Post
When you are a pro at a scam--the definition of "scam" also can be found under the term "insurance industry" -- you know how to try to pull a fast one. And AIG is trying to pull one -- under cover of the holidays. Check this out.
You may remember that AIG -- which is afloat only thanks to a bailout by you, the taxpayer, to the tune of $152 billion and counting--made a whole lot of public relations when its top seven executives agreed not to take bonuses this year.
Well, on the eve of Thanksgiving, obviously knowing the markets would be closed on the holiday and obviously knowing that just before the holiday few people would pay attention, AIG actually notified regulators that, well, yes, bonuses would be given out, as Bloomberg News and The Financial Times reports today:
American International Group Inc., the insurer that said yesterday it scrapped bonuses for top executives after a U.S. bailout, will still pay 130 managers "cash awards" to stay with the firm, including $3 million to retirement services chief Jay Wintrob.
Wintrob, 51, will get the "retention" payment in two installments, the first in April 2009 and the rest a year later, New York-based AIG said today in a regulatory filing. The firm previously disclosed the program in a Sept. 26 filing and said today that Wintrob and Chief Financial Officer David Herzog elected to get the payments four months later than planned.
"The expectation from the public and Congress was that they weren't getting bonuses, not that they'd be pushed off by several months," said David Schmidt, a consultant at executive pay firm James F. Reda & Associates. "That clearly violates the spirit of AIG saying they'll forgo their bonuses."[emphasis added]
From the FT:
However, the UBS news comes just a day after it emerged AIG, which has received more than $150bn in bail-out financing from the US government, would still pay 130 managers "cash awards" to stay with the firm. AIG disclosed the bonuses in a regulatory filing on the evening before Thanksgiving, a day when US markets are closed. The insurer had previously said its seven top executives would forgo their bonuses for 2008.
They just can't help themselves, can they? Call it "retention pay" or "cash bonuses" or some other euphemism -- but the fact is that your tax dollars are going to reward people who are lucky to even have jobs. There should have been a housecleaning that swept the entire top level of managers out on their asses for playing a role in the financial crisis that is hurting millions of people.
I have not seen this reported in other mainline traditional media. But, this is a scam.
Chief Executive Officer Edward Liddy is encouraging top employees at AIG subsidiaries to remain so the units retain their value while he finds buyers. The insurer is selling businesses, including the U.S. retirement group Wintrob heads, to repay a $60 billion loan included in the expanded government rescue package AIG got this month.
“We’ve said they aren’t eligible for annual bonuses, and they’re not,” Nicholas Ashooh, spokesman for AIG, said today in an interview. “What we’re talking about are retention agreements -- they’ve been pushed back by several months -- and it’s our hope that those businesses will be sold in several months.”
Looking for Buyers
If the units are sold before payments are due, AIG won’t have to give the awards, Ashooh said. Under the agreement announced this week, top executives are eligible for either severance or retention payments, not both, he said.
Wintrob is CEO of AIG Retirement Services Inc., the division that sells annuities. He was chief operating officer of SunAmerica when AIG bought the firm for $19.7 billion in 1998. The business he now heads may sell for about $12 billion, according to Gary Ransom, analyst at Fox-Pitt Kelton Cochran Caronia Waller. Wintrob didn’t return two calls seeking comment.
Can't we just flush these turds and be done with them?