In WHAT insane world do we give bonuses to failed executives of failed companies????

[Horse with no Name]

RETENTION bonuses are for people you want to keep. Their BONUS should be they get to keep their fucking job even though the did a crappy job. For fuck sake. Enough is enough!:mad:

http://news.yahoo.com/s/ap/20090710/ap_on_bi_ge/aig_bonuses
>>>snip
After its bonus payments ignited a firestorm of criticism earlier this year, American International Group Inc. is asking the federal government to weigh in on the insurer's plan to resume paying millions in promised retention incentives next week, according to media reports.

AIG, once the world's largest insurer, has asked the Obama administration's compensation czar, Kenneth R. Feinberg, to approve the payments in order to head off any public outrage, The Washington Post reported Thursday evening.

While the company isn't required to get the government's blessing because the payments are actually for 2008 employment contracts, the newspaper said executives are reluctant to move forward with installments coming due next week without official approval.

Feinberg has the power to reject pay plans he deems excessive at companies which benefited from large infusions from the government's $700 billion bank bailout fund. Feinberg also has authority to review compensation for the top 100 salaried employees at those firms. AIG is among the companies whose pay practices the government now oversees.

[LeftishBrit]

1. It's insane. Happening here in the UK too.

The argument is, if we don't pay them these obscene amounts how can we attract and keep 'good people' - but the problem is that it tends to attract the greedy rather than the good (even just using 'good' in the sense of 'competent'). If an average person messed up their job as much as these people have - how soon would it be before 'You're Fired!'?

[raccoon]

2. Well said! Rec'd, and c'mon, let's get this one on Greatest. nt

[patrice]

3. Socialism American-Style, i.e. "our" world. nt

[HughBeaumont]

4. Socialism for the wealthy, Capitalism for the rest.

We need to gather by the millions. In giant mobs. Invade Wall Street, corporate headquarters and mansions, Washington D.C. and don't leave until things change fairly for the workers of this country. We continue to allow the wealthy to run roughshod and live by their own set of rules and this nation has no future. Is it not painfully obvious by now that corporations and the wealthy that run them are only in it for themselves and not for the greater good?

"We can shape our future, or let events shape our future for us."

Please tell me this isn't just another empty platitude spoken by a national leader, Mr President. Unfortunate people needed work and income YESTERDAY. The fact remains that you cannot have a consumer-based economy if you do not have people that make an adequate wage to spend. You can't.

You need gainfully employed people, or else this whole model is going to come to a dead STOP. Them's the facts, guy. Simple choice. Help us or the wealthy. Simple choice. We have the larger buying power by far. We cannot buy if we do not work.

But hey, don't listen to me. I'm only talking sense here.

[ellenfl]

5. obviously in the oligarchy known as the u.s. of a. eom

[The Backlash Cometh]

6. It's a world gone mad.

Or...maybe they're buying off the witnesses?

[ladjf]

7. It's criminal rather than insane. nt

[zbdent]

8. happens when the President (Bush) rams through a gift to the banking industry

with the pre-requisite "no strings attached free-market" attitude that permeates the Republican/Conservative groupthink ...

[bvar22]

21. Its ALL the Republican's fault!

NOW we have Your Children’s Money too !!!
And there is not a fucking thing you can do about it!
Now THIS is “Bi-Partisanship” !
Better get used to it!!
Hahahahahahahahaha!

[SammyWinstonJack]

25. +1

That is apparently lost on some here, isn't it?

[Junkdrawer]

9. Who said they failed? Looks to me like they setup a PERFECT game...

where our government is FORCED to payout hundreds of billions indefinitely. Think that was easy?

[unblock]

10. it's NOT insane. it's completely fcuked up, but it's not insane

with the extreme concentration of power in corporations and the huge role of connections and relationships with these individuals, and the knowledge of where the bodies are buried, it just doesn't work the same way as it does for us underlings.

if a programmer or a customer service rep or even a mid-level manager screws up, you can fire them and replace them with relatively little pain in terms of the company as a whole. but with ceo's, they can expose unsavory information, start up a competing company, reveal trade secrets, work for a competitor and take key customers with them, and so on. moreover, finding a suitable replacement isn't at all easy because, again, it's not just a matter of finding actual talent. you need the right relevant connections, someone the remaining consituents (suppliers, customers, investors, executive) trust and so on.


the key way to solve this problem is to decrease the concentration of power in companies, and to find ways to make profitability more a function of actual good management and innovation rather than deal-making, mergers and acquisitions and that sort of thing. a good way to start would be to seriously cut back on the permissible size of corporations. mergers and acquisitions for bigger companies are lucrative in large part because the combined entity has more muscle to bully remaining competitors and customers and suppliers. this is not cool and not an overall economic plus. it's only a financial one for the combining entities.

[Berry Cool]

11. You have some good points about the flaws in the system, but I would respond to your statement

that CEOs "can expose unsavory information, start up a competing company, reveal trade secrets, work for a competitor and take key customers with them, and so on" by saying it isn't that easy--they could get the pants sued off them for doing that. That's why they are made to sign noncompete contracts. Corporations aren't dumb.

[unblock]

13. yes and no.

yes, ceo's do sign noncompetes, but no, they wouldn't necessarily get sued.

first, there are legal ways to bypass noncompete clauses, e.g. by starting out as a consultant or just waiting out the 3 year noncompete period or have your spouse do the stuff that would be considered competing. i'm not an expert but i know it can be done.

second, it really, really doesn't look good for a corporation to sue its former ceo. it gives investors the willies, it gives the NEW ceo the willies, and runs the risk that a deposition will expose some highly embarassing or detrimental information, which the media immediately pounces on. so companies are highly reluctant to sue former ceo's even when they know they have a solid legal case.

third, the ceo is rich enough to hire a good legal team who can cause much pain for the company. again this all becomes public information, so the old ceo can even toss in some relatively frivolous claims and get the accusations in the press. it's like an ugly divorce, and corporations usually do everything they can to avoid such a mess.

[Berry Cool]

17. Well, of course a noncompete is only good for so long

but it's not as if no one ever gets sued for violating a noncompete, whether it looks good or not. Of course there are disadvantages, and it can be costly to go up against a CEO's "dream team," but there are disadvantages to any kind of litigation, and it's costly, yet you don't see any lack of litigation out there. Some stuff gets settled, some doesn't.

Your post seems like kind of a short way of saying that lower-level personnel in a company are expendable no matter how good they are, because there are simply more of them out there, whereas CEOs are highly valuable, no matter how bad they are, because there are so few of them in the first place that even the bad ones need to be curried and placed on a high pedestal lest they flee for better prospects. Maybe that's what you're saying, but I think it's a sad commentary on how the corporate world views its workers.

It makes me sad to think that all employees below C-level executives, even the best, are now regarded as "a dime a dozen" while all C-levels are regarded as gold, no matter what blithering incompetents they are. There is something very wrong with that picture.

[unblock]

20. i agree completely

it's not that regular employees aren't valued, it's simply that they're not in a position to sufficiently influence the course of a company. one software engineer in a team of 10 may make a difference in getting a key feature in or a critical bug out, but he's not going to triple the value of a company by snapping up a competitor at a bargain price.

that's not to say the software engineer couldn't have cut the same deal as the ceo did, but we'll never know because companies NEVER give regular employees the opportunity to even TRY stuff like that.

and yes it's not the c-level employees ARE the only valuable ones, it's that they are REGARDED as the only valuable ones, at least on an individual basis. again, the problem is the concentration of power. the c-level execs are empowered to do things that can easily sink the company or triple it. no one else is given the opportunity.

[DCKit]

12. Considering our last pResident, failing upwards has become an American tradition. n/t

[Deja Q]

15. So how come *I* am not the ruler of the universe?

:pout:

[crickets]

14. "to approve the payments in order to head off any public outrage"

That strategy won't head off public outrage; it will expand the focus. As it should.

[Kablooie]

16. It's simply the robber barons taking care of their own. Nothing more. Nothing less.

An old story that never ceases to remain fresh.

[LWolf]

18. In the same world that we appoint failed policy "leaders"

to positions in an administration about "change."

[anigbrowl]

19. I think you're jumping to conclusions

Aren't you sort of assuming that everyone at AIG is a failure, and is now getting a bonus? Realtistically, it's more likely that some staff are irresponsible failures, while some others are responsible people who tried to limit the damage or object to unjustified risk-taking. Those people would be deserving of a bonus if the departments they worked in did their job well without any financial shenanigans.

I've never seen a company where everyone was incompetent or greedy; it's usually 10-20% bad people, 10-20% good people, and 60-80% people who just work there and don't have much influence over or understanding of company policy. So it's possible this isn't as bad as it looks - I'd be inclined to wait and see who AIG is proposing giving bonuses to, and why, and how much, before getting all bent out of shape about it.

[western mass]

22. a world run by failed execs of failed companies?

[flamin lib]

23. Retention bonuses aren't what most of us think of as bonuses.

Most people think of a bonus as something you get for exceptional performance. A retention bonus is sort of the opposite. Case in point is Centex, one of the largest home builders in the U.S. They just went belly up so to speak and were bought by Pulte, another major home builder. Virtually everybody at Centex, my wife included, will lose their job when the acquisition is complete. Some of these people are important to the process of closing the company down. As a result those people are offered retention bonuses if they stay and complete the transition instead of accepting some other offer.

Sure, Pulte could make the transition happen eventually but it's worth some pretty hefty $$ to them to do it quick and easy and it's worth it to the executives of Centex to pass up an immediate job to stay and turn the lights off.

[WonderGrunion]

24. The insane world where the "Bonus" system is used to dodge taxes

Businesses have a policy of paying their executives relatively low "salaries" and compensating them in other ways that can be used to avoid paying income taxes on them. This includes "bonuses" and stock options. There is a strong reason why executives are far more concerned about Capital Gains tax cuts than income taxes.

[Egalitariat]

26. I'm pretture they have contracts. AIG could breach the contracts by not paying

but it would likely be an easy lawsuit to win by the employees. And AIG would end up paying all attorney fees and court costs, in addition to the contractual bonus.