AIG has been described as the company where federal dollars go to die.
It may also be a career killer for Edward M. Liddy, the chief exec handpicked by the government last fall after its initial bailout of the foundering insurance giant.
AIG’s plan to pay $165 million in executive bonuses dominates today’s news. The payments will be made despite a heated conversation last week between Liddy and Treasury Secretary Timothy Geithner, the Washington Post reports.
Edward M. Liddy
Liddy followed up with a letter to Geithner, agreeing to restructure some of the payments and expressing concerns about the company’s ability to keep top staff if they “believe that their compensation is subject to continued and arbitrary adjustment by the U.S. Treasury.”
Some of the bonuses are going to employees of the financial products unit, the division that nearly brought down the company last year, The New York Times reports.
The payouts will undoubtedly deepen taxpayer resentment toward well-paid business leaders at companies receiving bailout money. Members of Congress have already questioned the wisdom of retaining the employees who took the company to the edge of disaster.
No firm has received more federal dollars than AIG.
Along with 24 other top execs at the company, Liddy is receiving $1 in salary this year. A former chairman of Allstate, he left a partnership at the private equity firm Clayton Dubilier & Rice to take the AIG job.
Liddy clearly likes a challenge. At Allstate, he led a massive restructuring effort that cut costs and sparked a class-action suit by former agents.
But at AIG, he may be in an impossible position. Although he vowed in December to “repay every penny” of the government bailout, investors haven’t shown the same confidence. The stock price has dropped by more than 80 percent since Liddy took the helm in September.
Lawyers had advised him that the company was contractually obligated to honor the bonuses.
“Needless to say,” he wrote Geithner, “in the current circumstances, I do not like these arrangements and find it distasteful and difficult to recommend to you that we must proceed with them.”
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4 Comments
#1. Harvey Wharfield 03.15.2009
Here’s an email I sent to a couple of guys from the LA Times re: their story on AIG bonuses…
RE: Ailing AIG stands by need for bonuses
to scott.reckard, jim.puzzanghera
show details 10:57 AM (14 minutes ago) 3.15.09
Hey boys,
Funny how these corporations stick together, huh ?
“An even bigger problem, they added, was that financial products employees who are
denied payments could quit and that AIG’s losses — the insurer took the deepest bath
in red ink in American history last quarter, losing $61.7 billion — could spiral enormously
if the only people who understand the company’s convoluted dealings are not around
to “unwind” the damage they have caused.”
You are aware that the de facto (by default) Federal Government, in the ten mile square
that it’s Constitutionally limited to, is a corporation itself, right ? With a CEO posing as
a “President” !
“The United States government is a foreign corporation with respect to a state.”
19, Corpus Juris Secundum, Corporations, ยง 883 …and many, many other cites from
the Supreme Court, U.S. Code, etc., etc., etc. !
What else could we expect from a corporate D.C. ? Cronyism at the highest possible levels !
One hand scratching the other…ad nausium, ad infinitum !
Harvey: [Wharfield]
Boston
#2. jax 03.15.2009
This is sick. Why in the world are we helping these companies that keep sending millions to people who do not know how to run a company? They cry yet get paid millions on the “average joes” taxes. Furthermore, I fear this is just the tip of the iceberg. Look what Enterprise rent-a-car did to get bailout funds:
http://www.butasforme.com/2009/02/25/alert-enterprise-rent-a-car-may-have-fired-employees-as-fake-evidence-when-lobbing-for-bailout-money/
#3. Erik Petterson 03.15.2009
edward m. liddy - what a turd!
#4. Brittancus 03.15.2009
AIG is not the only location of festering greed, even when our country is submerged in dark chasm of unemployment and foreclosures. The reason AIG, a massive mega insurance company became insolvent is that it got too big? It is a stain on America integrity as the ponzi scheme of Mr. Maldoff has shown us. When Americans taxpayers are suffering from this terrible plight cause by so many individual issues.
The import of thousands of fraudulent cheap labor through the H-1B visa game, hardly ever supervised by the dept of labor, engineered by iniquitous immigration attorneys. The unceasing betrayal of our politicians as Speaker Nancy Pelosi (D-CA) who has sold out the American worker by killing E-Verify. Unfair trade agreements that have seen our industrial base disappear into third, cheap labor countries, so that millions of US companies have closed their gates.
All around the country we have seen the padlocked factories and silent machines, because it was cheaper to import car parts from Mexico. Then to import them back across the distressed drug infested borders. Then the taxpayer bails out banks, insurance and hundreds or other defaulted business to the tune of more than a trillion dollars. Then without any oversight the executives are still receiving massive bonuses even though the company has failed. As we sink lower into this financial quagmire, our bumbling politicians led by Sen. Harry Reid (D-NV), has dishonored his Oath to Nevada constituents and the US people. By tearing out the E-Verify amendment in both the Stimulus/omnibus spending bills. It will now allow at the least 300.000 illegal immigrant labor to take construction jobs from documented workers.
Thanks to the Democratic leadership even our workforce must–submit–to millions of illegal cheap labor. They have squirreled into the both blue collar to the higher professional echelon of positions. We have till September to right this disgusting wrong, by demanding every politician revise–EVERIFY– in perpetuity. Washington switchboard for your incensed calls to 202-224-3121
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