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AIG bonus payments controversy
USINFO | 2013-08-13 14:58
The AIG bonus payments controversy began in March 2009, when it was publicly disclosed that the American International Group (AIG) was to pay approximately $218 million in bonus payments to employees of its financial services division.
AIG is notable for having received $170 billionin taxpayer bailouts and in the fourth quarter of 2008 posted a loss of $61.7 billion, the greatest ever for any corporation. Beyond the $165 million in bonus payments that were recently announced, total bonuses for the financial unit could reach $450 million and bonuses for the entire company could reach $1.2 billion. This quickly led to what somehave labeled a "populist outrage."
On March 16, 2009, New York State Attorney General Andrew Cuomo sent a letter to AIG demanding "the list of individuals who are to receive payments" and "a description of each individual's job description and performance at AIG Financial Products" in order to determine "whether any of the individuals receiving such payments were involved in the conduct that led to AIG's demise and subsequent bailout" and "whether, as you claim, such individuals are truly required to unwind AIG Financial Product's positions." AIG failed to respond, so Cuomo subpoenaed them for the names of the bonus recipients. Cuomo announced that 73 AIG employees were each paid more than $1 million in bonuses, saying "AIG made more than 73 millionaires in the unit which lost so much money that it brought the firm to its knees, forcing a taxpayer bailout." and "Something is deeply wrong with this outcome."
On March 21, Connecticut Attorney General Richard Blumenthal issued a subpoena to AIG to find out why they gave out an additional $53 million in bonuses on top of the $165 million already reported.
On March 24, 2009, The New York Times printed the open letter of resignation of Jake DeSantis, an executive vice president of AIG’s financial products unit, to Edward M. Liddy, the chief executive of AIG DeSantis stated that he and the majority of AIG-F.P. employees had nothing to do with the money-losing credit default swaps, that many of them had lost much of their savings in the form of deferred compensation invested in the capital of AIG-F.P., that he and others had agreed to work for an annual salary of $1 out of a sense of duty to the company, that AIG-F.P. employees were assured many times following the government bailout in September 2008 that AIG would honor the pre-existing retention contracts with scheduled payments to be made in March 2009, and that AIG-F.P. employees believed they were let down by Liddy's lack of support against opportunistic political pressure. He also stated he was going to donate his March 2009 payment to those suffering from the global economic downturn.
AIG is notable for having received $170 billionin taxpayer bailouts and in the fourth quarter of 2008 posted a loss of $61.7 billion, the greatest ever for any corporation. Beyond the $165 million in bonus payments that were recently announced, total bonuses for the financial unit could reach $450 million and bonuses for the entire company could reach $1.2 billion. This quickly led to what somehave labeled a "populist outrage."
On March 16, 2009, New York State Attorney General Andrew Cuomo sent a letter to AIG demanding "the list of individuals who are to receive payments" and "a description of each individual's job description and performance at AIG Financial Products" in order to determine "whether any of the individuals receiving such payments were involved in the conduct that led to AIG's demise and subsequent bailout" and "whether, as you claim, such individuals are truly required to unwind AIG Financial Product's positions." AIG failed to respond, so Cuomo subpoenaed them for the names of the bonus recipients. Cuomo announced that 73 AIG employees were each paid more than $1 million in bonuses, saying "AIG made more than 73 millionaires in the unit which lost so much money that it brought the firm to its knees, forcing a taxpayer bailout." and "Something is deeply wrong with this outcome."
On March 21, Connecticut Attorney General Richard Blumenthal issued a subpoena to AIG to find out why they gave out an additional $53 million in bonuses on top of the $165 million already reported.
On March 24, 2009, The New York Times printed the open letter of resignation of Jake DeSantis, an executive vice president of AIG’s financial products unit, to Edward M. Liddy, the chief executive of AIG DeSantis stated that he and the majority of AIG-F.P. employees had nothing to do with the money-losing credit default swaps, that many of them had lost much of their savings in the form of deferred compensation invested in the capital of AIG-F.P., that he and others had agreed to work for an annual salary of $1 out of a sense of duty to the company, that AIG-F.P. employees were assured many times following the government bailout in September 2008 that AIG would honor the pre-existing retention contracts with scheduled payments to be made in March 2009, and that AIG-F.P. employees believed they were let down by Liddy's lack of support against opportunistic political pressure. He also stated he was going to donate his March 2009 payment to those suffering from the global economic downturn.
