Friday, March 27, 2009

AIG Losing Executives

If you want a completely new perspective on the AIG bonuses, try reading Jake DeSantis' Resignation Letter.
(or click on the first result from this Google Search if you are not a resgistered member of

Follow that up with news of more AIG employees jumping ship.

This is exactly what I predicted would happen back on March 21st:

Second, AIG needs to be able to retain its valuable employees. It is simply not fair to blame the entire Financial division at AIG for the decisions a few executives likely made. My understanding is that most all of the executives that were most responsible for misjudging risk and overselling their financial products have been let go. You simply cannot lose all the employees in a division of a company and expect the company to be able to continue to function well, and we REALLY need AIG to be able to continue to function, at least for now. How well would the company you work at function if 80% of the employees left all at once? When AIG started to realize how bad of shape all the investment banks were in, and that they themselves were headed for insolvency as a result, they were afraid many of their employees would leave the company. How many employees would stay at the company and have their reputations sullied by their continued association with AIG if they were not promised additional compensation in return? In early 2008, AIG offered retention bonuses to anyone who would stay until March 2009, and more bonuses for those who would stay until 2010. We just hit the round of bonuses that were due on March 15, 2009, and the bonuses were paid as promised. It is important to realize that the bonuses were NOT performance bonuses, they were retention bonuses. These valued employees that may have had little if any responsibility for the financial crisis were promised bonuses if they would stay on at AIG. They fulfilled their part of the contract, and their contracts should be honored. It is VERY DANGEROUS to go down the road of breaking contracts. Government is supposed to help enforce voluntary contracts, not force companies to break them.

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