LadyEllen
Posts: 10931
Joined: 6/30/2006
From: Stourport-England
Status: offline
|
As contractual agreements, the bonuses cannot be simply withdrawn or reduced retroactively by actions which contravene contractual law; however in this case there should be attention paid perhaps to the time period in which the bonuses are to be paid. If for instance the contracts dont specify a "payment due by" date, there is a window by which the bonuses can be withheld until better times, without being withdrawn. If there is a "payment due by" date, then the question is regarding the consequences of withholding the bonuses until better times - in the UK for instance, there is a maximum late penalty charge plus interest, unless specific contractual conditions indicate additional late payment penalties.
There is also the question of whether the bonuses are indeed enforceable at all, considering that the company should have gone bankrupt had it not been rescued. In this, the matter of how the rescue was made is important - handled properly, it should be the case (under UK law at least) that an administrator (the treasury/government in this case) is charged with realising the best value of the assets for the benefits of creditors, which might be accomplished by selling the business as a whole as a going concern or liquidating the assets by way of item by item sale. In this case, it would seem that the administrator effectively sold the business as a going concern to the taxpayers, and creditors ought to be paid from the monies from that sale.
In this, government comes first in the line of creditors (for outstanding taxes et al), then secured creditors, then ordinary creditors, importantly including employees. Given that AIG was effectively bankrupt, then it is unlikely that ordinary creditors should receive anything more than a few cents in the dollar for what they are owed, and this includes any bonus payments. In this way, bonuses should be effectively cancelled out there not being enough realised from the sale of the business to meet them. However that means all payments - and perhaps also outstanding salary payments to employees lower down the scale. Given that the business continued in new hands though, it would then be a commercial matter for the board to decide whether to restore ordinary creditors, especially employees - accounting to the shareholders for their decision.
In addition, there should be a question as to the actions of directors and executives; whether criminal proceedings ensue or not, there may be cases where civil proceedings to recover losses suffered as a result of negligent actions could be pursued; most rightly perhaps in this case by the administrator, whose duty it is to realise the best outcome for the failed business and its creditors. Bonus payments made could be recovered this way, should cases be proven.
The whole matter really revolves around the manner in which the rescue was made - from the comments here it would appear that those remedies that might normally be available have been irrevocably waived by the actions of those who executed the rescue?
E
_____________________________
In a test against the leading brand, 9 out of 10 participants couldnt tell the difference. Dumbasses.
|
RE: The House passes a punitive tax - 
Profile
New Messages
No New Messages
Hot Topic w/ New Messages
Hot Topic w/o New Messages
Locked w/ New Messages
Locked w/o New Messages
Post New Thread