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RE: Dear AIG, .... I quit! - 3/25/2009 4:53:35 PM

rulemylife

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quote:

ORIGINAL: SilverMark

If what is said in the letter is true, this man is no crook nor has he done anything less than his job. To read the responses to his resignation reeks of jealousy not some form of righteous indignation. If the company that those of you who seem to think he is such a leach work for, were to be under bankruptcy most of you would be right there extracting every cent you think you are owed. To begrudge what the man made, in an area not related to the problem is much like saying tomorrow all of you work for free....and few,if any would do it. Pretty amazing amount of smugness being displayed by those who would not expect less if they found themselves in a similar situation.

I have to ask why we have had numerous threads on the automakers bailout, with an almost universal opinion that the UAW and their workers are greedy bastards destroying their industry while we have people justifying the AIG bonuses?

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RE: Dear AIG, .... I quit! - 3/25/2009 6:20:32 PM

MrRodgers

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quote:

ORIGINAL: DedicatedDom40

Liddy, the CEO, has only been there for 5 months, and a good portion of that time has been spent dealing with congress. He came over from Allstate. He wouldnt necessarily have had private one-on-one conversations with all the grunt VPs at AIG.

Also, to you and me, bonus = bonus. To them, bonus = normal salary when everybody is contracted for a $1 artificial salary. If the guy doesnt get ANY pay beyond a $1 salary, and the bonus which is how the guy really gets his salary is a political hostage and taxed into oblivion, would YOU go in to work tomorrow when there is no salary paid for your effort? I sure as hell wouldnt. Thats basically what the guy is saying, too. How you conclude "then he obviously isn't quitting because he needs more pay" sincerely baffles me. He can't get more pay, or ANY pay, under current conditions.

Do us all a favor and put away the tinfoil hat.

This letter is not to be believed.

True and not true. Libby just joined and likely didn't meet this VP. First of all the problems at AIG DID in fact start at their Financial Products division. It was the office in London and it had little to do with CDS (credit default swaps) it was the complete deviation from AIG's history but they too leveraged $billions to speculate in and to insure the risk of MBS (mortgaged backed securities) and once called upon would have been a big hit upon AIG's other core businesses if not for the US govt.

He may be correct in that only a few (dozen or hundreds) out of 400 employees (or more) were involved but it WAS AIG Financial Products Div. that started the downfall of the co. He was VP and it WASN'T his responsibility to see that these risks were not taken ? He's very likely just the kind of VP or any sloth that thinks it wasn't his responsibility and in ANY case...he was making millions.

Yes, now they take $1 but the typical manager let alone VP...made millions for the last several years, so I shed not a single tear over their financial situation or their $1 salary. The TYPICAL investment banking manager is a multi-millionaire by 35 and becomes deeply ensconced in the capitalist dream of...more millions. I am wondering what AIG paid him during all of this ?

Yes, he isn't likely going anywhere, so why does he need a 'retention' bonus at all ? What do we need to pay to 'retain' him ?

This whole letter is a joke and for him, time to go get a real job and not managing paper-traders...risking other people’s money.

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RE: Dear AIG, .... I quit! - 3/25/2009 6:34:33 PM

Raiikun

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quote:

ORIGINAL: MrRodgers

so why does he need a 'retention' bonus at all ? What do we need to pay to 'retain' him ?

Simple. It was part of his agreed upon compensation, and when you have a company that's struggling to keep alive, the people who DO know how to do their jobs are the ones you damn well need to keep.

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RE: Dear AIG, .... I quit! - 3/25/2009 6:46:57 PM

Raiikun

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quote:

ORIGINAL: MrRodgers
First of all the problems at AIG DID in fact start at their Financial Products division. It was the office in London and it had little to do with CDS (credit default swaps)

Got a source for this btw? Back in September last year, pretty much everyone was saying it was the Credit Default Swaps that were the culprit that hamstrung AIG.

http://www.reuters.com/article/newsOne/idUSMAR85972720080918
http://www.cnbc.com/id/26718242/?__source=aol%7Cheadline%7Cquote%7Ctext%7C&par=aol
http://www.npr.org/templates/story/story.php?storyId=94748529

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RE: Dear AIG, .... I quit! - 3/25/2009 7:04:35 PM

MrRodgers

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quote:

ORIGINAL: Raiikun

quote:

ORIGINAL: MrRodgers

so why does he need a 'retention' bonus at all ? What do we need to pay to 'retain' him ?

Simple. It was part of his agreed upon compensation, and when you have a company that's struggling to keep alive, the people who DO know how to do their jobs are the ones you damn well need to keep.

I don't give a damn what was agreed upon. If not for the US taxpayer AIG in something foreign to the capitalist...a free-market, would have been bankcrupt. As I am sure we all know by now, once in bankruptcy...all bets (agreements) are off.

In fact, as on ongoing concern...AIG IS already dead. We had to buy 80% of it for it to be alive on life-support at all.

Let's look at the all too typical American values here. Screw the auto worker who really did come to work just to do his job and for 20-30 years and if the auto cos. have to declare bankruptcy...everything these employees worked for could be gone...ther pension, their healthcare or any other benefits the court would decide in their judgement, would just have to go.

AIG would otherwise be in bankruptcy so trust me, among the first 'obilgations' to go would be all of these bonuses. Even the Delaware courts, by far the most business friendly legal regime of all 50 states, have stopped awarding retention bonuses in bankruptcy.

Is it really an American economic social value that taxpayers need to live up these so-called obligations to pay bonuses to the very people who now need the taxpayer's money to stay out of bankruptcy ? I hope not.

< Message edited by MrRodgers -- 3/25/2009 7:07:25 PM >

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RE: Dear AIG, .... I quit! - 3/25/2009 7:13:05 PM

Lucylastic

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Im trying hard to feel sorry for this guy and failing miserably
ah well
Lucy

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RE: Dear AIG, .... I quit! - 3/25/2009 8:00:21 PM

SilverMark

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Simple rule....read the first sentence....If the letter is true....I have yet to bash anyone for making a living and do not take shots at the UAW anymore than I have this guy....I wish it were as simple as people keep repeating, first and foremost, to void contractual obligations is indeed a dangerous precedent. Secondly, if the gentleman performed to his bonus, and the company doesn't file bankruptcy, he earned it.

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RE: Dear AIG, .... I quit! - 3/25/2009 8:29:23 PM

awmslave

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I guess the same executives who receive bonuses have turned the idea of bonuses upside down and made it into de facto salary.
I see the general problem with corporate executive pay. They have played and created the system that drains significant part of country's resources into the hands of few people. Total annual salaries plus bonuses of Wall Street and corporate executives amounts perhaps 100+ billion annually. It is substantial amount of money compared to annual budgets of states for example and it must have effect on society. Where this money goes for instance is important (Swiss banks, villas in Italy)? I remember 20 years ago some journalist discovered Chrysler CEO made a few million a year and he investigated what the man actually does for about $2000 an hour. Now we are talking ten times this amount in many cases. Adjustment for inflation (1000%)?
I have heard, it is considered healthy when CEO makes about 11 times the salary of average worker. US Fortune 500 CEO-s make about 40 times average worker. The argument: they earn the money working hard is just BS. I would have no problems somebody gets showered with money except the resources are limited and this money must come from somewhere. Company owners (shareholders) certainly should get vote here because it comes directly from their pockets and as today they have no say about it.

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RE: Dear AIG, .... I quit! - 3/25/2009 9:12:27 PM

MrRodgers

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quote:

ORIGINAL: Raiikun

quote:

ORIGINAL: MrRodgers
First of all the problems at AIG DID in fact start at their Financial Products division. It was the office in London and it had little to do with CDS (credit default swaps)

Got a source for this btw? Back in September last year, pretty much everyone was saying it was the Credit Default Swaps that were the culprit that hamstrung AIG.

http://www.reuters.com/article/newsOne/idUSMAR85972720080918
http://www.cnbc.com/id/26718242/?__source=aol%7Cheadline%7Cquote%7Ctext%7C&par=aol
http://www.npr.org/templates/story/story.php?storyId=94748529

Here: http://www.independent.co.uk/news/business/news/aig-london-unit-not-regulated-by-fsa-1645223.html

and here:
http://www.iht.com/articles/2008/09/28/business/aig.php

< Message edited by MrRodgers -- 3/25/2009 9:16:03 PM >

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RE: Dear AIG, .... I quit! - 3/25/2009 11:19:00 PM

Kirata

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quote:

ORIGINAL: Raiikun

Back in September last year, pretty much everyone was saying it was the Credit Default Swaps that were the culprit that hamstrung AIG.

You might find this interesting with respect to Credit Default Swaps:

Blow'em All Up

Obama's nominee to head the CFTC is also relevant to the subject:

Gary Gensler

K.

< Message edited by Kirata -- 3/25/2009 11:22:50 PM >

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RE: Dear AIG, .... I quit! - 3/25/2009 11:33:57 PM

FullfigRIMAAM1

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Yes, read it, and believe every word of it... I too would work for $1/year, never meet the manager, and keep the faith.
I actually do believe in charity, and doing it for a greater good. M

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RE: Dear AIG, .... I quit! - 3/26/2009 5:29:16 AM

Raiikun

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quote:

ORIGINAL: MrRodgers
I don't give a damn what was agreed upon. If not for the US taxpayer AIG in something foreign to the capitalist...a free-market, would have been bankcrupt. As I am sure we all know by now, once in bankruptcy...all bets (agreements) are off.

In fact, as on ongoing concern...AIG IS already dead. We had to buy 80% of it for it to be alive on life-support at all.

Okay, but it's not bankrupt. We pumped billions into it to try and save it. Presumably in hopes that our investment will be worth it by their recovery.

So, why would we wanna turn around and be absolute morons and drive away the people who are actually doing something to turn AIG around? That's one point I gotta give Barack, he apparently realized this which is why he seemed to be against taking the bonuses away.

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RE: Dear AIG, .... I quit! - 3/26/2009 5:33:58 AM

Raiikun

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Posted this in another thread btw, but as people apparently have missed it there, (and it's equally relevant here as to why we shouldn't be total morons and deny rightfully earned compensation) -

Immagine a senario in which NBC pays all of their employees via bonus, keeping in mind that the contracts of the individual performers are not negotiated collectively, but individually. General bad-programming happens, and the network falls near bankrupsy, but the government feels they are essential to the economy or nation, so it bails them out, in terms of a loan.

It serves to reason that the network failed because it had a glut of poor programming. Most, but not nessecarilly all, shows have done poorly. Heroes loses money, Medium loses money, Conan loses money, Chuck loses money, ect... however, lets say that Leno has a very highly rated show, individually, despite the failings of the rest of the network. He has reached the incentive clauses in his own contract by merit of his own performance.

In this senario, Leno is clearly the type of programming the networks needs to turn the corperation around, and make it profitable in order to pay back the sizable taxpayer loan NBC just aquired. It makes sense that you would want to retain him.

Why would you try to take away his justly begotten gains? He made money. He honored his contract.

If you take away his money, which he is legally and morally entitled to; why would he stay? He is clearly a cut above, making money in an industry where their is none to be made, and there just arent that many people in the world who can do the job as well as he can. You have to attract people like him to the business if you want to see a return on your investment. You can't attract people, or retain your best people. if you punish them for doing a good job.

The people who got bonused by AIG are people with degrees in finance and economics from MIT and the like. They are the reason AIG functions at all. We need them there unless we admit that we don't want to see a return on our investment. We can't disincentive that.

Million dollar incentive bonuses are the reason these brilliant people do the work they do. Take away that, and you may as well trust the running of our newly managed economy to the folks who run the DVM and the teachers unions.

In addition, these are contracts. You don't want the government empowered to tax punitively, or to break private contracts that were legally entered into. The government had every opportunity to stop these sorts of payments by placing stipulations into the bailout language. They did not, so there are no stipulations. You could argue then, that their aren't enough Ivy League lawyers in the federal government, but then I'd laugh at you.

The fault here lies with congress. Don't punish hard working Americans who are achieveing the goal of paying back your 30 billion dollar loan. AIG is not a collective. The companuy failed in large, but that doesn't mean that everyone who worked for them failed, and they shouldn't be treated as such.

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RE: Dear AIG, .... I quit! - 3/26/2009 9:17:21 AM

samboct

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Excuse me- but lets look at the problem in another way-

1) The guy agrees to help unwind the financial products division at AIG. He claims no responsibility for the actions of the group in London doing credit default swaps.

2) His salary is $1. His bonus, should he achieve success is $0.75M- for less than one years work. It sounds like in previous years, he's made comparable sums so if he's out of a job- he shouldn't be hurting.

Observations-what sacrifice is going on here? The $1 a year guys were first employed by FDR during WWII. He took executives from the auto mfgs and they volunteered their time to help improve armaments production. NO BONUSES!!!! and their salary was $1/yr. To equate DeSantis with these patriots is pretty sick. They knew the country was in trouble and volunteered to help. The distinction between salary and bonus is irrelevant to most folks- me included. DeSantis should also recognize the country is in trouble- and volunteering ones time does not mean getting handsomely paid if successful. He's a mercenary- pure and simple.

In terms of his denial of responsibility- yeah right. Corporations diffuse responsibility- they don't eliminate it. If you work for a restaurant that's a mob front- once you find out about it- what's your obligation? Especially if they've paid you handsomely. I don't know about you folks, but taking that money wouldn't let me sleep well at night- I'd look for another job after blowing the whistle- and acknowledge the fact that the restaurant was a mob front. "Legitimate" businesses owned by the mob are still part of a criminal enterprise in my book since they help the enterprise function. AIG perpetrated a swindle on the world's finances. He was part of it. His defense of "I'm not responsible" is like the prison guards in the Third Reich saying they were only following orders.

In terms of his job performance...Well, $0.75M is a lot of money for one years work. Seems to me, that we can find lots of well qualified folks who are out of work that might be able to do the unwinding as well as this guy- for a lot less money. His claim that being part of AIG makes him well suited for this job may be bogus- since as he says- it's a different division where he has no knowledge of their actions. Running his own division? Again- is $0.75M per year really a fair market price- or is this guy trying to take advantage of a disaster? I guess I don't see much difference between someone selling water bottles at $10 a throw to Katrina victims and this guy....

Sam

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RE: Dear AIG, .... I quit! - 3/26/2009 10:42:39 AM

Raiikun

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quote:

ORIGINAL: samboct

Observations-what sacrifice is going on here? The $1 a year guys were first employed by FDR during WWII. He took executives from the auto mfgs and they volunteered their time to help improve armaments production. NO BONUSES!!!! and their salary was $1/yr. To equate DeSantis with these patriots is pretty sick.

So is it evil now to just simply want to get paid for the work you do?

In terms of his denial of responsibility- yeah right. Corporations diffuse responsibility- they don't eliminate it. If you work for a restaurant that's a mob front- once you find out about it- what's your obligation?

There any proof he was aware that a small segment of the company elsewhere was doing something risky that could cause the mess? Did the people themselves even realize how risky it was?

quote:

Again- is $0.75M per year really a fair market price- or is this guy trying to take advantage of a disaster?

Was there a disaster to take advantage in past years for him to gouge a $750k annual salary? If he was getting paid that then, why would it be "taking advantage of a disaster" now?

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RE: Dear AIG, .... I quit! - 3/26/2009 10:52:48 AM

Raiikun

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quote:

ORIGINAL: MrRodgers

quote:

ORIGINAL: Raiikun

quote:

ORIGINAL: MrRodgers
First of all the problems at AIG DID in fact start at their Financial Products division. It was the office in London and it had little to do with CDS (credit default swaps)

Got a source for this btw? Back in September last year, pretty much everyone was saying it was the Credit Default Swaps that were the culprit that hamstrung AIG.

http://www.reuters.com/article/newsOne/idUSMAR85972720080918
http://www.cnbc.com/id/26718242/?__source=aol%7Cheadline%7Cquote%7Ctext%7C&par=aol
http://www.npr.org/templates/story/story.php?storyId=94748529

Here: http://www.independent.co.uk/news/business/news/aig-london-unit-not-regulated-by-fsa-1645223.html

and here:
http://www.iht.com/articles/2008/09/28/business/aig.php

Oh, btw, again...got any sources that say that it wasn't due to CDS that caused the AIG trouble? From one of the links you did provide -

"These insurance products were known as "credit default swaps," or CDSs in Wall Street argot, and the London unit used them to turn itself into a cash register. The unit's revenue rose to $3.26 billion in 2005 from $737 million in 1999. Operating income at the unit also grew, rising to 17.5 percent of AIG's overall operating income in 2005, compared with 4.2 percent in 1999."

"Regardless of Goldman's exposure, by last year, AIG Financial Products' portfolio of credit default swaps stood at about $500 billion. It was generating as much as $250 million a year in income on insurance premiums, Cassano told investors."

"In the quarter that ended Sept. 30, 2007, AIG recognized a $352 million unrealized loss on the credit default swap portfolio."

So, I still see nothing that contradicts what DeSantis said in his letter about not being part of the activities that hamstrung AIG.

< Message edited by Raiikun -- 3/26/2009 10:59:28 AM >

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RE: Dear AIG, .... I quit! - 3/26/2009 11:34:17 AM

samboct

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"Was there a disaster to take advantage in past years for him to gouge a $750k annual salary? If he was getting paid that then, why would it be "taking advantage of a disaster" now?"

As a taxpayer- I want to see that my money's well spent. Any attempt to correlate executive compensation based on performance has fallen flat because executive's pay is based on the comparison with others- not the value to the company. Example- Joe Blow gets $700,000 a year. I'm a bigger dick than he is, so I deserve $800,000 a year. The real question is whether or not there are some smart folks out there who'd do the same job for $100,000 a year- and possibly better.

Right now, DeSantis is sitting in the catbird seat because of the perception that he's irreplacable. I doubt it. The fact that he's been able to get a $750k/yr salary in the past doesn't mean that he deserves it now- especially with the company tanking. His bellyaching that people would have left AIG unless they'd been promised bonuses- well any idiot knows that when you take a job, you investigate the financial health of the company, because if they go belly up, they can't pay you. Effectively AIG HAS GONE BANKRUPT- and all I'm doing is suggesting that the imbeciles who were too stupid to spot the problem in the first place may not be the most effective to deal with the current situation. On the other hand, I recognize that doing a radical restructuring around the financial industry given the current shape we're in may actually be counterproductive. Obama may be right in dialing back the rhetoric about the mercenary pay these clowns are collecting- but that doesn't mean I have to like it.

In terms of my own actions- if I deliver a report to a client and there's an error in it- I don't ask the client for more money to fix it- I take on the task and consider it part of my good reputation. (Hasn't happened yet.) These clowns are like the mechanic who when fixing one thing, breaks another, and wants to be paid for the second repair. I consider these types of actions despicable- don't you take responsiblity for your work? In short- DeSantis whining would carry a lot more weight if he'd taken the responsiblity for the mess, accepted a buck a year, and done his best to fix it. Wanting to be well paid is insult to injury- and he's not well paid- he's obscenely paid.

Sam

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RE: Dear AIG, .... I quit! - 3/26/2009 12:19:02 PM

Raiikun

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Once again, you're assuming DeSantis and others were the one responsible for the mess, when that's not the case. The ones responsible were a small part of a division DeSantis had nothing to do.

Back to the NBC example above, it's as if you're wanting to punish Jay Leno because Chuck and Heroes was failing.

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RE: Dear AIG, .... I quit! - 3/26/2009 12:39:35 PM

rulemylife

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quote:

ORIGINAL: SilverMark

Simple rule....read the first sentence....If the letter is true....I have yet to bash anyone for making a living and do not take shots at the UAW anymore than I have this guy....I wish it were as simple as people keep repeating, first and foremost, to void contractual obligations is indeed a dangerous precedent. Secondly, if the gentleman performed to his bonus, and the company doesn't file bankruptcy, he earned it.

No, I know you don't take shots at the UAW.

I was only using it as an example that contracts have been re-worked in the past to help struggling companies.

The airlines and the concessions by their unions are another example.

But somehow, in this case, we want to believe that these bonuses are sacrosanct.

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RE: Dear AIG, .... I quit! - 3/26/2009 1:09:52 PM

Raiikun

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I for one never claimed them to be sacrosanct. If both parties want to renegotiate the contracts, let 'em.

That's a far cry from us declarng "OMG, they got paid for their work, and they wouldn't have without the bailout so take the money away!"

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