Wednesday, March 25, 2009

Scarlet Letters

I haven't written much about the AIG bonus issue because it's been so obviously an exercise in Kabuki. Today we actually heard from someone from AIG who isn't groveling about his role with the company. The New York Times, bless its soul, printed an open letter from AIG hand Jake DeSantis to Edward Liddy, the chief exec of the giant insurer. De Santis's letter pretty much speaks for itself.

I understand how retention bonuses work because I earned one from Bank of America in 2006. The circumstances were different — B of A had decided to close its Minnesota offices and was moving operations to Hillsboro, Oregon. As a result of this, I ended up losing my job. B of A knew that the move would be disruptive to its business, so it offered me and a number of my colleagues the opportunity to earn a retention bonus if we stayed with the company while it wound down its operations in Minnesota. While the bonus was only a fraction of what the AIG folks earned, it represented the equivalent of an additional 2-3 months' salary. Rather than leave B of A early, I stayed on and worked to the end.

It was the right thing for B of A to do. While I was hardly irreplaceable, it would have hurt the line of business substantially if I'd left early. That is why companies pay retention bonuses. I never felt bad about taking the bonus, because I'd earned it.

No matter what you might think of AIG generally, it had a legitimate business reason to pay such bonuses, because retaining people who can do complicated tasks is a big challenge. If you want to keep people in position, you have to pay them. And since DeSantis was a "dollar a year" man, he essentially worked for free this year, since he is now in the position of having to give up his bonus. And now AIG won't have his services for much longer. Perhaps one of AIG's critics can do the work that DeSantis does, but I wouldn't bet on it.


my name is Amanda said...

There seems to be equal blame in Mr. DeSantis’ letter, placed on certain politicians and AIG CEO Liddy. (Notably, there is nothing mentioning the President.) However you’ve only referenced the critics of AIG. Perhaps the CEO ought to have adopted a strategy that better defended his “blameless” employees rather than immediate capitulation. (Did they fire their PR dept?!)

The idea that the media is run by Liberals is so old and boring. There’s something more important to the media than the supposed Liberalism of individual journalists: $$$. The story that makes money is the story that gets printed/reported, and if there are details omitted, or even exaggerated, then this is a tiny detail quickly overlooked. The kind of outrage focused on the AIG bonuses doesn’t necessarily belong to Liberals; it’s a class issue. If any news outlet had found something that makes more money than “wealthy Americans receiving million dollar bonuses from a company bailed out by taxpayer money from millions of struggling Americans,” then maybe the AIG bonuses could have been saved.

Welcome to the reason I changed my mind about becoming a journalist years ago.

Mark Heuring said...

Yes, Liddy deserves criticism for not standing up for his people. Having said that, bravery is in short supply these days. And standing up to an angry mob, especially one that has the power of the State behind it, is a pretty daunting task.

You'll also note that I didn't mention Obama, either. The show last week was a Congressional one, and the politician who deserves the most opprobrium is Christopher Dodd. Obama and Geithner could have called b.s. on all this and didn't, so I guess I'd put them in the same circle of Hell as Liddy.

I also didn't talk about the liberal media either, you'll notice. At this point they aren't being anything more than stenographers anyway.

my name is Amanda said...

Oh I know you didn't mention the media - I just meant that the ire is being propagated by the media.

The $ thing is somewhat of a personal tangent.

Mark Heuring said...

Understood. There's more to the media angle but it's yet another post I'll have to write.

W.B. Picklesworth said...

"The idea that the media is run by Liberals is so old and boring."

I agree. It is tiresome and irritating that this story lurks year after year after year.....