# Five AIG execs say may quit over pay: report



## tjf67 (Dec 7, 2009)

Bye Bye, dont let the doorr hit you in the ass on the way out!!!

We should fire them just for saying it.    uke:


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## billski (Dec 7, 2009)

Waaaaah waaaaah.  Bobby took my toys!

We have to pay that kinda dough in order to get "talent."   I'll bet there are quite a few very talented hot shots out there willing to work for a fraction, that will never get the opportunity.   I mean c'mon, think of all these highly paid execs that have run their companies into the ground.  A few even go to prison.

Hey, it doesn't seem like the market for purchasing ski resorts is too hot right now.  AIG still has nothing to say about any takers for Stowe.  Which reminds me, isn't AZ for sale?


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## mondeo (Dec 7, 2009)

When the government is known to step in whenever a company like that has financial difficulties, what risks are there? They were just doing their jobs. It's bad business practice to not use the government as your backstop if you know you have it.

But there needs to be a scapegoat.


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## billski (Dec 8, 2009)

mondeo said:


> When the government is known to step in whenever a company like that has financial difficulties, what risks are there? They were just doing their jobs. It's bad business practice to not use the government as your backstop if you know you have it.
> 
> But there needs to be a scapegoat.


the more important question is who put them in the position of needing a bailout?


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## mondeo (Dec 8, 2009)

billski said:


> the more important question is who put them in the position of needing a bailout?


No, the important question is who in the government started a policy of not letting big companies fail? As soon as that started, putting your company in a position to justify a bailout was no longer the end of the world, as it should be. There's simply nothing to lose anymore, only gains by taking massive risks subsidized by taxpayers.


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## Warp Daddy (Dec 8, 2009)

tjf67 said:


> Bye Bye, dont let the doorr hit you in the ass on the way out!!!
> 
> We should fire them just for saying it.    uke:



+1  these greed hogs need a massive dose of reality


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## billski (Dec 8, 2009)

In Japan, leaders take responsibility regardless of their complicity, publicly apologize and often resign. In the not too long ago past would commit suicide.  In the US, leaders take the money and run.   Just because greed is legal doesn't make it right.


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## bigbog (Dec 8, 2009)

mondeo said:


> No, the important question is who in the government started a policy of not letting big companies fail?...........


1+
..But the parachutes/lifeboats were created "legally"...that's where another part of the problem lies.  People, before they left for their parachutes and lifeboats...knew they wouldn't be sent to prison once out of certain positions, and government has nothing to do with that.  
That's done with their legal and judicial help..._That's_ where the corrupt issues lie.   Just label it under "National Security" and get the list of people who jumped ship...and take em' out for the firing squad.  We label all that drift over with Al Qaeda(sp?) as terrorists and lock em' up like vermon...I don't see how they're more dangerous than those who grabbed their parachutes at AIG.

Wasn't there a bus tour of the neighborhood where a number of execs lived?  Was in the first few weeks I saw this little segment...never saw anykind of follow up.


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## ctenidae (Dec 8, 2009)

Regardless of any other consideration, putting the salary caps in place was a stupid, if politically expedient, thing to do. No real upside, other than appeasing the villagers.


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## tjf67 (Dec 8, 2009)

ctenidae said:


> Regardless of any other consideration, putting the salary caps in place was a stupid, if politically expedient, thing to do. No real upside, other than appeasing the villagers.



We villagers are the reason they still have a jobs.


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## tjf67 (Dec 8, 2009)

mondeo said:


> When the government is known to step in whenever a company like that has financial difficulties, what risks are there? They were just doing their jobs. It's bad business practice to not use the government as your backstop if you know you have it.
> 
> But there needs to be a scapegoat.



You are confusing good business with ethical business.    Our leaders of industry should strive for higher ethical standards.  They should be leading by example.   In your scenario I should come break into your garage and steal you skiis.  I know the insurance company will replace them for you.


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## Marc (Dec 8, 2009)

tjf67 said:


> You are confusing good business with ethical business.    Our leaders of industry should strive for higher ethical standards.  They should be leading by example.   In your scenario I should come break into your garage and steal you skiis.  I know the insurance company will replace them for you.



Not to speak for mondeo, but I think in his scenario, the consequences would have been bankruptcy.  And managers of companies forced to declare bankruptcy tend to be worth significantly less in future job markets.  However, it seems mondeo feels if there were simply the consequence of bankruptcy in place, the managers would have recognized that and managed the company much differently.


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## tjf67 (Dec 8, 2009)

Marc said:


> Not to speak for mondeo, but I think in his scenario, the consequences would have been bankruptcy.  And managers of companies forced to declare bankruptcy tend to be worth significantly less in future job markets.  However, it seems mondeo feels if there were simply the consequence of bankruptcy in place, the managers would have recognized that and managed the company much differently.




We were not baling out companies nor was there ever an incling that we would when they were being leveraged to the hilt.  So there main reason was bonuses.


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## ctenidae (Dec 8, 2009)

tjf67 said:


> We were not baling out companies nor was there ever an incling that we would when they were being leveraged to the hilt.  So there main reason was bonuses.



Sure, except that most of the "outsized" bonus payments in 2008 and 2009 were deffered or retention bonuses related to market events as early as 2004 or 2005, that were developed in response to Congress effectively limiting executive compensation to $1 million in 1993 by changing the tax code. No one, certainly not stockholders, was complaining about AIG's performance in 2006 and 2007, when much of teh bonus pool was generated.

I'm not saying that how AIG ran its business was good, or right, or effective. But putting abitrary caps on the comensation a company can pay its employees does nothing more than handcuff the company. 99% of AIG's troubles came out of its Financial Products division. All the other groups have been profitable. Should the management of American Home Assurance be punished because the head of AIGFP went overboard? Should a top producer at Lexington have his bonus or salary capped because of the actions of another division over which he has no control, no influence, and no knowledge? Perhaps your salary should be reduced because the UPS guy that delivers packages to your neighbor is late sometimes.

Interestingly, the credit default swaps that have gotten the lion's share of the blame from the media for AIG's problems were actually a minority player in the big picture. They were also mostly sold to European banks trying to get around BASEL I regulations.


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## tjf67 (Dec 8, 2009)

ctenidae said:


> Sure, except that most of the "outsized" bonus payments in 2008 and 2009 were deffered or retention bonuses related to market events as early as 2004 or 2005, that were developed in response to Congress effectively limiting executive compensation to $1 million in 1993 by changing the tax code. No one, certainly not stockholders, was complaining about AIG's performance in 2006 and 2007, when much of teh bonus pool was generated.
> 
> I'm not saying that how AIG ran its business was good, or right, or effective. But putting abitrary caps on the comensation a company can pay its employees does nothing more than handcuff the company. 99% of AIG's troubles came out of its Financial Products division. All the other groups have been profitable. Should the management of American Home Assurance be punished because the head of AIGFP went overboard? Should a top producer at Lexington have his bonus or salary capped because of the actions of another division over which he has no control, no influence, and no knowledge? Perhaps your salary should be reduced because the UPS guy that delivers packages to your neighbor is late sometimes.
> 
> Interestingly, the credit default swaps that have gotten the lion's share of the blame from the media for AIG's problems were actually a minority player in the big picture. They were also mostly sold to European banks trying to get around BASEL I regulations.



A top producer is not getting his bonus chopped.  Thek work on comission. All those deferred pay packages from the earlier years were where the problems started.  It did not just pop up overnight.  They new what they were doing back then, winding things up unitl they popped.  They were using shit for collateral and they new it and passed it on to make the bottom line look better in the short term. Stockholders did not know what was going on.  heck you sound like you are in the industry and you did not know what was going on If you dont think you can get a qualified perosn to do the jobs for what on the table you are mistaken.  They are all trying to protect there own.  

.


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## ctenidae (Dec 8, 2009)

tjf67 said:


> A top producer is not getting his bonus chopped.  Thek work on comission. All those deferred pay packages from the earlier years were where the problems started.  It did not just pop up overnight.  They new what they were doing back then, winding things up unitl they popped.  They were using shit for collateral and they new it and passed it on to make the bottom line look better in the short term. Stockholders did not know what was going on.  heck you sound like you are in the industry and you did not know what was going on If you dont think you can get a qualified perosn to do the jobs for what on the table you are mistaken.  They are all trying to protect there own.
> 
> .



He's getting his bonus chopped if the outrage over bonuses says he is.

I was in the industry, and then I got into a different industry, and I did see what was going on, and we did make a lot of money for our clients anticipating it. If stockholders didn't know what was going on, they probably shouldn't have been stockholders.

Like I said, I'm not defending their business acumen.I'm not saying they were right. I'm not even saying they deserve any bonuses. All I'm saying is a government mandate on salary caps has abolutely no redeeming qualities other than to give politicians Frankenstein's head to show the rampaging villagers.


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## mondeo (Dec 8, 2009)

tjf67 said:


> We were not baling out companies nor was there ever an incling that we would when they were being leveraged to the hilt.  So there main reason was bonuses.


Yes, there was:
http://en.wikipedia.org/wiki/Savings_and_loan_crisis
http://en.wikipedia.org/wiki/Econom...he_September_11_attacks#Airlines_and_aviation
http://en.wikipedia.org/wiki/Moral_hazard

Executives have a responsibility to their shareholders to maximize profits. The ethics issue is a Catch-22; if they don't take advantage of the moral hazard, they don't maximize profits. Furthermore, by not acting they allow another company to act, making the second company's financial statements more attractive, resulting in devaluation of the first company's stock. S&L, now the subprime crisis, another 20 years we'll be right back here blaming the executives again.

Also, in regards to golden parachutes, they have their place. Carly Fiorina is a great example - her moves hurt in the short term, but positioned HP to be the largest IT company in the world within a year after she was booted out.


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## ctenidae (Dec 8, 2009)

mondeo said:


> The ethics issue is a Catch-22; if they don't take advantage of the moral hazard, they don't maximize profits. Furthermore, by not acting they allow another company to act, making the second company's financial statements more attractive, resulting in devaluation of the first company's stock. S&L, now the subprime crisis, another 20 years we'll be right back here blaming the executives again.
> 
> Also, in regards to golden parachutes, they have their place. Carly Fiorina is a great example - her moves hurt in the short term, but positioned HP to be the largest IT company in the world within a year after she was booted out.



That's the truth, Ruth. It's amazing how badly Fiorina was villified in the press and even her own Board, but she did precisely what needed to be done for the company. 

Some blame for the financial mess has to be placed on We, the People. Americans are more highly leveraged than most companies, and we just kept going back to the trough at every opportunity. Of course companies kept filling up the trough- we kept asking for more. To not do so would have been irresponsible of management. Why did AIG get into trouble? Because they sold too many CDS to people who wanted too much, and it was all based on greedy homeowners who sucked up every last bit of debt they could get their hands on. 

Lay some blame on the folks who bought 3 times as much house as they could afford. It's not rocket surgery to know that if you can't afford three times your mortgage payments now, you're not going to be able to in 5 years when it resets, either. It also doesn't take a rocket surgeon to know that eventually house prices will fall from unsupportable hights. Sorry to say it, but if you're not aware of these things, then maybe, just maybe, you shouldn't go buy a house. I have some sympathy for victims of predatory lenders, and sure, everyone gets caught up in euphoria on occasion, but don't blame it all on Wall Street. You know who paid for those "outsized bonusses"? Everybody who took out a NINJA loan, an IO loan, a 5 year option ARM, a 7 year ARM, a home equity line, and every other kind of creative way to turn your house into an ATM machine.

We should stop slamming the barn door shut after the horse had left, and teach people to notice that the door is wide open, and maybe they should close it before there's an equine escape.

/rant


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## riverc0il (Dec 8, 2009)

ctenidae said:


> Regardless of any other consideration, putting the salary caps in place was a stupid, if politically expedient, thing to do. No real upside, other than appeasing the villagers.


+1

I thought the Financial Sector Witch Hunt has always been misguided. CEOs get big bonuses, that is just the fact of the matter. Bonus compensation plans often reward components of performance. Most bonus packages allow that your entire enterprise could have negative net profit and the bonus package still pays out depending on various components. Instead of doing the popular vote getting option, it would have been much better to seek permanent systematic changes to ensure similar boom and bust, nay collapse, cycles do not occur... regardless how much money the executives make.

It just well be that by putting caps on executives, that even worse less qualified executives step into those roles and do an ever worse job.... which certainly would not benefit tax payers in any way.


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## ski_resort_observer (Dec 8, 2009)

I agree with tjf67 and billski.......let's really look at these exec's as who they really are......their the ones that took and/or allowed the AIG finance unit to run amok, into the toilet. Consequences are a good thing...there is plenty of top talent out there, seasoned exec's who will happily take their places, with a fresh,clean and uncumbered path for alot less pay. 

I'm not sure a salary cap is good thing or not but paying these same idots, who were driving the train off the tracks, the same huge compesation they enjoyed in the past is total stupidtown IMHO

Compesation based on merit is supported by many on Wall St. Using that system, top exec's for AIG should be paying the company, not the other way around. Many times a top exec's compensation is made up in varying degrees of company stock. If the company does poorly, stock price goes down, their compensation is reduced.


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