Posted on 03/20/2009 6:31:07 AM PDT by marshmallow
Former AIG chief executive officer Hank Greenberg said the company under his leadership never had the kind of retention bonus system that has subjected it to withering criticism.
"When I was there, nobody had a contract with the company, including me," Greenberg said in a nationally broadcast interview Friday. "If you didn't do the job, you didn't deserve to be there. We had a bonus plan based on performance."
Greenberg's interview was broadcast on CBS's "The Early Show" a day after the Democratic-led House approved a bill that would impose punitive taxes on big employee bonuses from AIG and other firms bailed out by taxpayers.
"We want our money back and we want our money back now for the taxpayers," declared House Speaker Nancy Pelosi, D-Calif.
The bonuses, totaling $165 million, were paid to employees of the troubled insurer, including to traders in the financial unit that nearly caused the company's collapse.
On Wednesday, the current chairman and CEO of AIG, Edward Liddy, told Congress under oath that his predecessor was responsible for the financial problems the company now is experiencing, saying mistakes had been made on a scale few could have imagined.
Greenberg denied that in the CBS interview.
"Absolutely not," he replied when asked directly if he would have paid out the retention bonuses had he still been at the helm of the company. Revelations of the payments triggered widespread outrage across the country and on both sides of the political aisle.
(Excerpt) Read more at investmentnews.com ...
BTTT! Ping.
What Greenberg is saying - that “he never gave retention bonuses / employment contracts” - or at least how he’s being selectively quoted, is bullsh*t.
Sure, employees and execs don’t have contracts during the usual course. That’s true everywhere in business (not for athletes and coaches, though).
But there is a general exception to this principle when a company or a business unit is dissolving, and the existing company needs certain employees to stay around (against the employee’s better interests in getting a new job as quickly as possible) to implement the wind down or transition.
You see this in corporate outsourcing all the time. A company signs a contract that entails that one of their business units services will be transferred to another company, i.e., IT operations transferred to a big tech company on an outsourcing basis.
The techs, once they know outsourcing is coming, will want to get out and secure new jobs, but the current company (note, who are making those techs’ job go away) need the techs to stay around for 9 months or so for knowledge transfer, continuity, etc, in order to ensure the success of the transfer.
So the current company has to give the techs a big incentive to stay, and the most incentive-laden way for the company to do that is to offer attractive $$, but to make the offer back-end loaded, to be received as a lump-sum bonus, so that the tech is required to stay the entire 9 months to get it.
So — this is what AIG has done. Greenberg is comparing apples (regular operations) with oranges (special case re winding down). And he KNOWS that.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.