[Marxism] Could the AIG tempest spill out of the teapot?

Anthony Boynton anthony.boynton at gmail.com
Fri Mar 20 14:49:22 MDT 2009


The article below is interesting more for the place it was posted, “BNET
Business Network: The go to place for business” than for the content, which
people on this list are probably aware of. Even corporate management seems
pissed off about the AIG bonuses. An interesting tempest. Could it spill out
of the teapot? Anthony



AIG: How Would You Grade the Fed's Governance?

By Steve Tobak March 18th, 2009 @ 11:24 am



Last weekend, insurance giant AIG paid retention bonuses totaling $165
million, or $1 million plus to 73 people in its financial products unit -
the one that led to the company’s demise. And there’s more to come. Think
that’s business as usual in corporate America? Not exactly.



As a comparison, I thought I’d check the most recent proxy statement for a
few companies with market caps comparable to AIG’s at its peak, around $100
billion (today it’s worth about $2 billion). Here’s what I found:



At Microsoft, none of the five highest compensated officers received bonuses
(or salaries, for that matter) in excess of $1 million. The same was true at
Apple. At Google, four of seven named officers earned bonuses of $1.6
million each in 2007, a year that revenues grew by 60 percent, net income by
40 percent, and share price by 40 percent. Understandable.



To summarize: 4 of 17 top executives, at comparable companies with
outstanding operating performance, received bonuses in excess of $1 million,
versus 73 in one division at a failed bank that had to be bailed out by U.S.
taxpayers.



So what’s wrong with this picture? I mean, how many $1 million bonuses have
you received in your life? The problem is that the foxes are guarding the
henhouse. Let me explain. The response to the AIG bonuses from congressional
leaders has been one of outrage, right? In words, yes. In deeds, not
exactly.



It turns out the stimulus bill, while limiting compensation for TARP
recipients, has a loophole that exempts the very bonuses congress now seeks
to tax. Chris Dodd - Chairman of the Senate banking committee - says he
didn’t add the loophole. So how did it get there? Dodd says he doesn’t know.




According to reports at the time, President Obama and Treasury Secretary
Geitner were “outraged” by the news. Now we learn that Geitner actually knew
about the AIG bonuses months ago. And don’t forget that AIG CEO Edward Liddy
was actually appointed by the federal government last June.



So, what do you think of the corporate governance job our leaders are doing
at the companies they bought with our money? How would you grade their
performance? I thought the new regime was going to bring us transparency,
that it wasn’t going to be “politics as usual.”



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