[Cruisingdad]

Let me just chime in here on the stay bonuses... with the real world.

Should you be outraged? I don't know. I guess to the average person it would seem that this was rediculous. Many people here and elsewhere do not earn a Million dollars in their life... much less in one bonus. And then, they consider the fact that we are propping up that company with tax dollars just so they can give these outrageous bonuses... how dare they? Hmph. Sorry, I am not supporting them, but I will at least comments on what I see all the time.

Retention bonuses are very common. I have many people I am working with right now that have considerable retention bonuses. Now, I am not working with anyone whose retention bonus is a million+. However, a half million or so is not uncommon. On top of that, they are given contracts to keep them there to the end which may include a cash bonus of many hundreds of thousands, continuing their salary for a year(s) beyond termination, or both. Both is very common. And incidentally, when they get these cash bonuses, they are typically walking out the door the next day (well, at least after the check has cleared).

Why?? Have you considered that some of these people are irreplaceable? Have you considered that there really are people whose jobs are so critical and who play such an intrical part of a company that their leaving would cost much more than the measealy stay bonuses they are receiving? If they walk out the door, the tail spin of what they leave behind could cause massive problems for the company. The company CANNOT stop them from leaving. This is America. All they can do is put together very lucrative golden handcuffs (a term we use in our business) to keep them around as long as possible.

How many of these people who got these bonuses were truly, idependentally, responsible for AIG's failure?? Come on. I bet it would be hard to place the blame on any one person. Likely, they were doing their job or what they were told to do. Yes, even senior management is told to do.

Am I shocked at the size of the bonuses? Well, a bit I guess. However, I certainly understand the reason for them. If I were working for AIG, and I saw what was happening around me, and I was getting lots of recruiting calls (which you know they were, probably by the second), I would certainly have been listening. The leadership knew that. They knew the only way to keep them from leaving and having an even bigger mess on their hands was to pay them unbelieveably high bonuses to keep them around. Even in the best of times, replacing someone at that level takes a long time. Now imagine trying to recruit someone into AIG under the mess they are in right now!! You could about forget it. And anyone worth a crap that did come would probably demand bonuses and salaries well beyond the stay bonuses that were given to the management that we keep hearing about.

Maybe you say, "Well yeah, CD, but a million dollars??? Come on!" I understand. Funny, though, it is all relative. When I was in college, and this is really the truth without exhaggeration, Kris and I were happy to get .25 to go to McDonalds to get an Ice Cream cone. If we came across $5 - we would go to Taco Bell and eat our fill. She worked in the bank and when she got some Christmas bonus (it was $100), we felt like we had won the lottery.

Now... $100??? Not to belittle it, but that would not even begin to touch the bills we have. Crap... that wouldn't even touch the medical bills. It is not how much money you make, it is how much you have left over and what your outgo is. Some of the poorest people I have ever met were 'millionaires'.

If I were councelling the management at AIG some months ago, I would have told them they were crazy to stay there (and no, I do not work that sector, thank God). No doubt they saw that too as did their leadership (whether it be the CEO or the board). I actually think they had no real choice but to extend very high stay bonuses. They do seem a bit high to me... but again, I do not work that sector and everything is proportional. These bonuses were not rewards for whta they had done, they were bribes to keep them from going.

All I am trying to do is give you the other side of the story and the reality of how the world works in senior management. Unless proven otherwise, I suspect that they did what they had to do to keep as much talent with them as possible. THis whole debacle with the press could have been handled differently and I think the Obama comment(s) certainly did not help. I feel that the damage done now will have considerable impacts on those people. No doubt that they will either give back their money, get taxed out of the mind for it, or belittled for doing what about any other person would have done on this planet. And before you say, "Well, so-and-so refused their bonuses..." just remember that was apples-oranges. There is only one AIG, and you do not know what the future prospects of that person(s) job was nor the total comp others in other industries/banks were receiving in base/bonus, etc.

I do not doubt that there is some aspect of a 'good ole boy's club' in Insurance. But in what industry is there not? And if you really want to get upset, did you see how much money walked out the door to the banks of other countries? Did you see how much went to other banks? How long will you, YOU AS AN AMERICAN, have to work to pay back just the billions that went overseas? If you want to be mad, be mad at Congress and those who drafted the 'bailout-lottery' of nearly a TRILLION DOLLARS with little or no oversite. Be mad at the legislative failures and graft that made this possible. Be mad at what got us here in the first place.

My opinions.

- CD