At least we don’t have Enron to kick around any more. AIG has replaced it as the most vilified company in the world. Worse even than that Georgia peanut company that killed people.
“I’m mad as hell, and I’m not going to put up with it any more.” So spake the little remembered Eddie Chiles, former owner of the Texas Rangers, Western Supply, and past seeker of the governorship of the great State of Texas.
Today he would be a good running buddy for those members of the 5th estate, howling public masses, and driveling politicians who compose the latest screech of public opinion demanding the economic lynching of the recipients of the so called “stay bonus” from AIG. At the risk of being accused of being a corporate apologist, let me say that I’ve rarely seen so much heat with so little light. Perhaps that should be excused in the case of John Q. Citizen who knows little and cares less about the facts leading to some rich business people getting even richer at the expense of their tax dollars. I must say, however, that I’m disappointed, if not surprised at the false angst, misinformation, and lack of understanding exhibited by otherwise reputable journalists (excepting Lou Dobbs, of course), and by politicians who are motivated only by that which always motivates politicians.
I’ve just watched a segment on MSNBC which iterated the vilest sort of threats promising violence of the most disgusting sort against the person and families of the AIG executives who do not return these putative ill gotten gains. I will quote only one of these missives, “you may get the bonus, but we will get your children”. Nice, huh. What’s that about shouting fire in a crowded theatre.
Let’s clear up a few facts:
1. Language allowing the payment of these bonuses was specifically included in the legislation enabling government support of AIG which was passed into law in October of 2008. Yes, I said October. Everyone who cared to had the opportunity (maybe even the obligation) to understand what had been voted into law because it was deemed to be in the best interest of the economy and security of the United States.
2. None, I repeat none, of the people who were responsible for the credit default swap fiasco received any bonus money. They all were fired or quit. If you said they should also be horse whipped, I would not disagree.
3. CEO’s do not appoint the members of their board of directors. Perhaps they did unduly influence these decisions in days of yore, but today director nominees are vetted and selected by a committee of independent directors (as determined by SEC regulations), approved by a vote of the full board and subsequently by a vote of the shareholders.
4. Some of the bonus recipients had agreed to work for little or no salary for up to a year in return for which they were contractually promised a payment if they successfully completed their tenure and achieved their objectives. One presumes that many, if not most of these people would have sought less troubled waters failing these inducements and their own conscience.
5. The congress had the opportunity to preclude payments under these contracts and did not do so. The administration had the opportunity to “jawbone” the management and board of AIG to not pay the bonuses. They did not do so.
6. There is ample precedent for management of failed companies to receive financial inducements to continue their employment when it is determined to be in the best interest of the shareholders to do so. Executives of Worldcom, Enron and Arthur Anderson all were offered and received bonuses to continue their employment while unwinding the company, selling assets or completing contractual obligations. Executives of many other companies in Chapter 11 often receive similar financial inducements.
So what’s going on here? Is the complaint that it “just isn’t fair”. Or is it believed that these are evil people who need to be punished or held to a different standard? Is it about the amount of money? I should note here that the $165 million in bonus, while it’s a large number, is approximately .0011 per cent of the “government bailout” or .000413 per cent of AIG’s annual revenue. As I have trouble with decimals and zeros, I can’t prove to you whether or not this is, in fact, significant, but it sure doesn’t sound like it.
Since none of the above reasons appears rational to me, I conclude that the accumulated anger is, at the minimum, irrational. What worries me even more is that this irrational anger is another manifestation of the “we/they” syndrome. The godly vs. the godless, the conservative vs. the liberal, the intellectual vs. the anti-intellectual, the culture of youth vs. the anti-diluvian senior, the christian vs. the muslim, the haves vs. the have nots, and in this case, the perceived-to-be-rich vs. everyone else. If one is good, the other, ipso facto, must be bad. If you’re not like me, I can’t respect or like you. If you don’t believe what I believe you are, more likely than not, immoral. If you have more than I have, I will resent you.
I don’t know how we got to where we are today, but it saddens me. I hope for a better future, but for the moment, I must admit to more than a little pessimism. That’s not normally my nature.
I can tell you this, if I were in their shoes and were offered $256,578 (the average after-tax payment in question) to work another year for the most publicly reviled company in America that will more likely than not be broken up in to a million pieces, I would take your bonus and stick it where the sun doesn’t shine. Then I’d take my Harvard MBA and seek out the nearest hedge fund. After all, that’s where the real money is.
