IDBillzFan Posted March 17, 2009 Posted March 17, 2009 Currently, the government owns an 80% equity stake in AIG. Wouldn't it be more accurate to say that WE own an 80% equity stake in AIG? I mean, the government is using taxpayer money to do this, so maybe WE own it. I hope I get a corner office. I've always wanted a corner office.
DC Tom Posted March 17, 2009 Posted March 17, 2009 Wouldn't it be more accurate to say that WE own an 80% equity stake in AIG? I mean, the government is using taxpayer money to do this, so maybe WE own it. I hope I get a corner office. I've always wanted a corner office. It might be...but personally, I don't think the government would recognize any sort of responsibility to us such as that. Hell, I don't even think Congress understands that they have an 80% stake in AIG. They seem to be under the misguided belief that the executives own the corporation, rather than shareholders.
The Dean Posted March 17, 2009 Posted March 17, 2009 It might be...but personally, I don't think the government would recognize any sort of responsibility to us such as that. Hell, I don't even think Congress understands that they have an 80% stake in AIG. They seem to be under the misguided belief that the executives own the corporation, rather than shareholders. I had 10 spare minutes earlier, I watched some of a press conference (Gibbs, I believe), and watched the CNN scroll. So, my info (from today) is from what I could get from the Q and A, as well as watching the headline oriented scroll. So, let's consider that as fair warning for the following. It was mentioned that the Gov't owns a large percentage of the company, and as such might sue the company with respect to the bonuses. As you mentioned, I'm guessing the stock owned by the Gov't is non-voting stock. The bonuses were portrayed as "contractual", while at the same time called "retention bonuses". It seems to me, that they would only be contractual if the executives were retained. There's a simple solution to that, I think. Seriously, it may be a naive plan, on my part, but I think the executives due big bonuses (for retention) should have been let go before AIG got the money. Then if (crappy, dishonest and incompetent) AIG top management could have attempted to hire back, the few execs really worth keeping.
DC Tom Posted March 17, 2009 Posted March 17, 2009 I had 10 spare minutes earlier, I watched some of a press conference (Gibbs, I believe), and watched the CNN scroll. So, my info (from today) is from what I could get from the Q and A, as well as watching the headline oriented scroll. So, let's consider that as fair warning for the following. It was mentioned that the Gov't owns a large percentage of the company, and as such might sue the company with respect to the bonuses. As you mentioned, I'm guessing the stock owned by the Gov't is non-voting stock. The bonuses were portrayed as "contractual", while at the same time called "retention bonuses". It seems to me, that they would only be contractual if the executives were retained. There's a simple solution to that, I think. Seriously, it may be a naive plan, on my part, but I think the executives due big bonuses (for retention) should have been let go before AIG got the money. Then if (crappy, dishonest and incompetent) AIG top management could have attempted to hire back, the few execs really worth keeping. Retention bonuses can also be structured as a future payment contingent on the person staying. That is, "Don't leave, sign this three year employment contract, and we'll give you a $100k bonus every six months" or something like that. I've gotten a couple in my time (not that big), and the basic reasoning behind them is usually to agree upfront to a bonus structure contingent on the employee choosing to remain with the company. In other words, if you fire a guy, they're still entitled to the bonus (again, how it works in my experience. I expect that's common, otherwise why would you need to spell it out in a contract?) The other thing to consider is that it isn't just executives. Probably the top third to half of the company receives a significant portion of their total compensation in bonuses - again, typical for the financial industry. Congress isn't talking about just taxing the big, bad executives (who've still not been demonstrated to be all that big or bad - they mismanaged risk in a big and very stupid way, that's about it). They want to take EVERYONE'S bonus - 91% of everything below $100k, 100% of everything above. So the government wants the right to nullify private contracts they already approved months ago on a very large scale, based on the presumed but not demonstrated impropriety of people receiving the bonuses? And despite having no legal standing to dictate the management of the company? The only justification here is "We're the government, we're bigger than you, and we can do whatever the hell we want." The real problem here isn't AIG, it's the government morons who bought a huge chunk of a failing company in such a way that they had no say about anything. Unfortunately, Congresscritters get face time, AIG execs don't. So the voting public will never get a chance to understand how royally incompetent their government has been, keep voting them in, and keep perpetuating the problem. And if the government sues - or does anything to negate the contracts, for that matter - there will be a hell of a lot of counter suits from AIG employees based on the simple premise of "I fulfilled the obligations stipulated in my retention contract, AIG is bound by law to fulfill theirs, the government can't intervene on the basis of moral outrage." At that point - and I think it will get to that point - this cluster!@#$ gets taken to a whole new level. Should be fun, watching parties argue in front of the Supreme Court whether or not the government has any right to nullify contracts between private parties.
The Dean Posted March 17, 2009 Posted March 17, 2009 Retention bonuses can also be structured as a future payment contingent on the person staying. That is, "Don't leave, sign this three year employment contract, and we'll give you a $100k bonus every six months" or something like that. I've gotten a couple in my time (not that big), and the basic reasoning behind them is usually to agree upfront to a bonus structure contingent on the employee choosing to remain with the company. In other words, if you fire a guy, they're still entitled to the bonus (again, how it works in my experience. I expect that's common, otherwise why would you need to spell it out in a contract?) The other thing to consider is that it isn't just executives. Probably the top third to half of the company receives a significant portion of their total compensation in bonuses - again, typical for the financial industry. Congress isn't talking about just taxing the big, bad executives (who've still not been demonstrated to be all that big or bad - they mismanaged risk in a big and very stupid way, that's about it). They want to take EVERYONE'S bonus - 91% of everything below $100k, 100% of everything above. So the government wants the right to nullify private contracts they already approved months ago on a very large scale, based on the presumed but not demonstrated impropriety of people receiving the bonuses? And despite having no legal standing to dictate the management of the company? The only justification here is "We're the government, we're bigger than you, and we can do whatever the hell we want." The real problem here isn't AIG, it's the government morons who bought a huge chunk of a failing company in such a way that they had no say about anything. Unfortunately, Congresscritters get face time, AIG execs don't. So the voting public will never get a chance to understand how royally incompetent their government has been, keep voting them in, and keep perpetuating the problem. And if the government sues - or does anything to negate the contracts, for that matter - there will be a hell of a lot of counter suits from AIG employees based on the simple premise of "I fulfilled the obligations stipulated in my retention contract, AIG is bound by law to fulfill theirs, the government can't intervene on the basis of moral outrage." At that point - and I think it will get to that point - this cluster!@#$ gets taken to a whole new level. Should be fun, watching parties argue in front of the Supreme Court whether or not the government has any right to nullify contracts between private parties. Thanks. Nice roundup.
DC Tom Posted March 17, 2009 Posted March 17, 2009 Thanks. Nice roundup. You're welcome. I don't want anyone to misunderstand me either: I don't give a crap about AIG's executive compensation. I DO give a crap about the government's belief that they can override private agreements and rights on a whim, because they're the government and they're outraged. The bailout, originally, was a "good" idea in that it was the best of a host of really, really awful choices (most of the rest being some variation on the theme of "complete worldwide economic disaster"). Trying to use that now to exert management control over corporations from the exalted walls of Capitol Hill is a load of crap - legislation on the basis of fear mongering and moral outrage. It was bull sh-- when they passed the PATRIOT Act on that basis, and it's bull sh-- now.
The Dean Posted March 17, 2009 Posted March 17, 2009 You're welcome. I don't want anyone to misunderstand me either: I don't give a crap about AIG's executive compensation. I DO give a crap about the government's belief that they can override private agreements and rights on a whim, because they're the government and they're outraged. The bailout, originally, was a "good" idea in that it was the best of a host of really, really awful choices (most of the rest being some variation on the theme of "complete worldwide economic disaster"). Trying to use that now to exert management control over corporations from the exalted walls of Capitol Hill is a load of crap - legislation on the basis of fear mongering and moral outrage. It was bull sh-- when they passed the PATRIOT Act on that basis, and it's bull sh-- now. I don't disagree. This seems to be a sideshow for the public, right now. But, I'm not convinced conditions couldn't have been put on the funds, before dispensing them, but I'm no expert on any of this...not even close.
BuffaloBill Posted March 18, 2009 Posted March 18, 2009 How stupid and negligent do you have to be to give billions of dollars of taxpayer money without asking how it would be used. AIG needed money because they screwed up and now the President is shocked that they are not putting the bailout money to good use?! Spare me the fake outrage and let them fail. Why would you show a profit if you ran GM, AIG, CITI, etc. The free money stops when you get out of the red. Incentivizing failure is sure to fix everything! This cr@p is now political grandstanding there was no doubt were the money was going. Our friends in congress new damn well that they were passing money through AIG to other banks an investment banks. Sad reality is that the bonuses are a small fee paid to supposedly restoring the health of the system.
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