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We all get it - so why don’t the executives at AIG?
By Lauren | March 16, 2009
Washington’s in an uproar again this morning over the news that insurer AIG plans to use taxpayer bailout money to pay hefty executive bonuses. According to news reports, AIG initially planned to pay $165 million in bonuses to executives in its British-based AIG Financial Products unit, the group whose risky investments brought the insurer crashing down in the first place. Congress is livid, Treasury Secretary Timothy Geithner is pushing hard on AIG to reconsider, and the press is having a field day. Still, AIG insists that it’s contractually obliged to pay the bonuses and could be sued if it fails to do so.
And that, folks, is the problem.
At a time when unemployment has risen to 10% or higher, and when people who still have jobs lie awake at night terrified about losing them, the idea of anyone getting a multi-million dollar bonus from taxpayer funds is hard to swallow. The notion of paying such an enormous bonus to someone who brought a company to the brink of ruin is mind-boggling. And the idea that such a person, having been denied that astonishing bonus based on poor performance, would have the unmitigated gall to file a lawsuit to collect - and maybe even win it - defies belief. And yet, here we are.
Without actually reading the AIG executives’ contracts - and none of us is likely to do that any time soon - we can only surmise that they don’t include any standard of satisfactory performance. That’s something AIG’s Board of Directors might want to fix going forward. (Hint, hint.) In the meanwhile, though, this ugly situation could be easily remedied if the executives receiving the bonuses volunteered not to sue AIG. If they wanted to be really principled, they might even agree to accept less money, recognizing with the benefit of hindsight that they didn’t really earn what the contracts provide. A contract is, after all, an agreement between two parties, and agreements can be amended. AIG’s executives may have the right to sue, but that doesn’t mean they should.
Topics: Business Ethics, Personal Ethics, corporate responsibility, ethics |