AIG Executive Resigns

[mrt144]

Oh, the poor mister DeSantis, out of fear (it's not guild, he says!) he feels compelled to surrender is measly $742,006.40...

What's 742 thousand dollars for a company which is effectively bankrupt, anyway? A company which mr. DeSantis has "honorably" served 11 years, and yet did not in any way help becoming bankrupt. Oh, no, mr. DeSantis is entirely innocent, he never saw it coming and I bet that he doesn't even understand how it all happened! One has to ask, however, how such an innocent individual has been of any use over the past year for the recovery of that bankrupt company. And he must have been really useful - I mean, he easily took what, 10 average salaries? More?

And "the profitability of the businesses with which [he] was associated clearly supported [his] compensation"! But... haven't all banks been incredibly profitable up until 2007? Up until those businesses which consisted of pushing loans around and inflating paper assets bubbles blew up? I'm sure that even Bernie Madoff had his compensation supported by the profitability of his business, for decades!

You missed the point entirely. And not surprisingly, read stuff into the letter merely to mock him and a system you consistently and publically detest of. Was this your daily act of sophistry?

 

[Perfection]

they're all equally worthy of vilification for that.

So really, you don't have anything in particular against this guy because of his AIG membership, you're just attacking him as a part of your animosity towards the wealthy?

But this one is whining that he was afraid of having his "bonus" taken away, even published a letter about it. So he deserves special attention.

I don't think the bonus is the big thing, it's being punished for crimes he didn't commit that is.

I see no reason why he deserves any blame for the current financial crisis.

 

[Kerozine]

Hmm, the little I've read & watched concerning this issue failed to mention that the executives were from AIG's more profitable branches; I assume they weren't the ones responsible for AIG's catastrophic failures.

Oh well, everybody loses in this case.

 

[mrt144]

So really, you don't have anything in particular against this guy because of his AIG membership, you're just attacking him as a part of your animosity towards the wealthy?

I don't think the bonus is the big thing, it's being punished for crimes he didn't commit that is.

I see no reason why he deserves any blame for the current financial crisis.

Immo was outraged that normal people wouldn't give back a bonus. He questioned our humanity. And now he mocks someone for doing just that?

The really sad thing is that learning and exploring all that economic history, like he has, has just made him loathe a huge part of humanity to the point where everyone who is part of the system is guilty, even if, you know, they're not.

 

[Bill3000]

Immo wasoutraged that normal people wouldn't give back a bonus. He questioned our humanity. And now he mocks someone for doing just that?

To be fair, I'd presume inno would find the very nature of the CEO to be inherently exploitative anyway and would not be satisfied merely by one CEO giving away a bonus that he only gave away under public pressure.

 

[mrt144]

To be fair, I'd presume inno would find the very nature of the CEO to be inherently exploitative anyway and would not be satisfied merely by one CEO giving away a bonus that he only gave away under public pressure.

Yeah, and he also has a warped belief about people's natural behavior, hence the outrage. Inno, is bound by his ideology to be hypocritical if needed, because that can't possibly be worse than anything perpetrated by the status quo. In his world, what isn't exploitative?

 

[scherbchen]

A large portion of profit from brokerage houses is due to their own investments and arbitrage opportunities. It's just one of the myriad ways they make their profits, albeit a large one. So it makes sense for them to do the same thing with the bonus pool.

Let's say you are a trader who is will receive a $1M bonus at the end of the year if you meet certain specific goals. Over the course of the year, the company pays that bonus money into a pool that goes into the arbitrage fund for investment. If the arbitrage fund makes 30% profit over the year, your $1M bonus grows a corresponding amount. If the arbitrage fund loses money, which is incredibly rare, then your bonus would also be less by the same percentage. But because it is an almost guaranteed deal, nobody in their right mind objects to it. And if they did, their boss would just tell them to find a job at McDonalds or GM if they didn't like it. It's the way Wall Street works.

I see. I guess I am merely stumped by the idea of giving out bonuses to begin with...

 

[Bill3000]

Yeah, and he also has a warped belief about people's natural behavior, hence the outrage. Inno, is bound by his ideology to be hypocritical if needed, because that can't possibly be worse than anything perpetrated by the status quo. In his world, what isn't exploitative?

Economic systems that are not capitalist? Why is this particularly surprising?

 

[BasketCase]

I dont want to read that. I want knee-jerk reactions.

Heheh. Good line.

I am entirely a logical, left-brain person. For all practical purposes, I'm emotionally dead--I don't have knee-jerk reactions except when I'm playing Crysis.

However, having seen how destructive jealousy can be to people, I consider it something to avoid. I think this "AIG Outrage" is entirely the wrong reaction, and I say nothing productive is going to get done if rampaging mobs are running around Washington DC with hatchets and pitchforks.

 

[GoodGame]

Passionate letter, but I ain't crying for them. Sounds like AIG needs a fraud investigation.

 

[Mise]

All AIG members, all bankers, everyone who works in Wall Street, all white, blue-eyed Westerners should be shot and killed and and and and hung! God I'm so horny right now.

 

[El_Machinae]

I guess the lesson here is to not work for a corporation that's so big that you have no idea if it's going to succeed or not.

 

[Formaldehyde]

I see. I guess I am merely stumped by the idea of giving out bonuses to begin with...

Really? You don't think indviduals should be rewarded when they do an exemplary job and consquently make the company far more money than the bonus or stock options were worth?

And before you think that bonuses are typically reserved for the select few, they are not. Most salaried employees receive bonuses if they work for a brokerage house, regardless of their jobs. For example, computer support people who are on call 24/7 to keep up the trading systems may make $100K per year in salary plus another $200K in bonuses in a good year.

I personally think such a system is much fairer than everybody in the company only making a salary while the top executives get rich on huge salaries and underpriced stock options regardless of how the company even performs, which is how most corporations operate.

Passionate letter, but I ain't crying for them. Sounds like AIG needs a fraud investigation.

No, sounds like most people need to learn the basic facts of the situation before jumping to outrageous conclusions. Many fewer completely innocent witches are burned alive as a result.

 

[scherbchen]

Really? You don't think indviduals should be rewarded when they do an exemplary job and consquently make the company far more money than the bonus or stock options were worth?

And before you think that bonuses are typically reserved for the select few, they are not. Most salaried employees receive bonuses if they work for a brokerage house, regardless of their jobs. For example, computer support people who are on call 24/7 to keep up the trading systems may make $100K per year in salary plus another $200K in bonuses in a good year.

I personally think such a system is much fairer than everybody in the company only making a salary while the top executives get rich on huge salaries and underpriced stock options regardless of how the company even performs, which is how most corporations operate.

I think that if you do not do a decent job you should run the risk of being let go. if you do an outstanding job you get a promotion or a raise or have the opportunity to seek more gainful employment with the laurels you have earned. meeting certain goals should not, and I realize that I am being a bit naive here, be incentivized by short term monetary gain but rather long term job security, advancement and a higher salary.

 

[Formaldehyde]

Well, that obviously happens as well. They aren't mutually exclusive. It is merely a very lucrative way of spreading the wealth a bit more than it typically is. And nobody complains about it. Just the opposite. Talented people will refuse to work for a brokerage house that doesn't pay bonuses. Just look what's going to now happen to AIG as its intangibles are deliberately thrown away through acts of rampant mob violence. Nobody is going to want to buy a business unit where all the good people have fled, and the American taxpayers will consequently pay far more than if the bonuses were paid.

A similar business analogy to the Wall Street bonuses would be Microsoft during the halcyon growth days. During that period, they drastically underpaid their employees by as much as half what they were actually worth, and gave them lucrative stock options instead. If you stuck with Microsoft for 10 years or so, you typically retired a millionaire.

 

[Mise]

@scherbchen: I don't think you're being naive, just not seeing all sides of the equation.

You receive your salary for doing your job -- that is, satisfactorily performing what's written in the job description.

You receive a bonus for doing more than you were asked, for going "above and beyond the call of duty". If you do something that isn't in your job description, it is rewarded with a bonus.

Promotion is earned when you have shown that you are capable of doing the job that is being advertised. You don't just "get promoted", jobs higher up the ladder have to be available for you to apply for, and you have to be successful at the interview, even within your own company. 90% of the time, there simply aren't any higher positions for you to slot nicely into. You have to wait until someone else moves on, and for that someone to have held a position that is suitable for you. That is very rare.

Salary increases not only apply for the next year, but for every single year after that. There would therefore be less incentive next year for you to continue to generate new ideas, and may prefer instead to simply do your day job -- for which you are now being paid much more.

If you worked 12 hours a day to implement a new computer system at your firm, but still got paid the same as the guy who comes in 10 minutes late and leaves 10 minutes early and does his job but nothing more, and there were no promotion opportunities, wouldn't you be upset? Your boss can't promote you, because there's no vacancy to promote you to. So you decide to look for jobs in other companies. Clearly, your boss doesn't want you to leave -- you're a good employee who has in the past put in 12 hour days and implemented a new computer system -- your company doesn't want you to leave, because you're an valuable employee. In this situation, your boss can choose to reward you for your hard work by giving you a bonus. This means that you are less likely to want to leave the company, because it's a company that rewards you for your hard work. And because of this, you decide to work hard next year, too, because you know that it will lead to your getting a bonus.

Job security isn't even an issue -- you will only get fired if you cannot perform what is written in your job description.

 

[Cutlass]

Mise, "You receive a bonus for doing more than you were asked, for going "above and beyond the call of duty". If you do something that isn't in your job description, it is rewarded with a bonus." That does not describe the situation at AIG. The people getting bonuses were not going above the call of duty. Because what they were doing was their duty. Maybe they deserve a bonus for doing their duty to some degree better than other people could do it, but that is not "above and beyond the call".

 

[Formaldehyde]

Job security isn't even an issue -- you will only get fired if you cannot perform what is written in your job description.

Well, I wouldn't go quite that far. American employers don't have to show cause to fire you. Parting your hair on the wrong side or saying no to your boss's advances is reason enough in some cases.

But your point is essentially valid with the caveat that most salaried people get bonuses of some sort if they simply work in a brokerage house. It's really the profit producers whose bonuses are typically tied directly to the amount they generate. It also depends to a certain extent what your job entails. If you work as an operator in one of the computer rooms, you aren't going to get much of a bonus compared to working on the trading floor as a computer support person. But you are on call 24/7, and you are expected to live there until the problem is resolved regardless of who dies in your family, or what act your wife may threaten as a result. They can make bonuses that are double their salary in some cases.

 

[Mise]

Mise, "You receive a bonus for doing more than you were asked, for going "above and beyond the call of duty". If you do something that isn't in your job description, it is rewarded with a bonus." That does not describe the situation at AIG. The people getting bonuses were not going above the call of duty. Because what they were doing was their duty. Maybe they deserve a bonus for doing their duty to some degree better than other people could do it, but that is not "above and beyond the call".

I was more describing what goes on in more "traditional" companies. In some jobs, pay is more linked to performance than others, such as commission-based sales jobs, which has a high variable component based on how much stuff you sell. I don't see a conceptual difference between "bonuses" received by bankers and "commission" received by salesmen, therefore I prefer to separate "reward for putting in 110%" from "incentive to bring in money".

 

[scherbchen]

And nobody complains about it. Just the opposite. Talented people will refuse to work for a brokerage house that doesn't pay bonuses.

I see that. once the system is in place it forces you to play along with it or you are not able to hire the people you want, no doubt.

You receive your salary for doing your job -- that is, satisfactorily performing what's written in the job description.

You receive a bonus for doing more than you were asked, for going "above and beyond the call of duty". If you do something that isn't in your job description, it is rewarded with a bonus.

but these bonuses (AIG) are written into contracts, not given out on a whim by somebody saying "gee, Jim sure did a great job this quarter. let's get im a new car as a thank you".