Today is the deadline for American International Group (AIG) to pay $165 million in the form of bonuses to executives involved in businesses that led to collapse of the company — and the broader economy — last year. The company argues that these bonus payments were agreed to before the company required support from the government and taxpayers to stay in existence, and the government agrees. While some of the bonuses paid by AIG to its employees were reduced, these will go forward.
According to an anonymous government official quoted in the New York Times, the White House is outraged at the continuation of bonuses at taxpayer expense, yet they cannot do anything about it.
Is this too much attention on the one company? Should AIG be permitted to honor contracts drawn up under significantly different financial conditions? These bonuses supposedly help the company retain the best employees; if the employees in these divisions that led to the company’s collapse were the best employees, wouldn’t they have been able to avoid that collapse?