After Bailout, AIG Executives Head to Resort

[Helen]

Less than a week after the federal government offered an $85 billion bailout to insurance giant AIG, the company held a week-long retreat for its executives at the luxury St. Regis Resort in Monarch Beach, Calif., running up a tab of $440,000, Rep. Henry Waxman (D-Calif.) said today at the the opening of a House committee hearing about the near-failure of the insurance giant.
Showing a photograph of the resort, Waxman said the executives spent $200,000 for rooms, $150,000 for meals and $23,000 for the spa.

http://voices.washingtonpost.com/livecoverage/2008/10/after_bailout_aig_executives_h.html?nav=rss_email/components

 

[Rustward]

REWahoo started a thread about this a few days ago: http://www.early-retirement.org/for...er-dollars-at-work-39469.html?highlight=regis

soupcxan posted a link to something that looked like an invoice. http://oversight.house.gov/documents/20081007102513.pdf

I suppose there were other associated expenses, for example, travel.

 

[Rustward]

Took the time to quickly look over the "packages" currently available at the St Regis. Here is the least expensive one (note two-night minimum required). "Dog Perignon"! Guess an ocean view would cost more.

Pamper Your Pooch Package
The package consists of an overnight stay in a Resort view guestroom, a personalized welcome letter to the pet, the exclusive St. Regis doggy bed, pet amenities including “Sniffany & Co.”, “Bark Jacobs”, “Dog Perignon”, or “Jimmy Chew” toys, personalized silver food and water bowls, an array of treats, biscuits, and bones, along with an issue of Hollywood Dog! Pricing for this package begins at $545 per night. (two-night minimum required)

 

[SkisALot]

I heard on the news tonight that 4 AIG executives and 4 guests just went on a partridge hunting trip to somewhere in Europe to the tune of $86,000. Where's the oversight?

 

[Independent]

This is a good example of why it's difficult for the gov't to "take an equity position" in a private company.

According the the company, this wasn't a "retreat for executives". It was a reward for top sales people. The sales people don't work for the money-losing part of the AI Group. They work for a solvent, profitable insurance sub.

AIG management would say that this type of trip is standard practice in the insurance industry. The taxpayers want this business to remain profitable. The execs need to go to re-assure the top salespeople that their part of AIG has a future.

But taxpayers who don't get this kind of perk are frustrated at what "standard practice" means in US business. Where did any company get the idea that spa treatments are necessary business expenses? And, if they are "just part of our total compensation package", why don't the employees pay FIT on them? And why can't they dial this kind of stuff back at least until the "crisis" is over and the gov't gets our money back?

I don't know if the big banks getting the $125 billion will read this story and really dial back the perks (I wonder if any of them are buying luxury boxes in the new Yankees stadium), or if they figure they need to continue business as usual.

It will be interesting to see what happens.

 

[Bimmerbill]

Hey, good for them! I wished I worked there.

 

[Retire Soon]

Less than a week after the federal government offered an $85 billion bailout to insurance giant AIG, the company held a week-long retreat for its executives at the luxury St. Regis Resort in Monarch Beach, Calif., running up a tab of $440,000, Rep. Henry Waxman (D-Calif.) said today at the the opening of a House committee hearing about the near-failure of the insurance giant.
Showing a photograph of the resort, Waxman said the executives spent $200,000 for rooms, $150,000 for meals and $23,000 for the spa.

http://voices.washingtonpost.com/livecoverage/2008/10/after_bailout_aig_executives_h.html?nav=rss_email/components

Thanks for sharing the article. These AIG executives are no better than common criminals that populate our prison system. The only difference is that these white collar thieves wear suits instead of prison garb.

 

[Independent]

Today's news:

American International Group agreed Thursday to help the New York State attorney general’s office recover tens of millions of dollars in improper expenditures, including compensation given to two former top executives.

A.I.G. also agreed to cancel a $10 million severance package for its former chief financial officer, Steven J. Bensinger. He was replaced on Thursday by the giant insurance company’s comptroller, David L. Herzog.

The agreement came a day after Attorney General Andrew M. Cuomo assailed A.I.G. for making “unwarranted and outrageous expenditures” that he said violated New York law and that he called particularly “irresponsible and damaging” in light of the federal government’s $123 billion rescue of the company.

Mr. Cuomo criticized in particular the multimillion-dollar payments to Martin Sullivan, A.I.G.’s former chief executive, and Joseph J. Cassano, who ran the unit blamed for the losses that pushed the company to the brink of collapse. A.I.G. agreed Thursday to help recover that money.
Mr. Cuomo met Thursday with A.I.G.’s new chief executive, Edward M. Liddy, and the agreement was announced jointly by them.

Under the terms of the agreement, A.I.G. will provide the attorney general’s office with an accounting of all compensation paid to its senior executives. A.I.G. also agreed agreed to cancel all junkets and benefits that are not justified by legitimate business needs. AIG will immediately cancel more than 160 conferences and events, some exceeding more than $750,000 per event, for a total savings of more than $8 million.

Mr. Cuomo, in a letter to A.I.G.’s board on Wednesday, assailed the company for allowing executives to take golf and hunting trips after the government extended an initial $85 billion line of credit to the company. A handful of A.I.G. officials flew to England on a private jet for a partridge hunt that reportedly cost about $90,000. The use of the plane cost about $17,000, according to a person familiar with Mr. Cuomo’s investigation.

A.I.G. to Help Cuomo Recover Millions in Executive Pay - Mergers, Acquisitions, Venture Capital, Hedge Funds -- DealBook - New York Times

 

[Bikerdude]

From what I've read the trip was a "reward" for the best performing independent agents for AIG products. This is a common practice in the insurance (and many other) industry as the top agents bring in a majority of revenue. The top company executives usually accompany the agents to keep them on the company 'hook'.

Top selling independent agents in the insurance industry are treated as "kings". Just part of doing business IMHO.

 

[Notmuchlonger]

Im just jealous its not me Kudos for working the system

 

[ERD50]

I'm not going to defend the actions of some AIG employees - don't have enough info, but I will make an observation:

I imagine that many of those complaining here did not work for a mega-corp for many years. If they did, there were probably years that had a loss. But that does not mean that every perk for every high performer was pulled. Maybe the average worker got a smaller (or deferred) raise, but they still got paid. Plus, companies can have a loss overall, and still have a very profitable division, or maybe a group did work that helped lessen the loss? They should get rewarded, no?

Now, let's talk about the pot calling the kettle black - the federal debt is $$$$ <fill in the blank - I'm too lazy to look it up>. But federal employees still get paid, and get excellent benefits. Many of them (in absolute numbers, not in %) get some extravagant perks.

So, is AIG any different from the govt that is taking it over?

Now, if the AIG CEO had any sense, he would have called an immediate halt to non-essential expenditures. He could have avoided this embarrassment. He would have PO'd a few employees, who for all we know deserved this perk (or maybe not). Better that than be in the headlines. Bad call on the CEO's part, but it goes on every day.

-ERD50

 

[Marquette]

I can't speak for AIG, but something like 10% of our field accounts for 90% of our sales.

If I have a stake in AIG now, I want to make sure their top sales people are well taken care of. I want a good return on my tax dollars.

 

[chinaco]

I have not problem with the govt telling them to trim back. If stockholder had the clout they would tell them to do the same. Looks like AIG was involved in questionable activities before the CDS problem. This situation is another example of mismanagement... perhaps illegal activity. Greenberg invokes his Fifth Amendment right - Oct. 15, 2008

 

[Bikerdude]

Now, if the AIG CEO had any sense, he would have called an immediate halt to non-essential expenditures. He could have avoided this embarrassment. He would have PO'd a few employees, who for all we know deserved this perk (or maybe not). Better that than be in the headlines. Bad call on the CEO's part, but it goes on every day.

-ERD50

Just a little clarification. "Independent Agents" in the insurance industry DO NOT work for any one insurance company so they are NOT employee's they sell insurance from any or all companies or make deals to exclusively sell one companies product.

Most of these agents are wealthy and expect lavish 'perks' to keep them in the 'fold' of any one insurance company.

 

[ERD50]

Bikerdude - the article refers to them as 'company executives'. So, I'm assuming they are employees, not independent agents (I mean, it wouldn't be in print/internet if it were not true, right? )?

If they are totally independent, it does soften it quite a bit. I mean, if I did some business with company Xyz, and there was a bonus for some goal, and I made it, I would expect them to pay up on the bonus even if they were in trouble. It's a contract - gotta stick to it.

I don't know if this situation fits that or not, but either way the media and the public are going to run with it.

-ERD50

 

[free4now]

Like Joe the plumber, this seems like one of those problems that looks important on the surface but elicits the "who cares" response the deeper one looks.

 

[Independent]

In the first nine months of the year Citigroup, which employs thousands of staff in the UK, accrued $25.9bn for salaries and bonuses, an increase on the previous year of 4%. Earlier this week the bank accepted a $25bn investment by the US government as part of its bail-out plan.
At Goldman Sachs the figure was $11.4bn, Morgan Stanley $10.73bn, JP Morgan $6.53bn and Merrill Lynch $11.7bn.

Wall Street bankers in line for $70bn payout | Business | The Guardian

In an earlier post I said that it's very hard for the gov't to "take an equity stake" in a private business. And, "I don't know if the big banks getting the $125 billion will read this story and really dial back the perks, ... or if they figure they need to continue business as usual."

I don't know if these bonuses will end up being paid, or if the banks will try to dial back. Either way, I hope that both the banks and the gov't decide that they want to get the gov't out of the banking business as soon as possible.