Bailout Bonuses Zinged

There was outrage when it was announced that AIG would be handing out bonuses to their top people.

The government has asked that people in this category receiving bonuses to voluntarily give it up. Apparently one person (there may have been more but I only heard that one person had the decency to hand over their bonus without coercion) volunteered to do that but it doesn’t matter now. Congress has decided to slap it down by imposing a 90% (!!) tax on bonuses issued since December 31, 2008 by companies receiving bailout money in excess of 5 billion dollars to people whose family income exceeds 250K.

So the poor won’t be robbed to pay the rich- not today, at least.

There are other provisions but this is the one that the media is using as a sound-bite. Of course there has been a lot of finger-pointing to get to this point- with Republicans sniveling that bonuses should have been suspended as a condition of receiving a bailout in the first place.

My response would be “Duh.” It was a definite oversight. I can’t argue with that point but let’s plug that hole and move on- there is too much work to be done.

Ideally the job of a politician is to serve the needs of the constituents that elected him/her  to office (let me be naïve for just a moment…okay, the moment has passed) but this gets lost in the shuffle when the party agenda, self-interest, petty rivalries and backroom deals intercede.

But I digress.

I probably had the same WTF (?!) response most people had when AIG announced that bonuses would be awarded to the very people who were likely knee deep in the mess that lead to the near destruction of the company itself. Great job running the company into the ground boys and girls- here’s a big fat cheque for your efforts! I am sure there are other companies who are guilty of the same but AIG is the “scapegoat” of the moment so we will run just run with it.

I am just a wee person on the corporate totem pole and relatively new to the corporate world, despite my advanced age, but please indulge my naiveté while I work this out in my own mind.

Is not the purpose of a bonus to reward good work that is specifically tied to the performance of the company that is generally meted out on a percentage basis depending on one’s role within said company? Bonuses for work that translates to company growth, profits, increase in shareholder value.

This would be a win-win-win, no?

I understand that incentives are to attract the kind of talent to strengthen a company but when everything goes to sh!t and you reward those at the helm who steered the company to a really bad place (understatement), how is this an incentive to do what is for the good of the company and its shareholders?

Is this how you raise your kids?

I don’t get it. What am I missing? If this scenario makes sense (and it obviously made sense to someone), I am missing something BIG!

So it may be moot (in this case) since the government has put in the provision to claw the bonuses back some of the bonuses but I would bet my life and the life of my unborn children this is not the first time big fat bonuses were handed out when a company’s results have been less than stellar.  

Seriously, what am I not getting?

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~ by angryegg on March 20, 2009.

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