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AIG’s $443k Party to Celebrate $85B Bailout

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It’s absolutely insulting that AIG spent $443,343 on a retreat just days after the Feds bailed out the company with a $85 billion infusion that sucked 80% of the firm away into the Federal abyss.

It’s my personal opinion that C-level executives are overpaid by the conventions of mere mortals but the reality is that their salaries and benefits are the result of what the market will and can bear. Goldman Sachs CEO earned $74M last year, Lehman Brothers chief Richard Fuld defended his $71.9M payday (it wasn’t as much as before the bankruptcy though!), and ex-CEO of Bear Stearns James Cayne earned $49.31M over the last two years. It’s an ungodly sum of money, especially for companies that are either dead or on life support, but that’s how the game is played. You take the heat with one hand and the cash with the other.

What AIG did? Spending nearly half a million on a retreat at the St. Regis Report in Monarch Beach? That’s like someone spitting in your face. If I had any business with AIG, I’d seriously reconsider it.

Rock Out With Your Bailout [The Smoking Gun]

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12 Responses to “AIG’s $443k Party to Celebrate $85B Bailout”

  1. This is FUD says:

    Actually it was stated this was planned long before their recent financial woes. This expensive celebration is a standard industry practice of taking the best independent agents (in terms of sales). Nothing to see here.. move along.

  2. Jim says:

    I don’t want to seem like I’m totally defending them. But..

    LA Times quotes AIG on this saying it was a retreat to reward their salesmen: http://www.latimes.com/business/investing/la-fi-lazarus8-2008oct08,0,2801040.column
    “”It was not an executive retreat,” he said. “It was a meeting to reward and incent independent sales agents.”
    As Norton described it, AIG had invited about 100 of its top salespeople to stay at the St. Regis for a week of meetings and motivational events — and, as the company’s invoice shows, thousands of dollars’ worth of spa and salon amenities.”

    My company has those kinds of deals for our salesmen. And its something thats planned and scheduled long in advance. Usually its a reward deal for the top % of sales people for the year or something. I think our salesmen get to go to Hawaii.

    Sounds like AIG may have spent more than necessary. They might have been able to cancel it altogether but maybe not.

    But it may not be as bad as the media is making it. If its a reward for salespeople then it is probably scheduled and ‘promised’ well in advance. They may have had a large deposit or non refundable reservation with the hotel and may have had to pay most of the money even if they canceled it.

    Jim

  3. FrugalNYC says:

    I think I’m one of the few people not horrendously bothered by this. The retreat likely had been pre-booked long in advance and the cancellation fees (if it was able to be cancelled at all) would be huge for that number of people.

  4. jim says:

    hmmm.. if that’s the case, that it was a reward for salesperson performance, I take back my upsetedness… though their PR department should be raked over the coals for not making this aspect more well known!

  5. FrugalNYC says:

    ALthough them asking for more money: http://money.cnn.com/2008/10/08/news/companies/aig/index.htm?cnn=yes doesn’t make me want to love them more.

    From my work in a related (but not financial) industry, I know how some of those are booked and arranged. In addition to non-refundable fees mentioned above, there are other large strings. Also, what about those who would have been hurt by the loss of business at the other end?

    Yes, their PR team needs some smacking.

  6. Cap says:

    yeah i was pretty ticked off about it like most people till I read the clarification letter sent by CEO of AIG to Paulson. the media went and made it look worse than it is.

    maybe their good PR people bailed out of the sinking ship awhile ago..

    still, there’s plenty of other wacky things AIG did to be pissed about

  7. Curt says:

    yeah, it’s not every day that they secure that much money. If they would have added a large client, they probably would have also partied.

    But, to make matters worse, today they got another $37.5 billion from the Fed because they ran out of money again.

  8. Greg says:

    I have mixed feelings.

    I understand the “why.”

    What bothers me the most is why the “powers-that-be” at AIG have no understanding of why this was so repugnant to the American taxpayer.

    How about this for a spin: AIG contacts it’s 100 top sales reps, says there is a perception crisis with the American public, and hosts a retreat the Holiday Inn. They use the fancy hotel for R&R for 100 front-line combat troops, with a PR announcement that AIG does not think it appropriate that they use the hotel, but also do not want the money put down to go to waste.

  9. Patrick says:

    I am really pissed off about this issue. It just doesn’t make sense. Why would you continue with this planned event knowing the horrible press you are going to get. The bad spending habits of these executives seems to be the real reason that companies like AIG are not making it.

  10. saladdin says:

    They are rewarding salesmen for selling for a company that needed a 85bill loan?

    Their salesmen must really suck.

    saladdin

  11. Ben says:

    Just saw the SNL coverage on this — “even the Mafia knows to let things cool down before spending the money they stole”

    To right the ship, AIG needs some things to change, this isn’t a sign of change to me.

  12. DON says:

    This is an outrage and insult to us taxpayers, if they are (were) so much in financial trouble they needed the government bail out help why did they not CANCEL the event, I mean think about it… If anybody or any company is having a tough time financially the first thing they do is cut out the extra frills & benefits. Yes it may have been planned in advance but… the minuet they found out they were having financial hardships should have been the time to call & cancel the reservations I mean regardless of the bail out that $443,343 could have been taken and redistributed to other more important issues . It is like my boss says when it comes to Financial spending “WE HAVE TO PUT OUR FINICAL SPENDITURES IN THE ORDER OF PRIORTIES, NOT WHAT WOULD WE WOULD LIKE TO SPEND THE MONEY ON BUT WHAT DO WE NEED TO SPEND IT ON, (and yes extra employee frills and benefits such as this would be taken off of the list ( he has always said.. if employees want to keep their jobs they must make sacrifices


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