A.I.G. to give millions in bonus to employees
The American International Group will start paying $450 million in bonus to the company's financial products unit, The New York Times and The Wall Street Journal reported
A.I.G., received $170 billion in tax payers' money from the Treasury and Federal Reserve. This money bailed out the company that was on the brink of bankruptcy.
The financial products unit is the section of the company that is blamed for A.I.G.'s demise. The New York Times reported that they wrote trillions of dollars worth of credit-default swaps that protected investors from defaults on bonds backed in many cases by subprime mortgages. This issue is also a major factor into why the economy went into a tailspin.
Sunday, $165 million will be paid to 400 employees ranging in $1,000 to $6.5 million in bonuses. Seven executives will receive $3 million in bonuses. All these figures were reported by The New York Times.
Treasury Secretary Timothy F. Geithner called the bonuses unacceptable and that the contracts should be renegotiated.
Edward M. Libby the government-appointed CEO of A.I.G., said that the company is contractually obligated to pay the bonuses, and that there is no legal way to break them. He also added that the bonuses were negotiated before the bailout, and that it is the best way to keep the top talent at A.I.G.
The Wall Street Journal: http://online.wsj.com/article/SB123707854113331281.html?mod=wsjcrmain
The New York Times: http://www.nytimes.com/2009/03/16/business/16aig.html?pagewanted=1&_r=1&hp