AIG continues to fumble through the bonus-payment process. After making a horrible mess the first time around, when they paid $165 million in bonuses right after receiving a hundred billion, give or take, in TARP money, the company decided to seek some sort of guidance from Ken Feinberg.
Even though they say they don’t need the advice, they’re waiting for it anyway. Plus, another banker who is ready to pick a $100 million fight with Feinberg for his bonus.
So AIG has no problem blowing $165 million out the door, but now they’re crippled with fear on $2.4 million in payments that have come due to “dozens” of people under the same contracts.
The AIG decision was disclosed by George Madison, the nominee to be U.S. Treasury general counsel, in answer to questions from Sen. Grassley disclosed Madison’s answer in a public statement.
A source close to the matter said Madison’s information was correct. The bonuses were not paid because AIG is still working with Washington compensation czar Kenneth Feinberg on a number of issues, the source said.
After all that expensive counsel they went and got, NOW they’re playing coy? As if anyone even gives a crap about this rounding error. Do they even call Paul Hastings’s Patrick Shea for advice on this any more?
At least Feinberg, who used to be a partner at Kaye Scholer, seems to have his priorities right and isn’t bothering with this nickel-and-dime nonsense.
Meanwhile, there’s a much more interesting fight brewing. The WSJ reports
A top Citigroup Inc. trader is pressing the financial giant to honor a 2009 pay package that could total $100 million, setting the stage for a potential showdown between Citi and the government’s new pay czar.
The trader, Andrew J. Hall, heads Citigroup’s energy-trading unit, Phibro LLC — a secretive operation, run from the site of a former Connecticut dairy farm, that occasionally accounts for a disproportionate chunk of Citigroup income.
Mr. Hall’s pay package puts Citigroup in a tight spot. Ripping up the contract could trigger Mr. Hall’s departure and a potentially messy legal fight. But making any large payouts, even if they’re based on previously agreed contracts, could subject Citigroup to political and investor fallout.
At least they’re trying to get out ahead of the problem.
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{ 6 comments… read them below or add one }
The greed never ends, I suppose. Or the stupidity. How can companies such as Citi or AIG agree to such huge bonuses when they were actually taking in so relatively little.
Depends on your perspective. In one sense, the guy's a salesman who got a 17% commission on $600 million in revenue he generated. Lots of companies pay lots of salesmen higher percentages than that, it just gets blown out here because the gross numbers are so big. Plus, if they don't pay him $100 million, they'll lose the full $600 million when goes someplace where they will pay him.
The greed never ends, I suppose. Or the stupidity. How can companies such as Citi or AIG agree to such huge bonuses when they were actually taking in so relatively little.
Depends on your perspective. In one sense, the guy's a salesman who got a 17% commission on $600 million in revenue he generated. Lots of companies pay lots of salesmen higher percentages than that, it just gets blown out here because the gross numbers are so big. Plus, if they don't pay him $100 million, they'll lose the full $600 million when goes someplace where they will pay him.
Feinberg is cool. Not quite up to "Zuber is the nuts" standard, but still pretty cool.
How he has managed to keep his southie accent after all these years out of Boston is beyond me.
Feinberg is cool. Not quite up to "Zuber is the nuts" standard, but still pretty cool.
How he has managed to keep his southie accent after all these years out of Boston is beyond me.