AIG reaffirmed their commitment to the Executive Minimum Wage Law by paying out around $165 million in bonuses this weekend. About 100 million will go to executives in the Financial Products Division. Seven employees will receive about 3 million each.
Not only is AIG doing its part to uphold this important piece of legislation but higher ups also mentioned that they must uphold preexisting contracts with their employees. It seems they are turning over a new leaf in this regard or perhaps they weren't aware that the countless Credit Default Swaps they would have defaulted on without government aid were actually contracts! Or maybe they were confused by the wording and thought you were suppose to default on a Credit Default Swap!
We have a bit of a socailist climate out here on the west coast and our minimum wage runs about $9.50, which is a pretty good burger flippin' wage! Now, just one of those $3 million dollar bonuses will keep about 160 burger flippers flippin' for a 50 week work year. But, then again we are talking about burgers at a coerced fascist government wage and professional executives losing hundreds of billions at their pure free market job with a few hundred billion dollars of government bailout thrown in, certainly entirely unrelated subjects. A bit like say Jonathan Apples and Fuji Apples, no comparison!
It seems AIG's investment division hasn't been doing so well the last couple of years with their infatuation with Credit Default Swaps but AIG's government appointed chairman, Edward Liddy noted, "We cannot attract and retain the best and the brightest talent to lead and staff the AIG businesses-which is now being operated principally on behalf of the American taxpayers-if employees believe their compensation is subject to continuous arbitrary adjustment by the US Treasury." For some reason, he failed to mention that $33.6 million went to 52 employees that were no longer working at the corporation. We are certain this is only to convince these fine employees to return and resume their excellent performance.
Nevertheless, his statement is a well taken point and perhaps bonuses should be multiplied three or four times to find even more adept employees who can run their investment division and not require a $170 billion and counting payment from the same US Treasury to keep the company above water. They are already planning $230 million in bonuses for 2009 so this is a good start. It is really hard to find unemployed American executives these days for under 10 or 20 mill a year who might only lose a couple of billion for the company rather than a couple of hundred!
The US taxpayer now has an 80% stake in this wonderful corporation. President Obama and many of his helpers expressed outrage at the situation. It seems that AIG has legal obligations to continue to pay these bonuses. If I understand the term "bonus" correctly, the payment must be based on the continued excellent performance of these employees and executives! After all, payment that occurs when an employee and the company are not doing well is known in the real world as "severance pay" and this term was never mentioned!
There is no need for outrage. Things are as they should be. A mega-conglomerate like AIG operates in a vacuum. They are responsible to no one but themselves. The shareholder has provided capital that long ago has been absorbed and can only be recreated through the actions of someone outside the corporation who has more faith in the share than the current holder. The shareholder is "awarded" this so called ownership stake but virtually zero decision making power. By the way, don't forget to fill out your proxy!
As we already know, corporations have been given "limited liability" by the State, the same folks who gave AIG $170 billion. It is common corporate practice to extend this "limited liability" by leveraging their assets as much as possible. This leveraging has two beneficial effects: increasing the ability to earn profit and grow the corporation in an inflating business climate and eliminating any chance of credit recovery if they do face insolvency.
Part of this leveraging is the payout of huge salaries and bonuses to their executives. This is a way, much like a professional sports team, of distributing earnings within the social network of the corporation, rather than outside of it. A minimum stockholder dividend is also a good thing as it boosts stock prices which can further facilitate borrowing and leveraging, but it isn't necessary to go overboard in this regard.
This is another way to avoid the corporate tax along with subsidiary transfers and purchases. The deliberate dividend distribution from corporation to corporation also does much to redistribute earnings without tax as these distributions are tax free. So it is all part of a large, well orchestrated plan and should come as no surprise to anyone, especially those in government who are so close to the action.
We should be reassured that AIG is acting in a very socially responsible way to ensure these executives do receive the compensation they so justly deserve. Our support of these benevolent practices is the least the average citizen can do for the greater welfare of the mega-conglomerate corporation. If these monstrosities are to continue their effort to impose their dominance on every square inch of the planet they need our undying support. Or do they?
Other Related Articles by the Author:
Mortgage Backed Securities, Whose Fault?
Non-Socialized Responsible Non-Investing
Corporations and the Free Market
©2009 Gene DeNardo, all rights reserved. You must have written permission from the author in order to republish this work.
Published: Monday, March 16, 2009
Last modified: Wednesday, March 18, 2009
The views expressed in this article are those of Gene DeNardo only and do not represent the views of Nolan Chart, LLC or its affiliates. Gene DeNardo is solely responsible for the contents of this article and is not an employee or otherwise affiliated with Nolan Chart, LLC in his/her role as a columnist.
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Reader Comments:
Posted By: Anndm1950
Date: 2009-03-23 10:04:59
I have felt the power of the "Corporation" first hand. If you play by the rules which only apply to certain employees, you get to stay and collect your meager income. If, however, you rock the boat and insist that they play by the real rules, then don't let the door hit you on the butt as you are leaving after being fired.
Once upon a time, I worked a "Temp" job for AIG. They were much more concerned about the the heel of my shoes, what material my dress was made of and my hair cut, than what I was mentally capable of doing. Let me tell you, those executives need the bonus to continue to dress the part.
Posted By: gene
Date: 2009-03-23 16:38:57
I think you hit on something, they certainly play by their own rules!