Should AIG be punished for the bonuses the company gave out?
AIG should not only be punished but forced to pay retribution for the money that was loaned to them from the government. They laid workers off and were still allowed to give bonuses. Some of those bonuses equaled more than a few laid off workers' salaries. They carelessly allowed higher company executives to redo their offices at high price tags. They were still allowing trips to top of the line hotels and resorts. They slapped America in the face by saying "Look what I can get away with."
AIG has been the largest beneficiary of the 2008 Wall Street bailout and as such, should have made it their top priority to pay the government back as well as defer company bonuses until these debts are paid off. They reluctantly sold off one of their divisions, have not outlined their plans for future sales projections and don't seem to be too interested in fundamentally changing the way they do business. This may be in part to their political connections since many elected representatives were receiving sizable campaign contributions from AIG prior to this bailout and were more than inclined to approve this measure. However, AIG's business practices and ethical standards will remain in question so long as they don't pay back the government in full, and continue to give out bonuses. Punishing them will serve as a deterrent to others that may get the same idea.
AIG should be severely punished for thinking it could get away with paying out bonuses. This is a company that the government had strong reservations about helping in the first place, then they turn around and do something akin to thumbing their noses at us. This is another company that got itself into trouble, but the government helped them out. Any bonuses ought to be paid to Uncle Sam.
AIG is a large, well-known corporation and punishing them would provide a loud and clear statement for all of corporate America to fear. Back-room dealings by corporations are at the root of many problems occurring in our society. The downfall of huge conglomerates (such as Enron) in the past have made the public aware that things like this are occurring.
I believe that AIG should be punished for handing out the company bonuses because AIG decided to use the money for a cause that would not benefit the company as a whole, and it used it for a wrong reason. The money was given to AIG to pay its employees so they won't lose their job and can keep their company running and instead it used the money to play bonuses.
Since AIG was in the business of risk management, being an insurance company, they should have properly forecasted problems in the housing market. Furthermore, they should have known better than back Credit Default Swaps based on securitized home loans which clearly should not have been given out in the first place. Since AIG, like many other companies, always cries out for a free market system, the government should have punished them by allowing that free market system to clean them out.
AIG received billions of dollars in bailout funds after helping to cause one of the largest economic downturns in US history. The employees should not have been rewarded for this, regardless of whether they counted on multi-digit bonuses. A small business that is about to sink and gets a SBA loan or grant at the last minute is not going to give huge bonuses to their employees; the employees would just be thankful to have their job still.
Laws should be enacted to make giving large bonuses, such as those given to AIG executives, a crime when the company is near a state of collapse and in need of a corporate bailout in order to survive. There are reasonable compensation rules in the IRS code that limit compensation in certain industries. It seems like a similar set of rules could be established for corporate compensation.
AIG is a recipient of government money and should therefore be under tight scrutiny as to where that money goes. Bonuses are not a necessary business expense and should not be given out at a time like this. If the employees do not like it, they should go work for a more responsible employer.
Giving bonuses to the executives was an irresponsible use of tax payer money, and shows just how greedy corporations are getting. It's evidence that these things need to be more strictly regulated. I read an article that said AIG was obligated by contract to pay these bonuses, and something like that should be illegal. A bonus should be a reward for hard work that benefits the entire company, including all employees, and should be withheld as punishment if poor business practices lead to problems or loss of profits. AIG wasted tax payer money and they should be punished for it.
Although it is understandable that AIG has contractual obligations, those bonuses can wait until these fat cats earn the money which they feel so entitled to. The truth of the matter is that a 52% majority of the individuals earning these "retention bonuses" are no longer employed by AIG. Anyone running a company in need of a government bailout is undeserving of a bonus, and only an individual with poor taste would expect one. Receiving a bonus implies that one does their job effectively and efficiently, which clearly isn't the case with AIG. The state of the company proves that sales simply were not successful. AIG's use of American tax dollars, which were provided to keep the corporation afloat until it could provide for itself, is egregious.
AIG, as a company, should be held accountable for the bonuses it gave out, as that was very poor financial decision-making on its part. It would be hard to hold individuals responsible, as deeming who makes the final determinations is hard. You cannot hold the recipients of the bonuses responsible. But you can hold the company responsible, and expect them to make amends.
AIG was paying out millions to the same corporate bigwigs who nearly brought down the company. So instead of firing the the big shots, they ended up paying them these huge bonuses. This makes absolutely no sense at all. They were basically rewarding them for their arrogance and ignorance. Taxpayers should not have to pay to help out a company that believes in putting its overpaid executives before its customers. I wish the government never bailed them out. I'm sure I wouldn't lose any sleep at night if AIG wasn't around anymore.
AIG should not be punished for the bonuses the company gave out. For the most part, the bonuses had already been written into people's contracts before the government bail-out happened. If AIG had not paid the promised bonuses, then they might have faced messy legal issues for failing to uphold their end of the contract.
Also, a good portion of those bonuses went to rank-and-file workers, such as administrative assistants, office managers, etc. It would be unfair to deny those hard-working people the bonuses they had been promised. I suspect that the public would also have been outraged if AIG had failed to pay those bonuses.
AIG made the right decision in choosing to pay the bonuses.
The AIG situation was not a pretty one, but they were contractually obligated to pay out certain bonuses, even if that did come from the government pay out money. It would have been illegal not to pay and much larger issues could have arisen from nonpayment, like large lawsuits. I think it speaks highly of many of the employees that they returned their bonuses, but I can understand how some people did keep their smaller bonuses, as those comprised a large part of their expected salary.
As long as companies do not do things that are against the law, they should not be punished. While I do believe that it was extremely unethical for AIG to give out large bonuses, nothing that they did was illegal. If people want to punish AIG, then they would sell their stock in the company, or short it. But, the government should stay away, especially since what they did was not a crime.
The outrage at AIG handing out bonuses while damaging our economy is understandable, but we are a country of law and order. Many of those bonuses, if not all, were contractual obligations their employees were legally entitled to. Rather than seek mob justice punishment, the appropriate and civilized course of action would be to pursue a legislative solution or file a lawsuit.