AIG Retention Bonuses Paid to FORMER Employees

The NYT reports:

Seventy-three employees were paid more than $1 million in the newly minted bonuses at the insurance giant, American International Group, according to the New York attorney general Andrew M. Cuomo.

The attorney general provided some new details on Tuesday about some of the $160 million in bonuses that the insurance giant paid out last week in a letter sent to Representative Barney Frank, the chairman of the House Committee on Financial Services.

Mr. Cuomo did not name the recipients of bonuses, but said one employee received more than $6.4 million. The top seven received more than $4 million each, and the top 10 received a combined $42 million. Eleven of those who received “retention” bonuses of $1 million or more are no longer working at A.I.G., including one who received $4.6 million, he said. (emphasis added)

This story gets more and more interesting. Bloomberg is reporting that:

“American International Group Inc., the insurer under fire for handing out bonuses after its $173 billion government bailout, budgeted $57 million in “retention” pay for employees who will be dismissed.”

AIG disclosed the payments, part of a larger $1 billion program meant to retain staff, in a March 2 filing. The insurer was chastised yesterday by President Barack Obama for awarding $165 million to staff of the derivatives unit blamed for the firm’s near collapse, and New York Attorney General Andrew Cuomo said he’ll subpoena AIG to get details on those payments. (emphasis added)

The latest idea: 100% taxes on bonuses from bailout firms:

Well it looks like the whole American International Group Inc. (NYSE:AIG) bonus hoopla might not blow over after all. With public anger growing, Congress is jumping all over the issue and vowing not to let the troubled insurer’s executives walk away with the money, even if it means writing laws specifically to get money back.

While Democrats haven’t yet matched Iowa’s Republican Sen. Chuck Grassley’s suggestion that AIG’s brass commit suicide, they are throwing out some radical threats on the $165 million in bonus money.   According to The Associated Press, “House and Senate Democrats were crafting separate bills to tax up to 100% of generous bonuses awarded by companies rescued by taxpayer money.”

Right now my long pitchforks and torches trade is looking pretty sweet!

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Hat tip Dan Greenhaus

Sources:
Cuomo Offers Some Details of A.I.G. Bonuses
LOUISE STORY
NYT,  March 17, 2009
http://www.nytimes.com/2009/03/18/business/18cuomo.html

AIG Plans Retention Pay for Staff Facing Dismissal
Hugh Son
Bloomberg, March 17 2009
http://www.bloomberg.com/apps/news?pid=20601087&sid=arI_buLviQ9g&

Congress prepares 100% taxes for AIG
The Deal, March 17, 2009 at 3:16 PM
http://www.thedeal.com/dealscape/2009/03/congress_prepares_100_taxes_fo.php