Posting on my blog used to be a morning ritual for me. From 7:30-9:00 or so, I’d pour my thoughts, my emotions, my inner demons on this site wherever it happened to reside. It’s been 46 days since I put anything down here, just too busy and too worn out most of the time.
So it is all of the furor of AIG bonuses that has brought me out of hiding. Oh, you haven’t heard about it? There are a zillion thoughts on the matter, from Elliot Spitzer’s take at Slate to the NY Times Paying Workers More to Fix Their Own Mess, which brought hoots and howls aplenty. Here’s a great timeline of the key AIG retention bonus events.
Here’s my take: these AIG bonuses are a red herring on the one hand and the poster child of what’s wrong in our new America on the other hand.
First the red herring part. Many of us don’t receive bonuses. For those who do, most bonuses are nominal chunks of change for a job well done, more in the $2-10k range at the end of the year. A small portion of us are highly compensated. When I worked in Corporate America, I was one of these people. I received a six-figure bonus for a couple years, as well as things like stock options. These weren’t gifts but were detailed parts of my compensation. I left a job and various benefits like accrued employment time and pension to receive this type of compensation package.
Once, I even signed an agreement where I had a retention package. It stated that I received an extremely large amount of money if I remained employed through the divestiture of the business unit that I was employed at. I had been deemed a valued executive who needed to remain through the sale and acquisition of my company regardless of who the buyer turned out to be, as well as regardless of my value to the acquirer. You can search this site if you’re interested in what happend next.
I say all of that to state that some people make alot of money. “These people” who got AIG into the most significant financial crisis are indeed the same people who have been rewarded with extremely sizable bonuses. I’m assuming they met the goals and criteria to receive these bonuses and are now being paid. It is an easy out to attack these highly paid individuals, to torch them all collectively as inept, as criminal, as evil. I have never met anyone from AIG and have no knowledge of any individual’s performance. Demonizing those receiving bonuses is a red herring because it takes our focus away from the real problem. And as I said, the real problem can be seen quite clearly by these seven-figure bonuses. Here is the real problem:
The US Government cannot run a contemporary, leading company effectively. They do not have the business acumen, the management capabilities, the nimbleness, the ability to soberly make very tough decisions regardless of the fallout.
You’ll forgive me if I’m foggy on the details, but we basically loaned hundreds of billions of dollars to AIG (or gave it to them, I’m not sure which). The US Government then gained either ownership or something akin to 79% of the controlling interest in the firm, again I’m not sure which. From Day 1, our AIG Takeover/Turnaround Leadership Team should have been drilling into the minutiae of AIG, should have sniffed these retention bonuses out early, should have quickly dismissed the need for them. Really, where would any of these folks go in today’s economy? If we wanted to sign a retention contract with them that included some sort of bonus, we could have tied it to staying for a longer period of time and meeting specific objectives, both financial and non-financial. Ditto General Motors, ditto Chrysler, ditto the banks, ditto whomever else we’ve poured funds into.
I’ve quickly become tired of all these characters who so easily point at yes guilty scapegoats yet fail to take ownership and accountability. Do you think a Senator can actually run General Motors by meeting with their CEO once a month while serving as a Senator from Utah or Florida or Texas?
Here’s a clip from one of my favorite movies, The American President. It has nothing to do with the topic, but to me it is illustrative of what we desperately need: cutting through the clutter, taking ownership, and being ready to grind it out.
This isn’t about AIG, it’s not about bonuses, it’s not about Frank nor Limbaugh nor Obama nor Liddy. It’s not about Democrats and Republicans, not about winners and losers. Every ounce of energy focused on these types of things are a collective waste of effort.
It was just six months ago that we gave AIG their first loan. Six months. That isn’t very long ago. I say that to demonstrate that each of these days is precious for the thousand or so men and women in our nations capital, the tens of thousands of government leaders throughout each of our states and municipalities, and the tens of thousands of executives throughout Corporate America trying to figure out what to do next. Are they our best and brightest? A good chunk of them are for sure.
Be sure of a couple things. First, we’re going to have many, many more screw-ups in the coming weeks as we try to right the ship, a ship that is still listing severely and who may not be seaworthy for quite awhile. This should not come as a surprise to anyone. We still have no idea what the banks have done with all the money we’ve given them. There is no big flood of new credit that is jumpstarting things. On the contrary, credit card limits have been slashed, as have lines of credit. If each Senator worked full-time at only one company that we’ve loaned at least $500mil to in the last six months, do you really think they’d have the capabilities to turn their assigned company around? So AIG executives received $1mil+ bonuses based on retention agreements they signed in the early parts of 2008. Chalk up the $165mil as Lesson #1 for the Federal Government in how to run a company. The education of our Democratic and Republican leaders in how to run all the companies they’ve loaned money to and bailed out will cost well over $2,000,000,000,000 I’m sure when it’s all said and done.
And that brings me to the worst part of all this, the second thing in my couple things. That couple trillion dollars isn’t going to change America for the long-term, it isn’t going to do anything like reinvent American manufacturing so that we can suddenly grow ten million manufacturing jobs, it isn’t going to suddenly reinvent our energy demands, it isn’t going to suddenly create sustainable enterprises that will yield a stronger citizenry when our children are coaching soccer.
We as Americans have the capacity to think for ourselves more today than ever before. If you want to get all worked up and shout to your Congressman, your Senator, and your President, then take the words AIG bonuses out of your rhetoric. Let’s get rid of the red herrings, the easy targets that make us all feel better that we finally found someone to blame all this on. If you want to shout, then shout to them that we are all ready to take the tough medicine that is facing us.
My rant has fallen apart a bit, but there you go. If anyone reads this and wants to chime in, be my guest.
