Bonus Battles

Post-Bailout AIG Still Paying Bonuses

They received and lost hundreds of billions in federal bailouts, but AIG will spend some $100 million on bonuses for senior employees this week, the Washington Post reports, even as Treasury Secretary Timothy Geithner implored the company to stop the internal spending. In a letter to Geithner leaked to the Post last night, AIG CEO Edward Liddy said the bonuses had been scheduled months ago and "could not be cancelled altogether because the firm would risk a lawsuit for breaching employee contracts." Liddy also argued that changing compensation plans mid-stream would cause an exodus within AIG's already embattled ranks. AIG put forth a plan for restructuring bonuses but not for eliminating them: Thousands of the failing insurance company's employees will continue to receive hundreds of millions in bonuses.