Thursday, March 19, 2009

Bonuses For Failure

"There can be no real individual freedom in the presence of economic insecurity." ~ Chester Bowles

When I was in mid-level management for a national corporation (now defunct), the company had a payroll system that included a base salary, commissions, perks, and a bonus system.

The bonuses were based on achievement. If we did our jobs exceptionally well, we received bonuses, the amounts of which were directly affected by going over our established quotas. We had a monthly bonus system, and a quarterly bonus system, and a yearly bonus system. We had what we called a monthly, quarterly, and yearly TSQ (Targeted sales quota)that we had to surpass in order to be eligible for a bonus.

I said, "surpass".

That means, the amount of the bonus was determined by the percentage of earnings over the TSQ. If I went ten percent over TSQ, for example, I received a bonus commiserate with that overage. Fifteen percent garnered me a graduated bonus accordingly. And so on.

Many of the other managers made six figure salaries when their various bonuses were figured in by the end of the year. Of course, they were regional and district managers. I never rose above department manager. Although I did manage to receive some monthly, and a couple of quarterly bonuses in my thirteen years in the business, I never made six figures in a year. I also earned a couple of incentive trips. One a Carribean cruise, and one to the Ixtapa resort in Mexico. Plus a nomination for one national award, in which I finished second in the company.

But I digress.

All of a sudden, the upper management employees of AIG are on the hot seat for receiving bonuses, ostensibly paid for by us, the American taxpayers.

Now, I don't understand this at all. Why are any employees of AIG receiving bonuses in the first place? They lost money.

What kind of company rewards bonuses for failure?

Barack Hussein Obama and Democrat Senator Christopher Dodd are now sanctimoniously decrying the payment of these bonuses, as well they should, since they were two of the most vocal in favor of authorizing the bail-out of the financially ailing AIG.

But their protestations ring hollow.

Dodd and Obama are the top two recipients of campaign donations from AIG. Dodd received the most campaign donations and Obama ran a close second.

And now, we find out that Dodd is the Senator who inserted, in the bail-out bill, the exception that authorized the payment of these bonuses.

Now, of course, he's saying he didn't.

He is saying he doesn't know how that exception got into the bill. If we are to believe Dodd (who, of course, has nothing to gain from lying about his role in the current scandal), the provision to go ahead and pay bonuses somehow magically appeared in the bill without authorship.

I have heard rumors that the bonuses awarded to the AIG executives were specified in their current contracts. Perhaps this is true, but once again, what kind of company would agree to terms with employees to go ahead and pay bonuses when they lose money?

My own contracts specifically provided for bonuses if I surpassed the TSQ on a monthly, quarterly, and yearly basis. Nowhere was there any clause that directed the company to pay me extra if I failed to achieve my goal. The only bonus I would have received in that case would have been to keep my job.

If AIG agreed to pay their executives huge bonuses for losing money and driving the company to the brink of bankruptcy, it was a stupid agreement, and they don't deserve to be bailed out.

Which is what I've been saying all along.

In a free market system, there is no valid reason for the government to bailout any company, regardless of the circumstances. It is not the governments job to save irresponsible businesses.

If they fail, that is the price they pay for overspending and poor management.

Now Obama and Dodd have gotten us into this mess, from which there seems to be little hope of recovery.

And why?

I don't know.

But, if they've done it because of some kind of perceived obligation to AIG and other companies in return for their generous contributions to their respective campaigns, Obama should be impeached and Dodd should be jailed.

This is only the tip of the proverbial iceberg, anyway. AIG sent billions of that bail-out money to foreign banks. The bail-out money paid in bonuses for incompetent employees at AIG is a merely a drop in the bucket compared to the amount of money sent to other countries.

This whole thing reeks of incompetency, graft, malfeasance, and scandal.

We must recall all monies handed out to all the various recipients of all bail-out money. We must rein in this incompetent and irresponsible government.

We must stop the bleeding.

UPDATE: Apparently, Chris Dodd has abandoned his previous defense that someone sneaked that provision into the Omnibus bill. According to NewsMax:

WASHINGTON -- For a while, the disappearance of an executive bonus restriction from last month's economic stimulus looked like sleight of hand worthy of a Las Vegas stage. No one could explain how the provision faded into thin air. On Wednesday, Sen. Chris Dodd, D-Conn., acknowledged that his staff agreed to dilute the executive pay provision that would have applied retroactively to recipients of federal aid.

Dodd, the chairman of the Senate Banking Committee, told CNN that the request came from Obama administration officials whom he did not identify.


OK, so I will allow the Judge to reduce his sentence, and, if Dodd is telling the truth (finally), Obama should go to jail, too.

11 comments:

dissenterofone said...

Awesomely on point,

I believe the tactic is to keep the focus on these bonuses and not on the money hemmorraging out to Europe. Thanks for the addition info that the O team cashed in on campaign contributions from AIG.

Strange--Enron goes to Bush for dollars he says no and the media cries foul saying Bush is in on the take with Enron. O team comes to power AIG gets money, O team gets money and the blind mice blame Bush.

Joe said...

"Obama should be impeached and Dodd should be jailed."

Yes, Obama should be impeached and Dodd should be jailed.

But Obama won't be impeached and Dodd will not be jailed.

There is nobody to accuse them...certainly not the press, not the yellow-bellied, sapsucker Republicans, who are afraid of Democrats, and not the American people, for they have lost their say in how our government runs.

dissenterofone: You comment is SO right on!

Anonymous said...

"they were two of the most vocal in favor of authorizing the bail-out of the financially ailing AIG."

You mean the one the Bush administration engineered?

Lone Ranger said...

I believe there is one tiny error in your piece. Obama was at the very tip-tippity-top of the list of recipients of AIG generosity.

Dodd was the close second. The big story here is that once again the Democrats are using class envy to distract from the real issue. The AIG bonuses were about 0.097% of the bailout money. But, the Dems used this issue to make one of the biggest, unconstitutional power grabs in history. If they can raise the taxes of individual taxpayers they don't like, nobody is safe. People will be afraid to invest and achieve the American dream because they could be targeted next if they don't stay below the radar. This is how the income tax because a constitutional amendment in the first place. The vast majority of Americans thought it would never apply to them. It was just a tax on the "rich."

I personally don't care how a company wastes its money as long as I'm not a stockholder. But you are right in saying the government has no business bailing out the bad ones. Truman said the business of government is business. I say, business is none of the government's business.

Mark said...

I wonder why Libs can't get it through their heads that Bush isn't President anymore.

I wonder why Libs think Conservatives agree with absolutely everything Bush did while President.

I have ALWAYS said, NO BAIL-OUTS!! regardless of who engineers them.

See, that's the difference between Libs and Conservatives. Conservatives think, and voice their own opinions. Libs repeat whatever blather they hear from other libs, without thinking.

Joe said...

MARK: You are so right in your assessment of the thought processes of the liberal mind-set.

With them it's all about "I," in other words, "What's in it for me?"

The bail-outs were a bad idea from the get-go, they still are a bad idea and I don't care who thought of them.

You know what...I wonder how thoughtful it is for a liberal to comment who doesn't even have the guts to identify him/herself?

Mark said...

Joe,

"I wonder how thoughtful it is for a liberal to comment who doesn't even have the guts to identify him/herself?

It's probably Feodor or Dan, or some other former regular opposition poster who thinks I have banned them. Truth is, I haven't banned anyone. I just reject stupid or intentionally argumentative comments.

Occasionally I let stupid comments stand such as the one we are discussing, so we can see firsthand how stupid Libs are.

Mark said...

LR, I don't care if companies waste their money, either. But I believe if they do, they deserve to go bankrupt, not be bailed out.

The bail-outs set a terrible precedent, as we have seen. Now, everyone wants the government to bail them out. Even industries that are not even close to being in trouble.

Larry Flint, and other pornographers have asked for a bail-out.

At first, I feared this was only the beginning, but it appears the people are finally recognizing this fraud for what he is. I am thinking he will have to back away as he did with his ridiculous plan to make vets pay for their own health care.

Trader Rick said...

It may be that The Hussein O. will be impeached, assassinated or resign his office in the first term due to scandal, treason, and/or incompetence. His honeymoon is fast coming to an end. Unfortunately, the damage he and his fellow-travelers are doing may be irreparable in the near future...

Mark said...

After reading other blogs, I want to make it clear that I am not allowing myself to be distracted from the real obscenity that much more of the stimulus money is going elsewhere besides just to pay bonuses at AIG.

This post is specifically addressing the fact that bonuses should be earned by good performances, and my belief that the bonuses that have been paid to AIG are not earned, but instead, are repayment to Obama and company for all the campaign contributions made to them in the past.

Marshall Art said...

But that's what has been nagging at me, Mark. (And yes, I always check out your blog even when I don't have anything to add.) Just what were the bonuses for? What goals were set for them to achieve when they signed the contracts to take the gigs in the first place? I don't believe it's anywhere near impossible that at least some of them could have legitimately achieved their goals, making them worthy of their bonuses, but yet the company goes down the tubes. A poor game plan will lose the game, but the players could still have executed the plays as designed. Thus, the players did their jobs well, but the strategy for the game did not allow for victory.

In any case, if the bonuses were part of their contracts when they signed on to take the jobs, as I believe they were, and they achieved whatever goals were set for them in order to get the bonuses, then the failure of the corporation is besides the point as far as whether the corporation is required to pay the bonuses. If left to fail, then the bonuses don't get paid because there's no money because of the corp failure. But if the gov't is going to give them tax dollars to keep them afloat, then the bonuses are legitimate debt of the corporation just like their electric bills. What's more, the gov't cannot get between two parties tied by a legal contract, nor can the gov't single out a specific person or group for taxation, like they want to do with exec bonuses.

So we, the tax payers, are screwed as long as Barry insists on providing more bailout money to AIG and others. If the execs choose to forego their bonuses, that's up to them. Personally, if I was one of them, and I did my job as it was spelled out in my contract, I'd keep the damned money because I earned it and the corp owed it to me. Furthermore, I'm personally digging the fact that the stupidity of Brilliant Barry and the Dem dimwits is being exposed so early. The only real downside is that Dem voters will forget come the mid-terms and keep voting for more idiots. It sucks that the country has to suffer in order for people to get the message, but if that's what it takes, so be it.