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View Full Version : AIG Execs blow $440,000 of Bailout cash



marinejcksn
10-09-2008, 12:08 AM
AIG Executives Blow $440,000 After Getting Bailout

If you'd just gotten a government bailout, you might be tempted to hold a retreat at a nice California hotel -- and that's exactly what American International Group (AIG) employees did.

The committee on Oversight and Government Reform held a hearing on Tuesday at 10:00 a.m. Eastern time. to address and examine downfall of AIG, the world’s largest insurance company. The committee planned to discuss the financial excesses and regulatory mistakes that led to AIG’s government bailout.

One of the items discussed was AIG’s expenditure of $440,000 for a corporate retreat at the St. Regis Monarch Beach resort in Dana Point, Calif., about midway between Los Angeles and San Diego. These funds were spent on Sept. 22, a week after the Federal Reserve extended an $85 billion emergency loan to AIG to keep it from going bankrupt due to insurance liabilities.

...

The St. Regis Monarch Beach resort is described on its Web site as “a landmark resort of legendary proportions.”

http://www.foxbusiness.com/story/markets/industries/finance/aig-executives-blow--getting-bailout/
Legendary, indeed.

marinejcksn
10-09-2008, 12:18 AM
This story hit me today when AIG announced they need another 38 Billion from the Government on top of the 85 Billion they already got. Wha???

These rich fucks don't even give a crap, nothing changed and they're blowing my tax dollars on spa & hotel packages? I can't afford to take my wife to a nice hotel vacation and these assholes are blowing cash like this?

Now I understand why the french chopped off Marie Antoinette's head. Why aren't these rich assholes in jail? Better yet, lock & load America. I'll lead the first rifle team if ya'll are with me...I doubt God will be too angry that some scum like this gets what they deserve.:cool:

Zathras
10-09-2008, 04:09 AM
Boy am I glad I got my money out of the old 401k I had with AIG about a week before all of the shenanegans went down.

cat714
10-09-2008, 05:16 AM
:eek: St. Regis Monarch Beach is one of the most expensive resorts in the area. The website isn't lying. I thought about having my wedding there until I found out how much it was going to cost us. :eek:

It is not uncommon for big companies to do these things for their executives, BUT this wasn't their money to spend on this crap. :mad: You have to wonder what the hell these people were thinking. What a bunch of scumbags.

enslaved1
10-09-2008, 12:28 PM
Boortz brought up a different side of the story. A) the company actually throwing the shindig is an insurance subsidiary of AIG that has been turning a profit 2) it was planned well ahead of the collapse and had a $400,000 deposit already paid, again well ahead of the bailout, C) it's a common business practice to encourage the indpendant insurance agents to push the company products, which is a big part of how AIG will be making the money they are supposed to pay back for this bailout (yeah, I'll believe it after the check clears the bank, but it's a vaild point) and 4) Neal said one ought to go talk to the cooks, belhops, caddies, housekeepers, ect and tell them that they should not have gotten paid that weekend, or gotten the tips they did from those attending ect.

It looks ugly, no doubt, to get bailout money and then throw a party, but all these points make it real hard to just stay angry about the matter.

For some odd reason, this bit isn't on Neal's show notes yet, hopefully he'll update it.

buck
10-10-2008, 12:10 AM
I work in agent compensation for an insurance company. So I am biased, but...

This wasn't a "shindig" for executives. Everythign I've read on the subject leads me to believe this was a reward for their top selling independent agents - the people that actually bring money into the company.

The vacation and other rewards are actually part of the compensation structure (as determined by the actuaries) insurance companies use. In other words if there weren't rewards such as these, AIG would have most likely been paying more upfront commission to the agent's.

The money would have been gone either way, but the motivation to the agent's to push an AIG policy would have been less. The agent's would have begun pushing other companies policies to qualify for their get-aways and rewards, while the AIG polcies would be sitting.

Now is probably the time AIG needs to begin some very creative compensation. I imagine it's very difficult for an agent to convince a cilent to take an AIG polciy now-a-days, and extra motivation for the agent 9in the forms of vacations, etc) never hurts.

IMO the polticians know this, but they see the opportunity to score cheap political points with citizens that don't like the bailout in the first place (me included).

Zeus
10-10-2008, 12:21 AM
I work in agent compensation for an insurance company. So I am biased, but...

This wasn't a "shindig" for executives. Everythign I've read on the subject leads me to believe this was a reward for their top selling independent agents - the people that actually bring money into the company.

The vacation and other rewards are actually part of the compensation structure (as determined by the actuaries) insurance companies use. In other words if there weren't rewards such as these, AIG would have most likely been paying more upfront commission to the agent's.

The money would have been gone either way, but the motivation to the agent's to push an AIG policy would have been less. The agent's would have begun pushing other companies policies to qualify for their get-aways and rewards, while the AIG polcies would be sitting.

Now is probably the time AIG needs to begin some very creative compensation. I imagine it's very difficult for an agent to convince a cilent to take an AIG polciy now-a-days, and extra motivation for the agent 9in the forms of vacations, etc) never hurts.

IMO the polticians know this, but they see the opportunity to score cheap political points with citizens that don't like the bailout in the first place (me included).

Hell ya it's standard SOP in the commission based world. I know Insurance brokers that work their asses off and get compted weekend trips to Mexico or Vegas or get a nice new car for the little woman etc etc.

Aaron Burr
10-10-2008, 02:12 AM
Then we're in agreement that this news story is merely a blatant and shoddy attempt at stirring up class envy? Am I supposed to be huddled over a burning tire in a junkyard shaking my fist at the skyline?

The Socialists will stop at nothing to get John and Jane America to turn on Capitalism. I hope next year A.I.G. hands out diamond encrusted chalices filled with Condor eggs.

Look at it this way. It's $440,000 out of the governments hands.

marinejcksn
10-10-2008, 02:32 AM
Buck,

Thank you for the information, this was good reading. I knew from watching the news story that this whole thing wasn't CEO's out getting spa packages for free but incentives for agents...but it still agrivates me to no end. Why is it that people need 5 star incentives to work harder then what they're already being paid for? If I kill more terrorists then anyone in my unit, will the Marine Corps give me a Hotel getaway for me and my wife? No, nor should they. I'm being paid to do a job. I do that job to the best of my ability with every ounce of strength in my body every day I'm on the job. What happened to that? What the hell is wrong with America today?

And this is not directed at you Buck, because I really thank you for giving me more information on this. I'm always happy when people point out all the areas I haven't seen yet, because it motivates me to study more closely. But this is not how you do business. Agents wouldn't need creative compensation to sign clients if AIG had a sound business practice and did the right thing by the people. I'm so sick and tired of the immoral, corrupt companies in this country with the men at the top who don't deserve to be there ripping all of us off and not giving a damn about it because we're the helpless little guy, we're the serfs to them.

Why are there no trials? Why is Barney Frank not going to jail for what he did? Do you remember how big the thing with Enron was? They had every newspaper in the country calling for the head of Ken Lay and he thankfully got what he deserved and died in jail. And the corrupt people at Enron stole a couple hundred million. These companies today put us on the hook for BILLIONS of dollars, suddenly nobody knows who runs them? Nobody knows Obama is 2nd all time in History of campaign dollars from Fannie & Freddie, nobody remembers all the close friends of the Clinton family that were at the top of these companies....what the hell is wrong with everyone in America? Are we this stupid, are we this naive?

Zeus
10-10-2008, 03:04 AM
Buck,

Thank you for the information, this was good reading. I knew from watching the news story that this whole thing wasn't CEO's out getting spa packages for free but incentives for agents...but it still agrivates me to no end. Why is it that people need 5 star incentives to work harder then what they're already being paid for? If I kill more terrorists then anyone in my unit, will the Marine Corps give me a Hotel getaway for me and my wife? No, nor should they. I'm being paid to do a job. I do that job to the best of my ability with every ounce of strength in my body every day I'm on the job. What happened to that? What the hell is wrong with America today?

And this is not directed at you Buck, because I really thank you for giving me more information on this. I'm always happy when people point out all the areas I haven't seen yet, because it motivates me to study more closely. But this is not how you do business. Agents wouldn't need creative compensation to sign clients if AIG had a sound business practice and did the right thing by the people. I'm so sick and tired of the immoral, corrupt companies in this country with the men at the top who don't deserve to be there ripping all of us off and not giving a damn about it because we're the helpless little guy, we're the serfs to them.

Why are there no trials? Why is Barney Frank not going to jail for what he did? Do you remember how big the thing with Enron was? They had every newspaper in the country calling for the head of Ken Lay and he thankfully got what he deserved and died in jail. And the corrupt people at Enron stole a couple hundred million. These companies today put us on the hook for BILLIONS of dollars, suddenly nobody knows who runs them? Nobody knows Obama is 2nd all time in History of campaign dollars from Fannie & Freddie, nobody remembers all the close friends of the Clinton family that were at the top of these companies....what the hell is wrong with everyone in America? Are we this stupid, are we this naive?

MJ,

This is nothing unique to AIG or indicative of unsound business practice. Matter of fact it rather sound and widely used in the commission based world of high finance. Hell incentive packages are extremely common in most commission based business. Those incentives of course predicated upon economy of scale. You land a dozen or so multimillion dollar contracts an incentive package of a coupon for a free happy meal at McDonalds just aint going to do. Someone making you a bunch of money without costing you a bunch of money I'm sure you'd want to keep that someone happy so they continue making you bunches of money wouldn't you ?

No one knows for sure how this economic situation is going to turn out. The govt hasn't given anyone anything as of yet. AIG is on the hook to repay that money and if they don't uncle Sam gets a trillion dollors plus worth of assets for their 46 billion. That's like Me putting up $5,000 worth of collateral if you will buy me a cup of coffee and if I don't repay you for the coffee you keep the 5 grand. Hell I bet you'd go to bed that night praying I renege on the deal.

marinejcksn
10-10-2008, 05:45 AM
MJ,

This is nothing unique to AIG or indicative of unsound business practice. Matter of fact it rather sound and widely used in the commission based world of high finance. Hell incentive packages are extremely common in most commission based business. Those incentives of course predicated upon economy of scale. You land a dozen or so multimillion dollar contracts an incentive package of a coupon for a free happy meal at McDonalds just aint going to do. Someone making you a bunch of money without costing you a bunch of money I'm sure you'd want to keep that someone happy so they continue making you bunches of money wouldn't you ?

No one knows for sure how this economic situation is going to turn out. The govt hasn't given anyone anything as of yet. AIG is on the hook to repay that money and if they don't uncle Sam gets a trillion dollors plus worth of assets for their 46 billion. That's like Me putting up $5,000 worth of collateral if you will buy me a cup of coffee and if I don't repay you for the coffee you keep the 5 grand. Hell I bet you'd go to bed that night praying I renege on the deal.

My uncle works for Merck, he used to get all kinds of incentives like this and told me how it all works. I dunno, maybe it's just me I just don't understand the point of it. To me I think commission is enough, I wouldn't reward my best salesman for the year who is already making great money with anything more then maybe an award and a banquet dinner celebration, or something like that. Again it's just me personally, I don't see the need for dangling a carrot in front of my nose to get me to work harder.

buck
10-10-2008, 12:18 PM
I'm being paid to do a job. I do that job to the best of my ability with every ounce of strength in my body every day I'm on the job.

A salesman, especially one who has many different companies products to choose from, is entirely different from most other jobs.

And while you probably realize this, I didn't state it in my originaly post. The big payoff (beyond agent's pushing AIG policies to qualify for the vacation) comes in the good will generated after the vacation.

The agent will remember what the company did for him. They spent extra money on him, he made some good contacts and he had a lot of fun. This will provide extra motivation for the agent to push AIG policies in the future.

Afterall, company XYZ pays a little more upfront commission for each policy sold, but they didn't offer such a great time at a wonderful resort.

The loyalty this engenders with the agent is priceless.

P.S.That $400,000 vacation was most likely less then the amount of profit just one of those top agent's brought into the company.