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.
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