Everyone’s buzzing about bailout money being used to pay for AIG executive bonuses – to the same folks’ whose division was the one that caused AIG to fail.
Even President Obama was on camera, promising to do something about it.
The House of Representatives released copies of the contracts that are supposedly preventing the government from taking action on this. Too bad they don’t have a contracts guy reading section 3.04(b) with any clarity:
“3.04. Forfeiture of 2008 and 2009 Guaranteed Retention Awards as a Result of Termination of Employment of Covered Person. If the employment (or, as applicable, consultancy) of a Covered Person terminates prior to payment of a Guaranteed Retention Award, the Covered Person will forfeit the right to such Guaranteed Retention Award in the following circumstances: […]
b) the Covered Person’s employment (or, as applicable, consultancy) is terminated by AIG-FP for cause (“cause” means conduct involving intentional wrongdoing, fraud, dishonesty, gross negligence, material breach of the AIG Code of Conduct or other policies of AIG-FP or AIG, or conviction of or entry of a plea of guilty or no contest to a criminal offense); […]”
Given that the US Government now has a controlling interest in the organization, and given that the US Government has such an interest due to these executives’ imputed gross negligence (“recklessness and greed” according to President Obama), one would think that the US Government could simply fire these individuals – thereby preventing them from getting their bonus.
Just a thought… maybe I’m misreading something somewhere, but I don’t think so. President Obama: Please give me a shout if the AG needs some contract-review assistance. 🙂
(Thanks to ContractsProf Blog for many of the links.)
[Update: I guess there’s always the IRS version. I still think that 10% is too much of a bonus for these folks.]