I worked for a company which was bought out by another company. The announcement was made in June, with the expected closure being in December. The company gave out what they called retention bonuses (sizable ones at that). The payment was contingent on an employee being on the payroll on the closure date.

Because of the merger, it seemed evident that many jobs would be lost. However, there was still the day to day operations that needed to be completed, as well as the transition work after the close date.

These bonuses were given to keep employees from leaving. It benefited the company because the job still needed to be done, and the cost of training new people to do a job is far greater than paying a bonus to retain the experts. These bonuses were not profit driven. They were not based on importance. They were based on the realization that not paying them could and would have cost more.

A bonus structure is nothing more than a calculated percentage of a salary. When a company is looking to hire someone, they use as a baseline, not just the everyday compensation, but a performance bonus (based on reaching individual, team and district/division goals). Some are based on sales and customer retention. Others are based on cost reduction. In any case, the bonuses are pre-determined on a yearly basis and budgeted as a operating expense (i.e, the cost of doing business).

Congress is purposely confusing a bonus structure with a profit sharing plan (some companies have both), and they are doing so to distract what the real problem is... government intervention into private business. Period.

This Government has slowly lulled the people to sleep and has convinced us that profits are bad, property ownership is worse, and your wallet first belongs to the government, and they give you what they think you are worth.

Don't fall for it. The AIG bonuses are bound by contracts. Many were retention bonuses, like described above. And yes, the argument is also being made that some of the people were not on the payroll at the time the bonuses were paid. Contractually, they didn't have to be. They only had to complete certain tasks, or stay until a pre-determined date. If they met those criteria, then they legally earned those bonuses.

It doesn't matter that the Federal Government "bailed" out AIG. They "bailed out" AIG so AIG could continue day to day operations. Bonuses are nothing but a cost of day to day operations. In fact, I believe the Feds lent the money to AIG, and the money is supposed to be paid back (i could be wrong), and if that is the case, then there are no strings attached to how AIG can spend the money. Period.

Your outrage is misguided. It is misdirected. It should be directed at an overblown, overreaching government which is feining outrage, only to stir up chaos on a situation that they created.

Don't be fooled. Don't be lulled to sleep.

markbureau
24March2009