AIG (NYSE:AIG) May Have to Litigate over $21 Million withheld from Employees
Monday, March 15th, 2010
AIG (NYSE:AIG), now ignorantly owned by the U.S. government, may have to wait some time before they close the books on bonuses originally going to be paid out to former employees of $21 million, which are now being withheld by the giant insurer.
Supposedly withholding the payments are based upon existing contracts, but if that was clearly the case and that cut and dried, why the cloud continuing to hang over the situation? Obviously there are contractual issues involved that don't allow the company to simply hold back the $21 million, or at least a portion of it.
This is why positions, like that held by government pay czar Kenneth Feinberg shouldn't exist. Feinberg demanded AIG get back the approximate $45 million it paid out in retention bonuses last year, which were offered before the government swooped in and took over the company.
How the situation was supposed to work was when the workers got new jobs the amount of the bonuses were reduced according to what their net income they earned is.
These payments were originally very controversial, as they were awarded to those workers in the derivatives division of the company, which was part of the negative publicity related to executive bonuses.
AIG continues to be a disaster, and with the government making the calls, will continue to be for a long time to come. When you consider the way the government handles its own affairs, which if it happened in the private business world people would be going to jail left and right, the future of AIG doesn't look good.
As far as this bonus thing, it isn't clear at this time that the government and AIG will get away with taking the money away from their workers. It could go to the courts, which of course will then lead to some type of settlement or agreement.
Article by Gary B
The views expressed are the subjective opinion of the article's author and not of FinancialAdvisory.com
Tags: aig , bonuses , insurance
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