Bonuses For Failure

>> Thursday, March 19, 2009

"There can be no real individual freedom in the presence of economic insecurity." ~ Chester Bowles

When I was in mid-level management for a national corporation (now defunct), the company had a payroll system that included a base salary, commissions, perks, and a bonus system.

The bonuses were based on achievement. If we did our jobs exceptionally well, we received bonuses, the amounts of which were directly affected by going over our established quotas. We had a monthly bonus system, and a quarterly bonus system, and a yearly bonus system. We had what we called a monthly, quarterly, and yearly TSQ (Targeted sales quota)that we had to surpass in order to be eligible for a bonus.

I said, "surpass".

That means, the amount of the bonus was determined by the percentage of earnings over the TSQ. If I went ten percent over TSQ, for example, I received a bonus commiserate with that overage. Fifteen percent garnered me a graduated bonus accordingly. And so on.

Many of the other managers made six figure salaries when their various bonuses were figured in by the end of the year. Of course, they were regional and district managers. I never rose above department manager. Although I did manage to receive some monthly, and a couple of quarterly bonuses in my thirteen years in the business, I never made six figures in a year. I also earned a couple of incentive trips. One a Carribean cruise, and one to the Ixtapa resort in Mexico. Plus a nomination for one national award, in which I finished second in the company.

But I digress.

All of a sudden, the upper management employees of AIG are on the hot seat for receiving bonuses, ostensibly paid for by us, the American taxpayers.

Now, I don't understand this at all. Why are any employees of AIG receiving bonuses in the first place? They lost money.

What kind of company rewards bonuses for failure?

Barack Hussein Obama and Democrat Senator Christopher Dodd are now sanctimoniously decrying the payment of these bonuses, as well they should, since they were two of the most vocal in favor of authorizing the bail-out of the financially ailing AIG.

But their protestations ring hollow.

Dodd and Obama are the top two recipients of campaign donations from AIG. Dodd received the most campaign donations and Obama ran a close second.

And now, we find out that Dodd is the Senator who inserted, in the bail-out bill, the exception that authorized the payment of these bonuses.

Now, of course, he's saying he didn't.

He is saying he doesn't know how that exception got into the bill. If we are to believe Dodd (who, of course, has nothing to gain from lying about his role in the current scandal), the provision to go ahead and pay bonuses somehow magically appeared in the bill without authorship.

I have heard rumors that the bonuses awarded to the AIG executives were specified in their current contracts. Perhaps this is true, but once again, what kind of company would agree to terms with employees to go ahead and pay bonuses when they lose money?

My own contracts specifically provided for bonuses if I surpassed the TSQ on a monthly, quarterly, and yearly basis. Nowhere was there any clause that directed the company to pay me extra if I failed to achieve my goal. The only bonus I would have received in that case would have been to keep my job.

If AIG agreed to pay their executives huge bonuses for losing money and driving the company to the brink of bankruptcy, it was a stupid agreement, and they don't deserve to be bailed out.

Which is what I've been saying all along.

In a free market system, there is no valid reason for the government to bailout any company, regardless of the circumstances. It is not the governments job to save irresponsible businesses.

If they fail, that is the price they pay for overspending and poor management.

Now Obama and Dodd have gotten us into this mess, from which there seems to be little hope of recovery.

And why?

I don't know.

But, if they've done it because of some kind of perceived obligation to AIG and other companies in return for their generous contributions to their respective campaigns, Obama should be impeached and Dodd should be jailed.

This is only the tip of the proverbial iceberg, anyway. AIG sent billions of that bail-out money to foreign banks. The bail-out money paid in bonuses for incompetent employees at AIG is a merely a drop in the bucket compared to the amount of money sent to other countries.

This whole thing reeks of incompetency, graft, malfeasance, and scandal.

We must recall all monies handed out to all the various recipients of all bail-out money. We must rein in this incompetent and irresponsible government.

We must stop the bleeding.

UPDATE: Apparently, Chris Dodd has abandoned his previous defense that someone sneaked that provision into the Omnibus bill. According to NewsMax:

WASHINGTON -- For a while, the disappearance of an executive bonus restriction from last month's economic stimulus looked like sleight of hand worthy of a Las Vegas stage. No one could explain how the provision faded into thin air. On Wednesday, Sen. Chris Dodd, D-Conn., acknowledged that his staff agreed to dilute the executive pay provision that would have applied retroactively to recipients of federal aid.

Dodd, the chairman of the Senate Banking Committee, told CNN that the request came from Obama administration officials whom he did not identify.

OK, so I will allow the Judge to reduce his sentence, and, if Dodd is telling the truth (finally), Obama should go to jail, too.


Chuck March 20, 2009 at 5:24 PM  

Mark, thanks for stopping by. Great article. Corporate America has lost all sense of rewarding excellance. Maybe this is why we are in the crapper right now, we keep rewarding failure. One corporation fires a CEO for incompetence, another one hires them and pays them a retention bonus so they will not leave (think former CEO of Home Depot)

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