Following the taxpayer-funded bailout of American International Group (AIG) tales of spa trips, canceled spa trips, hunting extravaganzas, and executive bonuses have been irritating consumers nationwide.
Whether you consider the "bailout" to be merely a loan to get AIG through hard times or corporate welfare (or something in between), the fact is that taxpayers are helping save the company.
It's no surprise, then, that ordinary folks like you and me are awfully interested in how AIG is spending its money. After all, when we go through rough financial times, we usually cut back on all the extras. Good news came Wednesday that the former CEO Martin Sullivan will not receive $19 million in severance payments (for now, anyway) and a $600 million pot of bonus money won't be distributed.
These two items might be chump change in light of the almost $123 billion in credit lines the government has made available to AIG, but even holding back on this spending (which amounts to less than 1% of the total the government has offered up) sends an important message: If you want taxpayer help, you better be willing to cut any and all corners necessary to be a responsible recipient of the money.
Executive compensation is frequently a contentious issue when it comes to public companies. How much pay is too much? And when government bailouts are involved, the sensitivity to the issue is even higher. I'm not saying executives shouldn't be paid for their efforts. They should. But when the future of these companies has been put in jeopardy (which has impacted our entire financial system), there should not be monetary rewards for those who participated in the demise.
Kudos to AIG for at least temporarily putting a stop to massive payments to executives. Now... keep trying to regain the trust of consumers through responsible corporate action each day.
Tracy L. Coenen, CPA, MBA, CFE performs fraud examinations and financial investigations for her company Sequence Inc. Forensic Accounting, and is the author of Essentials of Corporate Fraud.
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