The President of the United States doesn’t want you to get your bonus

Posted by Marc Hodak on March 16, 2009 under Executive compensation, Scandal | 2 Comments to Read

You have to hand it to AIG.  I teach a History of Scandal class to warn my dear MBA charges how to learn from past mistakes, avoid trouble, sidestep the pitfalls.  It’s as if AIG senior executives took my class, then reversed all of the lessons in order to more efficiently get embroiled.  Today, they find themselves on the front pages for not one, but two separate scandals.  One of them has to do with bonuses:

President Barack Obama voiced outrage on Monday over large bonus payments awarded to top employees of insurer AIG and ordered his treasury secretary to legally block them if possible.

I understand the outrage, really, even though I cleanly lost the race of first to be angry, partly because my understanding of “bonus” doesn’t include guaranteed, fixed compensation, which appears to be the subject of this report.

So, when the President of the United States says he doesn’t want you to get your money, what does that mean?  The article was careful to include “legally block them if possible,” which suggests that Big O, who taught constitutional law, is a bit more mindful of the subtleties of this situation than, say, the average Kos commenter.  But no one wants the president gunning for them.  The government simply has bigger guns and a hair trigger.

Now, people will note that if the government gives you money, they have a right to call the shots.  Sure, but they still don’t have the right to break a contract.  Especially when they don’t have to (see UPDATE) in order to obtain a fair solution.

Alas, one of the things I let my students know is that once your private situation blows up into a public scandal, the mob will have their own idea of fairness.