AIG bonuses four times higher

Just like no one could have guessed the sub prime meltdown or the housing bubble, no one could have possibly guessed that AIG would lie to congress about their intention to quadruple employee bonuses and pay them using TARP funds.

In late March, AIG spokesman Nick Ashooh said the firm paid about $120 million in 2008 bonuses to a pool of more than 6,000 employees.

After repeated annoying queries from Rep. Elijah Cummings (D-Md.), AIG has offered a third assessment of exactly how much it paid out in bonuses for 2008 and now says it paid out more than $454 million in bonuses to its employees for work performed in 2008.

Astonishing only to our elected leaders, this figure is substantially higher than company CEO Edward Liddy claimed days earlier in testimony before a House Financial Services Subcommittee. Asked how much AIG had paid in 2008 bonuses, Liddy responded: “I think it might have been in the range of $9 million.”  $111 million less than the lowest number the company spokesman stated.

The new number, offered in a document wrapped in cotton candy submitted to Cummings on May 1, is the highest figure the company has disclosed to date.

“I was shocked to see that the number has nearly quadrupled this time,” said Cummings. “I simply cannot fathom why this company continues to erode the trust of the public and the U.S. Congress, rather than being forthcoming about these issues from the start.”

The original figure, $120 million, supposedly only reflected bonuses paid to executives and assorted bigwigs at its major businesses world wide.  The new figure of $454 million cooed Ashooh, “reflects all types of variable compensation across all of our businesses.” But, he was quick to assure that the $454 million figure includes the $120 million he had previously disclosed.

It is worth noting that the figures above do not include the controversial $165 million in retention bonuses offered to employees of a division of the company known as AIG Financial Products. If you recall, these payments caused a political firestorm earlier this year. Washington made a dog and pony show of being "stunned" that AIG would reward employees of the unit that destroyed the company with part of the $170 billion dollars they received as part of the initial tax payer bailout.

The controversial payments were sold by the company as “retention agreements” paid to keep valuable employees from leaving.

The resulting disclosure of the bonus payments to one division of the company prompted a query into how big the companywide bonus pool actually was for the 2008 tax year. This simple question has prompted three vastly different answers from AIG officials.

“I think we’ve been pretty forthcoming,” Ashooh blatantly lied. “AIG is not a simple organization. We’re answering the question that we think we’re being asked.”

We think you are a crook.

In late March, Congressman Cummings submitted written questions to AIG asking the company to “Please specify the exact amount in bonuses — not retention payments or any other form of compensation — paid by AIG to employees of any division of AIG in 2008 or paid in 2009 for work performed in 2008.”

To that question, AIG disclosed a division by division breakdown of payments totaling $454 million.

The company said it maintains “approximately 374” plans that pay variable amounts of compensation based on performance. Citing the large number of recipients and concerns over the safety of AIG employees, the company declined to provide a list of the names of bonus recipients.

AIG broke down its results by division, including:

• Domestic Life and Foreign Life Operations: 23,851 employees received an average of $5,050 each.
• Property Casualty Group: 3,943 employees received an average of $5,403 each.
• Foreign General Insurance Operations: 8,669 employees received an average of $5,074 each.
• Retirement Services Operations: 1,168 employees received an average of $11,889 each.
• Financial Services: 5,357 employees received an average of $4,994 each.
• Asset Management Group: 2,095 employees received an average of $51,026 each.
• Corporate wide variable plan: 6,410 employees received an average of $18,954 each.

The company also disclosed that it is developing a new bonus plan for 2009 in consultation with the Federal Reserve and Treasury.

At least AIG has not used $400 million in TARP funds to have their name on a ballpark. Yet.