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If I Were the CEO of AIG: My Letter About Bonuses
Mar 18If I were AIG CEO Edward M. Liddy, here’s the letter I’d send to employees:
March 18, 2009
To: AIG Employees
From: Edward M. Liddy, CEO
Re: Bonuses, Profitability, and Ethics
Colleagues,
I’m not going to beat around the bush: There won’t be any bonuses this year. None.
Let’s talk about why.
Starting Today, We’re Going to Do the Right Thing
We did a lot of things wrong. We took too many risks with other peoples’ money. We weren’t diligent. And when we took massive risks, we weren’t vigilant. We didn’t do the right thing.Starting today, we’re going to do the right thing. Every day. That starts with being honest with you and with the American people, who have given us over $165 billion dollars. Read that number again: $165 billion.
Doing the right thing means doing good business. It means understanding everything we do. It means not hiding behind a cloak of secrecy. It means making decisions every day that you’d be proud to tell your mother about.
We’re Going to Pay for Performance
We didn’t perform. No performance, no bonuses, no exceptions.It’s not that hard to figure out. We squandered a lot of money. We didn’t perform as a business. When we’re profitable again, we’ll pay bonuses. Until that time, we’ll pay market-based salaries.
We’re Going to Eliminate Some Jobs
I know you heard me talk in the media about the need to attract and retain talent. That’s right — talent. We want the right people at AIG. Right now, we have the wrong people in some jobs. They won’t be working with us.Rebuilding AIG is going to take new thinking. It’s not going to be fixed by the very people who got us into this mess by taking massive risks and then acting like they didn’t know what was happening when it all collapsed. Right now, I’m meeting with the SVPHR and other senior officers to talk about who will be going. We’ll be making that announcement in the next 24 hours.
Good People Will Want to Be with a Company That Does the Right Thing
Bonuses are good when performance warrants it. I know some of you will be saying that we’re going to kill the company if we let people go. I say there’s lot of really talented people out there who can help us right away. People who are motivated to do the right thing and want to be part of rebuilding an international company back into a company we can all be proud of. In fact, I want to hear from people like that myself. If you have what it takes and are ethical beyond reproach, you’re who we want here. Please send me an email at edward.liddy@aig.com. I promise to get right back to you. Myself.We can do this the right way. Today is the first step. I want people who are proud to be doing the right thing. Paying undeserved bonuses isn’t the right thing. I’m glad I said it. Doing the right thing is always the right thing to do.
Signed,
Ed
About the Author
Frank Roche
Frank started IFRACTAL over 7 years ago with Sarah Chambers. Together, they've created HR communications and HR software for some of the world's leading companies. Frank is also studying Flamenco guitar and origami.
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Couldn’t agree more! Put that in the contract!
Thanks, Rebecca. This one has me pretty aggravated…I do think they really should send a letter like this. It’d be pretty cool if AIG’s CEO could just fess up and get on with it.
Wouldn’t the letter have to be the intro to his own resignation? But me likey.
Hi Paul…that would have been a clever twist. Good one.
I would have just been satisfied with “We will not pay retention bonuses to those who are no longer with the company.”
Paying retention bonuses to those who fail is bad enough. Paying retention bonuses to those who have not been retained is beyond words to describe.
Greg, you’re right about that. It’s just insane paying retention bonuses to people who weren’t retained. Wow.
I think every member of the House and the Senate should be taxed at 90% for any family income over $250,000.00
The lesson here is that when fed $$ are involved gov will trump any employment/contract agreement that was previouisly and legally made. I find that troubling.
Let’s remember that Liddy didn’t get them into this mess. He came out of retirement when asked by the government to fix things. It’s a tough job. And he is taking no cash compensation. I’m sure when it came to these retention bonuses his lawyers told him they were binding, period. I’ll bet he didn’t like it either. The deal with the folks who left is that each retention contract had a date, and if they stayed through that date they qualified. They were owed the money, period. The problem is with the people who cooked the deal with no outclauses or conditions beyond retention. This is a lesson for all of us. While this situaation seems more troubling and is certainly more public, I have seen many similar situations. We should all develop bonus programs – performance, retention, whatever, that would stand up to public scrutiny if they had to. I hope the people who received these bonuses do the right thing and return them. They owe us at least that much for starting this whole mess.