Huge Bonuses for Executives Receiving Government Money

Bonuses usually aren't about the overall performance of the company. They are usually more specific to the responsibilities of the person getting them. Say you are in charge of the department that buys raw materials for the widgets your company makes. In your contract there are bonuses for increasing the quality of the raw materials your department brings in, while decreasing the overall cost. The rest of your company might be in the red, but if you satisfied the terms of the bonus, then the company is legally bound to pay it.

I don't know why there is a controverty over bonuses. The IRS already taxes bonuses differently than regular pay. There's no reason these bonuses should be taxed differently than any other bonus.

We keep hearing about how the companies messed up, but what we need to hear more of is how Congress contributed.. For instance with AIG being insurance for loans Congress strong armed banks into giving which were not good loans (as we've heard). So when those loans fell through, trouble for AIG.. (and banks). It may be nice to think all people should be able to own a home (and furnish it and put in a pool at the same time?) but that is an idealism and not compatible with the no nonsense of business. Charity is a separate issue and cannot be enforcibly weaved into business ventures.

We only see what the incompentent press wants us to see, and since they are taking their marching orders from the criminal Rahm Emanuel, it's no wonder we get more anti business propaganda than facts.

Bonuses usually aren't about the overall performance of the company. They are usually more specific to the responsibilities of the person getting them. Say you are in charge of the department that buys raw materials for the widgets your company makes. In your contract there are bonuses for increasing the quality of the raw materials your department brings in, while decreasing the overall cost. The rest of your company might be in the red, but if you satisfied the terms of the bonus, then the company is legally bound to pay it.

I don't know why there is a controverty over bonuses. The IRS already taxes bonuses differently than regular pay. There's no reason these bonuses should be taxed differently than any other bonus.

Yet it seems to me the bonus should be dependent upon the company being able to afford to pay the bonus from PROFITS; just my opinion, of course.

True, but then again, if you have no say in the parts that are doing poorly, but your department is doing well, you did accomplish what you needed to earn the bonus.

Obama said it himself, he has put capitalism on notice. He is just continuing the war on capitalism he joined in college... or even before.

Exactly, under chapter 11 all contracts would go under review and no one would be guaranteed a bonus.

We're paying attention to the wrong thing. If the government steps in and messes with their contract every last contract written is worthless. The constitution protects us from this happening.

http://www.youtube.com/watch?v=rWbKKydgj_o

True, which is exactly how it would be if the government would just butt out.

Exactly! All if this is proof that there is more to it than "bailing out" anyone. The Marxist in our government want controlling interest in as much of the private sector as possible.

The company is already dead. This bailout is doing nothing more than propping up a corpse.

Haha sorry for the dead company, it is tough now because of the crisis.

But shouldn't the people who did accomplish the terms of the bonuses get what they earned?

If they really did their work well, especially in risk control and risk assessment, the company will not need to ask government for money.
For the rank and file, a simple mistake that results in a few thousand dollars loss will likely result in termination. Why should executives be any different?
Ultimately all salaried staff are to make money for the company, that's the most basic term of employment.
I can't imagine what outstanding contribution the executives have made when the company nearly bankrupt.

But what if the terms of the contract were not tied to over all success?

What you are saying is, contracts should only be honored when the company feels like honoring them.

I'm not saying that the company shouldn't honor the contract. I'm just saying that the whole structure of benefits and compensations needs a major overhaul. It's stupidity on both parties, the company and the executives, to peg the performance on anything other than profitability.
There is usually a clause that says "bonus will be peg to company's and individual's performance." That clause is usually put in the contract or the company's compensation policy. If the clause is in company's policy, there will be a clause in the contract that says "all other terms and conditions as stated in the company's policy."
I think the board of directors is very stupid if they didn't put this kind of clause in the employee's contract.

Well the board of directors are clearly morons because they didn't put such a clause into the contract. Furthermore, our elected officials were morons because THEY didn't require the restructuring of executive contracts in order to include such a clause, or better yet, to remove executive bonuses entirely until bailout money is paid back.

Right now all these ideas are far too late. Sorry scheng, but the combined intelligence of the AIG board of directors and our elected officials, including our current president and his Treasury secretary is clearly inferior to that of an ordinary person such as yourself when it comes to business.

Obviously they are morons. If they are so smart and good at their work, the company will not be in this stage.
It's ironical that insurance company which cannot insure itself.
Anyway we only have their words that there is no clause to prevent payment of bonus when company is in bad shape. Once the government appoints some legal experts to go through clause by clause, word by word, they may come out with some little known clause. By then the government will have the weapon to take back every single cent paid out.

So you're saying that companies should only honor contracts when they feel like it?

Nope. That's not what I meant. My apologies if my post was misleading.

In all employment contracts, bonus is not a must. It is usually tied to company's profitability for the year. Well, at least this is the case for Singapore. I'm not too sure about other countries.

Just to share, I worked for a casino cruise company for more than a year. However, cae year end and we were told the company did not make any money and due to the economic downturn all employess will not be getting any bonus. But under the law there's nothing we can do. Even if we know the company is making money. Whoever heard of casino operators losing money through operations?

But was there a contract guaranteeing you a bonus? Or were bonuses merely benefits offered by the company. Benefits can be changed at will, but terms of contracts are harder to get out of.

In Singapore, company rarely guarantee the bonus. Only AWS (Annual Wage Supplement). I am aware benefits can be taken away.

Nice to see another fellow Singaporean here. This discussion really is a study of cultural differences.
In Singapore, our concept is: company makes money, we get bonus; company loses money, we accept pay cut. Then company can survive and continue to provide jobs for all.
It seems that in the US, the concept is very different. People want their rights, regardless of condition of the company.

Hello Scheng1,

You're right! Although we Americans aren't all whining narcissists.

There was a time that these kinds of cushy contracts were exclusive to the proven 'heavy hitters'. Unfortuately, we have a segment of our society who believe themselves to be entitled to that which they do not deserve. Rest assured, all hope is not lost for America. There is, at this very time, a war being fought for the hearts and minds of Americans and the battle between character versus personality.

Let us all keep an open mind. It's good to know coutries differ in their own ways. If I am American, I probably would be suing left right and center for my own rights too. Try working in a company with no rights. The only way of survival is to suck up to the right people, gossip, bad mouth "good friends", and stab people at the back. And it's happening right her in Singapore.