AIG

The not-rich have their collective panty in a wad over executive bonuses at AIG and other bailed-outed companies. Livid are the rank-and-file over executive greed and taxpayer extortion. Terrible just terrible. Or is it?

First, these multi million dollar bonuses were negotiated long before the market puked. Total compensation contracts were inked in early 2008 and bonuses were tied to 2007 amounts. Regardless of how the employee performed in 2008, at the very least, they would receive bonuses equal to 2007. And 2007 was a very good year.

Part of the umbrage lies in the common understanding of the term 'bonus'. It is generally implied to mean 'performance' bonus. But this is not the kind of bonus AIG and others delivered. The fact they were tied to historic performance and not current performance indicates they were something else.

AIG calls them 'retention' bonuses. Basically their way of saying: 'Thanks for making a billion dollars for us last year and don't get restless, we love you.' Why not just increase their salary? Because it's easier to adjust a bonus. And because of the when and how they are delivered, this above-base-salary compensation is advantageous to both employer and employee.

Call them what you want, you say, they were not deserved. These thieves should be jailed not rewarded with obscene amounts of money swindled from the taxpayer. Especially when so many have lost so much and the former middle class is approaching destitute.

Wrong. AIG is contractually bound to award these bonuses and as it turns out, they have been hard-earned. This sector of the finance world rewards those with the cunning and creativity to navigate the complex financial landscape. This means pushing the envelop and designing ever-more sophisticated financial products and means of delivery. The execs at AIG did what they were paid to do. They did it well. The did it legally. And their work was consistent with best-practices of the industry. They should be compensated per the agreement.

Bear in mind, AIG's collapse was due not to a company-wide irresponsibility as the media has intimated, but to the actions of one rogue operator in the London office who managed to leverage much of the company in a relatively new and unproven speculative product - derivatives.

The rest, who were just doing their jobs, have been unfairly villanized by association. Not only did they have nothing to do with the London rogue, but they were outstanding performers and responsible for what little liquidity remains.

When congress bought 80% of AIG they also bought the existing employee contracts and the obligation to honor them. Obama seems to have forgot this when he said the people should be angry. Way to go Mr. Prez for promoting irresponsibility and non-constructive emotion.

Give anyone their annual salary again in bonus and see if they turn it down. Ironic also the loudest mouths are also the greatest defenders of capitalism and the 'free-market'. Thank goodness the hypocrisy and righteousness in the subtext is drowning out their calls for lynching.

Doeth protesting these bonuses or the compensation of another, regardless the context is protesting way too much. Protesting the fact they are jealous. Protesting the fact they are hypocrites. Protesting the fact they weren't clever, savvy or smart enough to get a master's in business finance and penetrate the fraternity. Protesting the fact they chose NOT to take responsibility. Protesting their ignorance. Protesting the very system they are willing to defend with their lives.

Wait till the story breaks on the bonuses at Citigroup, Wells Fargo, BOA et. al. The AIG execs will look like choirboys by comparison. But before you retie your nooses, see above.