I want to make this clear – I am pro business! I think that free enterprise is the life blood of our economic system and I fully support people making lots of money. But, I have to question whether the payment of upwards of $165 million in bonuses to AIG employees is ethical or just insane?
The arguement in favor of AIG paying the bonuses is that the contracts that generated the bonuses were established before the economic meltdown and before AIG accepted government bailout money. Employees who work(ed) for AIG therefore should be entitled to payment under the terms of their contract for services performed.
- Do you agree?
- Does the company have an ethical or moral obligation to pay regardless of circumstances?
AIG has accepted, according to published reports, upwards of $170 BILLION of government bailout money. Sorry for the editoral content, but that is quite amazing by any standard that I could consider. Nothing like that has happened in my lifetime and I’m over a half century in years. So – here are some questions to consider:
- Should AIG be forced to void pre-existing employment and bonus contracts if they accept government bailout money?
- Should bonuses be paid?
- What basis or grounds for payment or nonpayment make sense for AIG?
If a homebuilder constructs a home and finds that he/she cannot sell it for the asking price and, in fact, finds that the market for his product is below the construction loan – what happens? Most of the time, the bank will foreclose and the sub-contractors, who have mechanic leins against the property, lose their time and receivable. In other words, they lose because circumstances have changed.
- Is AIG in the same circumstance?
- Should the employment compensation contracts be treated similar to a mechanics lien – void through forclosure?
- Is the government’s bailout of AIG in effect a forclosure to avoid bankrupcy?
- Is there any reason that AIG should be treated differently than other small businesses that are unable to honor their commitments today?
The definition of business ethics is, in business situations, the discipline dealing with what is good and bad and with a moral duty and obligation. The question for AIG is – what is the ethical thing to do? As a business ethics speaker, there is no right or wrong answer to most situations, it rather is a function of doing the right thing considering all the facts and circumstances. My opinion – the moral duty and obligation in this situation is to void the employment bonus contracts and accept that were it not for the taxpayers, AIG would not be in business!
Now is the time for AIG and any organization that accpets bailout money to make the tough decisions that honor the trust that the federal government and taxpayers have given them. Look to Lee Iacocca’s example – when the government bailed out Chrysler, he took $1 as his compensation. Perhaps the folks at AIG should take note. One thing is for sure they are not winning friends and influencing people – at least not positively.
YOUR COMMENTS WELCOME!