Wednesday, March 25, 2009

Bonus debacle

Have we overreacted to AIG's top executives' bonus payout debacle? $165 million looks like an awesome amount of money to waste on people's bonuses, but compared to the $170 billion AIG received for its bailout loan, it works out to about 1/1000 of the total package. As I understand it, the loan was intended to get the company on its feet again, running like a normal, functioning company should. And company bonuses are a normal, even expected, part of corporate function.

Let's make a comparison. An F22-A fighter jet like the one that crashed in California costs $150 million for the US government to write off outright -- almost the total sum of AIG's bonus package itself! For $170 billion, the US government could buy well over a thousand F-22s to replace the crashed one. So, really, there's a lot of bailout money left to deal with the company's problems, even after the bonus payouts. Keeping staff morale high in these bad times is one way to do it.

Of course when I myself am facing a no-bonus scenario at the end of this year, hearing about other people getting bonus amounts I could never even dream of does leave a bad taste in the mouth. But at the same time, there's no reason to get all irrational about it.

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