Thursday, March 26, 2009


This is a fledgling blog, and I don't quite know it's tone yet - except that it will be the things that matter to me.  And sometimes that will be my sick kids (two home now) - and when I am feeling less lazy, I may just venture out of my house and into the world at large.

That's what's happening this time.  

Yesterday, I read the letter from former AIG executive Jake DeSantis.  I scanned it, really, and then walked away.  It woke me up in the night, and it gnawed at me on the way to the pediatrician this morning.  

The impression that plagued me, that I kept coming back to, was that somehow Mr.DeSantis was boiling this down to an essence that he somehow defined as fairness.  He makes the case that he personally had nothing to do with credit default swaps (I confess here that I have no real idea what these are, or what they look like.)  And, therefore, it was not his fault that the company failed abysmally and required massive government propping up.

Since it isn't his fault, and since he stayed on to face accusations and a poisonous work and media environment, he was unequivocally entitled to the retention thank you that came in the form of a big bonus - which as part of the larger AIG exec pool, he is now being encouraged to return.

According to Mr.DeSantis?  That's not fair.

DeSantis argues, almost convincingly, that he works real hard, he misses his family.  He has been dedicated, honorable.  And working hard?  Missing your family?  Being honorable in the face of inarguably trying times?  That is worth every penny of the $742, 006.40.  If taxed at 90%, as has been suggested, (and my less-educated math is correct) that would leave $74,006. 

(Although, wait, if I am reading it right - that 742K was already after taxes... so if the tax is increased to 90% from the current 40-50% bonus tax... then the starting point is something close to twice that 742K....and he will actually have considerably more than that to play with. I could be wrong about that.  And, I digress.)

A tidy sum, in any case.  

My own limited experience with bonuses in the banking world (my foray there was short-lived and not at all glamorous) was that our bonuses were always dependent upon performance.  And that "performance" had three tiers:  corporate, group, and personal.  Sometimes, one could all-but-cancel-out another.

Put another way, as an executive, you may be kick ass, but if your company fails to earn a profit- or, unimaginable 8 years ago- fails in a giant, public, horrific way that leaves taxpayers (who include teachers, the oft-celebrated plumber, writers, steel workers and newly fired line workers, middle managers, and corporate execs from other corporations alike) footing the multi-billion dollar bill... you may no longer be eligible for your 'deserved' and hard won high-six-figure bonus.  Even if it is retention.  Even if you did nothing wrong personally. 

But, here's the thing:  when you are paid especially well for a job well done, and you work in an industry that sits in a culture that maintains that as an "executive" you now possess magic powers and can expect high six and seven-figure salaries, bonuses, shares, and feels SO much like you Earned It.  Every single penny.

But I argue, Mr. DeSantis, that the schoolteachers that raised you?  Working "multiple jobs?" And the steelworkers in the "world of closing steel mills" from your youth?  I'm betting that they all worked real hard.  And I further bet that they never dreamed of making in one year the sum of the remaining scraps of your bonus, that you will have the honor of donating to the charity of your choice.  

Something I say to my children ( who are arguably far too young to understand) when they yell "that's not fair," is that inevitably, "not fair" looks a whole lot like "fair" when it is in your favor - and pay attention, because next time, it MAY be in your favor.

Mr.DeSantis spent years in an industry where 'not fair' salaries played out in his favor.  And now?  Whether the bonus discussions are absolutely fair or de facto justifiable is not mine to say.  But it may be time to level things a bit.  It may just be Mr.DeSantis' turn.


  1. This jackass has not really understood why we all hate him. It's not cause he works hard. (that is what he is supposed to do) but that without the government bailout/handout, AIG would have been bankrupt with NO MONEY to pay these failure/retention bonuses. Being broke would have nullified these ridiculous "contracts" and he would have received zero, exactly what he deserved for being the VP of the department that failed so spectacularly. So, we all say So Long Mr. DeSantis. Good Luck with your next overpaid job you will fail at.

  2. Big international chunks of the world financial system may begin breaking apart because of wrong choices made by a small number of American financial wizards... and the national will to stop the damage is being harmed by Mr. DeSantis and people like him who are fanning populist rage by clinging to a definition of "fair" that serves only them. As Cat said, "not fair in your favor SEEMS like fairness..."