Here is what the NY Times had to say about AIG executives and bonuses a few weeks ago:
Now we can debate why A.I.G. felt it necessary to guarantee seven executives at least $3 million apiece when the economy was clearly on shaky ground. Perhaps we will find out these contracts were a bit of sleight of hand to enrich executives who knew this financial Titanic had hit the iceberg. But another possible explanation is that A.I.G. knew it needed to keep its people…
“We cannot attract and retain the best and brightest talent to lead and staff” the company “if employees believe that their compensation is subject to continued and arbitrary adjustment by the U.S. Treasury,” he said…
“The jobs are terrible,” said Robert M. Sedgwick, an executive compensation lawyer at Morrison Cohen who represents a number of employees of banks that have taken government money. “You have to read about yourself in the paper every day. These people are leaving as soon as they can.”
Let them leave, you say. Where would they go, given the troubles in the financial industry? But the fact is, the real moneymakers in finance always have a place to go. You can bet that someone would scoop up the talent from A.I.G. and, quite possibly, put it to work — against taxpayers’ interests.
“The word on the street is that A.I.G. employees are being heavily recruited,” Ms. Meyer says. ((Andrew Ross Sorkin, March 16, 2009. “The Case or Paying Out Bonuses at A.I.G.” Retrived from NYTimes.com on April 18, 2009.))
So while I understand the whole talent and retention thing, basically we are saying that the people who were arguably behind the largest financial crisis in modern economic history are worth retaining. There is no arguing that these are fabulously talented people. But fabulously talented people can either exercise their talent in either positive or negative ways.
An organization recruiting AIG talent knows two things. First, these people do have a track record for innovation and being very good at what they do. Second, the instruments these people put in bankrupted one of the largest corporations in the world and threw the world economy into a tailspin.
It’s like the concept about marriage and changing one’s spouse. You can assume you will be able to change your partner after you are married, but it never really works. So here, you know you have really talented and smart people, but the idea that you can change the underlying principles and philosophy they operate on seems a bit naïve.