Yesterday, we tried to convince readers that AIG’s $440,000 post-bailout vacation was entirely deserved. It’s stressful watching your business go out of business! But nobody seemed to appreciate how much AIG’s employees needed some R&R. C’est la vie.
However, after Mr. Waxman brought to light AIG’s excess, an AIG flack told the Wall Street Journal that the vacation, which was planned over a year ago, didn’t involve any of the top executives:
An AIG spokesman said that meeting was held as a way to reward high-performing insurance agents who had been major producers of business for one of AIG’s life-insurance subsidiaries. Top AIG corporate executives didn’t attend.
Plus, the AP reports, “New York State Insurance Department Superintendent Eric Dinallo told the committee that AIG may have been trying to stave off a mass exodus of top talent from the company.” And if that’s not enough for you, the LA Times reports that AIG’s $440,000 bill is just “a little” above average for a St. Regis client.
Granted, that’s probably not enough to sate many people who are decrying the excessive and irresponsible spending of AIG. However, perhaps this will change your mind.
We got on the horn with the St. Regis and we were told that cancellation of a reservation costs the price of the first nights room plus tax, if not made seven days in advance. This means that by the time the company learned it was being bailed out by the government it was too late to cancel. Unless it wanted to pay a cancellation fee.
Since Rep. Waxman released the invoice of the excursion (below), we can tell you know how much it would cost. 10 AIG employees stayed at the hotel, and assuming they didn’t share any rooms, that means that cancelling would have cost between $5,450 and $7,025, since a room costs between $250-450 and presidential suite costs $3,250.
Did they know that the company would implode ahead of the bailout? If they were listening to their bosses, probably not. Former CEO Hank Greenberg sang the praises of AIG just a few days before it blew up. Heck, even yesterday AIG didn’t seem ready to acknowledge that the company was in trouble.
So, to all the people frustrated that AIG didn’t cancel its corporate retreat, ask yourselves this: Would it be fiscally prudent for them to lose $7,000 just to sate public perception? Quibble all you want about the money they spent while there, but surely we can agree they shouldn’t have cancelled. No?
UPDATE: Someone else agrees with us! View From the Wing says that many execs stayed away from the AIG retreat. If only the media knew how to read a hotel bill, they would’ve realised it.
And in fact, it sure looks like executives stayed away — $58,000 (30%) of the hotel room charges were for attrition, meaning that they had committed to many more participants than ultimately actually attended.
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