If you’ve been following along with our AIG Financial Products bonus coverage, you know that many AIGFP employees feel they got a raw deal from New York Attorney General Andrew Cuomo. They claim that Cuomo okayed their bonuses and later stabbed them in the back for political gain when the bonuses became controversial. Cuomo, of course, denies he even knew about the bonuses.
So what really happened? The investigative team at the Huffington Post has been digging into this question. So far what they’ve uncovered could generously be called a “failure to communicate.” Cuomo knew about retention bonus plans at AIG as early as last October but his office insists he understood those bonuses wouldn’t be paid to employees at the controversial Financial Products unit. Instead, his office says he thought the bonuses would be paid to employees at the healthier parts of AIG’s business.
How did AIG FP employees get the impression that Cuomo had green-lighted their bonuses? It seems they believed that because their bosses at AIG told them this had happened. In an October 22, 2008 email obtained by the Huffington Post AIG FP chief William Dooley wrote:
As promised, I want to keep you apprised of any new developments. Earlier today, New York Attorney General Andrew Cuomo confirmed with AIG that the Deferred Compensation Plan and Special Incentive Plan accounts will have negative balances as the end of the current compensation year. The Attorney General has made clear that he was only referring to the DCP and SIP. I want to make clear to you that, as I indicated in my October 3 and October 9 letters to you, AIGFP will live up to its commitment of honouring your retention guarantees under the terms of the Employee Retention Plan (‘ERP’). Accordingly, the non-deferred portions of the Guaranteed Retention awards under ERP will be paid by AIGFP and, under the terms of the ERP, those payments are guaranteed by AIG.
It will probably remain unclear whether this was a genuine misunderstanding between Cuomo and AIG or whether AIG, Cuomo or both are lying. Several AIG executives claim that Cuomo was aware of the retention payments last fall. The employee retention plan was fully disclosed in AIG’s SEC filings, although Cuomo’s office indicates he wasn’t aware of it. (To be fair: neither were we or almost anyone else.) We may never get to the bottom of this since it is unlikely that anyone will find a way to subpoena internal emails from Cuomo’s office about the bonuses–and AIG executives must not have written records of Cuomo’s alleged assurances or they would have been leaked already.