Monday, March 16, 2009


The sputtering rage against AIG for paying bonuses is predictable, and paying them is hard to defend. But, the CEO of AIG knows talent can walk to the door at any moment and probably will, now that the government is telling the company what to do. In financial services businesses, talent is the key element of productivity. So, the CEO risked and accepted the rage against him. It was a brave thing to do, but a PR disaster.

His reasoning is that he wants to sell units with star players rather than shells without them. The counter-argument is that stars will probably leave anyway before the units are sold, if they can find a place to go. They probably will because poaching is underway in the financial services firms that remain. It was a dilemma for the CEO with no good outcome. Now, he had better get the units sold quickly, or he will have another problem in Washington DC.

AIG is demonstrating why CEOs are loathe to accept government bailout money.


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