I heard a corporate tax attorney talking on a news channel about this. He said that the bonuses are a good idea, because if the company has a bad year, they don't have to pay bonuses, and if instead the money had been paid as salary they would be stuck paying it.
This didnt make sense to me for two reasons:
First, some are saying that AIG is contractually obligated to pay the bonuses. If that is the case, then this was not really a bonus at all, just regular salary. The fact that it is a bonus leads me to think that this money is optional, and until I see a contract that says otherwise, I am not sure I believe what AIG is sayin about contractual obligations. I have seen a lot of employment contracts, and bonuses are frequently included, but are discretionary, and depend on the performance of the employee and the financial condition of the company.
Second, AIG has certainly had a bad year, so if what the attorney was saying about not paying bonuses in a bad year is true, AIG really should not be paying these clowns anything.
Also, have you guys heard that Citibank is taking $10 million in bailout money to redo executive offices?