AIG: They're "Lights Out" Bonuses

A "lights out" bonus is effected when a company is closing. The company offers some employees a bonus to keep them working until the lights go out. The company does it in its own interests--that is, without these specific employees, the closing would be a helluvamess.

It's a VERY common practice--I can name a number of companies who have executed those agreements in the Milwaukee area.

So AIG stepped in with an offer to employees of Financial Products. Work through all of 2008, and you'd get a lump payment in March 2009. Stick around through 2009, and you'll get paid through 2010. Almost all other forms of compensation -- bonuses, deferred payments and the like -- have vanished.

Who is NOT getting these bonuses?

The handful of souls who championed the firm's now-infamous credit-default swaps are, by nearly every account, long since departed

Here's what's left:

Pasciucco cringed at the notion, articulated by many lawmakers and even President Obama, that Financial Products is a firm of nearly 400 reckless and greedy derivatives traders.
In actuality, he said, nearly all the troublesome sectors of the business -- namely, the risky credit derivatives written on mortgage-backed securities -- are now out of the equation, as are the people who worked on them.

That leaves a small number of employees to untangle the remaining trades in four main areas: commodities, interest rates, currency and equities -- most of which were fully hedged and have caused little problem. The effort also requires a sizable number of "back office" staff,...

In other words, Geithner was correct (albeit one might quibble over how many people are needed...)

More at the link below.

HT: JustOneMinute