Newspaper that railed against AIG bonuses paid bonuses just before declaring bankruptcy
posted at 3:21 pm on March 30, 2009 by Ed Morrissey
While the national media stoked populist outrage over retention bonuses paid by AIG to executives, at least one of the newspapers involved had a bonus scandal of its own. Philadelphia Media Holdings, which publishes the Inquirer and the Daily News, paid $650,000 in executive bonuses less than two months before declaring bankruptcy (via Romanesko):
Though the company teetered on the verge of bankruptcy at the time, this past December Philadelphia Media Holdings awarded bonuses to CEO Brian P. Tierney, vice president of finance Richard Thayer and Daily News publisher Mark Frisby. …
PMH filed for bankruptcy in February. Toll, of the homebuilding Toll Brothers company, confirmed that the PMH board knew the company¹s fiscal situation was dire. “The financial condition of the papers was obviously not good,” said Toll. “We knew what was going to happen sooner or later.”
So why give out $650,000 in bonuses? “We thought it was deserved,” he said. “But we can’t get into the details because we’re involved in bankruptcy proceedings.”
That’s certainly a more nuanced approach than the Inquirer took in its editorial about the AIG bonuses. It criticized Wall Street and AIG specifically for — wait for it — detaching bonus payments from performance:
Bonuses never should have been given to the people who helped to create the financial crisis. AIG’s financial- products unit devised the infamous “credit-default swaps” that helped to bring the company to the brink of collapse, necessitating the bailout.
In 2008, this arm of AIG lost $40.5 billion. But employees at the business unit are receiving $450 million in bonuses under a retention program begun a year ago. The latest installment of those bonuses was paid out to 418 employees Friday; an additional $230 million is to be paid later.
Apparently, when Wall Street lost its way, it also lost any sense that “bonuses” should reward superior performance.
Apparently, there was a lot of that going around, including at the very offices that produced this editorial.
For their shock, shock! at AIG bonuses while their executives grabbed their own just ahead of the bankruptcy court, Philadelphia Media Group and its two newspapers win the Captain Louis Renault award:
Update: A media source I respect points out that Tierney et al probably had no input with the editors who wrote the editorial. That’s true. I wonder, though, if the editors had found out about the bonuses (paid in February) before writing that particular editorial. If not, will they vent their outrage over that situation?