AIG is terminating its deferred compensation programs. About $500 million belonging to well over 5,000 employees will be distributed in the first quarter of 2009.
AIG’s deferred compensation plan works by letting an employee voluntarily defer some of their earnings until they leave the company or retire. The company is terminating these types of plans because they do not want any further incentive for their employees to leave the company. The company is concerned about individuals leaving because AIG is working hard preserve the value of its businesses to both sell to pay off the bail-out loan and to rebuild AIG.
I believe that AIG is making a very wise decision. The financial crisis, coupled with the downfall of AIG is leaving employees with little reason to remain at the company. Many of the employees lost their savings in the economic turmoil, and will probably leave in order to obtain funds they are in urgent need of.
http://www.insurancejournal.com/news/national/2008/11/14/95543.htm
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