Holy cow – what it means to be too big to fail.
2. politics aig, financial crisis, society
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…the Covered Person will forfeit the right to such Guaranteed Retention Award in the following circumstances:
3.04 (b) the Covered Person's employment (or, as applicable, consultancy) is terminated by AIG-FP for cause (“cause” means conduct involving intentional wrongdoing, fraud, dishonesty, gross negligence, material breach of the AIG Code of Conduct or other policies of AIG-FP or AIG, or conviction of or entry of a plea of guility or no contest to a criminal offense); or
So, AIG's management should have dismissed all of the Covered Persons at AIG-FP for “cause” since they exhibited gross negligence when they failed to hedge wrong-way risk. These bonuses should never have been paid out.