NEW YORK — American International Group scrapped a seaside conference at a California resort amid a barrage of criticism for spending $440,000 on a similar event days after getting an $85 billion federal bailout.
AIG canceled the conference at the Ritz-Carlton in Half Moon Bay, Calif., “after a re-evaluation of the costs under the new circumstances,” said spokesman Joe Norton.
Senate Finance Committee Chairman Max Baucus demanded more details Thursday from the Federal Reserve on AIG’s event last month in Dana Point, Calif., including “who we can fire.”
“This kind of behavior is an insult to taxpayers,” the Montana Democrat wrote in a letter to Fed Chairman Ben Bernanke. He asked for a response by Oct. 23.
Events to reward top salespeople are common at financial firms.
Wachovia Bank, a lender in talks to be acquired after losing $9.5 billion this year, had planned to send 75 top brokers and their spouses on a Greek cruise. The bank canceled it Thursday, citing sliding financial markets, spokesman Jim Griffin said. The trip was reported earlier Thursday by the Los Angeles Times.
“Incentives for sales departments have proven over time that they work, and that’s true in every business that depends on the selling effort,” said Dean Bare, managing director of Stanton Chase International, an executive-search firm. “If these trips didn’t work, they would have stopped doing them a long time ago.”
Even so, perceptions matter, said Heather Elms, a business professor at Kogod School of Business at American University in Washington.
“Whether the company’s behavior is wrong on an absolute basis doesn’t really matter right now,” she said.
