This is a rush transcript from "On the Record ," March 17, 2009. This copy may not be in its final form and may be updated.
GRETA VAN SUSTEREN, FOX NEWS HOST: You're outraged. We don't blame you. We are, too. So is President Obama. But does outrage even matter at this point? Can anyone stop AIG from handing out $165 million in bonuses to its executives, or get back what has already been handed out?
Joining us live is Robert Sedgwick, partner and head of the executive compensation practice as Morrison Cohen LLP.
Robert, can we get this money back? I mean, can you -- can you break these contracts or can you go back and collect (ph) them? Can you tax them at 100 percent?
ROBERT SEDGWICK, EXECUTIVE COMPENSATION ATTORNEY: I doubt it. I don't think -- from what I understand, a bunch of the money is paid out under what are pretty standard retention agreements, where the basic agreement was that the people stay employed through a date certain, and if they were employed through that date, they would be paid the sums. People enter into those agreements, employers do, in order to prevent good people from leaving when they need them. And I think...
VAN SUSTEREN: Well, let me stop you right there because that's exactly what the CEO, Liddy, said, you know, it's to -- you know, it's to protect the brain trust, to keep the people who are -- you know, who are really good for the company. Here's the problem with that. When you say that, two things happen. All the American people say, These are the brains? You know, bring on the dummies because the brains have failed. That's the first thing. The second thing is that 11 people who got these bonuses are gone! They're not even at the company! So it didn't do very - - so you didn't retain very well with these bonuses.
SEDGWICK: It retained them from the period in which the commitment is made, through the time when they had to stay in order to get the bonuses because last fall, the temptation to leave AIG would have been quite compelling for many executives, who had the ability to find another job. And at this point, working for AIG in a prominent position being in the news is no fun at all.
VAN SUSTEREN: But...
SEDGWICK: And you combine the lack of fun with the lack of compensation, and I'm afraid you'll see a brain drain of a really serious kind out of the company.
VAN SUSTEREN: Well, when you say that, you know, it sort of suggests that you think that these were valuable employees to begin with. They may be very good men and women, but the fact is, this group of people did a lousy job, and it cost the American people a lot of money. So maybe losing them wouldn't have been such a bad idea to begin with. I mean, you know, when you talk about -- I mean -- I mean, the fact -- when -- when we let Lehman Brothers fold, that didn't hurt us. That didn't destroy us. You know, now we're really in a horrible situation, you know, doling out money to AIG.
SEDGWICK: Well, certainly, you understand the outrage. I personally had money invested in AIG stock, and to that extent, I'm not a happy person in any regard. But these are complicated companies and you need good people to run them. There is little incentive to want to be in that position at this time. And less so...
VAN SUSTEREN: Do you know of any good ones? Because there seem to be -- we haven't had the good ones recently.
SEDGWICK: No ...
VAN SUSTEREN: Do you know of any good ones?
SEDGWICK: Not -- well, I could offer some of my own clients for some of those positions, but I think the ability to attract anybody to those positions is extremely limited at this point.
VAN SUSTEREN: We only have 15 seconds left. You can't go back and tax these at 100 percent, can you?
SEDGWICK: I would think not...
VAN SUSTEREN: You can't go back...
(CROSSTALK)
VAN SUSTEREN: ... single them out?
SEDGWICK: I would think not. I think that's -- I'm not a constitutional lawyer, but ex post facto law, bills of attainder -- there'd be a series of constitutional issues in attempting to do it in that way. Jawboning is a different thing, although I wouldn't expect jawboning to be successful with many of these executives.
VAN SUSTEREN: Robert, thank you very much.
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