Facing Criticism After Remarks, AOL Chief Reverses 401(k) Changes

AOL had recently altered its 401(k) program, and its chief executive, Tim Armstrong, apologized for linking the move to soaring medical costs associated with two families’ “distressed babies.”

Comments: 192

  1. I was shocked to hear that AOL still existed. I'm sure they spent more mailing out all those disks over the years than they did on those two "distressed" babies.

  2. Hee. When my mom was cleaning out my now-deceased dad's stuff, she found enough of those things to fill a medium recycling bin.

  3. "I made a mistake".

    Well, well, well. At least he didn't say 'mistakes were made'. Still, I'm gonna nominate him for "Rich Jerk of the YEAR!!!"

  4. Hope he has room on the mantle for the Ignorant Oafish Lout of the Year award as well.

  5. Wimsy, it's early in the year and we have very large technology and private capital industries here in America. But he sure is an early favorite for a nomination, alongside Tom Perkins...

  6. AOL is still in business? WHY?

  7. Now that we know AOL is self insured, it seems Armstrong was lying when he blamed Obamacare. In addition, he has proved himself an insensitive lout as well as possibly violating the medical privacy of his employees. Unmentioned is the fact that AOL lost 200 million on an investment he championed (Patch) but that didn't seem to be reason enough to reduce the $12m pay he took home.

  8. Perhaps AOL would have been better off with traditional insurance, as opposed to being self-insured. Or did they forget to buy stop-loss coverage limiting their exposure to catastrophic events such as "distressed babies." Patch turned out to be more catastrophic to the bottom line than the babies did.

  9. Mr. Armstong makes $12 million a year. And most likely has an executive level health plan and retirement package paid for by AOL in addition to his salary. And yet, he threatens the likelihood of the rank and file who clearly depend on those benefits much more than he ever will. Perhaps his attitude and that of the AOL board who endorsed these decisions are why Jesus said it was easier for a camel to go through the eye of a needle than for a rich man to go to heaven...

  10. No. Jesus said, 1% own over 45% of the wealth of the nation and for them, too much of a good thing is not enough."

    It is not an attitude but a deep addiction that drives the 1%. That addiction is un-American, undemocratic, unethical, immoral and sick. The specific addiction is an obsessive need to collect more and more pictures of dead presidents, other F[l]oundering Fathers and luminaries of a country that is no longer of, by and for the people.

    Please try to get that message: "They do not care about poor and middle class Americans and other people on this planet. They care about 'their way of life', not yours."

    And for this, they as Lord Farquaad of Shrek I fame said, "I will send you to your death but this is a sacrifice I am willing to make."

    I would be shocked to learn how many kids of the 1% are serving in the military as in Afghanistan. Anyone know?

  11. I was shocked, SHOCKED to discover that AOL is still around. Having recovered from this I have to agree with Romaine's well conceived comment. But, having said that, soaring medical costs for those patients beyond hope are a different matter although this does not appear to be the case with Armstrong - another jerk CEO.

  12. An example of why a non progressive company like AOL has always struggled.

  13. Once again corporate American rears it's ugly head! Like W. James McNerney's $27 million salary & stock options, and then they slam it to the blue collar workers. Capitalism maybe a popular economic model, though it has no morals!

  14. That's why I don't understand why the fundamentalist Christians love it so.

  15. Armsrong = clueless

  16. It takes a special type of megalomania, narcissism and sociopathy to fire employees for taking pictures, to penalize employees 401K savings plans and to single out employee family medical misfortune.

    AOL CEO Tim Armstrong - who has earned $25, $15, $3 and $12 million from AOL in the years 2009, 2010, 2011 and 2012 respectively - shows once again why American is the land of the sociopathic.

  17. Trust me these guys think they are God. Having limitless power and surrounded by sycophants it is not surprising that this goes to their head.

  18. Socrates, you didn't seriously mean "earned", did you? "Received" would have been more accurate.

  19. Is it true that that his replacement is the former chief executive of Commodore?

  20. Nah--Atari or HP, I think...

  21. I really don't understand Armstrong's thinking here. 401(k) is a retirement plan, not a healthcare plan. So, how can AOL's having to paid unusually high healthcare benefits for a couple of employees be tied to providing retirement benefits to all employs, especially when 401(k)'s are designed to allow employees to defer their own income with or without a contribution from their employer? Am I missing something here?

    The points about Mr. Armstrong's $12 million salary (plus benefits) and the company's $200 million loss on Patch make one wonder about why leadership is rewarded for errors and then attempts to pay for the reward by reducing benefits to employees.

  22. It is called cash outlay. As in, out goes the cash.

    The fact he is not making the profit the street wants is another story, but this one is Econ 101 and Management -101

  23. Who the heck would go work for AOL with this guy at the helm...

  24. Who the heck would go work for AOL...It's still around?

  25. People who need the pay check?

  26. Mr. Armstrong makes $12 million a year (for this year's announced salary)+ pay perks + stock options + extra. And now he blames all the companies' financial dilemmas on 2 employees families' expensive babies? CEOs are clearly out of touch with the reality of most workers. They seek to cut every dollar out of employee benefits while taking it all for themselves.

    CEOs seem to be incompetent. Look at every video of CEO testimony before any court or in front of Congress. They claim "I don't know" or "I am not aware". It is laughable to have the slightest bit of respect for these incompetent buffoons. They seem to have the pirate code.... "Steal what you can, Give nothing back".

  27. They remind me of many of the attorneys I work with at a corporate law firm, a sense of entitlement beyond anything imaginable. Many of them think just because they went to law school and passed the bar, they are not entitled to be kowtowed to and served like masters. They are completely out of touch with the regular staff who do their bidding.

  28. Mr. Armstrong is in the Internet business. Once he fixed blame for a cut in the 401(k) match to two employees who were bound to be ID'd rather quickly, what did he think would happen to those individuals?

    Step down, Tim.

  29. I agree . Tim Armstrong is an embarrassment. His apology is hollow and his company is a terrible steward if it's employees' well being. His resignation would be a just outcome for his insensitivity and incompetence.

  30. Two words: single payer.

  31. Remind me why medical care has anything to do with your job? This really makes no sense. I will be glad when we these kinds of stories are history.

  32. To the rank and file, this was heartless and insensitive. But you can bet the company would not have batted an eye over the same medical costs if the same circumstances effected the family of an AOL exec.

  33. He's a typical CEO living high up above the clouds at corporate headquarters located on Mount Olympus looking down on the mere mortals and hurtling his thunderbolts at them. t's a Greek thing, as David Halberstam said, in The Best and the Brightest. And it's called hubris. But he has a fragile ego being shamed into issuing an apology and reversing his decision. After all, he looms large as a legend in his own mind. He makes me feel good about being a fine and upstanding member of the 47%.

  34. At least the employees (who remain) will get 'something' in matching funds. My husband's company did away with 401(k) matching altogether.

  35. As one who has worked in management of my own businesses and been exposed to managers in other enterprises, I can say without a doubt that top executives and others in management often make disparaging comments about employees, their needs and their demands. Most are smart enough to make those comments in private or in closed circles of people who share their viewpoints.

  36. A la the "47 %." Imagine having a president (again) that thinks that way. W was enough.

  37. If they were truly smart, they wouldn't say it at all.

  38. You mean like Mitt Romney's 47% comment which was said both privately and in a closed circle???

  39. Incidents showing how inhumane and utterly stupid the ultra rich can be are clear evidence they didn't make their millions and billions on true intelligence.

  40. “I made a mistake,” Mr. Armstrong said on Saturday. “I apologize for my comments last week at the town hall when I mentioned specific health care examples in trying to explain our decision-making process around our employee benefit programs.”

    Typical executive, apologizing for what he said, not for what he did.

  41. And WHAT is the rationale for AOL's existence now, or their social utility?

    And of course yet another self-entitled multi-millionaire CEO (one running another useless company into the ground, to boot) who begrudges the "little people" working for him health-care or a decent retirement!

  42. From the article:
    "The change would have disadvantaged AOL employees ..."


    Isn't that the point?

    To keep workers too broke to enter the market as potential competitors?

  43. I have to love that term, "disadvantage" employees. Do you think the reporter would use that term if the change had affected her? What a master of understatement.

    I also enjoyed the euphemism, "turnaround company." I guess those companies had their feeling hurt when they were referred, rightly as venture or vulture capitalists. How many people have lost their jobs so that the "turnaround company" can make millions.

  44. Armstrong's high salary, as noted by several commenters, certainly provides one frame of reference for his focus on $2m of healthcare claims. Total 2013 company revenue of $2.3b provides another.

  45. Greed at work. Its easy to figure out this guy. If he was smart he'd be lobbying for a single payer health plan. Wake up man!

  46. The failure to lobby for single payer shows just how dirt stupid the vast majority of today's CEOs are.

  47. US workers cannot count on their employers to contribute to a secure retirement. Defined-benefit pensions are gone, and 401K plans are are increasingly at risk.

    Keep AOL's behavior in mind the next time Republicans want to reduce Social Security or Medicare payments to retirees.

  48. Social Security was never designed nor was it ever intended to be a pension program.

  49. Tim Armstrong's pet project, Patch.com, cost AOL hundreds of millions of dollars over the past 5 years. It was at least the 3rd major attempt by AOL to capture local ad dollars, and is the 3rd to crash and burn in spectacular manner. At no time during the hemorrhage that was Patch.com did Armstrong feel that they needed to cut back on compensation. It's fairly clear that AOL is capable of absorbing massive losses without cutting employee benefits. Armstrong's ham handed attempt to cut back a benefit and blame convenient scapegoats was incredibly lame. He ought to be embarrassed.

  50. Can we now definitely conclude than a CEO is incompetent when he/she puts more energy into blaming employees/cutting their benefits than in real innovation/productivity?

  51. I don't think any major company has announced significantly increased expenses associated with the insurance changes. AOL is not a major company; it barely even a minor one.

  52. I just read the article written for Slate by the mother of one of the distressed babies. Wow, Armstrong really screwed up by singling out a mother who happens to be an extremely skilled writer. Ouch!

  53. It would be more honest if he simply said "In the opinion of the Management Team, we've decided to allocate more money to capital and less to labor".

    We've got to get our stock price moving in the right direction so our management stock options are worth more and more every year.

  54. I agree with Anne Green's comment that:
    "just read the article written for Slate by the mother of one of the distressed babies. Wow, Armstrong really screwed up by singling out a mother who happens to be an extremely skilled writer. Ouch!"
    Tim Armstrong owes ALL parents an apology.
    Laura Daltry, Sacramento CA

  55. Only parents, or anyone with high medical bills?

  56. Imagine how much they could save if they trimmed the costs associated with one overpaid, underperforming CEO....

  57. Why no criticism of the "health care providers" who charged one million dollars for their services? It's incredible that the ruinous prices charged by the medical industry are just viewed as a natural phenomena that can't be altered. I suppose that would mean a criticism of our glorious capitalist system.

  58. This man is a boor - the board should fire him.

    On the other hand, the next guy they get will probably be hired for his ability to do the same thing, without opening his/her loud mouth.

    In other words, the "CEO" material they would look for is not sensitivity and a shared humanity with the employees who toil for crumbs, but the ability to be inhuman with a human facade.

  59. And, the press really let the complicit, equally amoral board members off the hook by not naming them as the people who hired this jerk.

  60. Just like any other liar, he's trying to weasel out of his true position and nature of thief, scoundrel, and thug.

  61. "Tim Armstrong you have mail."

  62. Yea. Isn't this "hardworking" CEO a perfect example of what is needed in the American workforce? Maybe, someone should tell these hardworking CEOs that lying, cheating and ripping of their employees are not attributes of hard work. Maybe, it is time people like Armstrong understand that decent Americans do not begrudge them their wealth. What is resented is (1) their dishonesty and arrogance of how they get their wealth (2) that people who work hard for them with minimum compensation are lazy and begrudge them their wealth. Clearly these CEOs confuse dishonesty with hard work and stupidity with wealth. Those who say his apology is hallow are right on point-one apologizes for a mistake, not a behavior that is a reflection of who you are!

  63. Armstrong. Armstrong. Hmmmm, seems to me there was once a bicycle hero by that name. Oh yeah, he turned out to be a liar.

    And to think 40 + years ago, that name stood for a REAL hero. The first man to walk on the moon, Neil Armstrong. That was when America could accomplish things.

  64. I am sure when Mr. Armstrong needs health care, or anything for that matter, he's not too worried about his wallet. As for the rest of workers in this country, retirement benefits - what? Fully paid health care - say again? Job security?

    The trend is to cut skilled older workers, replace them with inexperienced younger workers who can be underpaid, overworked and afforded essentially no benefits at all.

    How ironic is it that many around my age, late 50s, that still have to work, are left to scramble to try to hang onto what we have built, only to look forward to having to deal with the attitude disdplayed by guys like Mr. Armstrong. We are problems, sick kids are problems, employees are problems in general.

    Except for the fact, if it were not for all those problem folks, guys like this arrogant CEO wouldn't have the keys to the bank.

  65. Some unionizing needs to be done among those "inexperienced younger workers who can be underpaid, overworked and afforded essentially no benefits at all."

  66. On the other hand, older workers don't get pregnant. Mr. Armstrong might consider that when hiring.

  67. My 61-year old wife was fired, thrown overboard, by a junior version of this corporate jerk. Age discrimination? You bet! Are they going to get away with it? Most likely. "USA" now stands for "United Sociopaths of America: Land of the free government bail-outs and tax breaks for the rich; home of the 'bravely trying to hang on' shrinking middle class.

  68. Usually when companies self-insure, they carry a stop-loss policy for the really big expenses. How come AOL hadn't done that? Seems like mismanagement to me.

  69. The fact that he (Armstrong) had to be reminded that he made a mistake in his callous comments is disturbing on several levels

  70. Is there *anything* AOL does correctly? This is one brand that started at the top and worked its way down. Sad, really.

  71. Putting aside his insensitive remarks, one wonders what kind of piling on of charges the hospitals and specialists did to deliver million dollar bills.

    Sick people should not be profit centers, but they are and lavishly so. So every-time the NY Times writes about stagnant worker salaries, they should come back to this article and factor in how much health-care benefits erode worker take-home pay..

    And then let's look at the ACA, which does nothing at all to combat these runaways expenses. It just puts more of us on the hook for massive unfunded liabilities, notwithstanding the tax increases on only the richest people that won't nearly cover the nut.

    Good politics, albeit bad policy.

  72. The ACA does nothing to combat these runaway expenses? Haven't you read that the increases in health costs have been diminishing and happening more slowly under the ACA than before it? And that is while it is still mostly not even in full effect yet. Obama cannot get a fair shake even when the facts support him.

  73. Sorry Charlie. The recession was the principle driver of slightly slow costs increases (in aggregate). As you aptly mention, and then forgot, the ACA has barely started yet. But if you read up on what it does, and does not do, cost containment is at best derivative of more people on medicaid and some pressure on Cadillac healthcare plans. But even those are delayed for several years at behest of unions.

    The ACA is a gift to the healthcare industry, and for some poor people, it makes healthcare more affordable, but that's it. The powerful hospital groups and increased use of specialist is driving up costs. But of course, understanding that would require people to read the new york times, where these very topics are covered.

  74. Armstrong owes these people much more than an overdue apology. The unspeakable damage he has caused them and all the AOL employees is heinous. Now this poor child and her family has a public history to overcome. And how is this done? This small fragile person who's very right to exist is questioned in public? All for the sake of corporate GREED? Outrageous! I hope these families and all the employees who ever will need medical care at AOL stand up and help Armstrong understand the personal and emotional costs he has inflicted.

  75. Since it was the mother who published an article giving their real names, let's set that on her.

    Not that Tm Armstrong is wonderful either!

  76. @kate - yes, the mother did put it out there, but I can understand why she might've felt moved to do so. It's undoubtedly better for her family if she puts their story out there instead of, say, an investigative reporter publishing a story after deducing who might've been the people Armstrong referenced. Even in a large company like AOL, it probably wouldn't take months of investigation to figure out the likely "distressed babies" (or, more accurately, their parents). Preemptively publishing their side of the story (especially since Ms. Fei is a novelist) may have felt like the best way to handle a lousy situation that they never should've been in. I'm not sure I wouldn't have made the same decision myself - I'd far rather have control over the "narrative," so to speak, than risk waking up one morning to an article about me and my child on the newspaper's front page.

  77. Brian Doyle Murray's character in National Lampoon's Christmas Vacation is explaining to his wife and the SWAT team why he abolished employee Christmas bonuses -- "Sometimes things look good on paper that end up hurting real people." The others say things like, "You didn't!?!" "That's really mean, mister." And, he takes the ban back, verbally increasing the bonuses.

    I guess Mr. Armstrong never saw the movie.

  78. More proof that the wildly out-of-proportion salaries of CEOS further remove them from the realities of everyday life for the rest of us. If Armstrong had a million dollars worth of hospital bills for his sick baby, that would be chump change for him. It would ruin the rest of us.

  79. This is a clear breach of patient privacy, which is a HIPAA violation and grounds for dismissal. The board should get rid of Mr. Armstrong.

  80. This is an interesting comment since just who are the HIPAA police and how do you get in touch with them? Don't know? That is what I thought I don't think anyone does.

  81. I thought about this too. But as I read this Armstrong didn't use names. The problem is that if there were 2 premies and you worked with these guys, that may be enough for a HIPAA violation. What is more glaring is his lack of judgment. You are going to announce on a public call that you are modifying the 401k match because you had two employees who had sick children? I agree with another comment that it sounds like AOL has self-funded coverage, but maybe without stop loss. These type of incidents are common enough that the consulting actuaries should have anticipated these type of claims. And if AOL did not have stop loss then why should the employees eat the loss, esp when the company is doing so well.

  82. Chicago lawyer: These types of events are very common in largish companies -- generally the single largest claim in a year under such a plan.

    I really don't think AOL revealed the names of these employees. They might not even have known the names -- their outside administrator may simply have given reason for high claims as several premature births. As far as I can tell, Ms. Fei took it upon herself to go public. Furthermore, even if she hadn't, the way so many people conduct their private lives in public these days - via Facebook etc. -- it would probably have been easy to figure out who they were -- but there is still no evidence AOL did that.

    Armstrong's comments may have been despiccable, but conversations on high claims like these go on all the time in corporate benefits departments -- but behind closed doors. Employees complain that their share of health care premiums keeps going up because employer says costs are going up -- well guess what, this is the type of cost, like all other medical costs, that pushes all employees' costs up.

  83. I don't get it: a corporation provides a benefit package to it's employees and then, when they use it, the manger is unhappy. Didn't the underwriters take the possibility of this situation into account ruin they structured this benefit? Aren't these benefits there to be used when catastrophic incidents like this occur? Aren't benefits a part of an employee's compensation?

    AOL provides a benefit and the benefit was used. The logical response is to address this issue with the insurance company and modify the policy if the coverage is unaffordable, not blame the employee that took advantage of insurance coverage that was rightly theirs.

    Doesn't AOL have an HR Department to advise management on appropriate communications regarding employee relations?

    After two episodes of mishandlng fairly run-of-the-mill HR incidents it is clear, at least to me, that Armstrong's management style is to disregard established HR procedures adopted by the Corporate Board of Director and go with a management approach which is emotional and subjective. This management style is narcissistic and the result is called "bullying".

  84. Yup, he's wearing a yellow tie. Doesn't that mean power?

  85. If he thinks the healthcare costs were high, wait until the lawsuits. The Board is just panting to give him another raise, I'll bet.

  86. Sounds like a first class jerk. You would think the board could find someone with a little better people skills.

  87. For $12M/yr you'd think there would be some kind of marketing package wrapped around him to simulate people skills at the least.

  88. Shoot, even Romney's gazillions couldn't buy him decent human-simulator software, so why expect much of a lesser millionaire? ;)

  89. If he wants to cut back, I suggest he start with his own outrageous compensation and retirement plan.

    I'm sick of these greedy CEO sociopaths.

  90. Why did AOL pay those health benefits? Is it insuring itself? If so, is that smart?

  91. Yes actually. AOL is self-insured.

  92. AOL is distinguished by organizing a mysterious army of writers (presumably living in their parents basements) to hand over its words and photographs in exchange for zero dollars.

    One must hope and presume that Tim Armstrong's business model is based on resolving how professional writers and photographers will be awarded free housing, electricity and retirement packages.

    Give the man some space!

  93. "We had two instances of extreme costs in employee healthcare that each amounted to more than $1 million dollars in expenses last year."

    That's basically what Armstrong's comment revealed.

    We can argue that the company's reasoning for its now pulled back 401K changes is specious. We can easily assert that Armstrong is insensitive at best and much worse as others have already done in the comments.

    But the type of response he offered is something that many CEOs, both male and female, routinely make when explaining decisions in town hall formats, on calls with analysts, or in interviews with journalists. Some of the comments here seem to suggest that Armstrong was doing something other than what is standard practice for a CEO. Someone points to a total on a balance sheet and asks, "What gives?" And an answer is given.

  94. ... and it quite sad that they get away with giving an answer without supporting empirical data showing correlation or causation between "a total on a balance sheet" and, in this case, O'care.

  95. What Armstrong has done with his clumsy explanation for the reduction in 401k benefits is highlight for the public how specious these arguments for cost-cutting are and how greedy these CEOs are, especially when the cost-cutting is contrasted with their obscene levels of pay.

  96. There is a say in French" ON PROFITE DE LA PLUIE POUR CHIER DANS LE TORRENT". For any incompetent CEO out there, it's Obamacare. They blame Obamacare for all their mistakes.

  97. It's not surprising that a corporate "suit" would think this way... comparing his "bottom line above all" thinking in terms of "distressed babies".
    What is amazing is his stupidity in voicing it. How did such an idiot ever rise to such a position?

  98. What this is, again, is a clear indication Mr. Armstrong is well over the tips of his skis, as is apparently the AOL Board given their lack of candor and forthrightness for AOL as a company in dealing with the materially out of touch with reality CEO.

  99. Yesterday I left AOL as my personal e-mail provider, after fourteen years. He's another 1% jerk.

  100. I can't believe anyone still uses AOL. Oh, based on my experience many still do, but it's the one email provider with which our servers at work consistently have trouble communicating. It's to the point where, if someone gives me an AOL address, I ask if they have an alternative. Get Yahoo or GMail, they're free.

  101. Jerk!

  102. Did he violate any privacy laws or AOL policy by mentioning employee medical specifics?

  103. Who knew AOL was still breathing? While Armstrong certainly sounds like a jerk, I think his comments highlight the need to fix something in the system. And, really, why should some people go without basic healthcare (a Maryland boy died when no one would take Medicaid to pull his infected tooth) while others have the supercharged version of healthcare?

  104. Some ought to "distress" him and see how he likes it. What an insensitive clod and jerk! How do these people rise to these positions? It wasn't because of his people skills, you can be assured as much.

  105. Yet another reason to decouple health insurance from employment and move to single payer like the rest of the civilized world.

  106. And multimillionaires like him are now crying "persecution of the job creators!" because the American public are calling them out for their greed and callousness. American workers need to keep up the public shaming.

    (Oh, and BTW -- most jobs are created by small business. I just wish the media would point that out every time the megamillionaires and their political cronies use that term.)

  107. Watching this buffoon lurch about "running" AOL is like watching a very bad driver: it would be entertaining if they weren't threatening other people's lives.

  108. Apparently, this man who has made it to the CEO position does not understand the concept of health insurance. Let me clarify: health insurance does NOT protect you or your company from people getting sick, having an accident, having a baby, or needing an expensive procedure. It is there BECAUSE of those possibilities. (By the way- same with life insurance). Essentially it is a gamble that more people will not need those services than will. But it is not so much of a gamble. The odds are always with the "house" and they are very very good odds. Fear not, neither AOL nor their insurance carriers are losing money because a few people needed expensive procedures.

    I am sick and tired of hearing about corporations profit "loss" because of the "cost" of their employees. When is it enough? Greed, sheer greed, nothing other than that.

  109. This isn't an aberration. This is typical, I believe; the aberration is the unintended candidness: These sorts of sentiments are for confidential, upper-level, board-room-type meetings only.

    How long is it going to take the American people to figure out that big corporations, Wall Street, and the Federal Government are _against_ the ordinary person? They are malignant entities, and we are simply sheep to be pushed around, or fleeced, and our Constitutional Rights and our dignity as persons is all a laughable joke.

    This guy is yet another despicable clown in a long line....

  110. If everyone boycotted Aol Tim would sit up and listen.

  111. If everybody stopped using AOL... wait...isn't that the problem? Everybody HAS stopped using AOL!

  112. Have they stopped reading Huffington Post? Or Daily Finance? Or Engadget?

    Too bad we'll never know what Arianna Huffington thinks about this.

  113. Lonely Pedant: I know what Arriana Huffington thinks. She publishes content she does not pay for. Somewhere deep within her she must realize that her writers somehow need to pay for food and shelter

  114. Just the ongoing onslaught against those who work for a living. I am surprised AOL didn't use the current corporate excuse "its the result of Obamacare".

  115. They did on Thursday.

    "Armstrong did not provide a lot of specifics about what aspects of Obamacare were pushing up the company's health care costs, but said it was one factor affecting the 401(k) restructuring.

    "'The Obamacare Act and some of the changes that happened there had increases in our health care costs,' Armstrong told CNN. 'We had to make a choice whether we pass those on or whether we took other benefits and reduce them.'"


  116. @Lonely Pedant: Right!

    And by saying "We had to make a choice whether we pass those on or whether we took other benefits and reduce them," Mr. Armstrong conveniently overlooked one idea: that HE could be paid a little less, INSTEAD OF either passing on costs or reducing other benefits. I guess he doesn't get paid to think outside the box. If he'd looked at ALL the solutions to the problem, he'd have had to consider that his own paycheck was too high - but I don't think his brain could stretch in that direction.

  117. Another example of the need for national health care to spread the costs. Will we ever learn?

  118. At the end of 2012 IBM announced the exact same 401k policy that AOL was pursuing, before their CEO put his foot into his mouth. Too bad IBM got away with chintzing their employees, but good AOL could not get away with it.

  119. They know how to make themselves rich, what more is there, really?

  120. My father sold his business to a group run by a bunch of self important MBAs who had no idea how to run a business except by only looking at the bottom line and spreadsheets. My Dad, however, was extremely gifted in how he related to people and cared about his employees.

    Sadly, these know nothing's destroyed Dad's business and ran it into the ground, fired three quarters if the staff, and list 80 percent of the revenues. Then they turned around and sold it to someone else.

    This was after they fired my father. What makes them think they know so much more than anyone else? They should teach MBAs and CEOs how to be human beings as a requirement

  121. Sorry about yiur father's bussiness but thank you for your post.
    Having worked in healthcare for over 30 years and watched an army of MBA types destroy US healthcare the head of AOL should be sacked. He us a.part of a useless cog that serves no section of humanity. The so called experrs are failures no mote thab over puffed bean counters that no not of quality, humanity and certainly not if intrgrity.

  122. Fairly interesting that Armstrong came up with this just as CBO again recently pointed out that the ACA gives people a chance to escape 'job lock' by offering the opportunity to have good insurance independent of employers. Just have to wonder if Armstrong was in a sense lashing out at this prospect by coming up with another form of 'job lock' -- namely, "Not sticking it out until Dec. 31st? -- no matching funds for you!"

  123. As clear an example of the general heartless of what we've to come call the "1%" as anyone could image. This man's total lack of awareness that a publicly a stated rationale to cut a benefit program that is itself the replacement for a defined benefit (pension) because sick children made it inconvenient is telling. How could he not know (or perhaps care) that it would kind of make people angry is profoundly telling. Mr. Armstrong; Charles Dickens knew your kind all too well. Besides, what does the 401K have to do with the health insurance that would have been paying for these children? Did AOL perhaps have the hubris to self-insure?

  124. Isn't singling out 2 employees w/ distressed babies opening those staffers up to massive reprisals from their coworkers who must all know who they are? Isn't it some kind of violation of medical confidentiality?

  125. Hey, this is America. We can have a fabulous military and police the world, or health care for everyone, but not both.

  126. AOL Values on Website:
    "Our values are our North Star in everything that we do"
    "We are in the business of helping people. Period.
    We say what we mean and do what we say. We act with integrity.
    We embrace change and a DNA of curiosity we think big and take chances.
    We hire and empower smart people who love what they do.
    We trust and root for each other we win as a team.
    We take fun seriously. "
    Mr. Armstrong, should read his propaganda before opening his mouth or change the company name to LOL.

  127. Or SOL.

  128. I like the cleverness here...changing the name from AOL, if they keep it up, to LOL. The joke tells you what to do, to laugh at it. That seems really creative to me.
    Another poster wrote simply that Mr. Armstrong..."You have mail!" Pretty cheeky stuff.

  129. I read this MBA stuff and want to hurl ...

  130. It's a very pernicious line of argumentation he's making. So the corporate management team tracks individual employees' medical expenses and when they're over budget, so to speak, for trying to save their lives or their families', AOL management will simply shift the cost to other employees by reducing other benefits. Very classy. Next thing you know this guy will announce that AOL eliminates healthcare benefits and directs all employees to the ACA. What a loser company with a loser chief.

  131. Armstrong's reversal of the 401(k) policy that he implemented at AOL is entirely insufficient. His remarks and evident failure to understand the realities that ordinary people confront every day show that he is absolutely unworthy and unfit to be a CEO or to hold a position of responsibility in any business or organization. He is a perfect example of what is wrong on Wall Street, in American business, and in the Republican Party today. He should be replaced immediately if he does not have the decency to resign.

  132. How, exactly, does any single employee's health issues affect the company at-large? Everyone pays a premium to the health insurance company. Presumably, AOL subsidizes the premium. That's a fixed cost for each employee family. If someone in the family is sick, the coverage pays for the illness. How can an executive be so ill-informed? And isn't the combined health insurance costs of all employees much larger than any one of these two examples? What an idiot! And what does any CEO do to earn $12 million a year? No one is that valuable. NO ONE.

  133. Many large employers do forego insurance, and insurance companies merely process claims on behalf of the company, which pays claims directly out of reserves. A smart company, however, would have insurance for large claims, a so-called "stop loss" policy. Who knows what's the case here: the reporter was too lazy to ask. My sense is that these high dollar cases were just an excuse for tightening up the 401(k), which is unrelated to the health benefits. Tim Armstrong is a jerk.

  134. Actually group plan premiums do increase if participants in the group are expensive to insure. No one talks about it but it's true- even under ACA.

  135. A large single claim can have a big effect the company at large. Too many 7-figure claims in a year and employer premiums will go up. Unless employer is willing to absorb that, employee costs will go up, although from a practical standpoint there are limits on how much you can raise them. In the case of a smaller employer, too many big claims may result in the employer simply discontinuing health insurance.

  136. This call could have been avoided if Mr Armstrong offered $1M of his overpaid salary to help these families with "distressed babies". Yes it is called charity a word that totally baffles the 1% but honestly the babies would be saved, the families and employees(no cuts to the 401K plans) would be appreciative and you just may feel good about yourself. Try it Mr Armstrong the other 99% have been doing it for years.

  137. Bohemian Grove ethics don't allow for the care of anything, especially kids.

  138. Mr. Armstrong violated HIPAA and should be fined.

  139. I am glad that Tim Armstrong reversed his ill-considered decision on his company's 401k plan to cheat AOL workers, but I am outraged that we have to go through this torturous procedure of public protest every time some corporate mogul decides to do something outrageous to his or her employees. Why can't these multimillionaire bosses just do the right thing by their hard-working work force rather than pushing them off the cliff and making them launch a campaign just to get decent management treatment for them.

    Armstrong would be nothing without his employees, but he clearly is of the ranks of CEOs who see their workers as peons who should be beholden to him and his entourage for even having a job. This attitude is all too pervasive in the United States today.

    I bet Armstrong votes Republican and supports ALEC.

  140. He took home $12 million last year, so he'd have had to give up $2 million and only "take home" $10 million, to cover the cost of those two babies?
    My, how very, very sad.
    Glad someone in the company had the intestinal fortitude to point out to him just how bad he looked (and probably is). Glad the peons will have the same 401K paycheck matching.....looking at Mr. Armstrong's behavior, it probably prevented a purge of employees on Dec 31, 2014.

  141. Another Chief Embezzlement Officer masquerading as someone superior to you and me, and therefore deserving of his obscene pay.

  142. At least he's trying to amend his statements.That is to his credit. His mistaken belief that because he was lucky/smart/ and in the right place at the right time, and now, as a rich white guy he is one of the chosen ones, perhaps has changed a bit. AOL is on the ropes and perhaps his glory days are behind him. I love the "come to jesus moments" with people born on third base thinking that they hit a triple.

  143. By singling out two cases, I believe AOL has exposed itself to prosecution under the health privacy act, and urge the Justice Department to immediately launch an investigation into whether AOL in General, and Mr. Armstrong specifically, violated the law. I would imagine the two families involved could also seek damages.

    Can the AOL board afford extended litigation and penalties and continue their "best quarterly profits in years?"

    For who?

  144. He didn't disclose any "protected health information" as defined by HIPAA.

    But regardless, he's protected by the implicit Highly Compensated Persons Immunity from Prosecution protocol that seems to be de rigueur these days.

  145. Nice guy - he gets $12 million a year, with heavens knows what benefits and airplanes, and he begrudges paying a fraction of that for two of his employee's kids to live. Next time he needs to go down to the hospital and at least have the guts to tell the parents to pull the plug on the babies.

    This is exactly what is wrong with our country at the moment. Nasty, greedy, completely unscrupulous CEOs like this guy. And a medical system that is totally out of control, and mainly there to make profits for people whose only goal is to make profits.

    The AOL brand website says that AOL's values/mission are to inform, entertain and connect. And, apparently, to let the children of its staff die from lack of medical care.

    How revolting this story is. And, "I made a mistake" from this CEO does not cut it. Raised badly, like too many of his colleagues, is unfortunately the truth.

    If the Board of AOL has any standards of decency then they will fire Armstrong first thing tomorrow morning. And no package of any sort - not even healthcare benefits. They don't need this kind of person at AOL, and we don't need this kind of person running companies in America either.

  146. It is distressing me that this man is not fired . Yesterday.

  147. His comments are wrong and that is why he took it back. However, there is another subtle point that we need to think very hard about. Overall health care costs have grown very high and more companies will reduce benefits or eliminate coverage. Obamacare premiums will also increase forcing future changes which will not be beneficial to us. It is time to think seriously about a single payer system and tight budget controls for restricting healthcare spending as a %GDP of the country.

  148. I am sorry for what Ms. Fei has gone through, but am I the only one troubled in the slightest about spending a million dollars to save a baby born five months into a pregnancy? How many other lives could have been saved or improved at the cost of keeping this one fetus/baby alive?

  149. Not troubled in the slightest. The day we start making callous value judgments and cost benefit analysis of saving a life, is the day no one is safe and a day of epic human tragedy. If we patronize AOL we should reconsider that patronage as long as Armstrong is around to set policy.

    Melvyn Polatchek

  150. I sincerely hope that you are the only one holding this opinion.

  151. Ask it this way: Am I the only one who would be willing to sacrifice my own fetus/baby to improve/save many others?

  152. Another burning example as to why our employment should not be tied to healthcare.

  153. There's a lesson here for America's cowed workers.

    For over three decades corporate bosses have bought and bullied their way to extraordinary power. AOL's people and their allies around the web shamed Armstrong into reversing himself.

    Push back hard enough and you'll break the self-image bosses have of being all-powerful. Maybe the dam is about to break.

  154. It is very typical for employers to pay their 401K match at the end of the year. (The three employers I've worked for that offered 401K's did that.) AOL employees have it better than most workers, and I am glad that Mr. Armstrong re-thought the cost-saving plan, and decided to continue to provide superior benefits. (Someone please explain how a 401K -- which is a retirement account by my understanding -- is affected by healthcare costs of current employees?)

  155. @Clurd: Re 401k's being affected by healthcare costs:

    You don't think Mr. Armstrong is going to let healthcare costs affect HIS take-home pay do you? Those costs will get taken out of other people's hides, namely employees who work for AOL and don't make $12 million a year.

  156. Originally, Armstrong rationalized the changes to the 401(k) program because "Obamacare is an additional $7.1-million expense for us as a company." Yet, as many commenters have pointed out, he earned $25 million in 2009 and $12 million in 2012, while overseeing the loss of hundreds of millions of dollars in a failed investment. He could have written a check from his own offshore checking account to cover the $7 million, which for Armstrong is probably the equivalent of buying a tall latte from Starbucks.

  157. Don't you just love it when a multi-millionaire complains about those low life employees that cut into his salary because of something they had no control over? What a putz. Perhaps if he made what those employees made then AOL could afford to continue giving the working employees decent benefits.

  158. Healthcare dollars spent on most of these premis is some of the best investment per year of human life gained, if you really want to be a technical jerk about it. Much better return on your investment than say, end of life care for your elderly parents. So, that's why we have health insurance, so we all pay in the pool whether we are healthy or sick, because one day, it will be your child, or parent or you who needs help.

  159. 12 million to run AOL? No wonder they're always in financial trouble.

  160. Surely if AOL has a self-funded medical plan it has a stop loss. If not, somebody ought to be fired for incompetence. Or perhaps Armstrong doesn't understand insurance. Further, whoever is administering the plan has no right to share information (names and/or medical care provided) about specific individuals even with the president of the company. A clear violation of employee and families privacy.

  161. There are no pockets in a shroud, Mr. Armstrong.

    All you have is money; you certainly don't seem to have any decency.

  162. Tim Armstrong, another poster child for America's plutocracy.

  163. Armstrong would make a good health insurance CEO with the attitude of, "If you're going to cost us money, we'll cut you off". With the Affordable Health Act the health insurance companies had to be legislated into doing much of what customers assumed was their raison d'etre.

  164. Our corporate culture has become all about how to increase the extreme wealth of the few at the expense of the many.

    Employees are not valued. After all, the more benefits cut and the lower the pay, the more millions for the top execs. Thus employees' life situations are not important nor a consideration. Anyone in their fifties is facing a lay-off at anytime. Due to their age they will also find it difficult to impossible to find a new job that remotely compares to the old job. That is unless they are a member of the we-DESERVE-to-be-super-rich executives club. They make millions and millions while decrying the very thought of a minimum wage of $10/hr. Who cares if employees can feed their children? The club where even the worst performers are assured they will be given millions to move on to their new job and new huge pay package.

    Too bad so many employees are opposed to forming unions. Their chances of climbing the financial ladder are dimming, as are their chances (and their children's) of having a middle-class to hang onto.

  165. A CEO whose compensation is well over $12 million a year but is not smart enough to realize that public comments complaining about how awful it is to have insurance costs for sick babies? How many millions of dollars worth of negative publicity did he cause AOL?

  166. Remember...there is no "bad" publicity in the new media frontier. I didn't know AOL existed as a going concern anymore.....now I do.

    Now lots of more people do. Maybe Armstrong is dumb like a fox. He won't get fired. These types never do. They all stick together...

  167. Russ453, I agree he won't get fired--or even have his compensation reduced by a nickel--but if there was no "bad publicity in the new media frontier", he would not have reversed his position.

  168. This man has displayed low class behavior over and over again. Clearly AOL has no future with him at the helm. It's high time to get rid of this unimaginative bully.

  169. My employer keeps cutting benefits (401K contributions, paid leave, % annual raise!) using the excuse of increasing health insurance costs. As frustrating as it is, I believe them and I don't think AOL is an outlier (though the CEO's lack of tact in this instance is grounds for dismissal IMO). The question is, where is the $$ going??? Physicians, insurance companies, hospital administrators?? Healthcare in this country is bankrupting us all.

  170. @southern mom: You know what's bankrupting us? The INSURERS. If we removed for-profit insurance companies from the equation, suddenly health care will cost a lot less for everyone.

  171. Yep, the insurers are gouging us, not to mention distorting the market and creating counterproductive incentives for healthcare providers that mess up the TRUE cost of services.
    IMO, one of the best features of the ACA is the requirement that insurers spend a specific minimum % on benefits, not overhead costs (Medicare, for example, has a much better accountability system to prevent as avoid spending far more than is reasonable on overhead costs vs. actual services and treatment. It's far more efficient.) . And if a company spends too much on those non-healthcare costs, it needs to be explained and laid out in writing for the people they insure, adding some much-needed transparency. It is absolutely ridiculous to be paying premiums that go, in large part, to glossy pamphlets and bloated staffs and CEO pockets. Health insurance companies have a duty to be fiscally responsible and rational, not continually raise premiums and justifying it through rising healthcare costs when they aren't willing to cut in other areas like executive compensation or marketing.
    I'd much prefer single-payer, and was a grateful user of the NHS in college while studying in the UK. But if we're stuck making a decil's bargain with insurers here in the US, we might as well try to make it more cost-efficient.

  172. Armstrong, whatever he may be like to those who actually know and love him or to those who actually don't but who feel free to judge him as insensitive and overpaid (I'll actually second that), is not really the issue.

    The issue is whether, despite the fact that we are an incredibly wealthy society, there nonetheless comes a point when we have to make choices on how we allocate resources.

    E.g., should millions be spent prolonging the life of those who are unlikely to ever recover from their medical conditions and unlikely to ever be a contributing member of society?

    Of course, we say, otherwise we're no better than the Nazis.

    But when those we're keeping alive become the dominant demographic, like the elderly are soon to become (and, yes, I myself am approaching geezer-hood), do we then inevitably and self-destructively short-change the future?

    Fear, and empathy for those who are filled with fear for those they love (like the parents of those unfortunate children), may eventually have to be harnessed by reason if we, as a society, are to survive.

  173. We are challenging the "Law of Life" by Jack London. Whether humans can do it over the long run remains to be seen.

  174. This is very personal, to Deanna Fei and to other families, including mine. Today's is my son's 32nd birthday. He was a 2 month preemie -- 4 lb..2 ounces at birth. It was a hard slog of weeks in the NICU back up from 3 lb .7 ounces to 5 pound when we could take him home. By age one, Ian had thunder thighs and an insatiable curiosity about the world that eventually led him to medical school and a career as an ER attending at a world-famous institution. Kind, wonderful doctors and nurses sheparded us through those first frightening days, as yours did. We joked he was a $20,000 baby -- we paid the phone bill. Sounds quaint, but society has an obligation to the young, the old and the vulnerable. Something AOL's chief should take to heart at long last.

  175. I'm glad for you but many of the smaller preemies don't fair so well and continue to be a drain on the medical system for years.

  176. I have purchased my own health insurance for nearly 40 years. It has been worth every penny, not only for myself, my husband and our children, but in my community and beyond. Our system has many problems, however, I am incredibly proud that my pooled insurance dollars have helped so many people and will continue to help families such as the two singled out by Mr. Armstrong.

  177. this is one of the most despicable things I have heard. blaming babies. really, a new low has been reached by those who lead corporate america.

  178. Here's your big poster that you take into 2016 on why medical insurance doesn't work. Anyone paying the insurance bill is going to say, "It's those people that are the problem" and not the system is the problem itself. So long as we have to live under those terms, our healthcare will be in jeopardy. This is not an aberration. Every HR, or CFO is saying or at least thinking the same thing. "That person got sick" or "we've got to screen new hires." It's a cancer in our society and economy. The only solution, which has already been accomplished by every other industrialized is scountryingle gov't payer.

  179. I hope that the geniuses on the Board of AOL are reading these irate comments by the readers of The New York Times and get rid of Mr. Armstrong. He has done incredible damage to their business. I shall never patronize AOL again. Why should he be so privileged as to retain his lucrative job while being so indifferent to the conditions of his workers, their families, and the public at large. The right thing to do would be for all of them to step down.

  180. one wonders at the degree of social and moral deafness in those that are responsible for of their companies. This is not a defect of capitalism per se, but rather the lack of humanity of many at all levels
    Make no mistake, Tim Armstrong will implement a cut, just in a less public way. The remedy though is activist boards and stock holders that balance their responsibility to maximize return with a genuine commitment to act responsibly to employees. It's been done before, just takes the right mix of people.

  181. This person is a terrible front man for AOL; the CEO should sack him...oh... he is the CEO...

  182. Didn't he fire someone on a conference call? This guy has got to be a real piece of work. I'll need to learn more about AOL's board for grins

  183. Nothing like a caring boss.

  184. This is quite consistent with the Koch Brothers Top One Percent way of thinking. They are Masters of the Universe; everyone else is a "taker."

  185. I have met Armstrong several times. Classic living in a bubble CEO. It wouldn't surprise me if Armstrong hadn't any FACTS re ACA cost impact on AOL, rather he had just talked about it with his plutocrat buddies who just KNOW how negative its impact will be, ignoring all data....Good luck AOL; this gaffe is not an outlier - this is who you CEO is....

  186. This guy sounds like an unmitigated jerk.

    Separately, the article omits connecting what health care costs have to do with timing of 401K matching?

  187. We can fix this problem by providing all americans with universal, single payor health insurance! When are we going to realize that our health care system is broken?

  188. Sounds great, then instead of an insurer saying "yes" to Ms. Frei the gov't will say "no."

  189. This is a classical example of an executive who is not delivering and so will let other do so for him. Looking for cost savings? Start by your holdings and salary and stock option plan. Will he do it? No. Will he let others do it? Yes.
    Mr Armstrong may know about cost cutting , but have no clue of value creation.
    Welcome to corporate greed

  190. This is another good example of why people's healthcare should not be left in the hands of their employers. People like this should not be given that kind of life-and-death power over others.

    'Medicare for all' would benefit both corporations and real people.

  191. The 1%er's do not care for workers except as an asset to provide more work for the least possible salary. Amazing that AOL's very first corporate value is 'AOL is in the business of helping people, period.' High earnings don't cut it? What is ENOUGH for the 1%er's?