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AOL CEO Sorry For 'Distressed Babies' Remark, Reverses Policy Change

Employee outcry over AOL’s changed 401k policy was so strong that CEO Tim Armstrong announced Friday that the company would scrap the overhaul.

The change would have switched 401k matching contributions by AOL from payments distributed per paycheck to an annual lump sum. The change would have affected both past employees who left the company mid-year and current employees who would no longer see the same compounding benefits in their retirement accounts.

When asked why the company originally made the switch, Armstrong cited “distressed babies” as examples of healthcare liabilities the company had to pay for in recent months. Armstrong told the story of two women covered by AOL’s employee healthcare benefits who needed roughly $1 million each during recent pregnancy complications.  He said the costs incurred by AOL were “above and beyond” what was necessary.

Armstrong’s comment didn’t help his case. A number of employees lashed back at Armstrong for referring to the children of employees as financial liabilities. One of the formerly pregnant women Armstrong referenced wrote a column for Slate in which she called the CEO out.

“When I saw the headlines, it was sort of impossible to process he was talking about my daughter,” Deanna Fei said. “It [was] a violation – for singling us out for using the health plan we paid for.”

“I take issue with how he reduced my daughter to a 'distressed baby' who cost the company too much money,” Fei wrote in her scathing criticism of Armstrong’s comments. “How he blamed the saving of her life for his decision to scale back employee benefits … the implication from Armstrong that the saving of her life was an extravagant option, an oversize burden on the company bottom line, feels like a cruel violation, no less brutal for the ludicrousness of his contention.”

On Friday, Armstrong announced that AOL decided not to change their 401k policy after all.  He glossed over the company’s attempted move in an email to employees.

"The leadership team and I listened to your feedback over the last week. We heard you on this topic,” Armstrong wrote. “And as we discussed the matter over several days, with management and employees, we have decided to change the policy back to a per-pay-period matching contribution."

Sources: Mail Online, Business Insider


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