CEO sorry for 'distressed babies' remark; reverses retirement plan
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[February 10, 2014]
(Reuters) — Tim Armstrong, AOL <AOL.N>
chief executive, reversed his
decision to cut employee retirement benefits and apologized for
remarks linking two women at the company with "distressed babies" to
its rising health care costs that set off a fire storm of criticism.
Armstrong issued a memo to staffers on Saturday explaining the
company would change its 401(k) policy back to matching
contributions on per-period basis rather than one lump sum at the
end of the year.
"On a personal note, I made a mistake and I apologize for my
comments last week at the town hall when I mentioned specific
healthcare examples in trying to explain our decision making process
around our employee benefit programs," Armstrong wrote in a memo
obtained by Reuters.
AOL declined to comment.
In a town hall meeting last week where Armstrong sought to clarify
why the company cut its employee retirement plan, he singled out two
unnamed women who had babies with health problems and the impact of
President Obama's health care reforms for adding millions of dollars
to AOL's bill.
The mother of one of one of those babies, the wife of an AOL
employee, came forward to address the insensitive comments in an
article on Sunday for Slate.com.
"I have no expertise in health care costs, but I have a 3-inch thick
folder of hospital bills that range from a few dollars and cents to
the high six figures. So even though it's unlikely that AOL directly
paid out those sums, I don't take issue with Armstrong's number,"
Deanna Fei wrote.
[to top of second column]
"I take issue with how he reduced my daughter to a "distressed baby"
who cost the company too much money. How he blamed the saving of her
life for his decision to scale back employee benefits," she
"How he exposed the most searing experience of our
lives, one that my husband and I still struggle to discuss with
anyone but each other, for no other purpose than an absurd
justification for corporate cost-cutting," Fei wrote.
The AOL chief's comment sparked a media backlash and overshadowed
AOL's fourth quarter results, after the online media and
entertainment company reported its best growth in a decade.
(Reporting by Jennifer Saba and Bill
Berkrot; editing by Nick Zieminski)
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