AOL CEO Tim Armstrong is getting no “benefit” of the doubt after telling staffers Thursday that the company paid nearly $1 million each to care for two staffers’ “distressed babies” in 2012.
The added expenses forced management to make difficult decisions by cutting the company’s contribution to its 401(k) plan.
The remarks came as Armstrong spoke to employees during conference call to explain the company’s position on the cuts, which were disclosed earlier this week.
The comments sparked indignation among employees and on social media, where many accused the CEO of using the infants as cover for an unpopular decision and questioned the propriety of his singling out two workers, while others worried that the less-generous 401(k) plan could spark other companies to follow suit, WSJ.com reported.
In response to the outcry, Armstrong issued a company memo late Thursday that said, “This morning, I discussed the increases we and many other companies are seeing in healthcare costs. In that context, I mentioned high-risk pregnancy as just one of many examples of how our company supports families when they are in need. We will continue supporting members of the AOL family.”
An AOL spokesperson declined to comment on company benefits.
The changes to the 401(k) plan now move the company match to a lump sum dispersed at year’s end, and is available only to employees who are active on Dec. 31, and those who leave before the end of the year get no match.