AOL chief apologizes for 'distressed babies' remark

Feb. 10, 2014 at 1:30 AM
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NEW YORK, Feb. 10 (UPI) -- AOL Inc. Chief Executive Tim Armstrong apologized for linking two female employees with "distressed babies" to the U.S. media company's rising healthcare costs.

His apology came in a reversal of his decision to cut employee retirement benefits.

The benefits issue involved a new policy, which Armstrong reversed during the weekend, in which AOL contributed a single lump sum at the end of the year to employees' 401(k) pension accounts, rather than matching contributions each pay period.

The lump sum disbursement was available only to employees active Dec. 31, meaning anyone who left before the end of the year wouldn't get a matching contribution, creating an employee uproar.

"We heard you on this topic," Armstrong said in an email. "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."

Armstrong had compounded the employee uproar Thursday when he tried to explain the change to the lump sum disbursement by saying care for two female staffers' "distressed babies" in 2012 cost the company about $1 million each.

"Two things that happened in 2012," Armstrong said after first saying the Affordable Care Act was driving up AOL's healthcare costs. "We had two AOLers that had distressed babies that were born that we paid a million dollars each to make sure those babies were OK in general.

"And those are the things that add up into our benefits cost," he said in remarks transcribed by an AOL employee. "So when we had the final decision about what benefits to cut because of the increased healthcare costs, we made the decision, and I made the decision, to basically change the 401(k) plan."

Later in the day, he sent a note to employees clarifying the "distressed babies" remark.

"I mentioned high-risk pregnancy as just one of many examples of how our company supports families when they are in need," his note said, adding, "We want to be open and transparent about the choices we make and why we are making them."

He went further in his email late Saturday.

"On a personal note, I made a mistake and I apologize for my comments last week," Armstrong said.

Armstrong apologized in August after firing an employee during a conference call attended by more than 1,000 employees because the employee had taken a photo of Armstrong with his camera phone.

While he apologized, Armstrong did not reverse the firing.

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