It was another rough week for Tim Armstrong and AOL Inc.’s HR department. AOL’s chief executive officer had to backtrack on a 401(k) policy change over the weekend after his comments defending the idea fueled employee outrage.
Armstrong had said last week that AOL needed the retirement-plan tweak to help offset health-care costs, such as two pregnancies that resulted in “distressed babies” with more than $1 million each in medical expenses. Following the outcry, he reversed the 401(k) decision in a memo to employees.
“We heard you on this topic,” Armstrong, 43, said in the memo. “I made a mistake and I apologize for my comments.”
The mea culpa was Armstrong’s second in six months for a public controversy. In August, he sent a memo to workers saying he was wrong for firing a creative director in front of a room full of employees, as well as a thousand others who were listening on a conference call. Previously, Armstrong was sued when he worked at Google Inc. for a case involving alleged discrimination of a woman pregnant with quadruplets.
Peter Land, a spokesman for New York-based AOL, declined to comment beyond Armstrong’s memo. Leslie Miller, a spokeswoman for Mountain View, California-based Google, also declined to comment.
In the latest incident, Armstrong’s comments prompted the mother of one of the “distressed babies” to criticize him in an essay she wrote for Slate.com.
‘Whiff of Judgment’
“The hardest thing to bear has been the whiff of judgment in Armstrong’s statement, as if we selfishly gobbled up an obscenely large slice of the collective health care pie,” Deanna Fei wrote for the news and analysis website. “We experienced exactly the kind of unforeseeable, unpreventable medical crisis that any health plan is supposed to cover. Isn’t that the whole point of health insurance?”
The uproar overshadowed AOL’s fourth-quarter earnings results, released on Feb. 6, which exceeded analysts’ sales and profit estimates. In Armstrong’s memo, he said the performance “validated our strategy and the work we have done on it.”
Under the announced 401(k) change, AOL planned to match employees’ retirement contributions in one annual lump sum, instead of incrementally during each pay period. While the level would have stayed the same at up to 3 percent of annual pay, the switch would have meant workers who depart AOL before the payout would forfeit the matching money. Employees also wouldn’t have been able to benefit from investing the contributions over the course of the year.