February 6, 2014 Last Updated 3:48 pm

AOL reports good revenue growth, then CEO opens his mouth and ruins the whole thing

AOL-logo-featureIt is hard to imagine working for a guy who just has to, just has to open his mouth and stick his foot in it. Tim Armstrong is that kind of guy, apparently.

This morning AOL reported earnings and the report should have stood on its own. Revenue from advertising was up 23.5 percent (subscriptions were down, but that is nothing new) and operating income, while not spectacular, was at least better than last year, impacted by a restructuring charge of $13.2 million related to reductions in personnel, including layoffs at Patch.


But then the CEO took to CNBC to say that AOL would be changing the way it distributes 401(k) matching contributions, all because of Obamacare. CNBC was the perfect place for that kind of talk, as the folks at CNBC are the polar opposite of what he could have expected at MSNBC. But did he not think anyone would report what was said?

“Do we pass the $7.1 million of Obamacare cost to our employees? Or do we try to eat as much of that as possible and cut benefits?” Armstong said. “For employees leaving to go to other employers, not matching those programs was probably the last thing on the list for us in terms of employee benefits that we wanted to keep.

“I have a townhall meeting today with all the employees and I’m going to bring this up and talk about it.”

Oh boy, did he. Then he talked about the fact that two employees at AOL had “distressed babies” which cost the company $2 million.

By this afternoon Twitter was alive with references to Armstrong’s $12 million income, and that if he really was concerned about the cost of those babies he could have sacrificed two months pay and still ended up making big money. (Even The Huffington Post’s story on Armstrong’s remarks mentions his $12 million income.)

“Every time you purchase something, or visit a website that’s making money off your visit, you are casting a vote for the type of world you want to live in,” wrote one commenter on The Washington Post story of Armstrong’s comments. “By visiting AOL owned companies you are supporting an organization that disrespects their employees and expands the gap in income inequality.”

Then a letter was circulated by AOL employees asking Armstrong to reverse his decision. “We strongly object to the new 401(k) matching practice and encourage the company to reverse its policy. Single lump-sum 401(k) contributions are an unnecessarily risky investment strategy and deprive workers who leave the company of retirement benefits they have earned,” the letter read.

Insensitive remarks by the super rich are nothing new, but they are becoming more and more common. Last week Tom Perkins, founder of Kleiner Perkins Caufield & Byers wrote a letter to the WSJ which starts out bad and ends worse, comparing criticism of the top 1 percent to Kristallnacht. (That there are those who honestly think condemning the actions of the rich are the equivalent to persecuting and killing Jews is something that I find terrifying.)

There is a reason companies employ CFOs and PR agencies. It is to keep CEOs from saying too much. But if they really do need to talk like some sort of Latin American dictator, the least they could do is to move to Latin America. They may find, to their surprise, that the locals don’t like what they have to say any more than the rest of us do.

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