You have to wonder what the conversation was like between Tim Armstrong, CEO of AOL, and his wife and mother of their three young children the day he arrived home last week after telling his workforce that health care costs for “distressed babies” were the reason he was cutting employee benefits.
“What were you thinking?” was probably the tamest of words exchanged.
How could he not have foreseen the backlash? How could he not have asked how he would react if, God forbid, one of his children had a catastrophic illness and because the monumental medical costs incurred to save his child’s life so burdened the company’s bottom line, co-workers would see a reduction in their retirement plans?
In a town hall meeting with employees last week, Armstrong announced that the company would be paring their 401(k) plans. “In 2012, 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,” Armstrong said. “And those are the things that add up into our benefits cost. So when we had the final decision about what benefits to cut because of the increased health care costs, we made the decision, and I made the decision, to basically change the 401(k) plan.”
The minute the words came out of the media giant’s mouth, he got mail. And lots of it was damning. A few AOL employees made cracks like: “I swear I didn’t have any babies in 2012. Don’t hate me for messing up your 401(k).”
As Armstrong’s luck would have it, the parent of one of the “distressed babies” was the writer Deanna Fei, author of “A Thread of Sky” (2010), a New York Times Editor’s Choice book. Fei’s husband, Peter Goodman, works as an editor for the AOL-owned Huffington Post.
Fei penned a scathing response to Armstrong and published it on Slate.com on Monday. “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,” she wrote. “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.”
Fei went on to describe the harrowing ordeal of her daughter’s premature birth in October 2012 and her first three months of life spent in the NICU. “She weighed 1 pound, 9 ounces. Her skin was reddish-purple, bloody and bruised all over. One doctor, visibly shaken, described it as ‘gelatinous.’ I couldn’t hold my daughter or nurse her or hear her cries, which were silenced by the ventilator. Without it, she couldn’t breathe.
“That day, we were told that she had roughly a one-third chance of dying before we could bring her home. That she might not survive one month or one week or one day. She also had at least a one-third chance of being severely disabled, unable to ever lead an independent life. … For longer than I can bear to remember, we were too terrified to name her, to know her, to love her.”
Thanks to medical advances, her daughter is now a healthy 1-year-old. And, too, thanks to health insurance for which she and husband had paid premiums, her family will not be penniless, which is the point of insurance anyway, right?
While Pei wrote the couple has been genuinely grateful for AOL’s benefits, “ 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.”
Armstrong also didn’t do himself any favors by missing the mark on his first attempt to stem the rising criticism. In an internal memo in which he attempted to clarify the ill-fated “distressed babies” reference, he said he “mentioned high-risk pregnancy as just one of many examples of how our company supports families when they are in need.” Except that there was nothing high risk about Fei’s pregnancy. Every exam up until the morning she woke up in labor showed her daughter was perfectly healthy.
Pretty soon, reporters dug up a 2005 workplace-discrimination suit that alleged Armstrong had gotten a woman carrying quadruplets fired and had called her an “H.R. nightmare.”
On Monday, Armstrong reversed his decision. He restored the original 401(k) policy and apologized for his comments in a companywide letter. Later he phoned Fei personally. She said his apology was sincere and that she forgave him. “He spoke to me in a heartfelt way,” Fei said on NBC’s “Today” show. “As a father of three kids to a fellow parent.”
I’m betting his wife made him come to his senses.