AOL CEO on 401(k) Changes: Blame Obamacare and Two Pregnant Employees’ ‘Distressed Babies’

Photo: Scott Eells/Bloomberg via Getty Images

Tim Armstrong should probably stop doing conference calls. The AOL CEO, who fired a guy during one for taking his picture, was perhaps too brash once again today, baldly telling his entire company that their benefits were being rolled back because two women went and got themselves pregnant. “Two things that happened in 2012,” Armstrong said, according to a transcript obtained by Capital New York. “We had two AOL-ers that had distressed babies that were born that we paid a million dollars each to make sure those babies were okay in general. 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.”

Earlier, on TV, Armstrong said, “As a CEO and as a management team, we had to decide, do we pass the $7.1 million of Obamacare costs to our employees? Or do we try to eat as much of that as possible and cut other benefits?”

The Huffington Post, which is owned by AOL, covered the comments in its business section, while some employees expressed their collective “WTF” in public:

Next week, Armstrong is scheduled to appear at a conference that aims to “reset the agenda for women in the workplace in the 21st century.”

Update: Armstrong has responded, but not apologized, in a corporate-speak internal memo, published externally by Recode.

AOLers -

As we discussed at the town hall, we care about you and the company – a lot. 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.

We provide a wide range of benefits – including our 401k plan – and conduct open information sessions each Fall on all available benefits as well as any changes being made. We will continue to do that.

The spirit of the town hall and the spirit of how we choose benefits are the same – we want to be open and transparent about the choices we make and why we are making them.

As I have said over and over again, our employees are our greatest asset. Let’s move forward together as a team. – TA

AOL’s Tim Armstrong Blames ‘Distressed Babies’