AOL CEO Apologizes For Controversial ‘Distressed Babies’ Comment, Restores Employee 401K Plans

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In a staff email sent out on Saturday, Tim Armstrong apologized for his comments singling out sick babies for why the company had to overhaul its benefits program

Following a highly publicized backlash from employees, AOL CEO Tim Armstrong sent out a company-wide email on Saturday saying that he was sorry for his controversial remarks about sick babies during a conference call and was reversing course in making changes to AOL’s 401(k) policy.

“I made a mistake and I apologize for my comments last week at the town hall when I mentioned specific healthcare examples in trying to explain our decision making process around our employee benefit program,” Armstrong wrote.

Read also: AOL CEO Tim Armstrong Under Fire For ‘Distressed Babies’ Comment During Conference Call

On Thursday, Armstrong specifically cited the sick babies of two women at the company for increasing the cost of health benefits.

“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 OK in general,” Armstrong exclaimed on the now infamous call. “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 healthcare costs, we made the decision, and I made the decision, to basically change the 401(k) plan.”

The 401(k) policy change would have flipped matched contributions from paycheck-to-paycheck to an annual lump sum — something that potentially would have stripped benefits from employees who left the company mid-year. However, after listening to the concerns of distraught staff members, Armstrong changed course. “We have decided to change the policy back to a per-pay-period matching contribution,” he wrote.

Read Armstrong’s apologetic memo below:

AOLers -

We began our journey together in 2009, and for the last four years have had an employee-first culture. As I have said before, the ability to change is a strategic advantage for us. With benefit costs increasing, we made a strategic, financial decision last year to revise our employee matching 401K program from a per-pay-period contribution to a yearly lump-sum contribution. We then communicated this decision in the fall through multiple channels to every AOL office in the US.

The leadership team and I listened to your feedback over the last week. We heard you on this topic. 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. The Human Resource team will be in contact with all employees over the next week to explain the change and to answer any other benefits related questions you might have. We are proud to provide AOLers with a robust benefits offering that spans from exceptional healthcare coverage to 401K’s to AOL fitness programs and beyond. On a personal note, I made a mistake and I apologize for my comments last week at the town hall when I mentioned specific healthcare examples in trying to explain our decision making process around our employee benefit programs.

Thursday we announced an outstanding Q4 and end to our fiscal year. More importantly, it validated our strategy and the work we have done on it. AOL is positioned for future growth and our long-term strategy to be one of the world’s leading media technology companies.

Now, as we begin 2014, let’s keep up our momentum. Thank you for the great 2013 year and for your ongoing passion. And know that I am a passionate advocate for the AOL family – TA

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