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AOL Chief Reverses Baby-Blaming 401(k) Cut

AOL Corp. CEO Tim Armstrong has abandoned an unpopular plan to delay company contributions to employee retirement accounts and apologized for citing two high-cost births as part of the impetus for the plan.

AOL
Justin Sullivan/Getty Images

“We heard you on this topic,” Armstrong wrote in a letter to employees Saturday.

In a move to cut costs, AOL had decided to pay matching 401(k) retirement contributions in one lump sum at the end of the year. Workers who left the company before the end of the year would have received no contributions, and all workers would sacrifice interest or earnings on those contributions throughout the year.

After a worker backlash, Armstrong said the company would return to depositing matching contributions every pay period throughout the year.

In the letter Saturday, Armstrong also apologized for bringing up specific health care examples during a town hall meeting in which the retirement plan was discussed. During the meeting, Armstrong cited higher health care costs in general and mentioned the high cost of health care for two women who gave birth to “distressed babies.”

“On a personal note, I made a mistake and I apologize for my comments last week,” he wrote in the letter Saturday.

On Sunday, the author Deanna Fei wrote in an article posted on the website Slate that she was the mother of one of the babies Armstrong referred to. Fei’s husband is an editor at AOL-owned Huffington Post.

In the article, which was being widely shared on social media, Fei explains in detail the harrowing and difficult birth of her daughter and excoriates Armstrong for blaming the need to reduce employee benefits on situations like hers.

She wrote that she takes issue with “how (Armstrong) exposed the most searing experience of our lives…for no other purpose than an absurd justification for corporate cost-cutting.”

(Copyright 2014 The Associated Press. All rights reserved.)

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