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Originally published Sunday, February 9, 2014 at 8:25 PM

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AOL chief reverses 401(k) move, apologizes for remarks

The head of AOL came under criticism for what many employees thought were insensitive remarks while discussing the company’s increased medical costs. To make his point, he cited specific health-care examples, including the costs of caring for a baby born prematurely.

The New York Times

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Tim Armstrong, the chief executive of AOL, has decided to reverse an unpopular change in the media company’s employee benefits program and also apologized for publicly singling out two families’ health-care issues as a cause of those changes.

AOL had recently altered its 401(k) program, switching its matching payments to one lump sum at year-end instead of throughout the year.

The change would have disadvantaged AOL employees, especially those who left the company before Dec. 31.

On an internal call last Thursday discussing the new policy, he had attributed the change partly to soaring medical costs associated with two families’ “distressed babies.”

Armstrong came under criticism for what numerous AOL employees thought were insensitive remarks while discussing the company’s increased medical costs. To make his point, he cited specific health-care examples.

“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,” he said, according to a transcript provided by an AOL employee.

Numerous AOL employees were displeased that Armstrong had singled out two co-workers, although without mentioning their names.

The mea culpa came as Deanna Fei, a novelist and the wife of Peter Goodman, an editor at AOL’s Huffington Post, disclosed that she was the mother of one of the babies that Armstrong had highlighted. In an essay for the online magazine Slate, Fei blasted Armstrong’s remark. (Goodman worked previously at The New York Times.)

“Let’s set aside the fact that Armstrong — who took home $12 million in pay in 2012 — felt the need to announce a cut in employee benefits on the very day that he touted the best quarterly earnings in years,” she wrote. “For me and my husband — who have been genuinely grateful for AOL’s benefits, which are actually quite generous — 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.”

In the article, Fei described the premature birth of her daughter — she weighed 1 pound, 9 ounces when she was born in October 2012, only five months into a healthy pregnancy.

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