AOL's Armstrong Apologizes For Kid Crack, Restores 401k Matches

Facing unsettled employees and investors, AOL head Tim Armstrong has officially apologized for referring to workers’ ailing children as “distressed babies” during last week’s town hall. Armstrong has also decided to restore AOL’s existing policy of offering matching 401k contributions to employees.

“I made a mistake, and I apologize for my comments last week at the town hall when I mentioned specific health-care examples in trying to explain our decision-making process around our employee benefit programs,” Armstrong explained in an email to employees.

The remarks followed last Thursday’s announcement that AOL would be cutting workers’ 401(k) plans. Per the change, the company planned to contribute to workers’ 401(k) plans at the end of the year -- rather than paycheck-to-paycheck. Any employee who left AOL before year’s end would have received no matching funds.



Yet, it was Armstrong’s words -- which referred to employees’ children with severe medical conditions -- that sparked widespread contempt. “Those are the things that add up into our benefits cost,” Armstrong said in reference to millions of dollars in medical bills he said AOL paid to care for employees’ “distressed babies.”

One mother, whose daughter was labeled “distressed” by Armstrong, took to on Sunday to scold her husband’s boss and his insensitive remarks.

Further fueling the backlash, Armstrong’s remarks came on the same day that AOL reported $36 million in net income, and a 13% increase in revenue during the fourth quarter. In an effort to restore order, Armstrong said this weekend that AOL would reinstate its policy of offering matching 401k contributions.

"The leadership team and I listened to your feedback over the last week,” Armstrong said in a letter to employees. “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."

Reached for comment, an AOL spokesman said the company would not be commenting further on the matter.

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