AOL CEO Tim Armstrong apologized to staffers and reversed 401(k) benefit cuts via email on Saturday. Yet after blaming the cutbacks on “distressed babies” last week, the change of course may be too little too late.
Citing healthcare costs and the Affordable Care Act, Armstrong told employees in a town hall meeting that he planned to change the company's 401(k) contribution match to a lump sum at the end of each calendar year, as opposed to paycheck to paycheck.
“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,” Armstrong wrote in a memo to staffers.
But following the apology, the mother of one of the babies blamed for the cuts, Deanna Fei, spoke out on NBC's Nightly News on Sunday. She described Armstrong's comments as “completely dehumanizing,” and wrote an article for the online magazine Slate that outlined the health issues of her daughter's premature birth in October 2012.
“I take issue with how… [Armstrong] blamed the saving of [my daughter's] life for his decision to scale back employee benefits. How he exposed the most searing experience of our lives, one that my husband and I still struggle to discuss with anyone but each other, for no other purpose than an absurd justification for corporate cost-cutting," wrote Fei, whose husband works for AOL as an editor.
AOL did not immediately respond to a request for comment.
In August, Armstrong told staffers during a conference to leave AOL if they “weren't taking the network seriously.” He then fired creative director Abel Lenz out of the blue when he tried to take a photo of him during the meeting. The outburst was caught in an audio clip, which has since gone viral.
The CEO used an internal memo to apologize to staffers in that instance, as well, writing, "We talk a lot about accountability and I am accountable for the way I handled the situation, and at a human level it was unfair to Abel. I've communicated to him directly and apologized for the way the matter was handled at the meeting…On Friday I acted too quickly and I learned a tremendous lesson, and I wanted you to hear that directly from me."
Last week, AOL reported that in the fourth quarter of 2013, it earned $679 million in revenue, up 13% compared to the same quarter of the previous year.
Costs related to AOL's hyperlocal news service Patch cut into its profits of $36 million, according to The New York Times. Last month, AOL sold a majority stake in Patch to Hale Global, a firm that specializes in turning around ailing technology businesses.
This blog post was updated on February 11 to correct the fact that Armstrong did not announce 401(k) changes last week. The changes were announced earlier.