AOL CEO Tim Armstrong Blames Costly Pregnancies For 401K Cuts, Controversy Ensues

Tim Armstrong, the CEO of AOL, is receiving backlash Friday for leaked comments he made during a townhall meeting with employees. In the comments, Armstrong appeared to be indirectly pinning the blame for AOL's 401(k) plan on two pregnant employees. Here's what he said, according to a transcript acquired by Capital New York from an AOL employee:

Two things that happened in 2012. 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. 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.

People weren't happy about his comments — to say the least.

In this particular conference call, Armstrong was explaining the reason for restructuring the company's 401(k) plan, which AOL changed to a "a lump sum at the end of the year, rather than contributing with every paycheck," according to the Washington Post's WonkBlog. Employees who leave before Dec. 31 won't get the lump sum at all.

Right before the conference call, Armstrong had made an appearance on CNBC, where he explained the changes. He took the occasion to pin the blame on Obamacare, saying it added $7.1 million to AOL's costs.

Re/code's Kara Swisher has aggregated several negative reactions to Armstrong's remarks:

“His comments during the earnings call, specifically blaming the policy change in part on the costs associated with the birth of two ‘distressed’ babies by AOL employees, were completely outrageous. Almost unbelievable.”

Since the transcript was leaked, Armstrong has sent a memo to employees, but hasn't apologized. Watch the video below to hear more.

In the memo, Armstrong explained that he used the high-risk pregnancies as "just one of many example of how our company supports families when they are in need. We will continue supporting members of the AOL family."

This isn't the first time Armstrong has been criticized for something he said during a conference call. In Aug 2013, Armstrong made headlines when he fired a man mid-call. As Bustle reported:

During a 1,000-person-strong conference call, AOL chief Tim Armstrong instructed his employees that AOL was shuttering half of its Patch websites. (Patch, designed to replace local newspapers, currently has 900 local news sites.) Because the impending-layoff news wasn’t enough, he then proceeded to fire a guy named Abel mid-call.

Armstrong waxed lyrical about how he’s going to take responsibility for Patch’s rise and fall for a while. Then it all kicks off.

“If you think what’s going on right now is a joke, and you want to joke around about it, you should pick your stuff up and leave Patch today,” he says, eerily predicting what’s coming next…

Abel, put that camera down right now!” cries out Armstrong. ”Abel, you’re fired. Out!”

There’s a pause, in which you can almost feel 1,000 people shaking in their boots, and then Armstrong jumps right back into it: ”If you guys think that AOL has not been committed to Patch, and won’t stay committed to Patch, you’re wrong.”

Way to boost morale.