AIG agrees to withhold Executive Pay

October 23, 2008

New York - American International Group Inc. submitted last month to a U.S. government bailout and agreed to hold $19 million in compensation to be put down for a former chief executive and $600 million slated for other executives.

According to an announcement of New York Atty. Gen. Andrew Cuomo last Wednesday that AIG, once the biggest insurer in the world, would withhold bonus and severance payments from former Chief Executive Martin Sullivan, the second of three CEOs the insurer has had since the reign of Maurice "Hank" Greenberg ended last 2005. It will also not allocate any of the $600 million in bonus pools and delayed compensation at AIG Financial Products.

Cuomo demanded AIG last week to stop "extravagant" spending and retrieve millions of dollars in unreasonable payments or proceedings. AIG has utilized two-thirds of its credit line of $122.8 billion from the Federal Reserve since its U.S. takeover.

Sullivan, 54, has been replaced by the former chairman of AIG, Robert Willumstad, as CEO last June 15 after two consecutive record quarterly losses that are tied to bad bets on housing markets.

Sullivan said last year that any losses tied to housing markets would be "manageable." Throughout his three-year term, AIG lost 46% of its market value. AIG said in a regulatory filing last July 1 that they have agreed to give him $15 million in severance pay and a $4 million bonus when he was ousted. He was also scheduled to receive equity and long-term cash awards valued at around $28 million.

Cuomo said Wednesday that, "Until the taxpayers recoup their investment in AIG, which is now in excess of $120 billion plus interest, there should not even be any contemplation of bonuses for executive performance."