Rep. Conyers Demands AIG Data On Retention Bonuses
BY ARTHUR D. POSTAL
National Underwriter News
December 2, 2008
WASHINGTON -- Maryland congressman demanded yesterday that American International Group provide more disclosure concerning retention bonuses it is paying to retain key senior executives.
In the letter, Rep. Elijah Cummings, D-Md., accused AIG of "disingenuous sleight of hand" by disavowing the payment of performance bonuses to senior execs in 2008, but then continuing to provide retention bonuses previously announced in September.
He said AIG was doing this by having the approximately 130 top officials involved agree to delay receiving their retention payments -- a first installment delayed from this month to April 2009, and the second installment delayed from December 2009 to April 2010.
AIG spokesman Joe Norton confirmed receipt of the letter, but said AIG would have a comment at a later date.
Mr. Norton also cited a joint statement issued Oct. 16 by AIG CEO Edward Liddy and New York Attorney General Andrew Cuomo in which Mr. Liddy agreed to several actions, including close scrutiny of AIG compensation programs.
Mr. Liddy also agreed in the statement to immediately cancel all junkets or perks "which are not strictly justified by legitimate business needs." As a result, the statement said, AIG agreed to cancel more than 160 conferences and events, some exceeding more than $750,000 per event, for a total savings of more than $80 million.
But in the same statement, Mr. Norton said, Mr. Cuomo noted specifically that "these actions are not intended to jeopardize the hard-earned compensation of the vast majority of AIG's employees -- including retention and severance arrangements -- who are essential to rebuilding AIG and the economy of New York."
In his letter, Rep. Cummings cited the $85 billion loan the government provided in September "to keep AIG afloat." That program has since been superseded by another agreement that increased the total cash available to AIG but reduced the interest cost and further diluted the stake that private shareholders have in the company.
"Against this background -- and given the massive layoffs occurring at other major financial entities, including Citibank -- the American taxpayers have a right to know why senior executives at AIG, who are frankly lucky to still have their jobs, need to receive additional bonus payments of any kind to retain them at AIG," Rep. Cummings said.
He asked in the letter that AIG disclose which executives in which AIG divisions are receiving the retention payments, and how much they are receiving. He also wants to know the base salaries of executives receiving the retention payments.
Further, he seeks information as to whether all executives are delaying receipt of their payments until next April or, if any executive is not delaying receipt of the payments, which executives are receiving payments this month and how much each executive is receiving.
"Why is it necessary for any AIG executive to receive a retention payment -- and why is it necessary that these be scheduled for April 2009 and April 2010?" Rep. Cummings asked. He also wants to know what will be the source of the retention payments provided in 2009 and 2010.
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