AIG Says More Will Get Retention Pay, Top Award of $4 Million Apiece|
By Hugh Son
December 8, 2008
Dec. 8 (Bloomberg) -- American International Group Inc., the insurer whose bonuses and perks are under fire from U.S. lawmakers, offered a retention program to another 38 executives that will award as much as $4 million apiece.
The retention payments range from $92,500 to $4 million for employees earning salaries between $160,000 and $1 million, Chief Executive Officer Edward Liddy said in a letter dated Dec. 5 to Representative Elijah Cummings. The original list had 130 names, and the biggest payment disclosed was $3 million.
AIG, which received a U.S. rescue package of more than $152 billion, has been criticized for saying it would eliminate bonuses for senior executives while still planning to hand out "cash awards" that double or triple the salaries of some managers. The payments are designed to keep top employees at New York-based AIG while Liddy seeks to sell units and pay back the federal government, which owns 79.9 percent of AIG.
"We are indeed fortunate to have benefited from the assistance extended to us by the U.S. government and we are grateful for the support of American taxpayers," Liddy wrote. "We would be doing a disservice to the taxpayer -- and would place AIG's asset divestiture plan at risk -- if we did not act decisively to ensure that our key employees remain."
AIG may sell businesses including its U.S. life insurance and retirement services operations. Collectively, the assets for sale equal "almost 65 percent of our company and employ approximately 70,000 people," Liddy wrote. Total employment is about 116,000, he said.
AIG's managers have overseen a record $37.6 billion in net losses so far this year. Cummings has called for Liddy's resignation and said AIG should provide names of those getting retention pay and explain why the awards are needed. Firms accepting taxpayer money shouldn't enrich employees, he said.
Cummings is a Maryland Democrat on the House Committee on Oversight and Government Reform.
Keeping the managers is necessary to maintain credit ratings and meet requirements in some reinsurance agreements, Liddy wrote. AIG disclosed the initial list of 130 managers in a September filing without saying how much most of the recipients will get. Another 38 people were added "subsequently" according to Liddy's letter, which didn't disclose the new recipients or say when they had been added.
The list was expanded so AIG can retain people with "key client relationships" and who have a high "degree of flight risk," Liddy wrote. He cited their "deep experience, extremely valuable business relationships, and unique ties to the many local communities where they live and work."
AIG spokesman Joe Norton had no immediate comment. Another AIG spokesman, Nicholas Ashooh, previously said that many AIG managers have lost their life savings.
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