Hartford Cuts Ayer's Pay in 'Most Challenging Year'
By Andrew Frye
April 3, 2009
April 3 (Bloomberg) -- Hartford Financial Services Group Inc. said Chief Executive Officer Ramani Ayer's compensation fell 72 percent in 2008, which he described as the company's toughest year.
Ayer's package was valued at $4.47 million for last year compared with $15.8 million for 2007, the company said today in a regulatory filing. He received no award from an incentive plan, said Hartford, based in the Connecticut city of the same name. The company's stock plunged 81 percent last year.
Ayer took more direct control over Hartford's money-losing life insurance unit in February after the company reported a $2.7 billion net loss in 2008 on costs to prop up guaranteed- return retirement products called variable annuities. Hartford may face further costs on the equity-linked contracts after declines in stock markets this year.
Last year "was clearly the most challenging year in our company's nearly 200-year history," Ayer said in February when the company announced a fourth-quarter loss. The insurer cut its dividend twice in the past year and said in November it would eliminate 500 jobs, or almost 2 percent of the staff.
Ayer's salary was unchanged at $1.15 million. Stock awards fell 81 percent to $1.08 million and option awards slipped 23 percent to $2.1 million. Ayer received $133,943 in other income including tax assistance and car services. Ayer's compensation from the incentive plan was $3.25 million in 2007.
Life insurers have dismissed workers and applied for government aid to rebuild funds after the worst financial crisis since the Great Depression pushed down the prices of stocks backing annuities and bonds held to pay future claims. Moody's Investors Service estimated that the industry lost $32 billion in capital and surplus last year.
Hartford's decline in New York trading last year more than wiped out gains accumulated since the insurer was spun off from ITT Corp. in 1995. The drop compares with a 43 percent slip at MetLife Inc., the biggest U.S. life insurer, and a 67 percent retreat by No. 2 Prudential Financial Inc. Genworth Financial Inc., the Richmond-based life insurer and mortgage guarantor, plummeted 89 percent last year.
Hartford was downgraded three times by Standard & Poor's in less than a month earlier this year after reporting that declines in commercial mortgage holdings had pushed a key measure of financial stability called the risk-based capital ratio below the company's forecast.
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