Hartford's CEO Paid $4.5 Million, Despite Large Losses

By Lilla Zuill
Insurance Journal
April 6, 2009


Hartford Financial Services Group said on Friday that it has awarded Chief Executive Ramani Ayer $4.5 million for his 2008 compensation, in the face of a $2.75 billion net loss.

The company also disclosed that it paid a former chief financial officer a special $500,000 retention payment for staying from the official date of his resignation, May 1, 2008 until at least June 15. The payment was made to David Johnson on July 25, his final day.

Ayer, who has called Hartford's recent financial results the worst in its 198-year history, has been criticized for his capital management, proceeding with a $1 billion stock buyback last June, then four months later having to turn to German insurer Allianz for a $2.5 billion investment. Weeks later Hartford reported a record $2.6 billion quarterly loss.

The company's shares have declined nearly 90 percent in the last year.

Hartford, a large writer of a popular retirement product called variable annuities, has been badly battered by investment losses and higher costs from guarantees on these annuities, which are linked to stock market performance.

Hartford said it awarded Ayer $1.15 million in salary, the same amount as 2007, $1.08 million in stock awards, $2.1 million in option awards, nil non-equity incentive plan compensation, and $133,943 for all other compensation, including $76,000 for personal and business use of Hartford's car service.

Ayer's total compensation was $4.5 million, according to a filing with the U.S. Securities and Exchange Commission. In 2007 it was $15.8 million.

Hartford reported Ayer's compensation in a summary table included in a proxy filing on Friday with the U.S. Securities and Exchange Commission.

Some pay consultants and governance experts tabulate executive pay differently, saying the summary total may be imperfect since it counts options and stock as part of pay when they vest rather than when they are awarded.

Lizabeth Zlatkus, who replaced Johnson a year ago as CFO, was awarded $4.3 million in 2008 compensation, Hartford's regulatory filing showed.

Chief Operating Officer Thomas Marra, who in February unexpectedly said he would step down in July, was awarded $6.6 million in 2008 compensation, the company said.

In 2008, Hartford had a net loss of $2.75 billion. A year earlier it had a net profit of $2.95 billion.

Hartford shares closed 10 percent higher on Friday at $8.74. The stock is 89 percent off its 52-week high of $79.88 set April 2, 2008, according to Reuters data.

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