[email=?Subject=Bloomberg%20news:%20%20AIG Freezes Executive Salaries,Liddy’s Pay Set at $1(Update5)&body=%20AIG Freezes Executive Salaries,Liddy’s Pay Set at $1(Update5)%0D%0A%0D%0A%20http%3A//www.bloomberg.com/apps/news%3Fpid%3Demail_en%26refer=home%26sid%3Dabs5qOXnwVfA]Email[/email]|Print|AAA
By Hugh Son and Karen Freifeld
Nov.25(Bloomberg)--American International Group Inc.,under pressure to limit executive compensation after a U.S.bailout,froze pay and scrapped bonuses for seven top leaders and said Chief Executive Officer [url=http://search.bloomberg.com/search?q=Edward+Liddy&site=wnews&client=wnews&proxystylesheet=wnews&output=xml_no_dtd&ie=UTF-8&oe=UTF-8&filter=p&getfields=wnnis&sort=date
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Edward Liddy[/url]
will get a $1salary.
The insurer’s next 50highest-ranked executives will forgo pay raises through 2009,New York-based AIG said today in a statement.New York Attorney General [url=http://search.bloomberg.com/search?q=Andrew+Cuomo&site=wnews&client=wnews&proxystylesheet=wnews&output=xml_no_dtd&ie=UTF-8&oe=UTF-8&filter=p&getfields=wnnis&sort=date
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Andrew Cuomo[/url]
,who demanded last week that AIG disclose compensation plans,said the insurer took a “positive step”and called on other firms to follow.
Liddy,62,is cutting costs after lawmakers and regulators criticized AIG for bad bets that forced the insurer to take a taxpayer rescue that was increased this month to more than $150billion.AIG,crippled by lossestied to mortgages,follows Wall Street firm Goldman Sachs Group Inc.in limiting executive compensation after receiving commitments of capital from the U.S.
“It is only fair that top executives,who benefit the most when firms do well,should also bear the burden of the difficult economic consequences their firms now face,”Cuomo said today in a statement.“Taxpayers have been slammed with a one-two punch,seeing their investments dwindle while simultaneously having to fund the Wall Street bailout.”
AIG shareshave declined about 97percent this year.The insurer was unchanged today at $1.77in New York Stock Exchange composite trading at 4p.m.
Show of Confidence
Liddy,appointed by the government in September after AIG agreed to cede an 80percent staketo the U.S.in exchange for an $85billion loan,will collect the $1salary through 2009and an unspecified number of equity grants that “show his confidence”in the firm,the company said.Liddy,who previously was working without pay,will also be eligible for a bonus in 2010and won’t get any severance.
“AIG is mindful that it must act prudently,”Liddy said in a letter to Cuomo dated today.
[url=http://search.bloomberg.com/search?q=Paula+Rosput+Reynolds&site=wnews&client=wnews&proxystylesheet=wnews&output=xml_no_dtd&ie=UTF-8&oe=UTF-8&filter=p&getfields=wnnis&sort=date
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Paula Rosput Reynolds[/url]
,the former CEO of Safeco Corp.hired in October to lead AIG’s restructuring,will get no salary or bonus this year.Her 2009compensation besides salary will be tied to company progress,said AIG,which is trying to sell units to repay the government.
“To the extent this management turns this company around and the taxpayers are made whole and the company makes a profit,I believe they should be incentivized,”Cuomo said on a telephone conference call with reporters.
Waiting for Answers
Cuomo said his investigation continues into pay at AIG’s securities-lending unit,which helped push the insurer to the brink of collapse.He also said he was waiting to hear from Citigroup Inc.,Bank of America Corp.and Wells Fargo &Co.after sending them letters about executive pay.Cuomo said both federal and state regulators have “jurisdiction”over national banks.
Wells Fargo spokeswoman Julia Tunis Bernard,Bank of America’s [url=http://search.bloomberg.com/search?q=Scott+Silvestri&site=wnews&client=wnews&proxystylesheet=wnews&output=xml_no_dtd&ie=UTF-8&oe=UTF-8&filter=p&getfields=wnnis&sort=date
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Scott Silvestri[/url]
and Citigroup spokesman [url=http://search.bloomberg.com/search?q=Mike+Hanretta&site=wnews&client=wnews&proxystylesheet=wnews&output=xml_no_dtd&ie=UTF-8&oe=UTF-8&filter=p&getfields=wnnis&sort=date
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Mike Hanretta[/url]
declined to comment.Citigroup will set compensation for senior executives at yearend,Hanretta said.
Goldman,the firm that set a record for Wall Street pay last year,became the first U.S.bank to scrap 2008bonuses for top executives.CEO Lloyd Blankfein,whose 2007bonus was almost $70million,and six deputies declined the awards.
Liddy’s compensation at Allstate Corp.in 2006,his last year as CEO of the insurer,was $24million.
Liddy’s predecessor,Robert Willumstad,rejected a $22million severance package after leaving AIG in September.Willumstad had to step down as one of the conditions for AIG to receive government help.Martin Sullivan,who was forced out in June,received 2007compensation valued at $14.3million,a 32percent decrease from the year before as profit dropped on writedowns tied to the housing slump.
Bad Trips
Liddy previously agreed with Cuomo to freeze $19million due to Sullivan and $600million in compensation for other executives.AIG also agreed in October to immediately cancel trips for conferences after the company was criticized for spending $440,000to send employees to a resort days after the bailout.
Liddy had been working without a salary or other compensation,spokesman Nicholas Ashoohsaid last week.
“You could say it’s been both thankless and payless so far,”he said Nov.18.
Ashooh declined to name the executives beyond Liddy and Reynolds among the seven leaders.
