AIG General Counsel Resigns Over Restricted Pay
Dec. 31, 2009 – The general counsel and vice chair for struggling insurer American International Group (AIG) has resigned due to pay restrictions imposed by President Barack Obama’s “pay czar.”
Anastasia Kelly, 60, this week resigned from AIG for “good reason” and will receive a $3.8 million severance package. Kelly joined the firm in 2006 as its general counsel regarding global legal compliance and regulatory matters. She became AIG’s vice chair in charge of legal, corporate affairs, communications and human resources earlier this year. Kelly recently hired a New York law firm to review her conduct at AIG and determine an appropriate amount in severance, according to a Bloomberg news report.
AIG officials also reported the resignation of Suzanne Fulsom, the firm’s chief compliance and regulatory officer.
The resignations come during the same week an unidentified AIG executive was reported to receive a bonus equal to nearly 10 times his annual salary after President Barack Obama’s “Pay Czar” recently approved the additional pay.
Officials for AIG and the U.S. Treasury Department cited privacy concerns when refusing to identify the executive, but “Pay Czar” Kenneth Feinberg recently approved the bonus pay after the executive recanted a prior resignation from the fiscally challenged insurance company. The executive will have his or her 2009 salary of $450,000 supplemented by long-term compensation package that includes $3.26 million in stock options and another $1 million in financial incentives.
Feinberg said the long-term compensation is comparable to those he earlier approved for AIG’s 25 top executives and is necessary to retain employees critical for helping the firm repay its massive debt to U.S. taxpayers. Feinberg earlier announced pay restrictions for the 100 highest-paid executives at AIG, including controversial retention pay bonuses for “critical” employees.
Calling the retention bonuses “legally binding contracts,” Feinberg said he would allow them for “particularly critical” executives and managers AIG officials have identified as important to the ailing corporation’s long-term success and, more importantly, it’s ability to repay its staggering debt to U.S. taxpayers.
AIG executives and managers not receiving retention payments are limited to base salaries of up to $500,000. Salaries must be comprised of 45 percent cash with the remaining amount paid in company stock that must be held for at least a year. Any stocks paid as “incentive” pay and not salary must be held for at least three years. The salary guidelines apply to 2009 but likely will be carried over for 2010, according to news reports.
‘Pay Czar’ Approves $4.3 Million Bonus for AIG Exec
Dec. 30, 2009 – An unidentified executive at struggling American International Group (AIG) will receive a bonus equal to nearly 10 times his annual salary after President Barack Obama’s “Pay Czar” recently approved the additional pay.
Officials for AIG and the U.S. Treasury Department cited privacy concerns when refusing to identify the executive, but “Pay Czar” Kenneth Feinberg recently approved the bonus pay after the executive recanted a prior resignation from the fiscally challenged insurance company. The executive will have his 2009 salary of $450,000 supplemented by long-term compensation package that includes $3.26 million in stock options and another $1 million in financial incentives.
Feinberg said the long-term compensation is comparable to those he earlier approved for AIG’s 25 top executives and is necessary to retain employees critical for helping the firm repay its massive debt to U.S. taxpayers. Feinberg earlier announced pay restrictions for the 100 highest-paid executives at AIG, including controversial retention pay bonuses for “critical” employees.
Calling the retention bonuses “legally binding contracts,” Feinberg said he would allow them for “particularly critical” executives and managers AIG officials have identified as important to the ailing corporation’s long-term success and, more importantly, it’s ability to repay its staggering debt to U.S. taxpayers.
AIG executives and managers not receiving retention payments are limited to base salaries of up to $500,000. Salaries must be comprised of 45 percent cash with the remaining amount paid in company stock that must be held for at least a year. Any stocks paid as “incentive” pay and not salary must be held for at least three years. The salary guidelines apply to 2009 but likely will be carried over for 2010, according to news reports.
The executive pay limitations imposed by Feinberg apply to all firms accepting taxpayer bailout funds through the federal government’s $700 billion Troubled Asset Relief Program (TARP). Others firms affected are Citigroup, General Motors and GMAC.
Obama appointed Feinberg to oversee executive pay at seven U.S. firms accepting taxpayer bailout funds. Feinberg in October reduced pay for AIG’s 25 highest-ranking executives by an average 57 percent. He later assessed pay scales for the next 75 highest-paid AIG employees, including the five executives who threatened to resign.
The threatened resignations were not the first at AIG over Feinberg’s limitations on executive pay. Barely a month after receiving approval for an executive compensation package valued at up to $10.5 million per year, AIG’s newest chief executive officer threatened to quit and later recanted over potential federal limitations on executive pay.
Robert H. Benmosche, AIG’s current chief executive and formerly the top executive at MetLife, in November threatened to resign his new position after Feinberg said he would limit executive compensation at corporations that accepted funds through the TARP program, which was created last year during the economic meltdown and designed to relieve ailing corporations of their toxic assets, such as mortgage-backed securities, which were dragging them down into bankruptcy.
Benmosche threatened to step down when the AIG chief executive informed the company’s board of directors he would resign from the position he accepted in August in light of executive compensation limitations recently announced by federal officials and after Feinberg had approved Benmosche’s $10.5 million pay package.
Benmosche reportedly cited potential problems retaining top executives with federally limited pay amounts when telling AIG’s board of directors he would resign last week, according to the Wall Street Journal, which cited anonymous sources. Benmosche allegedly clarified his comments later, telling board members he intends to stay on at AIG and telling employees he would “fight” on their behalf while continuing to work with Feinberg.
‘Pay Czar’ Okays AIG Retention Bonuses, Limits Executive Pay
Dec. 14, 2009 – Having already limited pay for the top 25 executives at taxpayer-rescued insurer American International Group (AIG), President Barack Obama’s “Pay Czar,” Kenneth Feinberg, recently announced pay restrictions for the next 75 highest-paid executives but also approved controversial retention pay bonuses for “critical” employees.
Calling the retention bonuses “legally binding contracts,” Feinberg said he will allow them for “particularly critical” executives and managers AIG officials have identified as important to the ailing corporation’s long-term success and, more importantly, it’s ability to repay its staggering debt to U.S. taxpayers.
AIG executives and managers not receiving retention payments are limited to base salaries of up to $500,000. Salaries must be comprised of 45 percent cash with the remaining amount paid in company stock that must be held for at least a year. Any stocks paid as “incentive” pay and not salary must be held for at least three years. The salary guidelines apply to 2009 but likely will be carried over for 2010, according to news reports.
The executive pay limitations imposed by Feinberg apply to all firms accepting taxpayer bailout funds through the federal government’s $700 billion Troubled Asset Relief Program (TARP). Others firms affected are Citigroup, General Motors and GMAC.
Obama appointed Feinberg to oversee executive pay at seven U.S. firms accepting taxpayer bailout funds. Feinberg in October reduced pay for AIG’s 13 highest-ranking executives by an average 57 percent. He later assessed pay scales for the next 75 highest-paid AIG employees, including the five executives who threatened to resign.
The threatened resignations were not the first at AIG over Feinberg’s limitations on executive pay. Barely a month after receiving approval for an executive compensation package valued at up to $10.5 million per year, AIG’s newest chief executive officer last month threatened to quit and later recanted over potential federal limitations on executive pay.
Robert H. Benmosche, AIG’s current chief executive and formerly the top executive at MetLife, reportedly threatened to resign his new position after Feinberg said he would limit executive compensation at corporations that accepted funds through the TARP program, which was created last year during the economic meltdown and designed to relieve ailing corporations of their toxic assets, such as mortgage-backed securities, which were dragging them down into bankruptcy.
Benmosche threatened to step down when the AIG chief executive informed the company’s board of directors he would resign from the position he accepted in August in light of executive compensation limitations recently announced by federal officials and after Feinberg had approved Benmosche’s $10.5 million pay package.
Benmosche reportedly cited potential problems retaining top executives with federally limited pay amounts when telling AIG’s board of directors he would resign last week, according to the Wall Street Journal, which cited anonymous sources. Benmosche allegedly clarified his comments later, telling board members he intends to stay on at AIG and telling employees he would “fight” on their behalf while continuing to work with Feinberg.
Feinberg in October ordered an average 50 percent pay cut for the top 25 executives at AIG and six other corporations that accepted taxpayer funds through the federal TARP program. Although Feinberg’s decision only applies to the remainder of 2009, executives at affected companies anticipate he will base 2010 compensation levels on the same criteria.
Proponents say the scaled-back compensation amounts are justified for firms that would be bankrupt but for taxpayer intervention. But opponents say the reduced pay levels only punish people not responsible for current company woes and make it harder for struggling firms to get back on their feet and retain critical staff capable of finding jobs elsewhere – as well as make it more difficult for firms to repay their respective debts to U.S. taxpayers.
AIG Execs Threaten to Quit Over Pay Restrictions
Dec. 8, 2009 – Five high-level executives at taxpayer-rescued insurance giant American International Group (AIG) earlier this month threatened to resign over federal pay restrictions, but two already have recanted, the Wall Street Journal reported this week.
High-level AIG executives – financial services head William Dooley, domestic property and casualty chief John Doyle, company attorney Anastasia Kelly, international life insurance chief Rodney Martin, and board vice chairman and international property and casualty insurance chief Nicholas Walsh – on Dec. 1 submitted notices stating their intent to resign their respective positions by the end of the month if President Barack Obama’s “Pay Czar,” Kenneth Feinberg, deeply slashed salaries, according to the Wall Street Journal. Two reportedly since have backed down from their threats to resign.
Obama appointed Feinberg to oversee executive pay at seven U.S. firms accepting taxpayer bailout funds. Feinberg in October reduced pay for AIG’s 13 highest-ranking executives by an average 57 percent and is assessing pay scales for the next 75 highest-paid employees, including the five executives who threatened to resign, according to the Wall Street Journal.
The threatened resignations were not the first at AIG over Feinberg’s limitations on executive pay. Barely a month after receiving approval for an executive compensation package valued at up to $10.5 million per year, AIG’s newest chief executive officer last month threatened to quit and later recanted over potential federal limitations on executive pay.
Robert H. Benmosche, AIG’s current chief executive and formerly the top executive at MetLife, reportedly threatened to resign his new position after Feinberg said he would limit executive compensation at corporations that accepted funds through the $700 billion federal Troubled Asset Relief Program (TARP), which was created last year during the economic meltdown and designed to relieve ailing corporations of their toxic assets, such as mortgage-backed securities, which were dragging them down into bankruptcy.
Benmosche threatened to step down when the AIG chief executive informed the company’s board of directors he would resign from the position he accepted in August in light of executive compensation limitations recently announced by federal officials and after Feinberg had approved Benmosche’s $10.5 million pay package.
Benmosche reportedly cited potential problems retaining top executives with federally limited pay amounts when telling AIG’s board of directors he would resign last week, according to the Wall Street Journal, which cited anonymous sources. Benmosche allegedly clarified his comments later, telling board members he intends to stay on at AIG and telling employees he would “fight” on their behalf while continuing to work with Feinberg.
Feinberg in October ordered an average 50 percent pay cut for the top 25 executives at AIG and six other corporations that accepted taxpayer funds through the federal TARP program. Although Feinberg’s decision only applies to the remainder of 2009, executives at affected companies anticipate he will base 2010 compensation levels on the same criteria.
Proponents say the scaled-back compensation amounts are justified for firms that would be bankrupt but for taxpayer intervention. But opponents say the reduced pay levels only punish people not responsible for current company woes and make it harder for struggling firms to get back on their feet and retain critical staff capable of finding jobs elsewhere – as well as make it more difficult for firms to repay their respective debts to U.S. taxpayers.
AIG’s Top Executive Threatens to Quit, Recants Over Executive Pay
Nov. 16, 2009 — Barely a month after receiving approval for an executive compensation package valued at up to $10.5 million per year, the newest chief executive officer of taxpayer-rescued American International Group (AIG) last week threatened to quit and later recanted over potential federal limitations on executive pay at firms rescued by U.S. taxpayers.
Robert H. Benmosche, AIG’s current chief executive and formerly the top executive at MetLife, last week reportedly threatened to resign his new position after President Barack Obama’s “Pay Czar,” Kenneth Feinberg, said he would limit executive compensation at corporations that accepted funds through the $700 billion federal Troubled Asset Relief Program (TARP), which was created last year during the economic meltdown and designed to relieve ailing corporations of their toxic assets, such as mortgage-backed securities, which were dragging them down into bankruptcy.
The Wall Street Journal last week reported Benmosche might step down after the AIG chief executive informed AIG’s board of directors he would resign from the position he accepted in August in light of executive compensation limitations recently announced by federal officials and after Feinberg had approved Benmosche’s $10.5 million pay package.
Benmosche reportedly cited potential problems retaining top executives with federally limited pay amounts when telling AIG’s board of directors he would resign last week, according to the Wall Street Journal, which cited anonymous sources. Benmosche allegedly clarified his comments later, telling board members he intends to stay on at AIG and telling employees he would “fight” on their behalf while continuing to work with Feinberg.
Feinberg in October ordered an average 50 percent pay cut for the top 25 executives at AIG and six other corporations that accepted taxpayer funds through the federal TARP program. Another decision is coming regarding the next 75-highest paid positions at the same seven firms.
Although Feinberg’s decision only applies to the remainder of 2009, executives at affected companies anticipate he will base 2010 compensation levels on the same criteria. Proponents say the scaled-back compensation amounts are justified for firms that would be bankrupt but for taxpayer intervention. But opponents say the reduced pay levels only punish people not responsible for current company woes and make it harder for struggling firms to get back on their feet and retain critical staff capable of finding jobs elsewhere – as well as make it more difficult for firms to repay their respective debts to U.S. taxpayers.
AIG officials last year accepted what has become a nearly $183 billion, taxpayer-funded federal rescue package after what formerly was the world’s largest insurer became its most indebted on bad bets tied to various mortgage markets. Federal officials approved the bailout funds for AIG and other firms to stave off what they claimed would be a devastating domino effect on global financial markets.
Chinese Bank Buys AIG Hong Kong Unit for $70 Million
Nov. 4, 2009 – Officials for the Hong Kong-based China Construction Bank Asia yesterday announced the firm has completed acquiring ailing insurer American International Group’s Asia-based AIG Finance subsidiary for about $70 million. The firm was rechristened China Construction Bank Asia Finance.
The former American International Group (AIG) subsidiary has more than 500,000 credit card customers and about 5 percent of Hong Kong’s credit card market, according to the online publication China Knowledge. The acquisition means parent corporation China Construction Bank, the second largest bank in the world based on market value, can expand its global business strategy while AIG officials continue selling assets to repay its staggering debt to U.S. taxpayers.
Formerly the world’s largest insurance company, AIG became the world’s most indebted insurer after federal officials in September 2008 agreed to extend the company an $85 billion loan in exchange for an 80 percent share of company stocks. Federal officials said allowing AIG to go bankrupt would have a devastating impact on U.S. and international financial markets and later revised lending terms, making it a $153 billion loan with a lower interest rate and longer repayment period.
Under the new plan, the Federal Reserve provided AIG $60 billion in loans and the U.S. Treasury another $40 billion so company officials could buy up preferred stock. Federal officials also approved $53 billion to purchase the company’s risky mortgage-backed assets and other debt contracts.
AIG attempted to sell off its overseas life insurance units and other subsidiaries to repay up to $60 billion in loans this year, but a combination of tightened global credit markets, a shortage of qualified buyers and decreased market values during a global economic downturn have caused the firm to fall short of its lofty goal. Company officials intend to focus future business on property and casualty insurance markets and maintain a minority financial interest in some profitable overseas ventures.
AIG has raised more than $4 billion through the sale of several of its subsidiary units. Industry analysts say the insurer could raise up to $50 billion through the sales of AIG’s U.S.-based and overseas life insurance units and retirement savings units. But the firm will have to do so with a new chief executive in charge.
President Barack Obama’s “czar” in charge of executive pay at firms accepting taxpayer bailout funds recently gave his formal approval for a $10.5 million annual compensation package for newly appointed AIG Chief Executive Officer Robert Benmosche.
Kenneth Feinberg, Obama’s pay czar, approved a $7 million annual salary plus another $3.5 million in potential incentives for Benmosche, the former chief executive at MetLife who recently was appointed AIG’s new top executive. Feinberg said the compensation amount is “appropriate when compared to the total compensation packages of other applicable presidents and chief executive officers” in a letter addressed to AIG’s board of directors.
Benmosche replaces outgoing AIG chief executive and board director, Edward Liddy, who was appointed to the insurer’s top spot by federal officials after AIG accepted its initial bailout terms in 2008.
Obama’s ‘Pay Czar’ Slashes Executive Pay at AIG, Others
Oct. 23, 2009 – Only weeks after approving an up to $10.5 million compensation package for the newest chief executive at taxpayer-rescued American International Group (AIG), President Barack Obama’s “pay czar,” Kenneth Feinberg, yesterday announced he was slashing executive pay by up to 90 percent for top employees at AIG and other firms bailed out by U.S. taxpayers.
The move means AIG executives will have their 2009 pay reduced by up to 90 percent from a year ago with a 58 percent reduction the average for the top 25 earners at the ailing insurance giant. Feinberg did not indicate whether the decision would affect AIG’s newest chief executive, Robert Benmosche, but he set a $500,000 ceiling for executive pay, unless a higher amount was deserved for “good cause.” Most executive compensation is to be paid in company stock rather than cash.
Other firms affected by Feinberg’s decision include Bank of America, Chrysler, Chrysler Financial, Citigroup, GMAC and General Motors.
The move comes about six months after President Obama found himself in hot water over executive bonus pay at AIG. After accepting a taxpayer-funded bailout valued at up to $182.5 billion, AIG intended to pay its executives hundreds of millions of dollars in “retention” pay designed to retain key employees at firms being sold to repay the insurer’s massive debt to U.S. taxpayers. U.S. Senator Chris Dodd (D-Connecticut) had amended the unread and non-debated $787 billion federal stimulus to require the bonuses be paid.
When a public furor arose over the bonus pay, Dodd and Obama initially claimed they knew nothing of the matter. But when reporters pointed out Dodd sponsored the amendment requiring the bonus pay be distributed, Dodd said he sponsored it only after being requested to do so by Obama’s administration. Compounding the problem, Dodd and Obama were among the largest recipients of campaign contributions from AIG employees, and the appearance of political corruption caused the President to demand the bonus pay be taxed heavily.
In the wake of the subsequent public outrage, Obama appointed Feinberg as the federal “compensation czar” in charge of reviewing executive bonus payments at companies accepting federal assistance. AIG earlier paid out $165 million in retention bonus payments to employees at subsidiary AIG Financial Products, which is responsible for crippling its parent company through exposure to risky credit default swaps tied to various mortgage markets.
When Democrats were preparing for their successful run for control of the U.S. Congress during the 2006 mid-term elections, Dodd sought campaign donations from executives and managers at AIG Financial Products. A top executive at a Connecticut-based unit of AIG Financial Products in 2006 told colleagues Dodd needed donations and instructed colleagues to donate and provide proof of their donations to company officials, according to the Washington Times report.
A Nov. 17, 2006, e-mail message sent to workers from AIG Financial Products Chief Executive Officer Joseph Cassano said Dodd was to become chairman of the Senate Banking, Housing and Urban Affairs Committee, which has federal oversight over the insurance and finance industries.
“Given his seniority in the Senate, he will also play a key role in the Democratic Majority’s leadership,” Cassano said in the e-mail message obtained by The Washington Times. “As he considers running for president in 2008, Senator Dodd has asked us for our support with his reelection campaign and we have offered to be supportive.”
Dodd’s campaign soon after collected more than $160,000 from AIG Financial Products employees at its Connecticut facility just before the Senator became committee chairman in 2007. Dodd later transferred the funds to his failed 2008 presidential campaign.
AIG employees and their spouses donated $121,378 to Dodd’s 2006 political campaign, $224,278 to his 2008 effort and $183,700 so far for Dodd’s 2010 campaign cycle, according to opensecrets.org. Cassano donated $7,118, according to the Center for Responsive Politics.