t r u t h o u t | AIG Gives "Retention" Pay After Scrapping Bonuses

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AIG Gives "Retention" Pay After Scrapping Bonuses

Wednesday 26 November 2008

by: Hugh Son | Visit article original @ Bloomberg

Edward Liddy, government-appointed CEO of American International Group Inc. One hundred and thirty of AIG's top managers will get "retention" payments - some in the millions - while Liddy finds buyers for the failed insurer. (Charles Rex Arbogast / AP)

American International Group Inc., the insurer that said yesterday it scrapped bonuses for top executives after a U.S. bailout, will still pay 130 managers "cash awards" to stay with the firm, including $3 million to retirement services chief Jay Wintrob.

Wintrob, 51, will get the "retention" payment in two installments, the first in April 2009 and the rest a year later, New York-based AIG said today in a regulatory filing. The firm previously disclosed the program in a Sept. 26 filing and said today that Wintrob and Chief Financial Officer David Herzog elected to get the payments four months later than planned.

"The expectation from the public and Congress was that they weren't getting bonuses, not that they'd be pushed off by several months," said David Schmidt, a consultant at executive pay firm James F. Reda & Associates. "That clearly violates the spirit of AIG saying they'll forgo their bonuses."

Chief Executive Officer Edward Liddy is encouraging top employees at AIG subsidiaries to remain so the units retain their value while he finds buyers. The insurer is selling businesses, including the U.S. retirement group Wintrob heads, to repay a $60 billion loan included in the expanded government rescue package AIG got this month.

"We've said they aren't eligible for annual bonuses, and they're not," Nicholas Ashooh, spokesman for AIG, said today in an interview. "What we're talking about are retention agreements - they've been pushed back by several months - and it's our hope that those businesses will be sold in several months."

Looking for Buyers

If the units are sold before payments are due, AIG won't have to give the awards, Ashooh said. Under the agreement announced this week, top executives are eligible for either severance or retention payments, not both, he said.

Wintrob is CEO of AIG Retirement Services Inc., the division that sells annuities. He was chief operating officer of SunAmerica when AIG bought the firm for $19.7 billion in 1998. The business he now heads may sell for about $12 billion, according to Gary Ransom, analyst at Fox-Pitt Kelton Cochran Caronia Waller. Wintrob didn't return two calls seeking comment.

Wintrob was one of six top-paid AIG executives in 2007, with total compensation valued at $7.63 million. He earned a salary of $775,000 and a $1.74 million bonus in addition to stock and options, according to an April regulatory filing.

AIG said yesterday it won't give 2008 bonuses for seven top leaders after New York Attorney General Andrew Cuomo demanded last week that it disclose compensation plans. The firm's next 50 highest-ranked executives will forgo salary raises through 2009. A call to Cuomo's office today seeking comment wasn't returned.

"Act Prudently"

Liddy, appointed by the government to run AIG after the insurer agreed to turn over an 80 percent stake, said yesterday the firm is "mindful that it must act prudently." He will get a $1 a year salary through 2009 and an unspecified number of equity grants.

AIG has declined about 97 percent in New York trading this year. The company climbed 18 cents to $1.95 at 4:15 p.m. in New York Stock Exchange composite trading.

Comments

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Are they all

Sat, 11/29/2008 - 22:48 — Anonymous (not verified)

Are they all insane?????????????? This is as bad as it gets all paid by the American middle-class taxpayer. And there is NO OUTRAGE?

Email this comment

This should have been

Sun, 11/30/2008 - 00:52 — Anonymous (not verified)

This should have been EXPRESSLY forbidden when the money was approved and Paulson doled it out. I cannot describe the level out outrage that this raises in me and, I'm sure, in everyday Americans. Retention bonuses?!! -- who WANTS them to stay on? They screwed up the company and now we're paying them retention bonuses to stay on? They should be encouraged to clean out their desks and go home! Gad! What a way to sh** on the American people one more time -- blatant, disrespectful, and arrogant. Gad!

told ya they'd walk away

Sun, 11/30/2008 - 02:00 — ultimusgimp (not verified)

told ya they'd walk away with it''''''

Keep raving about how we are

Sun, 11/30/2008 - 02:05 — Larry Milton (not verified)

Keep raving about how we are so upset, and keep on voting for the incumbents. Who is the idiot???

I say that all upper

Sun, 11/30/2008 - 05:41 — ravenvelvet (not verified)

I say that all upper management people of the bailout companies get paid the same salary as a business teacher in any high school of their choice in the nation. Let's see some real-world economics.

The gov't must stop all

Sun, 11/30/2008 - 07:20 — Anonymous (not verified)

The gov't must stop all salaries to these "managers" who mismanaged their companies and still take outrageous sums of money for themselves out of the bailout. As usual, welfare for the rich.

Oh, please. I'm the one who

Sun, 11/30/2008 - 07:21 — Anonymous (not verified)

Oh, please. I'm the one who said this should have been expressly forbidden. And there's no way in hell I'm sorry to have voted for a Democrat this time around. I'm not stupid! It's not who we vote for every four years that will make a difference, it's what we do in the interim, and so far we've typically done nothing from presidential election to presidential election. Leaving George W. Bush in office the last time, and electing another mainstream REPUBLICAN like John McCain this time around would not have done this country or the world any good. Voting for a third party candidate BEFORE any third party has a ghost of a chance is NOT principled and honorable -- it's pointless and stupid. Now that we have moved an inch in the right direction, it's time to support the kind of policies we want to see happen -- it's time to demand governance that benefits the people. Even industry and business is supposed to benefit the people, otherwise why would we support it? They get support from us because we expect support from them. NOW is the time -- in the four years before we elect another president, in the two years before we elect more senators and representatives -- now is the time to demand the government we want. We can't let ourselves get into this position again of having little choice but to vote for one of the two major candidates. If the Democrats don't give us the government we deserve, we have to be willing to vote a third party. As long as we don't get the likes of Bush ever again, we can risk it now.

taking off on Larry Milton's

Sun, 11/30/2008 - 07:57 — Basalt in Washington state (not verified)

taking off on Larry Milton's rant . . . the enormity of the fraud, corruption, duplicity, exploitation and aggression, not just this recent eruption, but from the first, when the colonial landed aristocracy undertook to snatch it away from the British king, is more than we in the feed lot can deal with. As long as most are placated with distractions of suicidal and unsustainable economies that are "empty calories", grossly pale substitutes for authentic, reasonable life, as long as divisions and "choices" (under the rubric of "freedom and liberty") are stoked and exploited by parasitic demagogues and symbolic analysts who produce nothing by way of the basic necessities of a reasonable life, most will "make do" with it. They will gladly loose themselves in bread and circuses (Budweiser and Super Bowls). Keep buying feedstock for the landfills, keep working so you can do such, keep recycling, stay infotained with corporate media . . . and above all, keep voting. Maybe it will change!

Let them move on. Maybe

Sun, 11/30/2008 - 08:26 — Anonymous (not verified)

Let them move on. Maybe McDonalds will be a better place for them. Let them see if they get money to stay on there. What a joke, they should get on their knees and thank God they are not on jail for all the money they stole.

Well, well, well, what a

Sun, 11/30/2008 - 15:26 — granny (not verified)

Well, well, well, what a surprise! So AIG is rewarding some of the top people who did so poorly. Sort of like the bush/chcney mob walking away with retirement and other unnamed benes intact, after lying and destroying the country. Let's hope "CHANGE" is really that.

This is why a third party, a

Mon, 12/01/2008 - 12:06 — leftyrite (not verified)

This is why a third party, a Social Democratic party, is needed. Obama, a brilliant man, will use his genius to bring order to a Finance party that includes well-off people of both nominal political parties. The unrepresented consciences of America need a party of ideas with long-range goals and ideals. Yes, governance requires compromise, but the lousy arrangements that we see time after time should tell us that the whole system with which we live has become way too destructive and wasteful in its present form. We need people to come together over much more positive shared ideals and beliefs. We may not make it to the promised land of governance anytime soon, but at least we'll have the satisfaction of devoting ourselves to a worthy party of social and political consciences. Reform of the necessary size and scope will never take place if the Left remains as marginalized and as scorned as it is presently.

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