AIG will freeze some pay to former execs

[NaughtyGeek]

ALBANY, N.Y. ? Financially troubled American International Group, now supported by a federal bailout, has agreed to freeze millions of dollars in compensation and bonuses for former executives.

In a letter Wednesday to AIG's new chairman, Edward Liddy, New York Attorney General Andrew Cuomo wrote that after his office's review of company documents, the insurance and finance giant agreed to stop payments under former chief executive Martin Sullivan's $19 million pay package.

AIG also confirmed that no payments will be made from the $600 million compensation and bonus pools of its Financial Products subsidiary, including $69 million the former head of the subsidiary, Joseph Casano, could have been paid and about $93 million that five other top executives might have been eligible to receive.

"The Financial Products subsidiary was largely responsible for AIG's collapse, and Casano has been terminated," Cuomo wrote. Taxpayers' financial interests should take priority over those managers, he said.

Company spokesman Joe Norton said Cuomo's letter was consistent with AIG's actions and discussions with the attorney general. After a meeting last week, Liddy and Cuomo issued a joint statement that payments to outgoing chief financial officer Steven Bensinger were stopped and the company would help Cuomo recover any illegal expenditures.

Cuomo said Wednesday that the next step for his office will be investigating how to recoup executive bonuses paid previously, saying a fraud law could apply depending on timing, circumstances and contracts. Handling AIG's case should be regarded as a template for other companies that require government help, he said.

"Taxpayers are, in many ways, now like shareholders of your company, and the new AIG has a responsibility to them in the first instance," Cuomo wrote Liddy, noting the $120 billion bailout will leave the U.S. Treasury holding AIG stock.

"We're looking at a number of companies which we don't wish to share at this point," Cuomo said. "You're going to have this same issue with many other companies."

He criticized excessive leveraging, poor regulation and executive compensation packages that gave incentives for short-term gains at the expense of long-term, sustainable growth.

Oh, this is ever so sweet. I'm sure that all the excesses won't be ferreted out, but to see that some substantial action is being taken makes my stress levels come down just a notch over this bailout crap. Even if only the top 2% earners responsible for this fiasco are pounded in the wallet, it will still be much more than I ever expected.

 

[WhipperSnapper]

It's probably just a song and dance until the media spotlight and public spotlight is off of them. Then it's back to the business of fleecing shareholders and taxpayers.

 

[GTKeeper]

IMHO every million counts. This is a good thing.

 

[NaughtyGeek]

Originally posted by: WhipperSnapper

It's probably just a song and dance until the media spotlight and public spotlight is off of them. Then it's back to the business of fleecing shareholders and taxpayers.

That may very well be, but I'll be a puppet for a day and take comfort that something, however small, is being done.

 

[DisgruntledVirus]

Originally posted by: GTKeeper
IMHO every million counts. This is a good thing.

Next step...

Have them pay back some of the money they earned running the company into the ground...

 

[StageLeft]

Better than nothing.

 

[GroundedSailor]

Originally posted by: NaughtyGeek

ALBANY, N.Y. ? Financially troubled American International Group, now supported by a federal bailout, has agreed to freeze millions of dollars in compensation and bonuses for former executives.

In a letter Wednesday to AIG's new chairman, Edward Liddy, New York Attorney General Andrew Cuomo wrote that after his office's review of company documents, the insurance and finance giant agreed to stop payments under former chief executive Martin Sullivan's $19 million pay package.

AIG also confirmed that no payments will be made from the $600 million compensation and bonus pools of its Financial Products subsidiary, including $69 million the former head of the subsidiary, Joseph Casano, could have been paid and about $93 million that five other top executives might have been eligible to receive.

"The Financial Products subsidiary was largely responsible for AIG's collapse, and Casano has been terminated," Cuomo wrote. Taxpayers' financial interests should take priority over those managers, he said.

Company spokesman Joe Norton said Cuomo's letter was consistent with AIG's actions and discussions with the attorney general. After a meeting last week, Liddy and Cuomo issued a joint statement that payments to outgoing chief financial officer Steven Bensinger were stopped and the company would help Cuomo recover any illegal expenditures.

Cuomo said Wednesday that the next step for his office will be investigating how to recoup executive bonuses paid previously, saying a fraud law could apply depending on timing, circumstances and contracts. Handling AIG's case should be regarded as a template for other companies that require government help, he said.

"Taxpayers are, in many ways, now like shareholders of your company, and the new AIG has a responsibility to them in the first instance," Cuomo wrote Liddy, noting the $120 billion bailout will leave the U.S. Treasury holding AIG stock.

"We're looking at a number of companies which we don't wish to share at this point," Cuomo said. "You're going to have this same issue with many other companies."

He criticized excessive leveraging, poor regulation and executive compensation packages that gave incentives for short-term gains at the expense of long-term, sustainable growth.

Oh, this is ever so sweet. I'm sure that all the excesses won't be ferreted out, but to see that some substantial action is being taken makes my stress levels come down just a notch over this bailout crap. Even if only the top 2% earners responsible for this fiasco are pounded in the wallet, it will still be much more than I ever expected.

:thumbsup:

Now to get the execs to pay back the money they already took by adjusting the goals to suit them.

 

[T2T III]

Originally posted by: GroundedSailorNow to get the execs to pay back the money they already took by adjusting the goals to suit them.

Say it ain't true. Executives manipulating the goals so it's easy for them to achieve results; thus getting bigger bonuses?

Isn't this kind of like the CEO of a company appointing or "cherry picking" someone to head the compensation committee for executives?

 

[SecPro]

Those executives will sue for the money that is due to them and they will win unless it can be proven that they were somehow in breach of their employment contract or obtained the money illegally.

 

[JS80]

Originally posted by: T2T III

Originally posted by: GroundedSailorNow to get the execs to pay back the money they already took by adjusting the goals to suit them.

Say it ain't true. Executives manipulating the goals so it's easy for them to achieve results; thus getting bigger bonuses?

Isn't this kind of like the CEO of a company appointing or "cherry picking" someone to head the compensation committee for executives?

welcome to the world of executive compensation

 

[zephyrprime]

Originally posted by: SecPro
Those executives will sue for the money that is due to them and they will win unless it can be proven that they were somehow in breach of their employment contract or obtained the money illegally.

I'll bet that those contracts are a lot less clear than one would expect. And I think the likelihood of fraud having been done in the past is probably pretty good.

 

[MovingTarget]

Good. These guys made waaaay to much even for the companies that were successful. The kind of income gap that has developed and widened between the leadership of publically traded companies and the people that actually DO the work has been out of whack for the better part of a generation. It used to be that an executive made only 40-50x what the average/median worker made at these companies, but in many cases it has grown exponentially. It isn't fair for the workers or the shareholders, imho. Those millions could better be spent in most ALL cases on R&D, operations, payraises/bonuses for the (real) workers, dividends, etc.

 

[GroundedSailor]

Originally posted by: T2T III

Originally posted by: GroundedSailorNow to get the execs to pay back the money they already took by adjusting the goals to suit them.

Say it ain't true. Executives manipulating the goals so it's easy for them to achieve results; thus getting bigger bonuses?

Isn't this kind of like the CEO of a company appointing or "cherry picking" someone to head the compensation committee for executives?

Gee . . . I never knew!

 

[Arkaign]

Executives that are found to have violated ethics or finance/tax laws, or have been personally responsible for the severe failing of their companies should have ALL of their assets seized and sold to pay the shareholders, and be banned from ever returning to the business world. Let them sell hotdogs at baseball games or paint driveways.

 

[TallBill]

Originally posted by: MovingTarget
Good. These guys made waaaay to much even for the companies that were successful. The kind of income gap that has developed and widened between the leadership of publically traded companies and the people that actually DO the work has been out of whack for the better part of a generation. It used to be that an executive made only 40-50x what the average/median worker made at these companies, but in many cases it has grown exponentially. It isn't fair for the workers or the shareholders, imho. Those millions could better be spent in most ALL cases on R&D, operations, payraises/bonuses for the (real) workers, dividends, etc.

I'm perfectly fine with ridiculously high CEO salaries as long as their companies continue to run on their own accords. It may seem greedy, morally wrong, or like a poor business decision, but that's capitalism right?

But as soon as they need assistance from the government, then they need to play by the government's rules.

By the way, anyone know what interest rate the $120bn loan was and how repayment is structured?