Top executives agreed to a series of pay restrictions, including canceling bonuses, as the troubled insurer struggles to stay afloat.
By Kenneth Musante, CNNMoney.com staff writer
NEW YORK (CNNMoney.com) — AIG Chief Executive Edward Liddy agreed to slash his annual salary to $1 as part of a series of voluntary pay restrictions by top executives tied to a massive $150 billion government bailout.
AIG (AIG, Fortune 500) will also forgo bonuses this year and eliminate pay increases through 2009 for the firm’s top executives.
Liddy will get paid $1 per year for 2008 and 2009, with his compensation consisting entirely of equity payments. While he will not receive bonuses during those years, he will be eligible in 2010 for “extraordinary performance.” He will also be ineligible for severance payments.
“This action by the senior management team demonstrates not only that we understand our obligation to taxpayers and shareholders, but also that we are committed to the future success of this organization,” said Liddy in a statement.
In addition to Liddy, Paula Reynolds, whom AIG hired as chief restructuring officer in October, will receive no salary or bonuses in 2008. From 2009 onward, any compensation above her base pay will be tied to the progress of AIG’s restructuring.
“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,” said New York state Attorney General Andrew Cuomo in response to a letter from Liddy informing him of the pay cuts.
Cuomo had voiced concern about AIG’s expenditures in October after it was reported that the company had spent $440,000 on a weekend meeting at a resort. Subsequently, AIG immediately cancelled 160 events, worth an estimated $8 million.
Government help: AIG has been in full-blown cost-cutting mode since October, as it has been receiving billions in government loans. more