AIG slammed over executive bonuses
AIG has agreed to restructure corporate bonuses after coming under fire over the payment of $US165 million ($244 million) to employees in its financial products division.
CEO Edward Liddy told the US House of Representatives last week that the payments made in the unit that caused many of AIG’s problems were made to “prevent undue risk exposure”.
“I am trying to prevent an uncontrolled collapse of that business,” he said. “Make no mistake, had I been CEO at the time I would never have approved the retention contracts that were put in place over a year ago. It was distasteful to have to make these payments.”
Mr Liddy came out of retirement to take the helm of AIG after the US Government asked him to help rehabilitate the company last September, five months after the retention contracts were put in place.
“I have asked the employees of AIG Financial Products to step up and do the right thing. Specifically, I have asked those who received retention payments of $US100,000 ($148,121) or more to return at least half of those payments,” he said. “Some have already stepped forward and offered to give up 100% of their payments.”
In a letter to House Speaker Nancy Pelosi last week, US Treasury Secretary Timothy Geithner expressed his and President Barack Obama’s outrage at the bonuses.
But he says the lawyers of both AIG and Treasury agree the contracts are legally binding.
“I demanded of Mr Liddy that he scrap or cut hundreds of millions of dollars in additional payments due this year and beyond,” Mr Geithner said. “He has committed to do this.”
The US Treasury will now impose a contractual commitment on AIG to pay it the amount of the retention awards just paid. It will also deduct the amount of the payments from the recently announced $US30 billion ($44.4 billion) in government assistance.
Mr Liddy has also given a timeline for the company’s restructure, telling the House AIG will be broken up within four years.
CEO Edward Liddy told the US House of Representatives last week that the payments made in the unit that caused many of AIG’s problems were made to “prevent undue risk exposure”.
“I am trying to prevent an uncontrolled collapse of that business,” he said. “Make no mistake, had I been CEO at the time I would never have approved the retention contracts that were put in place over a year ago. It was distasteful to have to make these payments.”
Mr Liddy came out of retirement to take the helm of AIG after the US Government asked him to help rehabilitate the company last September, five months after the retention contracts were put in place.
“I have asked the employees of AIG Financial Products to step up and do the right thing. Specifically, I have asked those who received retention payments of $US100,000 ($148,121) or more to return at least half of those payments,” he said. “Some have already stepped forward and offered to give up 100% of their payments.”
In a letter to House Speaker Nancy Pelosi last week, US Treasury Secretary Timothy Geithner expressed his and President Barack Obama’s outrage at the bonuses.
But he says the lawyers of both AIG and Treasury agree the contracts are legally binding.
“I demanded of Mr Liddy that he scrap or cut hundreds of millions of dollars in additional payments due this year and beyond,” Mr Geithner said. “He has committed to do this.”
The US Treasury will now impose a contractual commitment on AIG to pay it the amount of the retention awards just paid. It will also deduct the amount of the payments from the recently announced $US30 billion ($44.4 billion) in government assistance.
Mr Liddy has also given a timeline for the company’s restructure, telling the House AIG will be broken up within four years.