|Ex-AIG chief Martin Sullivan. New York Attorney General Andrew Cuomo said ''extravagant'' pay to executives helped cause problems at AIG and other companies. (Lawrence Jackson/Associated Press)|
AIG agrees to withhold $19m from former CEO
Firm also freezes $600m from others
NEW YORK - American International Group Inc. agreed to freeze $19 million due to its former chief and $600 million in compensation for other executives amid criticism of such payments in light of the collapsed insurer's US bailout.
New York Attorney General Andrew Cuomo said yesterday that AIG will withhold severance and bonus payments from former chief executive Martin Sullivan and will not distribute funds from the $600 million deferred compensation and bonus pools of AIG's Financial Products subsidiary.
Cuomo last week demanded that AIG, once the world's biggest insurer, stop "extravagant" expenditures and recover millions of dollars in unreasonable payments, or face legal action. The New York insurer submitted to a US takeover last month and already has tapped two-thirds of its $122.8 billion Federal Reserve credit line.
"Until the taxpayers recoup their investment in AIG, which is now in excess of $120 billion plus interest, there should not even be any contemplation of bonuses for executive performance," Cuomo said yesterday today in a conference call with reporters.
Cuomo said such pay packages helped cause the problems at AIG and other companies.
Peter Tulupman, an AIG spokesman, declined to comment other than to say Cuomo's letter yesterday to the company's new chairman and chief executive, Edward Liddy, is "consistent with our discussions with the attorney general and with actions we've taken."
Sullivan was replaced by AIG's chairman, Robert Willumstad, on June 15, after two straight record quarterly losses tied to bad bets on housing markets. Sullivan last year said any losses tied to housing would be "manageable."
When Sullivan was ousted, AIG agreed to give him about $47 million in severance and long-term compensation. He was to receive $15 million in severance pay, a bonus of $4 million, and equity and long-term cash awards valued at about $28 million, the company said July 1 in a regulatory filing.
Willumstad was replaced by Liddy last month as a condition of the government takeover of AIG.
Cuomo said he believes Joseph Cassano, former head of the financial products unit, has a $69 million share of the $600 million deferred compensation and bonus pools.
In addition, Cuomo said, five other executives in the subsidiary have a combined share of $93 million of those funds.