AIG CEO's salary is $1; no pay hike for top executives

NEW YORK: Troubled insurance giant American International Group In (AIG), for which the US government doubled the rescue package to USD 150
billion earlier this month, on Tuesday said that its CEO would get a salary of only one dollar and there would be no pay hikes for its top executives through 2009.

Separately, leading German reinsurance company Munich Re said that it is interested in buying the life insurance business of AIG in Asia.

Announcing compensation restrictions that go beyond the government's directive as part of its bailout package, AIG said its CEO Edward M Liddy would be given an annual salary of just one dollar in 2008 and 2009.

There would also be no annual bonuses in 2009 and no salary increase through 2009 for AIG's top-seven-officer Leadership Group, AIG said.

Besides, AIG has decided against no salary hike through 2009 for the 50 next-highest executives, in addition to bonus, severance and retention award restrictions.

AIG, for which the US government on November 11 nearly doubled the bailout package to 150 billion dollars from 80 billion dollars previously, is planning to sell some of its assets, including life insurance business in the US, Europe, Latin America and Japan, to recover from a financial mess.

Announcing the pay restrictions for its executives, AIG also said that it is developing a funding structure to ensure that no tax payer dollar is used for annual bonus or future cash performance awards for AIG's "Senior Partners," or the top 60 management people.

Commenting on the move, AIG Chairman and CEO Liddy said, "AIG's senior executives recognize AIG's obligation to tax payers.

"We are extremely grateful for the assistance we have received, and we know we have an obligation to use hat assistance to help AIG recover, contribute to the economy and repay tax payers," Liddy said.

The initial compensation for Liddy, who joined AIG on September 18, will consist entirely of equity grants, showing his confidence in AIG and its team.

While he would not receive an annual bonus in 2008 and 2009, he might be eligible for a special bonus for extraordinary performance payable in 2010Liddy will also not be eligible for severance payments.

Besides, Paula Rosput Reynolds, Vice Chairman and Chief Restructuring Officer, who joined AIG in October, will receive no salary or bonus in 2008. In 2009 and beyond, other than her base salary, any other compensation she receives will be tied directly to the progress of the restructuring efforts.

The other five members of AIG's top-seven-officer Leadership Group will not receive annual bonuses for 2008 or salary increases through 2009.

AIG's Senior Partners will not earn long-term performance awards in 2008 and they will not receive salary hikes in 2009, and their 2008 and 2009 annual bonuses will be limited.

Besides the restriction against any severance payment for the CEO, there will be restrictions on severance payments to members of the top-60 management members.

Courtesy: Times of India