A reminder: If your business or the company you worked for went under like AIG, you’d be SOL- One more thing, they are being paid with your tax dollars.
AIG Gives ‘Retention’ Pay After Scrapping Bonuses
American International Group Inc., the insurer that said yesterday it scrapped bonuses for top executives after a U.S. bailout, will still pay 130 managers “cash awards” to stay with the firm, including $3 million to retirement services chief Jay Wintrob.
Wintrob, 51, will get the “retention” payment in two installments, the first in April 2009 and the rest a year later, New York-based AIG said today in a regulatory filing. The firm previously disclosed the program in a Sept. 26 filing and said today that Wintrob and Chief Financial Officer David Herzog elected to get the payments four months later than planned.
“The expectation from the public and Congress was that they weren’t getting bonuses, not that they’d be pushed off by several months,” said David Schmidt, a consultant at executive pay firm James F. Reda & Associates. “That clearly violates the spirit of AIG saying they’ll forgo their bonuses.”
Chief Executive Officer Edward Liddy is encouraging top employees at AIG subsidiaries to remain so the units retain their value while he finds buyers. The insurer is selling businesses, including the U.S. retirement group Wintrob heads, to repay a $60 billion loan included in the expanded government rescue package AIG got this month.
“We’ve said they aren’t eligible for annual bonuses, and they’re not,” Nicholas Ashooh, spokesman for AIG, said today in an interview. “What we’re talking about are retention agreements — they’ve been pushed back by several months — and it’s our hope that those businesses will be sold in several months.”
If the units are sold before payments are due, AIG won’t have to give the awards, Ashooh said. Under the agreement announced this week, top executives are eligible for either severance or retention payments, not both, he said.
Wintrob is CEO of AIG Retirement Services Inc., the division that sells annuities. He was chief operating officer of SunAmerica when AIG bought the firm for $19.7 billion in 1998. The business he now heads may sell for about $12 billion, according to Gary Ransom, analyst at Fox-Pitt Kelton Cochran Caronia Waller. Wintrob didn’t return two calls seeking comment.
Wintrob was one of six top-paid AIG executives in 2007, with total compensation valued at $7.63 million. He earned a salary of $775,000 and a $1.74 million bonus in addition to stock and options, according to an April regulatory filing.
AIG said yesterday it won’t give 2008 bonuses for seven top leaders after New York Attorney General Andrew Cuomo demanded last week that it disclose compensation plans. The firm’s next 50 highest-ranked executives will forgo salary raises through 2009. A call to Cuomo’s office today seeking comment wasn’t returned.
Liddy, appointed by the government to run AIG after the insurer agreed to turn over an 80 percent stake, said yesterday the firm is “mindful that it must act prudently.” He will get a $1 a year salary through 2009 and an unspecified number of equity grants.
AIG has declined about 97 percent in New York trading this year. The company climbed 18 cents to $1.95 at 4:15 p.m. in New York Stock Exchange composite trading.