Posted tagged ‘AIG Bonus’

AIG Executive Offers Public Resignation

March 25, 2009

Jake DeSantis, an executive vice president of the American International Group’s financial products unit, has written a resignation letter to Edward M. Liddy, the chief executive of A.I.G., which has been published in the New York Times.

From the New York Times:

DEAR Mr. Liddy,

It is with deep regret that I submit my notice of resignation from A.I.G. Financial Products. I hope you take the time to read this entire letter. Before describing the details of my decision, I want to offer some context:

I am proud of everything I have done for the commodity and equity divisions of A.I.G.-F.P. I was in no way involved in — or responsible for — the credit default swap transactions that have hamstrung A.I.G. Nor were more than a handful of the 400 current employees of A.I.G.-F.P. Most of those responsible have left the company and have conspicuously escaped the public outrage.

After 12 months of hard work dismantling the company — during which A.I.G. reassured us many times we would be rewarded in March 2009 — we in the financial products unit have been betrayed by A.I.G. and are being unfairly persecuted by elected officials. In response to this, I will now leave the company and donate my entire post-tax retention payment to those suffering from the global economic downturn. My intent is to keep none of the money myself.

I take this action after 11 years of dedicated, honorable service to A.I.G. I can no longer effectively perform my duties in this dysfunctional environment, nor am I being paid to do so. Like you, I was asked to work for an annual salary of $1, and I agreed out of a sense of duty to the company and to the public officials who have come to its aid. Having now been let down by both, I can no longer justify spending 10, 12, 14 hours a day away from my family for the benefit of those who have let me down.

To read the rest of the letter, please click on the link above to access the article in the New York Times.

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15 AIG Executives to Return Bonuses

March 23, 2009

New York state Attorney General Andrew Cuomo says 15 employees who received some of the largest bonuses from American International Group have agreed to return the money in full.

From the Associated Press:

The commitments amount to more than $30 million of the $165 million in bonuses awarded earlier this month by the troubled insurer.

Cuomo says he still hopes that more AIG employees will return their bonuses. He expects his office will be able to recoup roughly $80 million of the money the insurer paid out.

Last week, AIG’s CEO, Edward Liddy, told Congress that some of the employees were going to give the money back. AIG has come under heavy criticism because the bonuses were given to employees after the company received $170 billion in government bailout money.

President Obama ‘Stunned’ by AIG Bonuses

March 20, 2009

Hey…so was I!

President Barack Obama said last night on “The Tonight Show” that he was stunned to hear about the $165 million in bonuses that were paid to employees of troubled insurer AIG over the weekend.

He has promised to do everything he could to get these bonuses back.

From NBC News:

“These financial industries are holding us hostage,” Obama said in an interview on NBC’s “Tonight Show With Jay Leno,” which NBC said was the first time a sitting president had been a guest on a late-night talk show.

Obama said the AIG payments raised moral and ethical problems, but he stressed that the bigger problem was the culture that allowed traders to claim them.

“We need to get back to a place where people know enough is enough,” he said. “If we can get back to those values that built America, then we’ll be OK.”

Obama used the visit as an opportunity to defend Treasury Secretary Timothy Geithner, who has been sharply criticized for his handling of the AIG controversy. Sen. Johnny Isakson, R-Ga., called for Geithner to resign Thursday afternoon.

But Obama said Geithner was doing an “outstanding job,” handling a full plate with grace and good humor.

“He is a smart guy. He is a calm and steady guy,” Obama said. “I don’t think people fully appreciate the plate that was handed him.”

Listing the recession, the banking crisis and the need to coordinate with other countries, Obama acknowledged that Geithner was “on the hot seat.” But he said too many in Washington were trying to figure out whom to blame when they should be focused on fixing the problems.

“Look, I’m the president. Ultimately, it’s my responsibility,” Obama said. “If I’m not giving [Geithner] the tools he needs, it’s on me.”

White House Goes After AIG Bonus Payments

March 16, 2009

President Barack Obama is going after the bonuses paid to employees of insurer AIG, expressing outrage that taxpayer money was used to reward executives at the bailed-out firm.

From the Washington Post:

“It’s a mob effect,” one senior executive said. “It’s putting people’s lives in danger.”

Politicians and the public spent yesterday demanding that AIG rescind payouts that they said rewarded recklessness and greed at a company being bailed out with $170 billion in taxpayer funds. But company officials contend that the uproar is scaring away the very employees who understand AIG Financial Products’ complex trades and who are trying to dismantle the division before it further endangers the world’s economy.

“It’s going to blow up,” said a senior Financial Products manager, who spoke on condition of anonymity because he was not authorized to speak for the company. “I have a horrible, horrible, horrible feeling that this is going to end badly.”

President Obama yesterday vowed to “pursue every legal avenue to block these bonuses.” But that pledge might have come too late. About $165 million in retention payments started to go out Friday to employees at Financial Products, after numerous discussions with the Treasury Department and the Federal Reserve.

From Reuters:

Though the insurance giant is being kept alive on a government bailout of up to $180 billion, it is now paying out $165 million in bonuses.

“This is a corporation that finds itself in financial distress due to recklessness and greed,” Obama said.

“Under these circumstances, it’s hard to understand how derivative traders at AIG warranted any bonuses, much less $165 million in extra pay,” he said at the White House.

“How do they justify this outrage to the taxpayers who are keeping the company afloat?”

Obama said he had ordered Treasury Secretary Timothy Geithner to pursue “every single legal avenue” to cancel the bonuses and a Treasury official said later it would modify a planned $30 billion capital infusion for American International Group to try to recoup the bonuses.

White House spokesman Robert Gibbs said the Treasury could impose rules on the $30 billion loan facility for AIG but declined to go into specifics or spell out ways the legal avenues available to the administration to block the payments.

Obama said Geithner was working on the problem.

“I want everybody to be clear that Secretary Geithner’s been on the case. He’s working to resolve this matter with the new CEO, Edward Liddy, who, by the way, everybody needs to understand, came on board after the contracts that led to these bonuses were agreed to last year,” Obama said.

Liddy told Geithner in a letter the insurer was legally obliged to fulfill 2008 employee retention payments but had agreed to revamp its system for future bonuses.

Obama said overall financial regulatory reform was vital to ensure this did not occur again.

He said the government needed “some form of resolution mechanism in dealing with troubled financial institutions, so that we’ve got greater authority to protect American taxpayers and our financial system in cases such as this.”

Pausing to cough, Obama said he was “choked up with anger.”

“We don’t have all the … regulatory power that we need. And this is something that I expect to work with Congress to deal with in the weeks and months to come.”

AIG To Pay $165 Million in Executive Bonuses

March 14, 2009

American International Group is giving its executives tens of millions of dollars in new bonuses even though it received a taxpayer bailout of more than $170 billion dollars.

Great to see MY tax dollars will help pay for these executives to get their bonuses!

From the Associated Press:

AIG is paying out the executive bonuses to meet a Sunday deadline, but the troubled insurance giant has agreed to administration requests to restrain future payments.

The Treasury Department determined that the government did not have the legal authority to block the current payments by the company. AIG declared earlier this month that it had suffered a loss of $61.7 billion for the fourth quarter of last year, the largest corporate loss in history.

Treasury Secretary Timothy Geithner has asked that the company scale back future bonus payments where legally possible, an administration official said Saturday.

This official, who spoke on condition of anonymity because of the sensitivity of the issue, said that Geithner had called AIG Chairman Edward Liddy on Wednesday to demand that Liddy renegotiate AIG’s current bonus structure.

Geithner termed the current bonus structure unacceptable in view of the billions of dollars of taxpayer support the company is receiving, this official said.

AIG Suspending Millions in Executive Payouts

October 23, 2008

It’s about time! American International Group has agreed to suspend payments to executives from a $600 million bonus fund as well as $19 million in payments to its former chief executive, this according to New York’s attorney general Andrew Cuomo.

From the New York Times:

The moves are the latest steps in an effort by the attorney general, Andrew M. Cuomo, to prevent bonuses and other compensation to former executives at A.I.G., which in recent weeks has received tens of billions of dollars in loans from the Federal Reserve. “There should not even be any contemplation of bonuses for executive performance because I find it hard to conceive of a situation that you could justify a performance bonus for management that virtually bankrupted the company,” Mr. Cuomo said on a conference call with reporters on Wednesday afternoon.

According to a letter Mr. Cuomo sent to A.I.G.’s current chief executive, Edward M. Liddy, the company has agreed to freeze $19 million in remaining payments to Martin J. Sullivan, the company’s former chief executive who was ousted in June. Mr. Cuomo said he did not know how much Mr. Sullivan might have already been paid under his employment contract.

The company also agreed not to make any payments from a $600 million deferred compensation and bonus fund for executives of A.I.G.’s financial products unit, which undertook many of the complex financial transactions that pushed the company to the brink of collapse. Mr. Cuomo said that Joseph Cassano, who headed that unit, stood to receive $70 million from the fund.

“We have received the letter and the letter is consistent with our discussions with the attorney general and with actions we have taken,” said Joe Norton, a spokesman for A.I.G.

Mr. Cuomo has already called on A.I.G. to assist in efforts to recover payments already made to executives at the company. On the call with reporters, Mr. Cuomo suggested that his actions offered a template for dealing with executive compensation at companies now receiving taxpayer money through the bailout approved by Congress this month.