New York — American International Group Inc. (AIG) has agreed to spending limits and established a governance committee after a meeting with New York Attorney General Andrew Cuomo.
In what the parties termed “a candid discussion” Cuomo met with Edward Liddy, the new chairman and CEO of AIG one day after Cuomo informed the insurer that it must recover improper bonuses and other payments and perks from its former executives or Cuomo would do so pursuant to New York law.
During the meeting, Liddy agreed to take several significant actions with respect to expenditures at AIG.
First, AIG agreed to provide the New York Attorney General’s Office with an accounting of all compensation paid to its senior executives, and has agreed to assist the Attorney General’s Office in recovering any illegal expenditures. This includes all forms of compensation paid to former CEO Martin Sullivan and the former head of the Financial Products unit, Joseph Cassano.
Next, AIG agreed to establish a special governance committee within AIG that will institute new expense management controls. Also, AIG will be issuing a new expense policy guidebook. These controls and protections will be designed at the board level to prevent any future unwarranted expenditures, such as salaries, bonuses, stock options, severance payments, gratuities, benefits, junkets and perks. The new controls will include direct supervision by Chief Administrative Officer Richard Booth.
Lastly, AIG also agreed to take several immediate actions, including withholding any payment on a multi-million dollar employment agreement with Steven Bensinger, the company’s CFO, who will be leaving AIG.
AIG also agreed to immediately cancel all junkets or perks which are not strictly justified by legitimate business needs. Accordingly, AIG will be canceling more than 160 conferences and events, some exceeding more than $750,000 per event, for a total savings of more than $8 million.
“These actions are not intended to jeopardize the hard-earned compensation of the vast majority of AIG’s employees, including retention and severance arrangements, who are essential to rebuilding AIG and the economy of New York,” Cuomo said in a statement.
Source: Office of Attorney General for State of New York
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