The compensation packages of top executives at New York-based American International Group Inc. are set to fall under new rules announced by Special Master for Troubled Asset Relief Program (TARP) Executive Compensation Kenneth Feinberg.
The rules are aimed at curbing pay for the top 25 executives at the seven firms receiving "exceptional" government assistance. AIG has received $182.3 billion in TARP funds. According to a release by the Treasury Department, the rules will align compensation with long-term value creation and financial stability by slashing cash compensation up to 90% and requiring salaries to be paid in company stock held stock over the long term.
The issue of executive compensation at firms receiving bail out money exploded into the public consciousness in March, when it was revealed that many employees at AIG including some at the infamous Financial Products unit which precipitated the company's financial meltdown, were receiving large bonuses.
Amidst the furor the bonus revelations created, acting AIG CEO Edward Liddy asked employees getting more than $100,000 to return half of the money. Although employees in the Financial Products employees have given back $19 million of the $45 million they were awarded in March, four of five managers in the unit have not make good on pledges to return the bonuses, Feinberg claims.
Also escaping any pay cut is new AIG President and CEO Robert Benmosche, who came aboard August 10, and will have an annual salary of at least $3 million in cash and $4 million in common stock. Feinberg formally approved the proposed compensation structure for Benmosche in a letter released on October 2, 2009.
Treasury Secretary Tim Geithner praised Feinberg's work. "Ken Feinberg has done a commendable job of applying the strong compensation standards of the Congressional legislation to the companies that received exceptional assistance from the government," Geithner said. "We all share an interest in seeing these companies return taxpayer dollars as soon as possible, and Ken today has helped bring that day a little bit closer."
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