Liddy’s salary at AIG next year? A buck
American International Group chief executive Edward Liddy, who is charged with the Herculean task of saving the giant insurance company, will receive $1 in compensation this year and next.
American International Group chief executive Edward Liddy, who is charged with the Herculean task of saving the giant insurance company, will receive $1 in compensation this year and next.
Under new compensation guidelines announced today by the troubled insurer, the seven most senior executives at AIG will receive no annual bonuses or salary increases through 2009.
The insurer’s next 50 senior executives will receive no salary increases through 2009. The plan also places restrictions on other bonuses, severance payments and retention awards.
“We are extremely grateful for the assistance we have received, and we know we have an obligation to use that assistance to help AIG recover, contribute to the economy and repay taxpayers,” Mr. Liddy said.
“This action by the senior management team demonstrates not only that we understand our obligation to taxpayers and shareholders, but also that we are committed to the future success of this organization.”
Under the arrangement, Mr. Liddy’s initial compensation, beyond the $1 annual salary, will consist entirely of equity grants.
He may receive a special bonus for “extraordinary performance” payable in 2010. He will not receive a severance payment.
Paula Rosput Reynolds, vice chairwoman and chief restructuring officer, who joined AIG in October, will receive no salary or bonus in 2008.
In 2009, she will receive compensation tied to the progress of restructuring efforts and a base salary.
AIG has begun developing a funding structure to ensure that no taxpayer dollars go toward annual bonuses or future cash performance awards for the top 60 members of AIG’s management.
Those employees will earn neither long-term performance awards in 2008 nor salary increases in 2009.
Their annual bonuses will be limited in 2008 and 2009 and severance payment curbs will exceed the restrictions mandated by the Troubled Asset Relief Program.
“We believe these actions demonstrate that we are focused on overcoming our financial challenges so AIG can return value to taxpayers and shareholders,” Mr. Liddy said.
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