AIG chief to Congress: Bonuses are ‘distasteful’
The chairman and CEO of American International Group acknowledged Wednesday to congressional interrogators that some of the insurance giant's executive bonuses are "distasteful."
The chairman and CEO of American International Group acknowledged Wednesday to congressional interrogators that some of the insurance giant’s executive bonuses are “distasteful.”
“We are meeting today at a high point of public anger,” Edward Liddy, chairman and chief executive officer, conceded in testimony prepared for a hearing by a House Financial Services panel. “I share that anger,” he said.
Liddy told lawmakers that the company grew into an internal hedge fund that became overexposed to market risks. AIG is the largest recipient of federal government emergency assistance. It has received $170 billion in bailout help and the government holds a nearly 80 percent stake in the company.
AIG is under fire for $220 million in retention bonuses paid to employees in its troubled financial products division. The most recent payment of $165 million began to be paid last Friday and caused a furor.
Liddy, who has led American International Group Inc. since last fall, has become the reluctant defender of princely employee bonuses that members of Congress — and much of the American public — find indefensible.
The retention payments — ranging from $1,000 to nearly $6.5 million — were not his idea. Liddy himself is not getting a bonus. The deals were cut early last year, long before then-Treasury Secretary Henry Paulson asked Liddy to take over the company.
In his prepared remarks Wednesday, Liddy said, “No one knows better than I that AIG has been the recipient of generous amounts of governmental financial aid. We have been the beneficiary of the American people’s forbearance and patience.”
But he also said that “we have to continue managing our business as a business — taking account of the cold realities of competition for customers, for revenues and for employees.”
“Because of this, and because of certain legal obligations, AIG has recently made a set of compensation payments, some of which I find distasteful,” Liddy said.
He told lawmakers, “I want to assure you that the people at AIG today are working as hard as we can to execute the restructuring plan that, we believe, offers America’s taxpayers the best possible income.”
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