15 of 20 top AIG execs agree to return bonuses

Tuesday 24th March, 08:44 PM JST

NEW YORK —

Fifteen of the top 20 bonus recipients at American International Group Inc have agreed to return their money following a firestorm of criticism and some arm-twisting from New York’s attorney general.

In total, AIG employees have agreed to return about $50 million of the $165 million in bonuses awarded earlier this month by the troubled insurer, New York Attorney General Andrew Cuomo’s office said Monday.

Cuomo said he still hopes that more AIG employees will return their bonuses. At most, Cuomo said his office could hope to recoup $80 million of the bonuses—roughly the amount paid out to American employees.

“I applaud the employees who are returning the bonuses,” Cuomo said during a conference call with reporters. “I think they are being responsive to the American people.”

Cuomo said 9 of the 10 people receiving the largest awards have agreed to return their bonus. Cuomo said some others have refused to return the money, while others are still considering it.

“We are deeply gratified that a vast majority of Financial Products’ senior leadership have expressed a willingness to forsake their recent retention payments,” wrote AIG spokeswoman Christina Pretto in a statement emailed to The Associated Press. She added that the company is continuing to review the responses of the other employees.

AIG has come under heavy criticism because the bonuses were given to employees after the company received $170 billion in government bailout money.

AIG Chief Executive Edward Liddy told Congress last week that some of the employees were willing to give the money back. But Liddy has expressed concern that the company may not be able to attract and retain talented employees if they believe their compensation is subject to adjustment by the Treasury.

Pretto said Monday that a “handful” of senior-level executives have resigned from the financial products division, and that there will likely be more resignations to come.

“We do believe that at this point it’s all manageable,” she said.

Cuomo said he doesn’t plan to release the names of the employees who have agreed to return the bonuses, and said there is no implied threat that if an employee doesn’t consent to returning the bonus that their name will be released. Cuomo had sought the names of the employees who received bonuses from Liddy through a subpoena.

He said his office is continuing to assess the security of the employees.

About 400 employees and future employees in AIG’s financial products division received bonuses. Documents provided by AIG to the Treasury Department said the awards ranged from $1,000 to nearly $6.5 million. Seven employees were to receive more than $3 million. Last week Cuomo said AIG paid bonuses of $1 million or more to 73 employees, including 11 who no longer work there.

Separately, the consumer protection division in the state of Connecticut—where AIG’s financial products division is headquartered—has subpoenaed the company, demanding that the contracts and names of employees who received the bonuses be provided by March 27. Gov M Jodi Rell has said she wants the division to determine whether the bonuses can be voided under the Connecticut Unfair Trade Practices Act.

Last week, the House passed a plan to slap a punitive, 90% tax on bonuses paid to AIG employees whose family income surpasses $250,000. Not all of the AIG employees earned more than the income threshold specified by the House bill.

But President Barack Obama has signaled opposition to the House’s tax bill on constitutional grounds.

The Senate is soon expected to take up its own plan on the tax.

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14 Comments

likeitis at 10:09 PM JST - 24th March

Good move for the 15, albeit late. The other 20 should be heavily taxed.
neverknow2 at 10:38 PM JST - 24th March

Good move for the 15, albeit late. The other 20 should be heavily taxed

Do you mean the other 5?
adaydream at 10:52 PM JST - 24th March

This goes to show the hilarity of these big corporations. This shows how these large corporations have been patting themselves on the shoulders with big bonuses whether you do a good job or not.

I think in my 37 years with the federal government, USMC and civil service, I never received more than a total of $5000.00. I can't fathom how someone would be entitled to $Millions$ for a successful project, let alone for failing at their jobs.

Since we own 80% of some of these corp. we need to make adjustments to their compensation packages. They are our employees. < :-)
Ninjazilla at 11:44 PM JST - 24th March

lets have the names of the other 5
shanabelle at 11:50 PM JST - 24th March

The real crooks here are the politicians (both sides of the aisle) who took money from these corps and pushed so hard for deregulation...the same ilk who now smack down any interventionist measures the new administration come up with. I am disgusted by the AIG bonuses but in perspective their ill-gotten gains are insignificant to the misdeeds of so many in Washington over the last few decades.
TheQuestion at 12:45 AM JST - 25th March

From an investing standpoint AIG just lost a lot of credit by bending to the will of the public. Contractually they were guaranteed those bonuses and allowing themselves to be manipulated by public opinion was a colossal display of weakness that they really can't afford at this point if they ever want to be seen as a respectable, IE profitable, corp again.

If AIG really wanted to gain some credit back in the business world it would have kept the bonuses and stated, quite plainly, that any attempt to impose additional taxes would be a breach of contract. And if they took it to court they would have won. A man motivated by profit is easy to predict, by returning the bonuses they have confused a lot of investors, and confused investors are never good investors.
adaydream at 12:58 AM JST - 25th March

shanabelle Phil Graham is the architec of the deregulations. He's the one that was John McCain's financial adviser who called Americans whiners and criers. John McCain had to get rid of him quickly. Deregulation was the republicans baby. I have to admit that Bill Clinton signed the package, but it was contrived and designed by the republicans.

Then AIG and the other losers bilked $Billions from all of us with the new rules and this is what we have. Corporations that lie, steal and than pat their bank accounts with these ill gained money. < :-)
stipend at 01:16 AM JST - 25th March

lets have the names of the other 5

For a lynching? Disgraceful.

AIG gets $185 - billion - in bailouts from tax payers. The bonuses are $165 million. It works out to 0.09%. It is a red herring.

Your country is selling you out people. It's time to wake up.
adaydream at 01:22 AM JST - 25th March

There was another $53Million in bonus given to AIG executives in November, 2008. Damn thieves. Go after this money also. < :-)
GJDailleult at 08:10 AM JST - 25th March

The red herring point is technically correct, but it ignores the fact that most people can't really get their heads around what AIG did. Not because they are stupid, but because what AIG Financial Products was doing was very complex and totally INSANE. But people can understand that it is pretty weird to be getting a bonus for destroying a company, and might get pretty angry when they realize the bonus is coming from their own money. So the backlash was predictable.

As for the "if they ever want to be seen as a respectable, IE profitable, corp again" post. Huh? AIG is a corpse, it is dead, it has ceased to be. While that is unfortunate for the other, legitimate parts of the company and the people who work there, that's the reality.

And Phil Gramm should have been sent to Guantanamo years ago. A financial terrorist.
TheQuestion at 09:17 AM JST - 25th March

AIG is a corpse, it is dead, it has ceased to be.

Correction, it's brain dead on on a respirator. You can't really call it alive but it's not quite dead. A very sad existance but it exists nontheless.
stipend at 12:24 PM JST - 25th March

People have got to see through the smoke and mirrors.

Had AIG been allowed to fail there would be no bonus issue to start with, and no absurd outflows of funds to the likes of.. JP Morgan ($400m), Morgan Stanley ($1.2b), Wachovia ($1.5b), B of A ($5.2b), Merrill Lynch ($6.8b), Goldman Sachs ($12.9b). Never mind the roughly $35 billion AIG had handed out to non-American banks.

Yeah, follow the money.
unscrejects at 02:48 PM JST - 25th March

The other five are phantoms.
Nessie at 03:24 PM JST - 25th March

I sure AIG would have lost even more money without those five. (rolls eyes)