Many Top AIG Executives Agree to Return Bonuses
March 24, 2009 - 8:23 AM<br />
In total, American International Group Inc. employees have agreed to return about $50 million of the $165 million in bonuses awarded earlier this month by the insurer, Cuomo's office said Monday.
At most, Cuomo said his office could hope to recoup $80 million of the bonuses -- roughly the amount paid out to AIG employees in the U.S. The bonuses were paid out to employees of the financial products division, a global unit that issued derivatives called credit default swaps that helped sink AIG as a whole last year.
The agreement to return the money followed a firestorm of criticism and some arm-twisting from New York's attorney general. AIG has come under heavy criticism because the bonuses were given to employees after the company received $170 billion in government bailout money.
"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 e-mailed to The Associated Press. She added that the company is continuing to review the responses of the other employees.
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, Connecticut's consumer protection division has subpoenaed AIG, 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.
AIG's financial products division is headquartered in Wilton, Conn.
Connecticut Attorney General Richard Blumenthal says his office also demanded the bonus recipients' names and the amounts.
Last week, the House passed a plan to slap a punitive, 90 percent 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 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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