American International Group Inc Chief Executive Edward Liddy will receive $1 in salary this year and next, and there will be no 2008 bonuses for the company’s seven most senior executives, the troubled insurance conglomerate said on Tuesday.
Fifty more AIG executives will be locked out of pay raises in 2009, AIG said in a statement.
In a period when Americans are losing jobs and homes, executive perks and bonuses have become a hot topic. Compensation has been under greater scrutiny, especially after missteps by banks and lenders have contributed to the global financial crisis.
AIG’s salary and bonus curbs follow New York Attorney General Andrew Cuomo earlier this month asking AIG for full disclosure on plans for executive bonuses and pay increases.
Cuomo told reporters on Tuesday that he is pressing forward with requests for bonus and pay disclosure from other Wall Street firms receiving government money.
Not all have responded, he said, declining to name names, but warning that he would take a hard view of firms that did not adopt an approach similar to AIG’s.
“I encourage other firms to wake up to the new reality on Wall Street and follow AIG’s step quickly,” said Cuomo.
He is reviewing moves made by Citigroup Inc, the giant U.S. bank that on Sunday was the recipient of the biggest government bailout yet.
AIG, once the world’s largest insurer, was forced in September to seek a government bailout to stay afloat. Days after accepting $85 billion in government loans, it emerged that AIG had funded hundreds of thousands of dollars for luxury executive retreats, hunting trips and a golf outing.
The cost of the United States’ rescue of AIG, which nearly collapsed under bad mortgage bets, ballooned to $152 billion earlier this month. The firm is currently trying to sell off assets to repay part of the federal debt.
Cuomo said AIG’s earlier agreement to freeze $19 million of bonuses to former Chief Executive Martin Sullivan and halt disbursements from a $600 million pool for AIG’s financial products division still stand. The insurer has also canceled any retreats and junkets.
Wall Street firms that have taken federal bailouts are mandated to put limits on executive salary and bonus payments. AIG said the restrictions it is putting in place exceed those required.
CEO Liddy, who joined AIG at the time of its September bailout by the U.S. government, is also forgoing any severance payment should he leave the company.
He may be eligible for a bonus in 2010, and is to be issued equity grants.
Cuomo said the arrangement is a good one. “If taxpayers get repaid, and get a profit, I think management should be rewarded,” he said.
“We believe these actions demonstrate that we are focused on overcoming our financial challenges so AIG can return value to taxpayers and shareholders,” Liddy said in the statement.
The company’s shares have lost nearly all their value since the beginning of the year. The stock was 4.5 percent lower at $1.69 in afternoon New York Stock Exchange trading.