American International Group Inc. will award 38 of its executives with as much as $4 million each as part of a retention program, according to a letter from chief executive Edward Liddy.
Employees with salaries between $160,000 and $1 million can receive between $92,500 and $4 million in retention pay, according to a Dec. 5 letter chief executive officer Edward Liddy sent to Rep. Elijah Cummings, D-Md., and a member of the House Committee on Oversight and Government Reform.
In a Dec. 1 letter to Mr. Liddy, Mr. Cummings requested the names of the executives receiving the retention pay and asked for an explanation of why the payments were necessary.
The 38 workers receiving incentive pay are in addition to another 130 executives who are also receiving cash awards.
AIG had disclosed the 130 retention pay recipients in a September filing with the Securities and Exchange Commission but did not reveal all of their names.
It did say, however, that Jay Wintrob, an executive officer of the company, is receiving a $3 million award.
The New York-based insurer, which has received more than $150 billion in rescue money from the government, has been under pressure to eliminate the bonuses of senior executives, but it was still providing cash awards to top workers to keep them at the company, according to Bloomberg.
In a Nov. 11 letter to the chief of AIG, Mr. Cummings had also requested that Mr. Liddy step down from his post after reports of an AIG sales meeting at a Phoenix resort surfaced.
However, in his latest letter, Mr. Liddy explained that AIG needed to keep the executives to maintain credit ratings and meet requirements in some of its reinsurance agreements.
“We would be doing a disservice to the taxpayer — and would place AIG’s asset divestiture plan at risk — if we did not act decisively to ensure that our key employees remain,” he wrote.
In the letter, Mr. Liddy said that he would receive an annual base salary of $1 for 2008 and 2009, with basic compensation made up entirely of equity grants and no annual bonus in those years.
He is also ineligible for severance pay.
However, Mr. Liddy will be eligible for a special bonus for extraordinary performance in 2010.
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