- The Washington Times - Wednesday, November 26, 2008

NEW YORK | American International Group Inc., under pressure to limit executive compensation after a U.S. bailout, froze pay and scrapped bonuses for seven top managers and said Chief Executive Officer Edward Liddy will get a $1 salary.

The insurer’s next 50 highest-ranked executives will forgo pay raises through 2009, New York-based AIG said Tuesday. New York Attorney General Andrew M. Cuomo, who demanded last week that AIG disclose compensation plans, said the insurer took a “positive step” and called on other firms to follow.

Mr. Liddy is cutting costs after lawmakers and regulators criticized the insurer for bad bets that forced the insurer to take a taxpayer rescue that was almost doubled this month to more than $150 billion. AIG, crippled by losses tied to mortgages, follows Wall Street firm Goldman Sachs Group Inc. in limiting executive compensation after receiving commitments of capital from the U.S. government.

“It is only fair that top executives, who benefit the most when firms do well, should also bear the burden of the difficult economic consequences their firms now face,” Mr. Cuomo said Tuesday. “Taxpayers have been slammed with a one-two punch, seeing their investments dwindle while simultaneously having to fund the Wall Street bailout.”

Mr. Liddy, who was appointed by the government in September after AIG agreed to hand over an 80 percent stake to the U.S. Treasury, will collect the $1 salary through 2009 and an unspecified number of equity grants that “show his confidence” in the insurer, the company said. Mr. Liddy will also be eligible for a bonus in 2010 and won’t get any severance.

His compensation at Allstate Corp. in 2006, his last year as CEO of the insurer, was $24 million.

Mr. Liddy’s predecessor, Robert Willumstad, rejected a $22 million severance package after being force out from AIG in September. Martin Sullivan, who was forced out in June, received 2007 compensation valued at $14.3 million.

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