A news release said the firm’s new restrictions also include no 2008 annual bonuses and no salary increases through 2009 for AIG’s top-seven-officer Leadership Group, no salary increases through 2009 for the 50 next-highest executives, and other bonus, severance and retention award cutbacks.
AIG is also developing a funding structure to make certain no taxpayer dollars are used for annual bonus or future cash performance awards for AIG’s top 60 members of management.
Edward M. Liddy, AIG’s Chairman and Chief Executive Officer, said AIG’s senior executives recognize AIG’s obligation to taxpayers. “We are extremely grateful for the assistance we have received, and we know we have an obligation to use that assistance to help AIG recover, contribute to the economy and repay taxpayers,” he said, in the news release. “This action by the senior management team demonstrates not only that we understand our obligation to taxpayers and shareholders, but also that we are committed to the future success of this organization.”
According to the announcement, under the restrictions:
- Liddy, who joined AIG on September 18, will receive an annual base salary of $1 for 2008 and 2009. His initial compensation will consist entirely of equity grants. He will not receive an annual bonus in those years, although he may be eligible for a special bonus for “extraordinary performance” payable in 2010.
- Liddy will not be eligible for severance payments.
- Paula Rosput Reynolds, Vice Chairman and Chief Restructuring Officer, who joined AIG in October, will receive no salary or bonus in 2008. In 2009 and beyond, other than her base salary, any other compensation she receives will be tied directly to the progress of the restructuring efforts.
- The other five members of AIG’s top-seven-officer Leadership Group will not receive annual bonuses for 2008 or salary increases through 2009.
- AIG’s Senior Partners will not earn long-term performance awards in 2008. Further, they will not receive salary increases in 2009, and their 2008 and 2009 annual bonuses will be limited.