American International Group Inc. (AIG) agreed to pay bonuses to members of its financial products division to make sure "its employees' and consultants' interests continue to be aligned with those of AIG and AIG's shareholders," according to a contract released by the House Financial Services Committee.
The bonuses, totaling $165 million, have been the subject of intense criticism over the past few days, as company executives, lawmakers and regulators continued to struggle to explain why the firm was rewarding employees responsible for its financial problems.
The Financial Products division has been widely criticized for having created and sold the credit default swaps responsible for bringing the company to the brink of bankruptcy in September 2008. The federal government has since invested $170 billion to shore up the insurance giant, in return for an 80 percent ownership stake.
According to the 2007 "Employee Retention Agreements" released by the House, non-senior management employees were promised bonuses for 2008 at the same level of 2007, despite the company's looming financial problems. Senior management was guaranteed 75 percent of their 2007 bonus.
AIG reported this month that it had lost $61.7 billion for the fourth quarter of last year, the largest corporate loss in history.
In a letter this week to House Financial Services Committee Chairman Barney Frank, Andrew Cuomo, the attorney general of New York State, said that the top recipient of bonuses received more than $6.4 million. In addition:
• The top seven bonus recipients received more than $4 million each.
• The top ten bonus recipients received a combined $42 million.
• 22 individuals received bonuses of $2 million or more, and combined they
received more than $72 million.
• 73 individuals received bonuses of $1 million or more.
He also noted that "11 of the individuals who received 'retention' bonuses of $1 million or more are no longer working at AIG, including one who received $4.6 million."
The contract released by the House did not include the names of those who would receive the bonuses, but both Cuomo and Frank have threatened to subpoena AIG if they were not provided.
Cuomo has also announced that he is considering legal action to recover the bonuses. On Capitol Hill, lawmakers are considering a number of measures, including a punitive 90 percent excise tax.
The bonuses, totaling $165 million, have been the subject of intense criticism over the past few days, as company executives, lawmakers and regulators continued to struggle to explain why the firm was rewarding employees responsible for its financial problems.
The Financial Products division has been widely criticized for having created and sold the credit default swaps responsible for bringing the company to the brink of bankruptcy in September 2008. The federal government has since invested $170 billion to shore up the insurance giant, in return for an 80 percent ownership stake.
According to the 2007 "Employee Retention Agreements" released by the House, non-senior management employees were promised bonuses for 2008 at the same level of 2007, despite the company's looming financial problems. Senior management was guaranteed 75 percent of their 2007 bonus.
AIG reported this month that it had lost $61.7 billion for the fourth quarter of last year, the largest corporate loss in history.
In a letter this week to House Financial Services Committee Chairman Barney Frank, Andrew Cuomo, the attorney general of New York State, said that the top recipient of bonuses received more than $6.4 million. In addition:
• The top seven bonus recipients received more than $4 million each.
• The top ten bonus recipients received a combined $42 million.
• 22 individuals received bonuses of $2 million or more, and combined they
received more than $72 million.
• 73 individuals received bonuses of $1 million or more.
He also noted that "11 of the individuals who received 'retention' bonuses of $1 million or more are no longer working at AIG, including one who received $4.6 million."
The contract released by the House did not include the names of those who would receive the bonuses, but both Cuomo and Frank have threatened to subpoena AIG if they were not provided.
Cuomo has also announced that he is considering legal action to recover the bonuses. On Capitol Hill, lawmakers are considering a number of measures, including a punitive 90 percent excise tax.
published March 19, 2009, 0 Comments
Leave a comment