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AIG Probed Counsel Over Pay Actions

Source: WSJ

Posted on 28 Dec 2009

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American International Group Inc. (AIG) conducted an investigation into recent actions by its general counsel, who along with four other executives told the insurer this month that they were prepared to resign over federal pay curbs, people familiar with the matter said.

The review, which was initiated by individuals within the government-controlled insurer, looked at the circumstances surrounding the actions of general counsel Anastasia Kelly, who had told other executives how to protect their rights to collect severance benefits, the people said. Ms. Kelly declined to comment.

A person familiar with the investigation said AIG undertook the review in light of the considerable scrutiny it is under. "People wanted to make sure everything was done the right way," this person said.

The probe has been completed, according to people familiar with the matter, but its outcome and conclusions aren't known.

Ms. Kelly and four other executives informed AIG in written notices on Dec. 1 that they believed they had "good reason" to resign and collect severance benefits they were entitled to if their pay was cut significantly. Ms. Kelly helped the group arrange for outside counsel to advise them, a spokesman for her said earlier this month.

The four executives, who work at AIG's insurance and financial-services units, have since rescinded their notices to the company, leaving only Ms. Kelly's outstanding.

Ms. Kelly is planning to leave AIG soon, people familiar with the matter said, and a search for a successor is under way. She joined AIG in 2006 and was named vice chairman in early 2009, taking on responsibilities for human resources, corporate affairs and communications.

The notices were given to AIG while the Treasury's pay czar, Kenneth Feinberg, was reviewing 2009 compensation structures for the 75 top executives at companies that had received large amounts of government bailout aid. The five individuals fell into that category and were concerned they might be subject to tougher pay restrictions in 2010 that could prevent them from collecting severance benefits.

Questions have arisen within AIG about whether Ms. Kelly was acting in her own interests or in the company's interests, people familiar with the matter said.

On Dec. 11, Mr. Feinberg told AIG that cash base salaries for its executives should be capped at $500,000 a year except for a small number of individuals certified by AIG's board compensation committee. It isn't known how the five executives' pay was affected by the rulings.