Posted on 23 Jul 2009
American International Group Inc. (AIG) withheld $2.4 million in executive bonuses that were scheduled to be paid July 15, Senator Charles Grassley said.
Grassley was told by George Madison, the nominee for Treasury’s general counsel post, that the New York-based insurer didn’t make the payments last week, the Iowa Republican said today in a statement on his Web site. Christina Pretto, a spokeswoman for the company, declined to comment.
AIG came under fire from lawmakers for paying $165 million in retention bonuses in March to employees of the Financial Products unit blamed for the insurer’s near-collapse. The $2.4 million that was slated to be paid last week is part of a separate $9.6 million pool for some of the top 50 senior partners of AIG. The managers were to get half of the sum in March, and subsequent payments in July and September.
Chief Executive Officer Edward Liddy told Congress in a March 18 hearing that while the awards to Financial Products employees were “distasteful,” he needed to keep staff to unwind trades and prevent a “systemic shock” to the economy. Liddy works for $1 a year.
AIG created retention programs designed to keep some staff in place through the end of 2009. The company’s stock decline prompted the insurer’s board of directors to weigh a retention program in June 2008, AIG said in a regulatory filing. Three months later, after getting an $85 billion credit line in its first government rescue, AIG acted “promptly” to hold onto key employees by handing out cash awards, the company said.