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Senator Grassley Revisits AIG Severance Payments to Execs Exiting Insurer

Source: WSJ

Posted on 26 Jan 2010

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Sen. Charles Grassley has sent a second letter to U.S. pay czar Kenneth Feinberg asking about reports of severance payments to executives leaving American International Group Inc. (AIG).

The letter inquires about former General Counsel Anastasia D. Kelly and Suzanne Folsom, who was chief compliance and regulatory officer.

Both left the company at the end of 2009. Ms. Kelly received an exit package of at least $3.9 million and Ms. Folsom received more than $1 million in severance, according to people familiar with the matter. Neither was reached for comment Monday.

Mr. Grassley (R., Iowa) in his letter Monday questioned Mr. Feinberg about a recent investigation by an outside law firm for AIG into whether Ms. Kelly was "properly performing her duties as general counsel." Mr. Grassley asked for details on that investigation.

Mr. Grassley also referred to reports that Ms. Folsom may have received $1 million in severance. He asked for information about the basis of that payout.

AIG said Dec. 30 that Ms. Folsom "left to pursue other opportunities." Unlike Ms. Kelly, Ms. Folsom wasn't a participant in AIG's executive-severance plan, according to people familiar with the matter.

An AIG spokesman Monday had no further comment.

The senator's questions come as AIG struggles to repay its multibillion-dollar government bailout under the Troubled Asset Relief Program, or TARP. Mr. Feinberg was charged with making compensation determinations for top employees at AIG and other companies that received assistance from the government.

Mr. Grassley's first letter, sent Jan. 15, focused on Ms. Kelly, who resigned for "good reason," AIG said, under the terms of AIG's executive-severance plan based on the reduction in her base salary mandated by Mr. Feinberg.

Mr. Grassley quizzed Mr. Feinberg on how that severance squared with "an annual limit of $500,000 on certain executive salaries at TARP recipients like AIG."

A spokesman for Mr. Feinberg said he would respond first to Congress, not to media inquiries.

Separately, AIG and its chief executive, Robert Benmosche, signed an aircraft time-sharing agreement covering the rules for when he may take a company jet on personal detours from business trips, according to a filing by the company.

The agreement elaborates on a luxury-expenditure policy that AIG put into effect at the end of December. That agreement already allowed Mr. Benmosche personal use of corporate aircraft if the use "is incidental to a business trip and the incremental cost is paid by the AIG CEO," according to that agreement. Personal use of company aircraft otherwise is "strictly prohibited," the December agreement said.

The agreement, signed last week and filed with the Securities and Exchange Commission on Monday, spells out the details, including incremental expenses Mr. Benmosche must cover, from lodging and ground transportation for the crew to in-flight food and beverages. In addition, Mr. Benmosche must pay an additional charge equal to all the itemized incremental expenses of the trip.