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Treasury Revises AIG Pay Ruling

Source: WSJ

Posted on 22 Dec 2009

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One highly paid employee of American International Group Inc. (AIG) won't be leaving the company as planned before year's end, prompting the U.S. Treasury to revise a recent decision on pay limitations for the employee.

In a letter to AIG dated Monday, Treasury pay czar Kenneth Feinberg said he will allow AIG to pay the employee -- among the company's 25 highest compensated -- about $4.3 million in incentive payments on top of an annual $450,000 salary.

The incentive payments would be in two parts: one an annual long-term restricted stock grant of up to $1 million and another stock payment valued at about $3.3 million on the grant date, according to Treasury's letter.

The executive, who wasn't named in the letter, was originally to be paid only a base salary of $450,000 for 2009 because of the individual's intention to leave the firm by year end. But AIG in November notified the pay czar that this employee will instead remain at the firm and is "critical to AIG's long-term performance and stability" as the company seeks to repay U.S. taxpayers. An AIG spokeswoman declined to comment beyond the contents of the letter.

In a separate letter to Citigroup, Treasury modified its pay ruling to allow Citigroup to pay expatriate compensation to five instead of four employees, as had been written.