CHARLOTTE, N.C. — American International Group said Tuesday it is limiting how much it pays its top executives, including granting chief executive Edward Liddy a $1 salary for this year and the same for 2009.
The decision is one of many broader moves made by the troubled New York-based insurer, which has been under pressure to restrict executive pay since accepting billions in government assistance to save it from collapse. AIG has received about $150 billion so far, more than any other company.
It was once the world’s largest insurer, with customers around the globe, and regulators feared the possible effect an AIG collapse would have had on the world’s financial system.
The company said there will be no 2008 annual bonuses and no salary increases through 2009 for AIG’s top seven officers and no salary increases through 2009 for the 50 next-highest AIG executives. In addition to his $1 a year salary, Liddy will be getting an unspecified amount of stock.
“We believe these actions demonstrate that we are focused on overcoming our financial challenges so AIG can return value to taxpayers and shareholders,” Liddy said in a statement.
AIG shares were unchanged at $1.77 in Tuesday trading.
The announcement comes after New York Attorney General Andrew Cuomo sent a letter to Liddy earlier this month saying AIG should be “completely transparent” about its compensation plans for 2008.
In mid-September, the Federal Reserve said it would offer two loans totaling $123 billion to AIG to help the insurer stave off bankruptcy. AIG was later allowed to access another $20.9 billion through the Fed’s “commercial paper” program. And earlier this month, the government announced new financial assistance to the company.
On Tuesday, Cuomo applauded AIG’s decision to limit executive pay and said other companies receiving federal bailout money should follow suit.
“It is only fair that top executives, who benefit the most when firms do well, should also bear the burden of the difficult economic consequences their firms now face,” Cuomo said. “The government is not writing blank checks to these companies.”
Earlier this month, AIG ended 14 voluntary deferred compensation programs, resulting in $500 million of payouts due in the first quarter of 2009.
