American International Group will pay Robert B. Willumstad, its new chief executive, as much as $46.5 million in combination base pay and bonus during the term of his appointment, according to a company filing with the Securities and Exchange Commission.

In a filing Friday, New York-based insurer AIG said it entered into an agreement last Wednesday with Mr. Willumstad to pay him a base salary of $1 million, the same amount former CEO Martin Sullivan received before he was replaced by Mr. Willumstad on June 15.

In addition to the base salary, Mr. Willumstad will receive a cash bonus of up to $8 million and "a target annual long-term incentive opportunity of $13 million." For this year he will receive a cash bonus of at least $4 million. The bonus will be deferred until he leaves AIG.

As CEO, Mr. Willumstad has received more than 1.05 million shares of AIG restricted stock worth $24.5 million at the time of award on Wednesday.

The stock options will vest in incremental amounts over a three-year period depending on the performance of the stock.

Mr. Willumstad, 62, will also participate in the company's executive severance plan.

Earlier this month, AIG said Mr. Sullivan would receive a total of $47 million in combination severance pay, bonus and stock options.

Bank of America today issued a buy rating on AIG based in part on its hiring of Mr. Willumstad as CEO because he came from outside of the ranks of the company.

The bank's analysis said that Mr. Willumstad faces a "significant and challenging" list of items he must address, and if he is successful, "we see confidence and multiple recovery."

Bank of America said it is "critical" that AIG obtain a new chief financial officer to fill the position that was vacated in May when the company moved CFO Steven Bensinger into the position of vice chairman.

In addition to seeking a new CFO, Mr. Willumstad has launched a top to bottom evaluation of company operations.

The bank analysis suggested that review, among other items, should include looking at a change in the incentive system and performance metrics and improvement in the firm's accounting philosophy.

Special Reports /

AIG's New Chief Exec Could Make $46.5M

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