American International Group said yesterday that it has replaced its chief financial officer, will cancel 160 conferences and events, and will seek to recover more than $40 million in payments to two former executives.

The announcement was jointly issued along with New York Attorney General Andrew M. Cuomo, who the previous day had threatened to sue the company unless it acted to recover "unwarranted and outrageous" spending on junkets and golden parachutes for executives.

He said the company outlays had come as it slipped into the financial crisis that forced it to obtain a $85 billion government loan.

In its joint statement, AIG and Mr. Cuomo said its action came after a "candid discussion" Mr. Cuomo held in his office with AIG Chief Executive Officer Edward Liddy.

The company said it would provide an accounting of executive compensation and assist his office in "recovering any illegal expenditures. This includes all forms of compensation paid to former CEO Martin Sullivan and the former head of the Financial Products Unit, Joseph Cassano."

Last year, as AIG was losing $5 billion in the final quarter, Mr. Sullivan was voted a cash bonus of more than $5 million and a contract that provided a $15 million golden parachute when he was replaced by Mr. Liddy after the government provided the loan.

Mr. Cassano, whose Financial Products unit put the company in its financial bind with credit default swaps, was let go in February without cause and allowed to keep up to $34 million in unvested bonuses. He was also placed on a $1 million retainer by AIG.

The company named David Herzog as executive vice president and chief financial officer, replacing Steven J. Bensinger, who had served since May as vice chairman for financial services and acting CFO.

Mr. Bensinger will not get a multi-million-dollar pay package that had been previously arranged.

By cancelling meetings, AIG said it would save $80 million. In addition, the company agreed to a variety of controls and steps to limit spending.

Among the events being canceled were:

o A $750,000 "Best Operator" Conference scheduled in Las Vegas.

o A risk management conference scheduled this month at the Ritz Carlton in Half Moon Bay, Calif., costing approximately $500,000.

o A sales conference scheduled for November, costing approximately $350,000.

o A meeting in Scottsdale, Ariz., scheduled for January 2009, costing approximately $190,000.

In the joint statement, Mr. Liddy said: "We're very grateful for the guidance of Attorney General Cuomo. We know that the attorney general shares our commitment to rebuilding AIG's business and paying back the U.S. taxpayer, and we will address the attorney general's concerns expeditiously." Mr. Cuomo said: "These actions are not intended to jeopardize the hard-earned compensation of the vast majority of AIG's employees, including retention and severance arrangements, who are essential to rebuilding AIG and the economy of New York."

According, to AIG executive the company has so far used up $70 billion of the $85 billion loan amount..

This article updated, 3:44 p.m.

Special Reports /

AIG To Slash Meeting Spending, Pursue Execs For Cash

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