NU Online News Service, April 1, 3:06 p.m. EDT
Three pension funds are asking the government trustees overseeing the U.S. loan to American International Group to withhold their support for one of the AIG board members who served on the company's compensation committee.
Officials from The American Federation of State, County and Municipal Employees union, the AFL-CIO and the Treasurer of the state of Connecticut sent a letter to the three trustees asking them not to vote for James Orr III, a director at AIG.
In the letter, they said Mr. Orr was a member of the company's Compensation and Management Resources Committee during the time "when it approved of the structure and the payouts for AIG senior executive compensation and retention plans" to those executives "who were culpable for massive losses incurred by the credit default swaps."
While the trustees do not have control over the day-to-day functions of the company, as representatives of the majority shareholders, U.S. taxpayers who are fronting the $85 billion loan to AIG, they do have the ability to effect change in the company as shareholders.
The letter, directed to Jill M. Considine, Chester B. Feldberg and Douglas L. Foshee, notes the furor recently caused by the $160 million in bonuses paid to executives at AIG-Financial Products group and other examples of what it says are unjustified compensation to executives.
The letter noted the payment of $34 million to Joseph Cassano, head of the financial products unit, and the $1 million per month salary as a consultant after he left the company in February after AIGFP had brought the company to its knees through multibillion-dollar losses from investments in credit default swaps.
It also noted the $47 million severance given to Martin Sullivan, the former chief executive officer of AIG, after he resigned, and $22 million in severance to Mr. Sullivan's successor, Robert Willumstad. After leaving as CEO Mr. Willumstad returned the money saying he did not deserve it.
The three trustees, appointed in mid-January by the Federal Reserve Bank of New York, receive $100,000 a year for their services from the trust established to oversee the loan agreement with AIG.
Ms. Considine was a senior advisor of The Depository Trust & Clearing Corp. from 2007-2008, serving as chairman since 2006 and as both chairman and CEO from 1999-2006.
Mr. Feldberg was chairman of Barclays Americas from 2000 until his retirement in 2008.
Mr. Foshee is president, CEO and director of El Paso Corp., owner of North America's largest natural gas pipeline system and natural gas producer.
A spokesman with AIG said the company would not comment on the letter.
In a filing with the Securities and Exchange Commission yesterday, the company said it was notified that board members Virginia M. Rometty and Michael H. Sutton would not stand for reelection at the company's annual shareholder's meeting.
An AIG spokesman had no comment on the board members decision except to say the filing speaks for itself.
The shareholder's meeting is scheduled to be held some time in May.
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