NU Online News Service, Nov. 30, 11:00 a.m. EST
American International Group and its former chief executive Maurice R. "Hank" Greenberg have agreed to settle all outstanding disagreements between the two, ending a bitter battle that ensued after Mr. Greenberg was forced out of the company in 2005 in an accounting scandal.
In a statement released Wednesday after the close of trading, New York-based insurer AIG, Mr. Greenberg and former Chief Financial Officer Howard I. Smith mutually agreed to settle all disputes between them and their business entities, including Starr International Company and C.V. Starr & Company.
Under the agreement, the parties will submit to an arbitrator Mr. Greenberg's and Mr. Smith's claims for past legal fees and expenses to determine how much of past legal fees AIG is legally obliged to pay. There is a cap of $150 million under the agreement.
In statements, Robert Benmosche, AIG's chief executive officer, said, "We are pleased that we have resolved our differences. The resolution of these long-running disputes will remove a significant distraction and expense and allow AIG to better focus its efforts on paying back taxpayers and restoring the value of our franchise for the benefit of all our stakeholders."
In the same statement, Mr. Greenberg said, "I too am pleased that these long-running disputes are now over, and I want to express my appreciation for Bob Benmosche's help, and the help of the AIG board, in resolving them. I look forward to assisting AIG in trying to preserve and restore as much value as possible for all of AIG's stakeholders."
The statement added that Mr. Smith concurred with Mr. Greenberg.
In a filing with the Securities and Exchange Commission, the agreement to reimburse Mr. Greenberg and Mr. Smith for "reasonable legal fees and expenses" does not include anything paid in settlements.
Former U.S. District Court Judge Layn R. Phillips, an attorney with the law firm Irell & Manella LLP, will determine what legal bills are to be paid by AIG and also will arbitrate any disagreements between the parties, the filing said.
Payment to the parties under AIG's directors and officers insurance agreement will be arbitrated by Daniel Weinstein, a former California jurist, who now heads up the Weinstein Mediation Center.
The agreement permits Mr. Greenberg to access archival materials in AIG's possession for purposes of writing his memoirs and the return of property that AIG possesses which belongs to him.
Among the items listed in the agreement are photographs of Mr. Greenberg and Cornelius Vander Starr, Mr. Greenberg and Chinese leaders in AIG's Shanghai building, a Persian rug, and any other materials that are not AIG business records and are of a personal nature to Mr. Greenberg.
In a separate filing, AIG reported that under orders of the special master for TARP executive compensation, the compensation was changed for Chief Financial Officer David L. Herzog and two other executives, Kristian P. Moor and Win J. Neuger.
Under the changes Mr. Herzog will be paid a salary of $350,000; Mr. Moor will be paid $450,000; and Mr. Neuger will be paid $425,000.
Mr. Herzog will receive annual stock salary of more than $3.1 million and Mr. Moor less than $4.7 million. They will also be eligible to receive 2009 annual long-term incentive awards payable in restricted stock of up to $833,333 for Mr. Herzog and $2 million for Mr. Moor if they achieve performance goals for 2009.
Mr. Neuger will not receive any rewards because he is leaving the company.
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