Chartis Spin-Off On Hold; One Exec Gets Increase

The low evaluations are keeping investors away from insurance companies, he said. "They perceive a decline in the return on equity for property and casualty stocks for the foreseeable future, primarily because capacity is relatively high," Mr. Newsome said.

The decision would be a reversal by Robert Benmosche, president and chief executive officer of AIG, from that of its former chief executive Edward Liddy.

Mr. Liddy announced a plan in April to spin off and rename some of AIG's best assets as a precursor to selling them off through initial public offerings because AIG reported huge paper losses as a means of cleaning up its balance sheet.

The spin-off plan was aimed at reducing taxpayer anger at AIG and justifying a joint decision of the Federal Reserve Board and AIG to provide up to $30 billion in an additional discretionary credit facility to the company in order to prop it up, if necessary.

Mr. Benmosche, who replaced Mr. Liddy in August, has adopted a different approach.

He is curtailing the asset sales as a means of building up the AIG businesses in hopes that a stronger company and a stronger economy will allow him to repay the government without a wholesale divestiture of prime properties.

Specifically, Mr. Benmosche has called off plans to sell two units, its Japanese life insurance company and a U.S. investment advisory business.

But, AIG cut its debt to the federal government earlier this month by $25 billion by turning over parts of two overseas life insurance businesses.

AIG is still operating the businesses, but is planning to sell them, either through IPOs or through sale to competitors or venture capital firms.

At the same time, the special master at the Treasury Department for compensation for companies receiving funds under the Troubled Asset Relief Program (TARP) Monday released a letter granting a $4 million increase in pay to an AIG executive.

An AIG spokesman declined to identify the employee, but Kenneth Feinberg, the Treasury special master for pay, apparently granted the request because the executive had threatened to leave AIG.

Specifically, the pay package approved by Mr. Feinberg granted the executive a long-term compensation program that includes stock options with a current value of $3.26 million and additional incentives that valued at up to $1 million.

The compensation approved by the special master will be above the executive's 2009 base pay of $450,000.

Mr. Feinberg acted at the request of Robert Benmosche, AIG president and CEO.

In approving the request, Mr. Feinberg said that he has determined that the additional compensation is consistent with the principle that he must follow that compensation "should be performance-based over a relevant performance period."

He said the pay for the particular employee that he approved in November "authorized no stock salary or annual long-term incentive award" for the particular employee because in responding to the special master's questionnaire on pay, AIG said the employee planned to leave AIG.

"However, in light of the fact that the specified employee will remain in the employ of AIG, it is appropriate to provide the employee with long-term incentives to ensure that the employee contributes to AIG's long-term success and, ultimately, AIG's ability to repay taxpayers."

Earlier this month there were reports that general counsel Anastasia D. Kelly made plans to leave the company if her salary were cut.