AIG Execs Ordered To Take Salary Cuts By U.S. Pay Czar

NU Online News Service, March 23, 3:51 p.m. EDT

WASHINGTON–Salaries of the 25 top executives at American International Group and other companies receiving government help must be cut on average by one-third from last year's levels, government pay czar Kenneth Feinberg said.

In addition, Mr. Feinberg, the Treasury special master on compensation, said today he has also ordered that the total pay package including deferred compensation and stock options for executives at AIG, GMAC and Chrysler Financial be reduced 15 percent compared to the pay these executives received in 2009.

His rulings pertained to 2010 pay for firms that received "exceptional compensation under government programs implemented after September 2008 to aid large companies in financial distress."

"Total pay decreased even including the value of the long-term stock the special master is requiring executives to hold over the long term," he said.

At the same time, the special master said he had ordered the cash salaries paid at the AIG Financial Products unit frozen. That subsidiary was responsible for the complicated financial maneuvers that brought AIG to near bankruptcy requiring a government bailout.

He also said that he had ordered pledges to repay bonuses that the employees had agreed to repay "fully repaid, and that all additional compensation at the AIGFP unit be made in stock that must be "held over time."

AIG officials declined comment. The company has said previously that t AIGFP employees, both current and former, had agreed to repay $45 million in bonuses, A source said AIG has "gotten most of that back."

AIG has been winding down the financial products unit, and letting employees go as the work volume declines.

Mr. Feinberg also said that concerns that cutting salaries at these companies would result in a mass departure of top talent are not accurate.

Specifically, he said that according to his findings, 4 percent of executives included in 2009 rulings remain with the companies.

Mr. Feinberg also released a letter requesting information on compensation paid to the 'Top 25′ executives at each firm that received assistance under the Troubled Asset Relief Program before Feb. 17, 2009 to obtain information needed for the 'look back' review required by the January 2009 Recovery Act under which he works.

He wants the information back within 30 days, Mr. Feinberg said in the letter. He said that, based on the law and Treasury Department regulations, he will review the information to determine whether any payment was inconsistent with the public interest.