Insurer American International Group Inc said it has cut the salaries of three top executives to comply with pay restrictions for companies that took federal bailout money, according to a regulatory filing on Wednesday.
The government has provided AIG with a bailout package worth up to $182.5 billion in exchange for an 80 per cent stake in the company. The package includes restrictions on compensation for the insurer's 100 highest-paid employees.
AIG said it would now pay Chief Financial Officer David Herzog a $350,000 annual salary, pro-rated for the period from Nov. 1 to December 31. That's down from the $675,000 annual salary he earned in 2008. He will also get $3.1 million in stock and is also eligible to receive $833,333 in restricted stock if he meets certain performance goals.
None of the three executives were given stock grants in 2008, according to a June filing with the Securities and Exchange Commission.
Kristian P Moor - who was named CEO of the company's spun-off property casualty and general insurance business Chartis in July - will be paid $450,000 in annual salary pro-rated for Nov. 1 to Dec. 31. That is down from the $959,615 in salary he earned in 2008. Moor will also get $4.7 million in stock and potentially another $2 million in performance-based restricted stock. Win J Neuger, chief executive of AIG Investments, will receive $425,000 in annual salary pro-rated for the period. In 2008, as AIG's chief investment officer - a position he relinquished in January of this year - he was paid a $1 million salary. Neuger is ineligible for stock awards because he will leave AIG after the sale of its asset-management business.
AIG also said it had suspended accruals to a supplemental retirement plan and other nonqualified deferred compensation plans for the three executives.
On Tuesday, AIG said it would go ahead with a previously announced pay package for its new CEO Robert Benmosche of $7 million in cash and stock. Benmosche, who took over as CEO of the embattled insurer three months ago, will receive an annual salary of $3 million in cash and $4 million in AIG common stock under the pay agreement.
AIG shares rose 16 cents to $34.84 in after-hours trading Wednesday after closing at $34.68, down 32 cents from a day earlier.