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October 17, 2008 at 07:55 AM
American International Group Inc. says it is replacing its chief financial officer, canceling 160 events, and seeking to recover more than $40 million in payments made to two former executives.
AIG, New York, issued the announcement together with New York Attorney General Andrew Cuomo.
Cuomo threatened earlier this week to sue AIG unless it acted to recover “unwarranted and outrageous” spending on trips and golden parachutes for executives at a time when it is depending on an $85 billion government credit line.
AIG’s agreement to act on spending came after a “candid discussion” Cuomo held in his office with AIG Chairman Edward Liddy, according to Cuomo and AIG.
AIG says it will provide an accounting of executive compensation and assist Cuomo’s office in “recovering any illegal expenditures.”
The review will include “all forms of compensation paid to former [AIG Chief Executive Officer] Martin Sullivan and the former head of the Financial Products Unit, Joseph Cassano,” according to Cuomo and AIG.
In 2007, as AIG was losing $5 billion in the final quarter, the company awarded Sullivan a cash bonus of more than $5 million and a contract that included a $15 million golden parachute provision.
Cassano, who ran a derivatives unit that exposed AIG to many billions of dollars in credit default swaps collateral calls, was let go in February without cause and allowed to keep up to $34 million in unvested bonuses. He also was placed on a $1 million retainer by AIG.
In related news, AIG has named David Herzog to take over as executive vice president and chief financial officer.
Herzog succeds Steven Bensinger, who has been vice chairman for financial services and acting CFO since May.
