WASHINGTON BUREAU — The special master of the Troubled Asset Relief Program is cutting top management salaries at American International Group Inc. by 91% for the rest of the year.
The mid-year pay cuts will be imposed after Nov. 1.
The special master, Kenneth Feinberg, also reduced the maximum annual cash compensation for executives at AIG, New York, (NYSE:AIG) to $500,000. AIG must show “good cause” to pay executives more.
AIG now owes the federal government about $81 billion for financial assistance provided by the U.S. Treasury Department and the Federal Reserve System.
If companies receiving government aid want to pay executives more than $500,000 per year, they should use stock arrangements that are not completely payable until the fourth year, or 2012, Feinberg says.
That approach will link the executives’ salaries with the companies’ performance, Feinberg says.
- Eliminated bonuses through the rest of the year for employees at the AIG Financial Products unit. “Employees in this unit who pledged to return amounts paid pursuant to previously existing retention awards must immediately repay the pledged amount,” and 4 of the 5 employees who have pledged to return their bonuses have not done so, Feinberg says. Feinberg says other AIG Financial Products bonus recipients have not promised to repay their bonuses.
- Declared that, “No additional amounts in 2009 may be accrued under supplemental executive retirement plans after today’s date.”