Press Release

December 9, 2008

 

  

Mr. Edward M. Liddy

Chief Executive Officer

American International Group, Inc.

70 Pine Street

New York, NY 10270

 

Dear Mr. Liddy:

 

Thank you for your letter of December 5, 2008, and for providing information on the retention payments that American International Group (AIG) approved for its employees on September 18, 2008. The information you provided indicates that (1) 168 people are to receive the retention payments; (2) that the base salaries of those receiving the retention payments range from $160,000 per annum to $1,000,0000 per annum; and (3) that the retention payments range in size from $92,500 to $4,000,000. The letter further indicates that only 13 individuals scheduled to receive the retention payments have agreed to delay the receipt of their first payments from December 2008 to April 2009. 

 

I remain concerned, as do many American taxpayers, that these retention payments are simply bonuses by another name.  We have all heard the story that top AIG executives are forgoing promised salary and bonus payments while the company gets back on its feet (in large measure by selling off operating units), but I am interested in knowing whether these same executives who have announced they are forgoing compensation are receiving “retention” payments to make up the salaries they are forgoing.  Is anyone who has publicly agreed to forgo a salary and/or bonus(es) going to receive a retention payment?

 

I think we could all benefit from some clarity as to the difference between the amount of compensation that AIG would have paid under normal circumstances to those receiving retention payments and the amount these 168 individuals are now expected to receive in compensation.  Please provide me with (1) a breakdown on what each of the 168 individuals scheduled to receive the retention payments received in 2007 in total compensation (including salaries, bonuses, and any other types of compensation) and (2) a breakdown showing what these 168 individuals will now be receiving in 2008 through their combined base salaries and retention bonuses. Please also identify any other compensation of any type from any source that the 168 individuals receiving the retention bonuses will receive in 2008. Further, please show what these individuals’ targeted compensation levels were expected to be in 2008 prior to the collapse of AIG. Please specify the units within AIG for which the individuals receiving the retention bonuses work – and what the status of these units is (e.g., pending sale, expected to be retained by AIG, etc.). Finally, please provide me with a breakdown of what would have been spent in total by AIG in 2008 on salaries, bonuses and retention payments had the firm not collapsed – and please also show what is now projected to be the firm’s total expenditure on salaries, bonuses, and retention payments in each of 2008 and 2009.

 

My staff informs me that your General Counsel and Chief Financial Officer indicated that the Treasury and the Federal Reserve exerted significant oversight authority in negotiating the terms under which AIG was permitted to award retention payments.  I think shedding light on this process will make great strides in assuring American taxpayers that their tax dollars are being used judiciously.  Can you please provide me with details on the terms you negotiated with these government authorities regarding these retention payments?  What assurances have you given the Treasury and the Federal Reserve that these retention payments will result in their intended effect? What other specific terms have you negotiated regarding both the specific executive compensation limits that will be put in place at AIG as well as how these limits will be enforced?

 

Additionally, there is frankly a lack of clarity regarding how all of the bailout funding – particularly the first $85 billion in bailout funding – has actually been spent. Please provide detailed information that explains the specific expenditures that have been made by AIG from the federal funding provided to it.

 

Finally, I have yet to receive a response to a letter that I sent to you on November 11; a copy is enclosed with this letter for your reference. In addition to the questions raised in that letter, you had indicated to me in an earlier telephone call that there were no AIG executives in attendance at the event in Phoenix, Arizona, held in early November 2008 – but media reports seem to confirm that there were at least some AIG executives in attendance at that event. Please specify exactly which executives attended that event and the full amount of any costs associated with the event borne by AIG.

 

Thank you for your attention to these matters.

 

Sincerely,

 

Elijah E. Cummings

Member of Congress