AIG said current and former employees of its Financial Products unit had so far agreed to accept cuts totaling about $20 million in retention payments, short of a $26 million target.
American International Group Inc, which was bailed out with a $182.3 billion US aid package, said it had decided to begin making the reduced payments to current and former employees who had agreed to the cuts. An earlier payout was part of the proposals the company had made to the employees.
These payments would total $100 million, the Washington Post reported. Although the payout is part of a previously known $195 million award that was due to employees of the AIG Financial Products unit, the news drew a fresh round of criticism from some members of Congress.
“It's not a question of whether or not the bonuses are justified, but rather if the Administration is being transparent with the American people about the nature and need of these bonus payments,” said Darrell Issa, a lawmaker who has spearheaded an investigation into the AIG bailout.
Sen. Chuck Grassley, a ranking member of the Committee on Finance, said, “AIG has taxpayers over a barrel. The Obama administration has been outmaneuvered. And the closed-door negotiations just add to the scepticism that the taxpayers will ever get the upper hand.”
The outrage follows a public outcry last March when AIG paid $165 million to employees of the unit that was behind the insurer's near collapse. Following the criticism, some employees of the unit said they would pay back $45 million from the retention payments they received in March 2009, but AIG got only $19 million back, putting it under pressure from various quarters including US pay czar Kenneth Feinberg to recover the remaining money.
AIG asked the unit's current and former employees to make up for the difference by taking cuts from the $195 million in retention payments that were due this March.
These payments are tied to employment contracts from 2007 that fell outside Feinberg's jurisdiction and the law, a Treasury spokesman said.
“We are encouraged that AIG employees are making good on the repayment pledges they made last spring,” he said.
Some 97% of current employees of the unit volunteered to take cuts in the payments due to them, AIG said.
Certain former employees had volunteered an additional $4.5 million in reductions, but for reasons unrelated to the program, AIG said it could not accept that offer.
“We will continue to work with the non-active employees to round out the remaining amount of our giveback target over the next few months,” AIG said. “We believe this allows us to largely put this matter behind us.”
Separately on Tuesday, AIG named Thomas Russo, a former top Lehman Brothers Holdings Inc lawyer, as its general counsel filling the position that became vacant on December 30, when Anastasia Kelly resigned in protest over pay curbs imposed at the firm by Feinberg.
Russo, who joined law firm Patton Boggs LLP after Lehman's collapse amid the financial crisis in September 2008, was named executive vice president for legal, compliance, regulatory affairs and government affairs, and general counsel.
Russo was earlier chief legal officer of Lehman, which he joined in 1993.
“I am excited to participate in a process at AIG to both repay the funds owed the US taxpayers, and to continue to have a company in which all employees and stakeholders will be proud,” Russo said in a statement.
AIG also named Paulette Mullings Bradnock as senior vice president and director of internal audit. Bradnock, who joined AIG in 2005, was earlier deputy director and chief of staff for the internal audit division.
Jeffrey Hurd, who was chief administrative officer, was named senior vice president, human resources and communications. Sandra Kapell was named vice president and global head of talent strategy and performance systems, reporting to Hurd.
Michael Cowan, a former Merrill Lynch executive, was named senior vice president and chief administrative officer, succeeding Hurd.
Christina Pretto was named senior vice president, communications, also reporting to Hurd. Pretto joined AIG last year as vice president, corporate media relations, from Citigroup Inc. (Reuters)