Incoming AIG CEO To Get $7 Million Annual Salary, Plus Incentives
August 17 2009 - 4:37PM
Dow Jones News
Incoming American International Group (AIG) President and Chief
Executive Robert H. Benmosche will get an annual salary of $7
million plus long-term incentive awards of up to $3.5 million per
year.
The package, announced Monday, has received "approval in
principle" from Kenneth Feinberg, the Treasury Department's special
master for executive compensation for institutions that received
bailouts. Benmosche was appointed to the position a week ago.
Last week The Wall Street Journal, citing a person close to
Benmosche, reported the lack of a formal pay package as Benmosche
took the helm of AIG left him "ready to walk if this doesn't get
resolved, and resolved quickly."
Benmosche's predecessor Edward Liddy wasn't able to negotiate a
salary beyond his $1 annual paycheck he got when he took the role
at the request of the U.S. Treasury Dept. in September. Liddy, the
former chairman and chief executive of Allstate Corp. (ALL),
stepped down on Aug. 7. He called his short tenure at AIG one of
the most difficult experiences of his life.
Benmosche, 65 years old, was chairman and CEO of MetLife Inc.
(MET) from 1998 until 2006, and has extensive holdings of MetLife
stock and stock options.
AIG said it couldn't replace the value of Benmosche's MetLife
holdings because under the Troubled Asset Relief Program such
payments aren't permitted. In an SEC filing Monday, AIG said paying
Benmosche for those holdings wouldn't be in the interests of AIG
shareholders.
It suggested Benmosche wasn't willing to sell the holdings, and
will be allowed to keep them: "Given current market conditions, Mr.
Benmosche also would likely be unable to sell or to realize
appropriate value for certain of his interests, which include
out-of-the-money options," according to the filing.
AIG's board of directors found a fix for the potential conflict
of having its chief executive invested in a potential rival: The
board will take steps to make sure Benmosche "is not
inappropriately involved in any transaction between AIG and MetLife
or any significant business decision involving MetLife," the filing
said.
The Wall Street Journal has reported that MetLife has been
involved in discussions over AIG's foreign life insurance
business.
Benmosche's salary will consist of $3 million in cash and $4
million in fully vested AIG stock will give him a significant
equity stake, which will "align his interests with those of AIG,"
the filing said.
AIG shares closed Monday down 95 cents, or 3.9%, at $23.42.
-By Lavonne Kuykendall, Dow Jones Newswires; 312-750-4141;
lavonne.kuykendall@dowjones.com