AIG 'Strongly Objects' to Pay Restrictions
Robert Benmosche received $2.7m in cash and shares for five months’ work at the helm of AIG in 2009, the insurer revealed on Monday in a filing that criticised the US government, its biggest shareholder, for keeping a lid on pay.
AIG’s comments underline the tension between its management and Kenneth Feinberg, the government’s pay tsar, who has to vet the packages of its 100 best-paid employees.
Over the past few months, AIG , which has received $180bn-plus in government aid, clashed several times with Mr Feinberg over his decisions to restrict salaries and bonuses and tie pay to the long-term health of the troubled company.
In Monday’s filing, AIG said it “strongly objected” to Mr Feinberg’s decision in November to reduce the salaries of David Herzog, chief financial officer, from $675,000 to $350,000, and Kris Moor, the head of the property and casualty unit, from $1m to $450,000.
AIG’s board also expressed concern that Mr Feinberg’s move to cap the cash salary of the top 100 staff to $500,000, unless there were exceptional circumstances, put the insurer at a “competitive disadvantage”.
The limitation on cash salary has resulted in lower cash rewards, as a percentage of total remuneration, than has ever been the case and significantly lower than AIG’s competitors, the filing says.
AIG, which is 80 per cent-owned by the government, also revealed it raised the salary of Rodney Martin to $900,000, above the $500,000 ceiling, in April to reflect “a significant increase in responsibility” following his promotion to head the life assurance division.
Mr Feinberg declined to comment.
Mr Benmosche’s yearly package, capped at $10.5m in cash and shares, was one of the least contentious issues as the former MetLife chief executive made clear he wanted to be paid in line with other financial chiefs. Mr Benmosche’s predecessor, Ed Liddy, had agreed to work for $1 a year after political pressure.
Last year, however, Mr Benmosche’s salary and stock awards were pro-rated to reflect the fact he took over in August. As a result, his package was dwarfed by the $10m-plus received by Mr Martin and Mr Moor.
However, those packages were boosted by stock awards that had been delayed from 2008 when AIG’s near-collapse forced its executives to forego some financial reward.