American International Group Inc. has set Edward Liddy's salary at $1, eliminated 2008 annual bonuses for top company executives, and restricted the top executives' 2009 pay increases.
The restrictions on bonuses and salary increases apply to the top 7 officers at AIG, New York, the company says.
Restrictions on 2009 salary increases also apply to the 50 next-highest-paid executives, AIG says.
AIG spending has been under scrutiny since September, when the Federal Reserve Bank of New York began providing financial support for AIG in exchange for a 79.9% stake in the company.
AIG says it is developing a funding structure to ensure that no taxpayer dollars are used for annual bonus or future cash performance awards for AIG's "Senior Partners"–the top 60 members of the management team.
Liddy, AIG's chairman, says AIG's senior executives recognize AIG's obligation to taxpayers.
"We are extremely grateful for the assistance we have received, and we know we have an obligation to use that assistance to help AIG recover, contribute to the economy and repay taxpayers," Liddy says in a statement. "This action by the senior management team demonstrates not only that we understand our obligation to taxpayers and shareholders, but also that we are committed to the future success of this organization."
Under the voluntary restrictions announced today:
- Liddy, who joined AIG on Sept. 18, after the government support was arranged, will receive an annual base salary of $1 for 2008 and 2009. His initial compensation will consist entirely of equity grants, "showing his confidence in AIG and its team," the company says.
- Liddy will not receive an annual bonus in 2008 and 2009, but he may be eligible for a special bonus for extraordinary performance payable in 2010.
