AIG to cut 2009 bonuses
Sunday 15th March 2009, 12:11PM GMT.
Insurance group AIG, which has received nearly $180 billion (£129 billion) in three different US government packages, has agreed to review its bonuses for the coming year.
In a letter written to US treasury secretary Timothy Geithner, AIG chairman Edward Liddy said that bonus structures would be reviewed in the future but payments for 2008 could not be drawn back.
The Obama administration has called for bonus payments to be restructured and has announced a cap on the payment of executives at companies receiving government assistance.
On the issue of bonus payments, Mr Liddy wrote: “Quite frankly, AIG’s hands are tied.
“Under the current circumstances, I do not like these arrangements and find it distasteful and difficult to recommend to you that we must proceed with them.”
Payments of $165 million (£118 million) to staff who were at the company prior to the government assistance will be paid today.
Mr Liddy added that his goal was to pay back the government’s loan with interest and to rebuild AIG into a viable business.
The US government has taken a 79 per cent stake in the company in exchange for providing taxpayer money to the group. AIG announced a loss of $61.7 billion (£44 billion) for the last three months of 2008 – the biggest quarterly loss in US history.
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