AIG to Terminate Voluntary Deferred Compensation Plans

November 14, 2008

American International Group Inc. said on Friday that it is terminating 14 voluntary deferred compensation programs involving 5,600 employees and independent agents and representatives.

Approximately $500 million in earned but deferred pay will be distributed in the first quarter of 2009.

This deferred compensation is all pay that an individual earned but volunteered to defer receiving until a later date. In each case, an employee could leave AIG for any reason and be entitled to this deferred pay.

“AIG has decided to terminate and pay out the deferred pay plans to remove the incentive for employees to leave in order to obtain their deferred pay,” said Andrew Kaslow, senior vice president, Human Resources.

“Many AIG employees have seen their life savings wiped out in the financial crisis,” Kaslow said. “Employees are now concerned about obtaining the pay they have earned but deferred so they can pay for retirement, college tuition or other expenses.”

Under the majority of AIG’s deferred pay plans, participants can only access deferred pay when they retire or leave the company. AIG is concerned that employees will leave AIG so they can obtain their deferred pay. This is a concern at a time when AIG is working to maintain the value of its businesses, whether those businesses are to be sold to repay AIG’s Federal Reserve loan or to be continued as part of a restructured AIG.

Source: AIG

Latest Comments

  • November 19, 2008 at 1:32 am
    blah, blah... says:
    Who really cares? This is not hurting the employees and is not at all newsworthy. I guess the IJ has to meet their negative article quota...
  • November 17, 2008 at 1:37 am
    Tom says:
    I'm not sure Ralph is totally correct. Yes, it's money the participants earned, but unless it's a qualified plan, it is not sitting somewhere in escrow or a trust fund or any... read more
  • November 17, 2008 at 12:36 pm
    Ralph says:
    The $500m is deferred compensation that these people already earned. This money was already sitting in an account somewhere. This is just screwing the employees. They've proba... read more
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