Former AIG CEO Willumstad Foregoes Some Stock Awards

December 31, 2008

Former AIG chief executive Robert Willumstad will forego stock awards he was granted as part of his agreement to step into the insurer's top post last June, the company said in a regulatory filing on Tuesday.

Willumstad led American International Group Inc. for about three months, stepping down in September when the firm's mortgage losses left it close to bankruptcy and in need of a government bailout that has now swelled to about $152 billion.

Willumstad earlier waived a $22.5 million severance payment that he would have been due, according to a document filed with the U.S. Securities and Exchange Commission.

The former Citigroup executive had been awarded about one million restricted AIG shares as a sign-on bonus.

AIG said rescinding the stock awards had been agreed by both Willumstad and the company.

Willumstad, who was already AIG's chairman, took over the CEO post from Martin Sullivan, who stepped down in June as losses on mortgage investments pushed AIG deep into the red. Willumstad was himself replaced by Edward Liddy in mid-September when the government stepped in with a rescue of the global insurer.

In total, the company has recorded write-downs and capital losses of about $66 billion over the past four quarters.

Willumstad retains previously granted options to purchase AIG shares at exercise prices ranging from $23.28 to $68.61, the company said.

He may also have retained rights to some other benefits, the filing said.

AIG shares rose 1 cent on Tuesday to $1.56. The shares have traded as low as $1.25 and as high as $59.42 in the past year.

The U.S. goverment has the right to take a roughly 80 percent stake in the insurer as part of the bailout, heavily diluting existing shareholders.

(Reporting by Lilla Zuill; editing by Gunna Dickson)