AIG Ex-CEO Severance Seen As High As $68M

June 18, 2008

  • June 18, 2008 at 7:06 am
    Chad says:
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    I haven’t read all of the feedback, but what I did read correctly asks the question: “given that this guy tanked the stock by 49% how is it that he would be entitled to any sort of severence?” Why didn’t the Board fire this man instead of letting him depart to collect whatever is the ultimate amount of the severence? The concept these days of paying executives who decrease shareholder value or even destroy entire companies is repugnant. You screw it up, you should get nothing when you leave but your hat.

  • June 18, 2008 at 7:41 am
    Bobby says:
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    don’t forget he worked a lot of over time and missed raising his children. now, at least, he can go on a pretty nice vacation.

  • June 18, 2008 at 10:36 am
    wudchuck says:
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    must be nice, that you can be let go and still get a heft amount of money. a regular employee does not get any! it’s ashame that the hard working folks don’t get any of these kinds of bene’s. $68 mill! i would not have to work anymore, except when my wife says, i want you out of the house! then i might find my little shed and do some woodwork.

    again, i wish i could have had that for a severance pay!

  • June 19, 2008 at 12:39 pm
    Chad says:
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    Perhaps, but he was well compensated for that time. Unfortunately others who work just as hard and gave up just as much lost half of their hard-earned investment on his watch, and you think he deserves a nice vacation?

  • June 18, 2008 at 12:41 pm
    Nobody Important says:
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    The only severance most of us get when let go is at the neck. Nice contract if you can get it.

  • June 18, 2008 at 1:10 am
    CJ says:
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    No one is worth that, either working or leaving!

  • June 18, 2008 at 1:19 am
    RJ says:
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    How can you call it a $68M severance if it includes “$14 million from a defined contribution plan”? Who includes the balance of a 401(k) plan as part of severance? That’s like saying the bank pays you $20 each time you make a withdrawal from your own account at the ATM.

    Further, the article goes on to say: “The figure is far higher than … the actual severance package that is likely to be negotiated…. Sullivan is more likely to receive between $35 million and $50 million in pay and benefits, according to a source familiar with the matter….The figure includes salary of $5 million, $30 million in severance pay.”

    If the article says the severance is $30M, why would the headline say $68M unless it was to mislead on purpose? Since most readers (such as wudchuck and CJ) would have the same reaction to a $30M severance as a $68M one, I don’t see the need for such exageration.

  • June 18, 2008 at 1:29 am
    Amazed says:
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    This guy discovered a cure for cancer?
    A way to make gasoline from old magazines?
    Even a policy to insure against going bald?
    No, he was the jettisoned captain of a ship that is badly leaking and losing $$ for its investors.

  • June 18, 2008 at 1:37 am
    KAREN says:
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    I CAN’T POSSIBLY UNDERSTAND HOW A CEO CAN BE WORTH THIS MANY MILLIONS ESPECIALLY WHEN THEY DID NOT DO THE JOB THEY WERE PAID FOR.
    WE NEED TO STOP THE EXORBITANT PACKAGES GIVEN TO CEO’S THAT FAR EXCEED THEIR VALUE.
    IF THE MILLIONS WERE GIVEN TO THE WORKING EMPLOYEES THEY WOULD BE HAPPIER AND THE COMPANIES WOULD FARE BETTER.

  • June 18, 2008 at 1:38 am
    CEO what a gig says:
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    can fail miserable and get a $50 million bonus. Give it 2 years and he will suface again and make even more money. CEO is the only job in America where it pay’s to FAIL. Rock Stars don’t get paid if they don’t have hits, Movie stars fall off the charts and there phone stops ringing. BUT CEO’s oh they get bonus’s for FAILING.

  • June 18, 2008 at 1:45 am
    Dread says:
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    Agree w/all comment re. the over-compensation for one individual. NOBODY deserves or needs that kind of money. Plus, you don’t reward someone for incompetence. This is how Boards of Directors take care of their own. It’s a small, secret society that takes an oath not to screw anyone inside.

  • June 18, 2008 at 1:50 am
    Mongoose says:
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    The LOWEST paid CEO is also the head of one of the best performing companies- Warren Buffet. His salary is $150,000 per year. He still lives in the same house that he bought 30 years ago which is in a middle class neighborhood.

  • June 18, 2008 at 1:59 am
    Fred says:
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    Anyone can screw up a company – large or small. CEO’s should only receive severance a even a wage if what they do generates a profitable company. If they fail they should have to return earning or at least NOT receive $68Million for their failure. Any IDIOT knew approximately when the Home Mortgage issue was going to collapse. CEO’s are like our politicians they screw us, stockholders, the economy, the country and (in this case), the world and walk away teflon clean and more wealthy than ever, leaving only mountains of wreckage in their wake. He should be Strung him up by his jewels.

  • June 18, 2008 at 2:15 am
    AZInsMan says:
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    If any of you people whining about Sullivan’s severance had worked at that level, you would understand the pay packages are negotiated when taking the job. If he was fired for cause, he would not get it. A significant portion of the investments now being written downward were purchased prior. BUT, as Greenberg said, they were evolving investments. You do not just buy them and leave them indefinitely. I do not think much of Sullivan, but kudos to him for negotiating a decent package for himself. If I was to take a job at that level attempting to satisfy the public markets, I would want a similar package. AIG makes $4 billion a quarter. They will be OK…

    If any of you had been NEAR that level, you would better understand.

  • June 18, 2008 at 2:18 am
    BigEFly says:
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    For $30 million, I’d step down too. Just tell me where to sign. I smell a stockholders’ class action, which doubly gets them as they will get little in benefits yet in addition to paying Sullivan, AIG will pay off some class action attorney (friend of the little guy – hah) to, thereby further diminishing their investment. Don’t be fooled by Buffet. That’s his base salary. The stock more than makes up for the difference.

  • June 18, 2008 at 2:20 am
    BJ says:
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    For all of you who are saying don’t pay the CEO, give it to the little guy…do you realize that Martin Sullivan has worked at AIG his entire career, starting off as a clerk at 17 and working his way up the ranks? Sure, the rewards are sweet at the top, but part of that severance/retirement is for the 30+ years he put in working his way up to the top.

  • June 18, 2008 at 2:34 am
    wudchuck says:
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    buffet has no control over this company, he does not even own a share of it….

  • June 18, 2008 at 2:42 am
    matt says:
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    Sure he loses the severence if fired “for cause.”

    So why not preempt getting fired by resigning in the face of TWENTY ***B I L L I O N*** DOLLARS write downs in SIX MONTHS AND a stock price sinking FASTER THAN THE TITANIC!

    Bottom line is, when he took over this company the stock price was sitting just under $60. Right now it is trading for $31.

    We all know this already but it’s worth saying again: HE GETS PAID TO INCREASE SHAREHOLDER VALUE.

    So, why are they giving $68M (Or $50M, or $30M, or even a single penny) to the person who was in charge while the SHAREHOLDER VALUE DROPPED BY 50%??

    I am sorry, but as an underwriter, if I post a 200% loss ratio on my book then “resign” before they fire me for poor performance, I sure as hell do not get a bonus that’s some absurd multiple of my annual salary.

    It’s a joke. Shareholders need to sue, board needs to be held accountable, and people in general need to wise up and stop buying shares of stock in companies that reward bad behavior and poor performance.

  • June 18, 2008 at 3:40 am
    Jane says:
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    He caused losses. Why not send him out with nothing and put the $68mm back in lenders hands to help with mortgages?

  • June 18, 2008 at 3:50 am
    Baxtor says:
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    Hey if Sullivan could negotiate such a contract, which one of us would have turned it down? Shame on AIG as this just shows they are like the rest of the multi billion dollar companies that over pay top execs. I’m glad their Best ranking dropped, not by much, but maybe it will continue (ha ha). Corporate America will never change until the American Public changes. Don’t buy insurance from AIG. Buy it from a mutual company. That would be a good start.

  • June 18, 2008 at 5:06 am
    Tony says:
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    Couldn’t agree more with RJ. The article is complete sensationalism. He won’t even get $68m, so why is it reported as if he will? Just to get the kind of reaction it has got here, that’s why. Now I don’t know Alexandra Higgins from Adam, but she is just a research analyst, and has plucked this $68 figure out of the air. It has been reported as gospel, in spite of the very same article saying “the figure is far higher than what has been disclosed by the company in regulatory filings, and higher than the actual severance package that is likely to be negotiated”.

    What a joke. Whether he deserves the actual final amount or not (certainly much of it – eg. defined benefits – seems to be his entitlement to me), the main issue is the sensationalist reporting and the “non-story” that is the result.

  • June 19, 2008 at 9:16 am
    Nobody Important says:
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    As much as I think he was probably overpaid, we certainly have a lot of people who think they should be able to determine what other people make. By all means, let’s make sure that everyone is paid equally so life is more fair. Lot’s of experts in fairness out there for sure.

  • June 19, 2008 at 9:29 am
    Chad says:
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    You’re missing the point of my comment. I’m not talking about what he was paid as CEO, I’m addressing the severence package and the illogic of paying someone huge sums after making consistently poor decisions, i.e rewarding poor performance. As another writer mentioned: would you get huge sums for NOT doing your job?

  • June 19, 2008 at 10:16 am
    Nobody Important says:
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    Who would you have make the decisions? If the stockholders and people connected otherwise to the company aren’t willing to exercise restraint in these salary and benefit packages, who is the final arbiter? That was my point. This goes along with all these people who want to limit profits. Either we have a free market system or we don’t. Just my opinion.

  • June 19, 2008 at 10:49 am
    Bobby says:
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    he likely to be unemployeed for awhile, so needs money to live on. most of you are missing that point!!!!!

  • June 19, 2008 at 11:49 am
    lastbat says:
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    I’m all for paying CEOs what they are worth – and I love CEOs like Buffett and the CEO of Costco (forget his name) who have low 6-figure salaries and keep the bulk of their wealth in stock – they get rich when the company does well.

    I do have a problem with allowing CEOs who tank a company to leave with golden parachutes. To me that is a mishandling of shareholder value by the board. If the CEO tanks the company that should count as “cause” for being let go and the severence should be nil. Give him any money he’s earned, but no severence.

    If we don’t hold our boards and our executives accountable we won’t see the returns we want.

  • June 19, 2008 at 1:20 am
    Bobby says:
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    Hey Pal, he NEEDS TO EAT too!!!!!!!! The stock losses are all “paper losses” any who……….

  • June 19, 2008 at 1:47 am
    lastbat says:
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    He can do what the rest of us do and save for a rainy day and apply for unemployment. That’s how he’ll eat.

    It’s one thing if the CEO is being let go because of a culture clash or some other reason not related to tanking the company; it’s quite another to give them millions for the privilege of destroying shareholder value.

  • June 19, 2008 at 5:09 am
    LARRY LOGIC says:
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    HE SUCCEEDED GREENBERG, WHO PROBABLY IS RESPONSIBLE FOR THE SUBPRIME MORTGAGES, SO HE MAY NOT EVEN BE AT FAULT. HOWEVER, THE BOARD ENDS UP PAYING THEM BOTH. SHOULD HAVE KEPT SULLIVAN, A 30-YEAR SOLDIER, UNTIL GREENBERG’S FOLLIES ARE ARE WASHED OUT. THAT WAY THEY COULD HAVE A BETTER FEEL FOR A PERFORMANCE SULLIVAN COULD HAVE CONTROL OVER!

  • June 21, 2008 at 7:54 am
    wudchuck says:
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    well, um….

    1) first of all, the ot you claim he gets – not so. remember that as a salaried employee that does not exists!

    2) his kids are probably already grown and in college or graduated from college.

    3) you mentioned his predecessor – read the article, he is a policyholder who is asking about why? i don’t think he had anything to do with it. he’s got money invested, why would he hurt his own pocket?

    *****
    i work for the buffet man, in one of his many companies he owns. you are correct in that his paycheck relies on the company’s well being. when the company does well, he loves to visit and have a great photo op with them. companies get real excited to see him in person. he is a class act – 5 stars in my book!

  • June 25, 2008 at 5:16 am
    KEEPitREAL says:
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    C’mon folks , “LETS KEEP IT REAL”-
    FOR 95% OF US THERE ARE NO JUSTIFICATIONS THIS IS SIMPLY OBSCENE!!!



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