AIG Chief Executive Robert Benmosche has moved to assure employees that recently appointed U.S. pay czar Kenneth Feinberg will not attempt to claw back compensation.
“It is important that all of you know that the Special Master’s jurisdiction is quite limited, and we expect Feinberg’s upcoming decisions on compensation to cover only the top 25 employees at AIG,” Benmosche said in an internal memo distributed around the company late on Wednesday.
The memo, a copy of which was obtained by Reuters, said the company was in “direct, near-daily discussions” with Feinberg, who has told AIG he will not seek retroactive salary adjustments.
The Obama administration appointed Feinberg in June to scrutinize the pay practices of the seven auto and financial companies that received the most federal aid.
Sources said on Wednesday that Feinberg was aiming to slash pay for each of those bailed-out companies’ top 25 earnersby half, and seek other concessions to ensure that salary levels were kept in check.
Benmosche sent the memo to AIG employees within hours of the reports. The company employs about 116,000 people around the world.
(Feinberg has since sent a letter to AIG with his compensation determinations. In his letter, Feinberg informs Benmosche that 2009 base salaries for AIG’s senior executives should not exceed $500,000, except for good cause. This means that overall cash compensation must be reduced 91 percent from 2008 levels. The majority of compensation is to be paid in stock rather than cash. Also, total compensation must be comparable to compensation for senior executives at similar firms. In AIG’s case, total compensation for these senior executives will decrease 58 percent from 2008 levels.)
In the months since its bailout, AIG has become a lightning rod for public anger as it agreed to stick to million-dollar bonus agreements for employees, including nearly $500 million for those working within AIG Financial Products, the unit at the center of its financial meltdown.
Benmosche, who became AIG’s chief executive officer this summer, has railed against criticism leveled at his employees and efforts to regulate pay. “You still need to pay people competitively,” he told Reuters in August.
Federal officials have approved AIG’s plan to pay Benmosche an annual salary of $3 million in cash and $4 million in fully vested stock. He also could receive a bonus valued as high as $3.5 million.
He has called his pay package “the bottom end of a competitive range.” His predecessor, Edward Liddy, agreed to work for $1 a year.
AIG declined to comment and did not answer questions about whether new regulations would affect Benmosche’s own pay.
Feinberg’s powers are limited to contracts signed since February.
(Reporting by Lilla Zuill; Editing by Lisa Von Ahn)
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