American International Group, the insurer whose government bailout was marked by controversy over executive salaries, on Wednesday said its board adopted a clawback policy to recover compensation in case of mistakes or wrongdoing.
In a regulatory filing, AIG said its board adopted the policy last week “to encourage sound risk management and individual accountability.”
The policy provides a mechanism to pull back bonuses and equity awards from executives for at least the one-year period prior to any event that triggers a clawback. Among those triggering events are a financial restatement, failures of risk management or acts that hurt the company’s reputation.
AIG received a bailout in September 2008 while on the brink of bankruptcy. Its rescue ultimately totaled $182 billion, all of which the government recouped, plus interest.
During the course of that bailout, executive compensation was a huge sticking point. Protests broke out in early 2009 after certain executives received millions of dollars in bonuses following the rescue.
At one point, the U.S. Congress considered legislation to claw back those bonuses, though it never became law.
The insurer also adopted a long-term incentive plan that awards AIG shares to executives based on performance and a short-term cash award incentive plan for the majority of employees.
The clawback policy and incentive plans were detailed in a filing with the Securities and Exchange Commission.
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