AIG to Pay Neal $2.7 Million to Cover Previous Firm’s Bonus

American International Group Inc. will hand a multimillion-dollar payout to insurance executive John Neal, even as the executive’s employment ended before he joined the firm.

The insurer will pay Neal $2.7 million to compensate for “foregone incentives at his former employer,” the company said in a filing Friday.

AIG withdrew its employment offer to Neal, who had been set to join the company as president in December, after learning that the executive was being investigated at his former employer, Lloyd’s of London, the Wall Street Journal reported earlier this week.

The swift reversal stunned Wall Street and cost Neal a lucrative job. He would have collected roughly $5 million in salary and bonuses for his first year, along with a target annual equity award of $5 million and a Day 1 restricted-stock grant of $4.5 million with a three-year vesting period. A $2.7 million cash bonus was to be part of the package, AIG said in a filing at the time.

Photo: John Neal. Photographer: Chris Ratcliffe/Bloomberg