Kenneth Feinberg orders pay cuts at AIG

24 March 2010

American International Group (AIG) has been ordered by US pay czar Kenneth Feinberg to cut its cash compensation payouts to senior executives by 33 per cent.

AIG is not the only company that will have to implement such measures, with other four bailed-out firms, GMAC, General Motors, Chrysler Group and Chrysler Financial, also subject to the ruling.

Mr Feinberg told a press conference in Washington that he expects to see total pay in 2010 fall by around 15 per cent for the top 119 executives across the five different companies.

"We're trying to continue to lower overall total compensation," Mr Feinberg said.

Mr Feinberg has been ordering a series of cuts at seven bailed-out companies, including Citigroup and Bank of America, since arriving in his post in June 2009 and stated that his policy of reducing pay by as much as 50 per cent has been vindicated by the number of senior members of staff remaining with their firm.

He said that around 85 per cent of the executives ordered to take smaller salaries are still with their company, reports Bloomberg.

Mr Feinberg went on to praise Robert Benmosche, the chief executive officer of AIG, for his cooperation with the current series of cutbacks.

From the executives singled out for pay cuts by Mr Feinberg, Mr Benmosche remains in line to take home the highest wage.

He is to receive a cash salary of $3 million this year, with long-term stock awards set to leave him with a total amount of $10.5 million in 2010.

Mr Benmosche and Mr Feinberg have previously had differences about the level of compensation that should be paid to staff working at AIG.

In November, the Wall Street Journal reported that Mr Benmosche was ready to quit his post if his $10.5 million salary package was not approved.

By Asim Shah

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