Cuomo
ALBANY, N.Y. (Legal Newsline) - New York Attorney General Andrew Cuomo is withholding the pay of the ex-CEO of troubled insurance and financial services company American International Group.
Cuomo wrote to new CEO Edward Liddy Wednesday that payments under Martin Sullivan's $19 million contract will be frozen, and that no payments will be made out of the $600 million compensation and bonus pools of AIG's Financial Products subsidiary.
Last month, the federal government offered AIG an $85 billion loan. The company may access an additional $37.8 billion from the Federal Reserve Bank of New York to keep the company solvent.
"The American taxpayer is now supporting AIG, making the preservation of these taxpayer funds a vital obligation and a priority responsibility of your company," Cuomo wrote. "Taxpayers are, in many ways, now like shareholders of your company, and the new AIG has a responsibility to them in the first instance.
"Indeed, given the overall circumstances and the damage incurred by the American taxpayer, their interests should be paramount. I applaud the different tone you are now setting at AIG which augers well for the company going forward, and I hope it will set a new standard for corporate culture at similarly situated firms."
Last week, Cuomo told the company it must stop generating "unwarranted and outrageous expenditures" and demanded the company pay back past expenditures that were unreasonable, like a $15 million retirement package and $5 million bonus to Sullivan.
In his Wednesday letter, Cuomo mentioned Joseph Casano, the former head of AIG's Financial Products subsidiary, and the $69 million share he has in the $600 million pool.
"The Financial Products subsidiary was largely responsible for AIG's collapse, and Casano has been terminated," Cuomo said.
"I believe that rebuilding trust in our capital markets requires executive compensation packages that are rational, fair, and based on bona fide performance measures that are disclosed to the public.
"We must ensure that executive pay package structures no longer create improper incentives for executives to overleverage their companies and manipulate the books for their own short-term financial benefit."
From Legal Newsline: Reach John O'Brien by e-mail at john@legalnewsline.com.