HR Administration

New York State Takes Aim at AIG’s Executive Comp

By Staff Report

Sep. 16, 2011

New York Attorney General Andrew Cuomo is threatening legal action to recover “unwarranted and outrageous” expenditures by American International Group Inc., including compensation payments to former executives.


In a letter to AIG’s board Wednesday, October 15, Cuomo charged that as the insurer was nearing a financial collapse, it “nevertheless made numerous extraordinary expenditures in the form of executive compensation payments, junkets and perks for its executives.” 


Without mentioning them by name, the letter cites compensation awards to former CEO Martin Sullivan and to Joseph Cassano, former president of the company’s financial products division. AIG’s board awarded Sullivan a $5 million cash bonus and a golden parachute worth $15 million when his employment agreement was extended in March 2008, according to the letter and Securities and Exchange Commission filings. Cassano—who was terminated in February 2008 as his division’s huge credit default swap losses were emerging—was allowed by AIG’s board to keep $34 million in bonuses and continued to receive $1 million a month until recently, the letter says.


“Moreover, even after the taxpayer-funded bailout of AIG, the company paid hundreds of thousands of dollars for luxurious retreats for its executives, including an overseas hunting party and golf outing,” Cuomo wrote.


Cuomo charges that the payments constitute fraudulent conveyances under New York law, and demands in the letter that AIG’s board provide an accounting of compensation and other expenditures and “review, rescind and recover all improper payments where appropriate.”


“If the board fails to take these actions, we will do so pursuant to the fraudulent conveyance laws of New York,” the letter warns.


In a statement, an AIG spokesman said, “Attorney General Cuomo’s concerns are immediately being brought to the attention of the board.


“On October 10, we issued a directive ending all activities that are not absolutely essential to the conduct of our business,” the spokesman said. “AIG’s priority is to continue focusing on the actions necessary to repay the Federal Reserve loan and emerge as a vital ongoing business.”


Filed by Douglas McLeod of Business Insurance, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.


Workforce Management’s online news feed is now available via Twitter.

What’s New at Workforce.com?

blog workforce

Come see what we’re building in the world of predictive employee scheduling, superior labor insights and next-gen employee apps. We’re on a mission to automate workforce management for hourly employees and bring productivity, optimization and engagement to the frontline.

Book a call
See the software

Related Articles

workforce blog

Compliance

Minimum Wage by State in 2023 – All You Need to Know

Summary Twenty-three states and D.C. raised their minimum wage rates in 2023, effective January 1.  Thr...

federal law, minimum wage, pay rates, state law, wage law compliance

workforce blog

HR Administration

Is your employee attendance policy and procedure fit for purpose?

Summary: Lateness and absenteeism are early warning signs of a deteriorating attendance policy. — More ...

compliance, HR technology, human resources

workforce blog

HR Administration

Clawback provisions: A safety net against employee fraud losses

Summary Clawback provisions are usually included as clauses in employee contracts and are used to recou...

clawback provisions, human resources, policy