A top executive of American International Group Inc. has been granted a $4.3 million pay-package bump by the troubled insurance giant's majority owner _ the U.S. government _ because the executive has decided to remain with the company.
Kenneth Feinberg, the Obama administration's pay czar, approved an AIG request to grant the executive a long-term compensation package that includes stock options with a current value of $3.26 million and an additional incentive award of up to $1 million. The package comes on top of the executive's 2009 base salary of $450,000.
In a letter released by the Treasury Department Monday, Feinberg said he was granting the request so that the executive's long-term compensation package would be comparable to those already granted to AIG's other top 25 executives. The executive had been planning to leave the company and had not been granted long-term compensation benefits.
Treasury, citing privacy restrictions, refused to reveal the executive's name and an AIG spokesman said the company would not disclose it either.
AIG has been a focus of taxpayer outrage over executive bonuses after it was revealed that the insurer, based in New York, would pay millions of dollars in bonuses to employees of the division whose trading in complex financial instruments had brought the company to the brink of collapse. The government provided up to $182 billion to stabilize AIG and as a result the Treasury Department holds a nearly 80 percent stake in the company.
In granting the request for an expanded compensation package, Feinberg said it was appropriate "to ensure that the employee contributes to AIG's long-term success and, ultimately, AIG's ability to repay taxpayers."
The companies under Feinberg's jurisdiction have argued that the strict pay restrictions have made it harder for them to retain and attract top talent.
Feinberg has set pay restrictions for AIG and other companies receiving the largest amounts of support from the government's $700 billion bailout fund. Many banks have scrambled to pay back their government assistance to escape the pay restrictions.
In a separate ruling, Feinberg said Monday he was amending the pay restrictions for Citigroup Inc. to expand the number of executives covered by special overseas living allowances to five instead of four.
In October, Feinberg ruled that companies receiving exceptional assistance from the bailout program, known as the Troubled Asset Relief Program, would have the cash salaries for the top 25 highest-paid executives limited in most cases to $500,000 with additional compensation required to be paid in company stock that cannot be redeemed until beginning in 2011.
Feinberg sought through the stock compensation to better tie executives' performances to the long-term fortunes of their companies.