Friday, October 17, 2008
The New York Attorney General and AIG issued a joint statement a day after the AG expressed strong displeasure with some of AIG's expenditures since taking government money. According to the statement,
Mr. Liddy [AIG's CEO] agreed to take several significant actions with respect to expenditures at AIG. First, AIG has agreed to provide the New York Attorney General’s Office with an accounting of all compensation paid to its senior executives and has agreed to assist the Attorney General’s Office in recovering any illegal expenditures. This includes all forms of compensation paid to former CEO Martin Sullivan and the former head of the Financial Products Unit, Joseph Cassano.
Second, AIG has agreed to establish a Special Governance Committee within AIG which will institute new expense management controls. Also, AIG will be issuing today a new Expense Policy Guidebook. These controls and protections will be designed at the Board level to prevent any future unwarranted expenditures, such as salaries, bonuses, stock options, severance payments, gratuities, benefits, junkets, and perks. The new controls will include direct supervision by Chief Administrative Officer Richard Booth.
Third, AIG has agreed to take +several immediate actions. Effective today, AIG will not make any payments pursuant to the multi-million dollar employment agreement of Steven Bensinger, the company’s Chief Financial Officer, who will be leaving AIG. Attorney General Cuomo has specifically asked AIG not to make payments pursuant to that agreement in light of the Attorney General’s ongoing review of the propriety of such payments.
AIG has also agreed to immediately cancel all junkets or perks which are not strictly justified by legitimate business needs. AIG will be canceling more than 160 conferences and events, some exceeding more than $750,00 per event, for a total savings of more than $8 million.