NY Attorney General Cuomo Revealed Details of AIG Bonuses

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“Spending a billion dollars on retention payments while the company is on its deathbed is ludicrous, particularly when some of those payments are going to employees the company plans to terminate,” said Representative Elijah Cummings (D-Md.) on the House Oversight and Government Reform Committee.

This article is a follow-up to the previous piece on the New York Attorney General Andrew Cuomo and AIG by this writer. On Mar. 17, Tuesday afternoon, Mr. Andrew Cuomo released a letter to the Chairman, House Committee on Financial Services, Rep. Barney Frank (D-Mass.) about the recent American International Group (AIG) bonuses that revealed details previously unknown to the public. 

NP readers can read the complete AIG bonus details here:

In the letter, Mr. Cuomo wrote, "Last week, AIG made 73 millionaires in the unit which lost so much money that it brought the firm to its knees."  Mr. Cuomo continued, “Something is deeply wrong with this outcome."

Mr. Cuomo did not name the bonus recipients, but the numbers are astonishing, given AIG's fragile financial status.  

According to the documents that Mr. Cuomo's team had collected, AIG agreed in its employment contracts to provide at least as large a bonus in 2008 as it did in 2007 to members of the same Financial Products unit.  In other words, bonuses were given twice to the same Financial Products unit whose performance results were disastrous. It is unclear how long that provision has been in these contracts. 

Mr. Cuomo's letter further revealed that 11 of the 73 employees who received "retention" bonuses of $1 million or more are no longer working at AIG, including one who received $4.6 million. All had already left the company on their own.  The same was true for many of the some other 300 who received less than $1 million bonuses.

A brief summary of these taxpayer-funded bonuses under TARP as revealed in Mr. Cuomo's letter:

•  The top AIG bonus recipient received more than $6.4 million;
• The top seven 7 AIG bonus recipients each received more than $4 million;
• The top ten AIG bonus recipients received a combined $42 million;
• 22 executives received AIG bonuses of $2 million or more, worth a combined $72 million
• 73 people received AIG bonuses worth $1 million or more; and
•  Eleven people who received AIG 'retention' bonuses of more than $1 million are no longer employed by the company, including one executive who received the largest bonus.
  

Finally, Mr. Cuomo noted that AIG had renegotiated the contracts with the Financial Products employees, persuading them to accept essentially, no salary in 2009 in exchange for receiving their bonuses. Apparently, prior to accepting the TARP funds in 2008, AIG had gone ahead to lock in these deals with its employees.

A Partial list of Related NP Articles on AIG by this Writer and Others:

Pythiian1:  President Obama & NY Attorney General Cuomo Outraged by AIG
Jordan:  Outrage Spreads over AIG Payouts "Too Big to Fail"  and AIG CEO Requests Execs Give Back Half of Bonuses
Esta: Treasury pressure is on, AIG top 25 to receive $1.00 for 2009
Barry Artiste: AIG to pay $165M in Executive bonuses, from Bailout Cash

TARP Related Articles by this Writer:

• Eight Banks' CEOs Grilled by Congress on TARP Funds
• The Bush Administration Overpaid $78 Billion to Banks in Bail Out