AIG pay rates under scrutiny

Robert Benmosche received $2.7m in cash and shares for five months’ work running AIG in 2009, the insurer revealed on Monday in a filing that criticised the US government, for capping pay, the FT and Reuters report.

In Monday’s filing, AIG said it “strongly objected” to pay tsar Kenneth Feinberg’s decision in November to reduce the salaries of David Herzog, chief financial officer, from $675,000 to $350,000, and Kris Moor, the head of the property and casualty unit, from $1m to $450,000.

AIG’s board also said the move to cap the cash salary of the top 100 staff to $500,000 put the insurer at a “competitive disadvantage”.

Cash compensation, as a percentage of total compensation, is now lower than ever and significantly lower than AIG’s competitors, the filing says.

Fairholme is second biggest shareholder

Fairholme Capital Management reported a 11.1 percent stake in AIG, making it the largest shareholder in the insurer after the U.S. government, which owns nearly 80 percent, according to Thomson Reuters data. Bloomberg said the stake was about 15 million shares.

AIG has wants to the retirement age of directors to 75 from 73.

Performance measurement

Dow Jones added that Benmosche's performance was measured, in part, by his ability to stabilise AIG's "talent pool" and the company's ability to avoid negative changes in its credit ratings.

Goals for Kristian Moor, the CEO of AIG's Chartis property-and-casualty insurance business, included helping the unit avoid "the use of capital from AIG parent" and increasing its return on equity and operating income, the proxy stated.

AIG said a board committee determined that its top executives "had substantially achieved or exceeded" their target performance levels, and received their target incentive compensation last year.

During 2009, AIG's board had 27 meetings, more than many corporate boards and more than the 19 meetings the board held in 2008.

Chairman Harvey Golub, who was elected last summer, received an additional annual retainer of $500,000 that was pro-rated for the months he was at AIG last year. In all, the 70-year-old received $224,420 cash from AIG last year and no stock or options.