AIG says it will curtail executive bonuses

ALBANY, N.Y., Oct. 22 (UPI) -- New York Attorney General Andrew Cuomo said rescued insurance company American International Group has agreed to freeze an executive bonus fund.

AIG said it would discontinue use of a $600 million bonus fund and stop making payments to former Chief Executive Officer Martin Sullivan, who was fired in June, The New York Times reported.

In a classic golden parachute arrangement, the company was scheduled to pay Sullivan $19 million in spite of the company's performance during his tenure as CEO.

Another executive, Joseph Cassano, was scheduled for $70 million in payments from the bonus fund, although he led AIG's financial products unit, which oversaw many of the company's risky transactions, the Times reported.

"I find it hard to conceive of a situation that you could justify a performance bonus for management that virtually bankrupted the company," Cuomo said on a conference call with reporters.

AIG spokesman Joe Norton said the company was complying with Cuomo's directives.

AIG accepted a federal line of credit of $85 billion in September. In accepting the help, the U.S. government took possession of 79.9 percent of the company.

"Once a company accepts tax dollars, there are different rules," Mr. Cuomo said.