AIG CEO to work for $1 until end of 2009

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Liddy forgoes salary and bonuses as troubled insurer freezes executive wages.

AIG chief executive Edward Liddy will receive an annual base salary of $1 for 2008 and 2009.

In a statement, AIG announced voluntary restrictions on executive compensation that include a $1 salary for Liddy; no 2008 annual bonuses and no salary increases through 2009 for AIG's top-seven-officer Leadership Group; and no salary increases through 2009 for the 50 next-highest executives, in addition to other bonus, severance and retention award restrictions.

AIG is also developing a funding structure to ensure that no taxpayer dollars are used for annual bonus or future cash performance awards for AIG's "Senior Partners," the top 60 members of management.

Liddy said AIG's senior executives recognise AIG's obligation to taxpayers. "We are extremely grateful for the assistance we have received, and we know we have an obligation to use that assistance to help AIG recover, contribute to the economy and repay taxpayers," Liddy said.

“This action by the senior management team demonstrates not only that we understand our obligation to taxpayers and shareholders, but also that we are committed to the future success of this organisation.
Edward Liddy

"This action by the senior management team demonstrates not only that we understand our obligation to taxpayers and shareholders, but also that we are committed to the future success of this organisation."

Paula Rosput Reynolds, vice chairman and chief restructuring officer, who joined AIG in October, will receive no salary or bonus whatsoever in 2008.

In 2009 and beyond, other than her base salary, any other compensation she receives will be tied directly to the progress of the restructuring efforts.

AIG added that there will be restrictions on severance payments to members of this management group, which exceed TARP severance restrictions.

"We believe these actions demonstrate that we are focused on overcoming our financial challenges so AIG can return value to taxpayers and shareholders," added Liddy.