AIG to pay Greenberg’s fees

AIG and its former CEO Hank Greenberg and CFO Howard Smith have agreed to settle all the remaining lawsuits between them, the FT and others report.

The deal will see the insurer return a Persian rug and photographs of its former chief executive with Chinese leaders and the company’s founder Cornelius Vander Starr, the FT says.

AIG will reimburse legal fees of up to $150m for Greenberg and Smith, subject to a review by an independent third party.

Starr covered too

The settlement also covers Greenberg’s firm CV Starr that underwrote some of AIG’s business, and Starr International Company, his private investment group.

The settlement gives Greenberg “reasonable access to, and/or copies of” archival materials to write his memoirs.

Both sides agreed not to make public statements disparaging the other, ending a period of hostile exchanges after Mr Greenberg’s departure when AIG was hit by an accounting scandal in 2005.

Distraction

AIG CEO Robert Benmosche said: “The resolution of these long-running disputes will remove a significant distraction and expense and allow AIG to better focus its efforts on paying back taxpayers and restoring the value of our franchise for the benefit of all our stakeholders.”

Greenberg said: “I want to express my appreciation for Bob Benmosche’s help, and the help of the AIG board. I look forward to assisting AIG in trying to preserve and restore as much value as possible for all of AIG’s stakeholders.”

The Times added that Greenberg continues to contest some charges brought against him by Attorney General Eliot Spitzer.

AIG lost all its claims

Bloomberg quoted former federal prosecutor Christopher Clark, a partner at Dewey & LeBoeuf LLP in New York who isn’t involved in the case, as saying: “I’m sure that AIG is not looking to trumpet the fact that having lost all of its claims against Greenberg, they now have to pay all of his legal fees.”

Layn Phillips, a partner at Irell & Manella LLP, a former judge and ex-U.S. attorney for Oklahoma, will review legal expenses.

AIG salaries cut

Reuters added that AIG had also finalised changes for salary and bonus to be paid to chief financial officer David Herzog, and Kristian Moor, CEO of its global property-casualty unit.

Herzog could receive cash and stock of up to $4.5m, and Moor up to $7.6m. The executives' compensation was reworked to comply with regulations imposed by Washington pay czar Kenneth Feinberg.

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