AIG Agrees to Freeze Executive Bonuses

NY takes tough action to limit payouts to curNewser Newsroom 1.15.0rent, former bigwigs
By Nick McMaster,  Newser Staff
Posted Oct 22, 2008 4:55 PM CDT
Under pressure of New York's attorney general, American Insurance Group will stop paying bonuses out of a $600 million fund for that purpose, the Times reports.   (AP Photo)
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(Newser) – AIG will suspend bonus payments to its executives after getting pressure from New York Attorney General Andrew Cuomo. The ailing insurance firm, which recently got billions of dollars in loans from the Federal Reserve, also will stop $19 million in payments to a former CEO fired in June. Cuomo said it made no sense to reward management under the circumstances.

“There should not even be any contemplation of bonuses for executive performance because I find it hard to conceive of a situation that you could justify a performance bonus for management that virtually bankrupted the company,” said Cuomo. The state's actions represent a template for taking tough action with firms that accepted the government bailout, he said.