AIG limiting executives' pay; CEO getting $1 salary

CHARLOTTE, N.C. - American International Group Inc. said yesterday that it was limiting how much it paid its top executives, including granting a $1 salary for this year and the same for 2009 to its chief executive officer, Edward Liddy.

The decision is one of many broader moves made by the troubled New York insurer, which has been under pressure to restrict executive pay since accepting billions in government assistance to save it from collapse. AIG has received federal bailout money of about $150 billion so far, more than any other company.

The company said there would be no 2008 annual bonuses and no salary increases through 2009 for AIG's top seven officers and no salary increases through 2009 for the 50 next-highest AIG executives. Besides his $1-a-year salary, Liddy will get an unspecified amount of stock.

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

AIG shares were unchanged yesterday at $1.77. In December 2007, they were at more than $61.

The announcement came after New York Attorney General Andrew Cuomo sent a letter to Liddy this month saying AIG should be "completely transparent" about its compensation plans for 2008.

Yesterday, Cuomo applauded AIG's decision to limit executive pay and said other companies receiving federal bailout money should follow suit.

"It is only fair that top executives, who benefit the most when firms do well, should also bear the burden of the difficult economic consequences their firms now face," Cuomo said. "The government is not writing blank checks to these companies."

Like other insurers, AIG has been slammed by deterioration in the credit markets amid concerns that complex, structured investments it insures will increasingly default.

Its problems did not come from its traditional insurance subsidiaries, but instead from its financial-services operations, and primarily its insurance of mortgage-backed securities and other risky debt against default.