U.S. pay czar Kenneth Feinberg said on Monday that he has revised his decision on pay limitations for a top executive of the American International Group (AIG), as the executive has decided to remain with the company.
Approving the request of AIG, the pay czar will allow paying the employee about $4.3 million in incentive on top of the annual base salary. Prior to this development, the AIG executive was entitled to a base salary of $450,000 for 2009 because the person intended to leave AIG by the year end.
According to a letter from the pay czar, the $4.3 incentive payments will consist of an annual long-term restricted stock grant worth up to $1 million and a stock payment valued at about $3.3 million on the grant date.
The pay czar is in charge of deciding compensation packages for the highest-paid employees at all the firms that received bailout money.
Earlier this week, in a major revelation, the chief of AIG disclosed its intention of repaying the Troubled Asset Relief Program (TARP) loan back to the U.S. government within the next two years. For this, the company expects to use earnings from business operations and by disposing unnecessary businesses in the near term.
Other concerns that need attention are the improvement in overall aggressive managerial efficiency, regenerating confidence among the dispirited staff and withstanding consistent pressure from the U.S. government to sell assets quickly to repay debts. These issues have to be dealt with — head-on and immediately — to prevent the company from collapsing. So retaining the employee is critical to the long-term performance and stability of AIG.
In a separate letter by the pay czar on the same day to Citigroup (C), the pay czar said that it has modified its pay ruling allowing Citigroup to expand the number of expatriate employees who qualify for some extra compensation from four to five.
On Monday, the shares of AIG closed at $28.06, slightly down from $28.19, on the New York Stock Exchange.
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