Insurer American International Group Inc. will use stock units instead of common stock in paying executives for 2009 to comply with pay rules for companies that took federal bailouts, AIG said in a regulatory filing Thursday.
Companies like AIG that hold government bailout funds are subject to limits on executive pay; in AIG's case, the rules cover the insurer's 100 highest-paid employees.
The New York-based insurer said last month that it cut the salaries of three top executives, including Chief Financial Officer David Herzog, to comply with the rules. But it plans to go ahead with a $7 million pay package for CEO Robert Benmosche.
Benmosche, who took over as CEO in August, will receive an annual salary of $3 million plus $4 million in AIG common stock.
AIG's federal bailout package is worth up to $182.5 billion. In exchange, the government holds an 80 percent stake in the company.
In Thursday's filing, AIG said it received final determination Dec. 21 from the government's pay czar, Kenneth Feinberg, that AIG's highest-paid employees could be compensated in either common stock or stock units reflecting the value of a basket of AIG subsidiaries.
On Dec. 24, AIG decided to use stock units reflecting the value of AIG's common stock, according to Thursday's filing. The executives affected include Herzog and Kristian P. Moor, CEO of Chartis, the company's spun-off property casualty and general insurance unit.
The filing comes a day after AIG said it lost a top executive due to the government's limits on executive pay. AIG said Wednesday that vice chairman and general counsel Anastasia Kelly resigned, effective immediately, because of a cut in her base salary that Feinberg mandated.
AIG shares lost 3 cents to $29.95 in after-hours trading Thursday after closing at $29.98, down 62 cents, or 2 percent, from a day earlier.
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