February 18, 2011
Even as American International Group Inc. was sliding into insolvency in recent years and negotiating a massive federal bailout last year, it was constructing a compensation package for top executives that would provide as much as $1 billion in bonuses, according to a shareholder lawsuit filed Wednesday in Los Angeles.
AIG, which has been heavily criticized for the bonuses, has contended that it was legally obligated to pay because its compensation program was put in place before the company was given access to $70 billion in direct federal bailout money and much more in loans.
But the lawsuit, which relies on previously undisclosed information and public filings, government documents and news reports, builds a portrait of a company that constructed its executive compensation program to guarantee the payouts — even when it knew its business was deteriorating because of a variety of fraudulent activities.
The suit, among the first to hit the once-dominant insurance giant, puts together a detailed timetable for AIG’s financial meltdown and outlines the company’s compensation system, set against the backdrop of two criminal investigations that were being conducted into the company’s practices over the last eight years.
The suit names AIG Chief Executive Edward M. Liddy, retirement services Chief Jay Wintrob and Director Stephen Bollenbach, among others, alleging that they helped put together the bonus scheme that breached the company’s fiduciary duty to shareholders.
Article: LA Times
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