American International Group, Inc. (AIG)

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AIG to cancel severance package

NEW YORK (AP) | American International Group said it has canceled a multimillion-dollar severance package for its departing chief financial officer and will cooperate in a New York state review of other executive pay deals.

New York Attorney General Andrew Cuomo and AIG issued a joint statement Thursday announcing that the company had stopped making payments to outgoing Chief Financial Officer Steven Bensinger, whose departure has been planned since May.

Mr. Cuomo said Mr. Bensinger's so-called golden parachute had been worth about $10 million. Neither he nor the company would say how much of that had already been paid or how much was outstanding.

The announcement came a day after Mr. Cuomo began pressuring AIG to slash pay and perks for high-level executives and said he would investigate whether any of the company's compensation deals were improper.

Mr. Cuomo said he met Thursday with AIG's new chairman, Edward Liddy. During the meeting, AIG agreed to cooperate with the investigation and join with the state in attempting to recover any illegal expenditures.

"He understands the need for reform," Mr. Cuomo said of Mr. Liddy. "He understands the new culture that must be brought to AIG."

Pay and perks at AIG have been under scrutiny since the Federal Reserve began propping up the huge insurer with almost $123 billion in loans in effort to avoid a liquidity crisis that could have put it out of business.

In return, the government received warrants to acquire a 79.9 percent ownership stake in AIG.

Mr. Cuomo declined to say exactly how many pay deals were being reviewed, but revealed that the inquiry will include compensation paid to Martin Sullivan, the former chief executive, and Joseph Cassano, the former head of AIG's financial products unit.

Under state law, the attorney general has the power to seek a refund of performance bonuses awarded unjustly by an undercapitalized company, Mr. Cuomo said.

AIG also affirmed Thursday in the meeting that it was calling off 160 conferences and events it had planned in the coming months for employees and clients, some in pricey vacation destinations, thus saving about $8 million.