AIG trustees fine-tune insurer's board, pay pacts
NEW YORK (Reuters) - Trustees of U.S. taxpayers' stake in American International Group Inc (AIG.N) will tell lawmakers on Wednesday that they are reshaping the giant insurer's board, and working with management to develop new pay agreements.
The three trustees are actively seeking new members for the board of the bailed-out insurer, according to prepared remarks for U.S. House of Representatives Committee on Oversight and Government Reform.
AIG was rescued by the U.S. government last September when it could no longer meet cash calls from trading partners for derivatives written by its financial products unit.
The trustees oversee stock issued to a federal trust in March that is worth 77.9 percent of the company, and this is the first time they have been called to testify before Congress.
The changes to the board are part of the trustees' broader effort to bolster "AIG's corporate governance framework," they said in their first congressional testimony since taking on their role.
They have also asked AIG management to update them quarterly on employee compensation programs and on May 7 wrote to Chief Executive Edward Liddy, asking him to develop a comprehensive plan to be applied across the corporation by year-end.
The focus on pay follows public outrage earlier this year after it emerged that millions of dollars in retention bonus payments had been paid to staff of a money-losing financial products unit. Many of those employees have since returned the payments, but the furor has left AIG unsure of how to compensate employees.
In the letter to Liddy, the trustees said the new plan should include policies that had as their goal the "recruitment and retention of the people best qualified to lead and staff AIG during this difficult time.
"Without these people, it will not be possible to maximize the value of AIG for its shareholders and U.S. taxpayers," the trustees wrote, according to a copy of the letter submitted to the congressional committee.
So far, the United States has agreed to pay up to $180 billion in aid for AIG. In exchange, the United States has taken nearly 80 percent ownership of AIG.
Lawmakers are also hearing from Liddy on Wednesday, the second time he has testified in the eight months since he took the company's reins.
The trustees are Jill Considine, a former director of the Federal Reserve Bank of New York; Chester Feldberg, a former employee of the Federal Reserve Bank of New York; and Douglas Foshee, chief executive of El Paso Corp (EP.N).
In the testimony, the trustees also asserted their support for Liddy's intent to seek market value for assets, and not sell at fire sale prices.
To date, AIG has reached agreements to sell more than a dozen businesses and properties, generating proceeds of about $5 billion. Some of the large sales it had planned have foundered amid the credit crisis, leading the company to consider initial public offerings as a potential avenue as early as the first half of 2010.
Proceeds from asset sales are to repay AIG's debt of about $45 billion drawn from a Federal Reserve credit facility, and another $40 billion received under another federal funding program.
(Reporting by Kristina Cooke and Lilla Zuill, editing by Matthew Lewis)
