NEW YORK American International Group Inc (AIG.N) said it paid a $47 million severance package to former Chief Executive Martin J. Sullivan, whose resignation took effect on Tuesday.
Sullivan, who left his position in mid-June after two quarters of record losses at AIG and saw its share price fall by half, will receive a severance of $15 million and a bonus of $4 million for the portion of the year he worked, according to a regulatory filing.
Sullivan also will hold on to outstanding equity and long- term cash awards valued at about $28 million, the filing said.
His resignation is being treated as for "good reason" meaning he is entitled to the severance package outlined in his employment agreement, but contingent on his not competing with AIG for business for one year.
Sullivan, who worked at AIG for 37 years, also will be provided an office and an assistant until the end of December.
Sullivan was under enormous pressure from major shareholders to leave after AIG, the world's largest insurer, wrote down $20 billion in losses on the market value of assets linked to subprime mortgages.
When he was ousted in mid-June, Sullivan joined the ranks of Wall Street chiefs -- including former Citigroup Inc (C.N) chief executive Charles Prince and Merrill Lynch & Co Inc's MER.N Stan O'Neal -- forced to leave their jobs amid large losses stemming from the collapse of the U.S. subprime mortgage market, which tightened credit globally.
Sullivan was replaced by veteran former Citigroup banker Robert Willumstad, who was already AIG Chairman. Willumstad, 62, has said he will craft a turnaround plan for AIG by September. Willumstad spent nearly 20 years at Citi and 40 in banking.
Last month, AIG posted the worst results in its 89 year history, leading to lower financial ratings and forcing it to strengthen its balance sheet by raising $20 billion in capital.
(Reporting by Dan Wilchins; additional reporting by Phil Wahba; editing by Carol Bishopric and Andre Grenon)