Human Capital & Careers

AIG Execs Cash In on LTIPs

The company also disclosed that it will replace the long-standing plan, which had been provided by closely held Starr International Co., with an AI...
Stephen TaubJune 30, 2005

A large number of current and former executives at American International Group Inc. earned big bucks in 2004 from a long-term incentive plan (LTIP), according to the embattled insurer’s recently filed proxy.

The filing also stated that the company would replace the long-standing plan — which had been provided by Starr International Co., a closely held company controlled by former AIG chairman and chief executive officer Maurice Greenberg — with an AIG program, according to press reports.

While most of the individuals received between $1.4 million and $2 million from a combination of salary and bonus, they accrued multiples of that sum from their LTIPs (though LTIP payments do not begin until the employee retires after turning 65).

Greenberg, who was ousted as chairman and CEO earlier this year, earned more than $10 million from LTIPs in 2004. He also received $1 million in salary and an $8 million bonus, and earned about $7.8 million from exercising more than 158,000 options. However, the receipt of 115,812 shares, with an aggregate value of more than $5.7 million, was deferred, according to the proxy.

Former vice chairman and chief financial officer Howard Smith, who was fired in March 2005, received more than $4.2 million in LTIPs, roughly three times his combined 2004 salary and bonus of nearly $1.4 million. Smith earned another $1.2 million or so from exercising options and selling the underlying shares.

Current president and CEO Martin Sullivan earned more than $4.2 million from LTIPs; senior vice chairman for general insurance Thomas Tizzio, more than $5 million.