Under intense pressure from New York State Attorney General Andrew Cuomo, top executives from the insurance behemoth AIG have agreed to give back at least $50 million in bonus money from a pool of $165 million the company recently doled out.
Cuomo said today that AIG began to cooperate with his office and "at the end of the day" his office estimates it can "recoup" about $80 million.
"You have done the right thing," Cuomo said he would tell those employees. And he added "I believe the employees have set an example."
At least $30 million of the money AIG employees promised to return, Cuomo said, came from 15 of the top 20 bonus earners who each agreed to give back their total bonus. He said others had not yet been contacted, were considering whether to give back and only a few had outright refused.
"It's a difficult decision," Cuomo said.
In addition, Cuomo said that nine of the top ten earners had agreed to give back their bonus. Of the $165 million bonus pool, about $80 million was awarded to U.S. employees of AIG. Cuomo expressed confidence that he would continue to recoup those dollars.
"We are deeply gratified that a vast majority of FP's senior leadership have expressed a willingness to forsake their recent retention payments," said AIG spokesperson Christina Pretto.
"We continue to review the responses of our other FP employees and we appreciate Attorney General Cuomo's support. FP employees continue to work professionally and diligently to achieve an orderly wind-down of the FP business, which continues to have some $1.6 trillion of notional derivatives on its books, down about $1 trillion since the beginning of 2008," Pretto said.
"Our legal theory is the fraudulent conveyance theory," Cuomo said when asked how he would approach the issue of recouping the money from bonus recipients who refused his initial demand that they return it.
"If a person returns the money, I don't believe there is a public interest in revealing their name," Cuomo said. "These are people who are doing the right thing," Cuomo said. He noted that in many or most cases they were not involved in the unit that had resulted in AIG's staggering losses.
Cuomo said his office was still weighing whether the identities of employees who refused to give back their bonuses would be revealed. He said his investigation was ongoing and a security assessment would need to be completed before any such decision was made.
The company has received about $173 billion in public money to stave off collapse and protect the nation's financial system from the catastrophic collateral damage that would have resulted.
Cuomo's office advised Rep. Barney Frank earlier this month that:
The top recipient received more than $6.4 million;
The top seven bonus recipients received more than $4 million each;
The top ten bonus recipients received a combined $42 million;
22 individuals received bonuses of $2 million or more, and combined they received more than $72 million;
73 individuals received bonuses of $1 million or more; and
11 of the individuals who received "retention" bonuses of $1 million or more no longer working at AIG, including one who received $4.6 million.
Click here to read Cuomo's letter on AIG bonuses.