San Diego State University’s Independent Student Newspaper Since 1913

The Daily Aztec

San Diego State University’s Independent Student Newspaper Since 1913

The Daily Aztec




San Diego State University’s Independent Student Newspaper Since 1913

The Daily Aztec

More bonuses given to top AIG executives

MCT Campus

College students work hard for their money, and are aware of how quickly loans add up in debt.

Conversely, top executives at American International Group, Inc. are seeking out bonuses, even with a company debt to taxpayers of more than $87 billion.

As the state of California chases a downward spiraling economy with a $60 billion budget deficit and a 20 percent funding cut in higher education alone, the struggling insurance giant AIG is hoping for the support of the federal government to pay millions of dollars in bonuses to some of its top executives.

In March, AIG paid $165 million to employees of the swaps unit, which included more than 45 executive moves to competitors. Former CEO of AIG, Edward Liddy, said salary increases are the company’s effort to retain valuable employees.

Proposing bonuses will be more of a challenge for Robert Benmosche, who replaced Liddy as CEO on Aug. 3. Lawmakers advised a 90 percent tax on such financial awards.
AIG is under the authority of U.S. compensation official Kenneth Feinberg and has been discussing its latest projected executive awards with him.

Feinberg, appointed by President Barack Obama, is looking for a reason to believe that AIG’s fiscal rewards will be issued appropriately for performance.

Poor publicity of AIG’s first quarter bonuses caused customers to cancel annuity contracts topping off the more than $100 billion in net losses AIG suffered from failed housing market bets in the last six quarters.

AIG has plans to sell assets and stakes in three of its subsidiaries to pay its debt to the federal government. This year, the company only sold $2.6 billion worth of assets. As a result, AIG sold stake in two of its foreign life insurance subsidiaries in exchange for government forgiveness of $25 billion of a $44.8 billion loan.

According to www.bloomberg.com, retention bonuses at AIG are set to cost the company $249 million during the last two quarters of this year. But things could be looking up for the company. After six losing quarters, the insurer reported a second quarter net income of more than $1.8 billion, according to CNN Money.

Critics fear that although AIG is working to pay its loan and has experienced a spurt of profits in its last quarter, the company has not stopped its borrowing. The insurance company received additional government assistance, borrowing $1.2 billion from a second $30 billion Troubled Asset Relief Program loan in order to sustain its domestic life insurance unit’s capital reserves, according to CNN Money.

As Benmosche takes the reigns as CEO of AIG, there are a few things that will be at the top of his to-do list. Benmosche will be focused on continuing to sell assets to pay off government loans, he will be looking to hire new talent in order to regenerate company planning and development and he will be stuck in the middle of the continuing controversial negotiation process regarding top executive bonuses.

While California students and residents are forced to deal with the state’s budget cuts, every taxpayer will continue to keep a close eye on big businesses and big bonuses.

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San Diego State University’s Independent Student Newspaper Since 1913
More bonuses given to top AIG executives