AIG Bonuses Back in News with Hearing on Capitol Hill

There is more chatter about executive pay and bonuses today, as AIG’s pay culture is back in the news due to today’s hearing on Capitol Hill.

The House Committee on Oversight and Reform has convened today’s hearing in response to a government audit that was released on Wednesday.

The audit shows that payment structures for AIG executives shifted around 2007, which is when the company started incurring the major losses that ultimately led to so many issues for the company and others. The shift involved greater rewards being paid out for short-term gains.

Here is perhaps the most starting figure, courtesy of the report on this story by CNNMoney.com:

Neil Barofsky, the special inspector general of the $700 billion bailout program, said in a report released Tuesday that AIG’s 2008 compensation plans totaled $1.77 billion. That’s despite the company recording nearly $100 billion in losses last year, including the largest ever quarterly loss in the history of American business. 

Against the backdrop of today’s hearings, the U.S. Treasury Department continues to urge AIG to curb its bonus habits. AIG has $198 million in bonuses currently promised to employees of its trading unit, but there are significant legal hurdles that must be overcome for the Treasury’s demands to have any impact.

Tags: AIG, corporate governance, executive compensation, executive pay, House, U.S. Treasury Department