AIG Said to Give Departing Lawyer $3.8 Million in Severance Pay
By Hugh Son
American International Group Inc. general counsel Anastasia Kelly, who is stepping down after a dispute over government-imposed pay limits, will collect about $3.8 million in severance, said people familiar with the matter.
AIG concluded that Kelly, 60, was owed the money after the New York-based insurer hired a law firm to review her conduct, according to the two people, who declined to be identified because the company hasn’t announced the decision. Kelly resigned for “good reason” after her salary was cut, AIG said yesterday in a statement. Suzanne Folsom, the company’s chief compliance officer, also left, AIG said.
Kelly told at least four other executives last month how to protect their pay and hired outside attorneys for advice, the people said. The five leaders wrote in Dec. 1 letters to AIG that they were prepared to resign if their pay was cut by Kenneth Feinberg, the Obama administration’s special master for executive compensation. AIG, once the world’s biggest insurer, received a taxpayer-funded bailout valued at $182.3 billion, placing the company under Feinberg’s jurisdiction.
“General counsel are supposed to be setting a prime example of good ethics at a company, not acting as carpetbaggers as they leave,” Frank Glassner, chief executive officer of Veritas Executive Compensation Consultants LLC, said yesterday in an interview. “This severance pay is ridiculous.”
Folsom, a former director of the World Bank in charge of an anti-corruption unit who was hired by Kelly in April 2008, will collect more than $1 million in severance, the people said.
Kelly’s Work
Robert Benmosche, AIG’s CEO, said in the statement he was “exceedingly grateful” for the work Kelly did “to help AIG recover from its financial crisis and the excellent counsel she has provided the company.”
AIG hired Mike Delikat, a partner at New York-based Orrick, Herrington & Sutcliffe LLP, to assess Kelly’s role in the pay dispute and gauge whether she acted in the company’s best interest. Delikat declined to comment, other than to confirm that he led the team that reviewed Kelly’s conduct. The Wall Street Journal reported this week that AIG was preparing to award severance pay to Kelly.
Christina Pretto, an AIG spokeswoman, declined to comment. Kelly and Folsom didn’t return phone calls seeking comment.
Kelly hired law firm Dickstein Shapiro LLP to represent her and four AIG managers concerned that Feinberg would impose limits on severance pay. The four other executives retracted their Dec. 1 letters, the people said. Feinberg later ruled that base salaries at AIG and three other firms shouldn’t exceed $500,000, with some exceptions.
Severance Plan
Managers included in an executive severance plan may collect awards equal to as much as two years of salary and bonuses if they are terminated with “good reason,” AIG said in a June regulatory filing.
“I don’t see any reason AIG would want to spend more taxpayer money than they needed to” for Kelly’s severance, said Jeanne Branthover, a managing director at Boyden Global Executive Search Ltd. in New York. “It seems like they are upholding their end of a contract.”
Kelly joined AIG in 2006 to help the insurer recover from regulatory probes that led to the retirement of former Chief Executive Officer Maurice “Hank” Greenberg. The former MCI/WorldCom and Fannie Mae general counsel was promoted to vice chairman and given control over AIG’s public relations and human resources departments in early 2009. She commuted from her home in Washington to AIG’s New York headquarters each week.
Lawsuits
As general counsel, Kelly was involved in lawsuits against Greenberg, including one accusing him of improperly taking $4.3 billion in stock. The company settled all lawsuits with Greenberg, 84, in November and said it would reimburse as much as $150 million of his legal fees. Benmosche has said he would seek Greenberg’s advice on running the firm.
Kelly was among leaders named in a September 2008 e-mail listing people who should be dismissed over AIG’s near-collapse, according to Fortune magazine. The so-called kill list was written by then-controller David Herzog, now chief financial officer. He urged former CEO Robert Willumstad to “clean the slate” for his government-appointed successor, Edward Liddy, the magazine reported.
–Editors: Otis Bilodeau, Dan Reichl.
To contact the reporter on this story: Hugh Son in New York at +1-212-617-7872 or hson1@bloomberg.net.
To contact the editor responsible for this story: Dan Kraut at +1-212-617-2432 or dkraut2@bloomberg.net
Tags: AIG, American International Group, anti-corruption unit, chief compliance officer, severance
This type of wealth disparity in this country is ridiculous and a hazard to a functioning democracy and free market. The $20.3 billion paid out as bonuses on Wall Street could support over a quarter-million good-paying middle class jobs. I truly believe the best way to prevent socialist tendencies in government is to prevent the accumulation of extreme wealth amongst the elite. Supply-side economics doesn’t need to rely on the top-income earners to invest if there is a healthy middle class. It seemed that America functioned just fine (likely better) when the income disparity was much lower.