AIG Paid $67.3 Million in 2017 to Departing CEO and His Successor
March 27 2018 - 4:10PM
Dow Jones News
By Leslie Scism
American International Group Inc. paid $67.3 million to its
chief executive officers in 2017, with part of the payment going to
a man who resigned under pressure early in the year and another
portion to attract his successor.
The steep executive pay is the cost of AIG changing its strategy
for boosting lackluster profit margins. In March 2017, former Chief
Executive Peter Hancock stepped down under pressure from activist
investors as his turnaround plan suffered setbacks. He was
succeeded in mid-May by Brian Duperreault, a longtime industry
executive who had begun his career at AIG in 1973.
Mr. Duperreault, who ran three other firms before being
recruited by AIG last year, racked up $43.1 million in compensation
for 2017, according to AIG's newly filed proxy. That includes two
previously disclosed awards totaling $28.2 million to get him to
leave Hamilton Insurance Group Ltd., a Bermuda property-casualty
insurer and reinsurer that he founded in 2013 and ran.
Mr. Hancock had total compensation of $24.2 million. Of that, $5
million is a previously disclosed payment for agreeing to stay
until a successor was found, which turned out to be about two
months. Mr. Hancock also received $9.5 million as a lump sum under
terms of AIG's executive-separation agreement, which was in place
as of 2012, also previously disclosed.
Messrs. Duperreault and Hancock earned salary totaling $1.6
million between them: $1 million for Mr. Duperreault's 7 1/2 months
and just under $600,000 for Mr. Hancock's 4 1/2 months. Both
executives also had long-term-incentive stock awards valued at
$11.2 million for Mr. Duperreault and $8.1 million for Mr.
Hancock.
AIG's compensation for its top executives exceeds what many Wall
Street banks paid out. All together, the five biggest Wall Street
bank CEOs received $126 million in total compensation in 2017, and
the average was $25 million. JPMorgan Chase & Co.'s James Dimon
-- whose bank's $2.5 trillion balance sheet is about five times the
size of AIG's -- was the highest paid of the five at $29.5 million.
Each of those firms had a single chief executive for the year.
The changes at the top of occurred as the global insurance
conglomerate continues to try to regain its luster in the wake of
repaying a nearly $185 billion crisis-era bailout by U.S.
taxpayers. AIG wrapped up repayment in 2012, after selling many of
the most-profitable parts to raise cash. Since then, it has faced
pressure to grow faster by activist investors Carl Icahn and John
Paulson.
Also in Tuesday's proxy, AIG disclosed it is shrinking its board
for the second straight year, to 11 from 16 in 2016 . Two directors
aren't standing for re-election, as previously disclosed by AIG in
regulatory filings, and no one is running to replace them,
according to the proxy.
One of the departing directors is Samuel J. Merksamer, who
joined the board in spring 2016 as part of an agreement between AIG
and Mr. Icahn. The billionaire investor was one of the most vocal
of AIG's shareholders in pushing Mr. Hancock to take aggressive
actions to improve AIG's results, including splitting it apart. At
the time, Mr. Merksamer was a managing director of Icahn Capital
LP.
Since last spring, when Mr. Duperreault came on board, Mr. Icahn
has thrown support behind Mr. Duperreault's hiring and new approach
to reviving AIG's fortunes. Mr. Duperreault is aiming to expand AIG
again, including through acquisitions. Like Mr. Hancock, he
believes AIG is better off staying a conglomerate than breaking
into property-casualty and life-insurance parts.
The other departing director is Peter R. Fisher, a senior fellow
and lecturer at the Tuck School of Business at Dartmouth College
and former head of fixed-income portfolio management of BlackRock
Inc.
Last year, a trio of directors stepped down, including Mr.
Paulson.
Liz Hoffman contributed to this article.
Write to Leslie Scism at leslie.scism@wsj.com
(END) Dow Jones Newswires
March 27, 2018 16:55 ET (20:55 GMT)
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