CHARLOTTE, N.C. – An American International Group Inc. executive who received a retention bonus worth more than $742,000 after taxes has resigned publicly — in an Op-Ed column in The New York Times.
Jake DeSantis, an executive vice president at AIG’s Financial Products division, said Wednesday he’s leaving the company and will donate his entire bonus to charity. The letter, addressed to AIG’s CEO, Edward Liddy, criticized Liddy for, among other things, agreeing to the payments but then calling the bonuses “distasteful” as he testified before disapproving members of Congress.
“We in the financial products unit have been betrayed by AIG and are being unfairly persecuted by elected officials,” wrote DeSantis, who was head of business development for commodities. “In response to this, I will now leave the company and donate my entire post-tax retention payment to those suffering from the global economic downturn. My intent is to keep none of the money myself.”
He added: “I take this action after 11 years of dedicated, honorable service to AIG. I can no longer effectively perform my duties in this dysfunctional environment, nor am I being paid to do so.”
New York-based AIG has been heavily criticized by government offficials and the public after it awarded $165 million in bonuses earlier this month. The retention bonuses, payments designed to keep valued employees from quitting, were paid out whether the employee had a great year or a terrible one.
The bonuses were given to employees of the financial products division, a global unit that issued derivatives called credit default swaps that helped sink AIG as a whole last year.
“Ed deeply appreciates the frustration expressed in this letter and believes that the recent vilification and harassment of AIG employees is grossly unfair and unwarranted,” wrote AIG spokesman Mark Herr in a statement e-mailed to The Associated Press.
Attempts to reach DeSantis were unsuccessful.
Two days after AIG received its first injection from the government in mid-September, AIG named Liddy, former chairman of Allstate Corp., as chairman and chief executive succeeding Robert Willumstad, who stepped down after three months on the job.
Liddy told Congress last week that the retention payments — ranging from $1,000 to nearly $6.5 million — were not his idea and called them “distasteful” Liddy himself is not getting a bonus and is only drawing $1 a year in salary. The bonuses were promised in contracts with employees that AIG signed early last year, long before then-Treasury Secretary Henry Paulson asked Liddy to take over the company.
“I have the utmost respect for the civic duty that you are now performing at AIG,” DeSantis wrote in the letter. “You are as blameless for these credit default swap losses as I am.” AIG had invested heavily in credit default swaps, extremely risky insurance contracts for bonds and other investments.
Even so, DeSantis said he is disappointed and frustrated over what he called Liddy’s lack of support.
“I and many others in the unit feel betrayed that you failed to stand up for us in the face of untrue and unfair accusations from certain members of Congress last Wednesday and from the press over our payments,” DeSantis wrote in the letter, which was sent Tuesday to Liddy.
DeSantis noted that Liddy had decided to accelerate by three months the payout of more than a quarter of the bonus money. “That action signified to us your support, and was hardly something that one would do if he truly found the contracts “distasteful,” he said.
Liddy told Congress last week that some of the employees were willing to give the money back, and on Monday, New York Attorney General Andrew Cuomo said 15 of the top 20 bonus recipients agreed to return their money. In total, about $50 million of the $165 million will be returned, Cuomo’s office said Monday.
AIG has expressed concern that the company may not be able to attract and retain talented employees if they believe their compensation is subject to adjustment by the government.
An AIG spokesman said Monday that a “handful” of senior-level executives have resigned from the financial products division, and that there will likely be more resignations to come.
AIG came close to collapsing last September because it had gotten heavily into the business of insuring mortgage-backed securities, the risky investments that are at the root of the hundreds of billions of dollars in losses suffered by banks and other financial institutions around the world.
Since September, the government has given AIG $182.5 billion, maintaining that without help, AIG would fail, further disrupingt already stricken markets and cause more damage to the economy. In return for the aid, the government took a nearly 80 percent stake in AIG.