A corporate governance firm estimated yesterday that Martin Sullivan, who was replaced Sunday as American International Group's chief executive officer, will receive approximately $68 million in severance.
A company spokesman, when asked about the estimate from The Corporate Library, pointed to an AIG 8K filing with the Securities and Exchange Commission, which states: "Compensation arrangements for Mr. Willumstad and transition arrangements for Mr. Sullivan have not yet been determined."
Mr. Sullivan's resignation was accepted, and he was replaced by AIG Chairman Robert Willumstad, following pressure from shareholders and investors after the company posted losses for two consecutive quarters totaling $13 billion.
Corporate Library, in reaching its total, noted Mr. Sullivan's:
o $2.5 million salary.
o Average three-year annual cash bonuses of $26.7 million.
o Pension benefits totaling $3.3 million.
o Stock awards totaling $21.9 million.
o Medical and life insurance of $32,316.
o Some $14 million from a defined contribution plan.
The severance, according to Corporate Library, mirrors deals for other recent resignations tied to subprime losses--such as that of Charles Prince of Citigroup, who received $40 million in severance after the company wrote down more than $24 billion; and Stanley O'Neal of Merrill Lynch, who received more than $160 million after the company wrote down more than $23 billion.
In the case of AIG, Corporate Library noted that the SEC and U.S. Justice Department are investigating whether the company and its financial products division intentionally overstated the value of contracts linked to subprime mortgages.
It said this investigation comes at a time when shareholders have lost more than 18 percent of their investment value over the last three years, while the value of the CEO's compensation over the same period totals more than $39.9 million.
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