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AIG Agrees to Restructure Executive Bonuses
By AP / MARTIN CRUTSINGER Sunday, Mar. 15, 2009Print
(WASHINGTON) β€” Insurance giant American International Group has agreed to Obama administration demands to restructure some of its corporate bonuses.

However, the troubled company will still pay out millions of dollars in bonuses after the Treasury Department determined that the government did not have the legal authority to block those payments. (See TIME's "25 People to Blame For the Financial Collapse")

Treasury Secretary Timothy Geithner has demanded that the company scale back future bonus payments where legally possible, an administration official said Saturday.

This official, who spoke on condition of anonymity because of the sensitivity of the issue, said that Geithner had called AIG Chairman Edward Liddy on Wednesday to demand that Liddy renegotiate AIG's current bonus structure.

Geithner termed the current bonus structure unacceptable in view of the billions of dollars of taxpayer support the company is receiving, this official said.

In a letter to Geithner dated Saturday, Liddy informed Treasury that it would restructure $9.6 million in bonuses scheduled to go a group that covers the top 50 executives. Liddy and six other executives have agreed to forgo bonuses.

The group of top executives getting bonuses will receive a total of $9.6 million now, with the average payment around $112,000.

This group will get another 25 percent on July 14 and the final 25 percent on September 15. But these payments will be contingent on the AIG board determining that the company is meeting the goals the government has set for dealing with the company's financial troubles.
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The Feds should not have bailedout AIG without removal AIG top brass and replacing them with Hank Greenberg who built the company into an international giant and maintained a triple A rating . He blew the horn on AIG years ago when they kicked him out but no one listened because they thought he was trying to get even for his removal .
this bailout is only helping these big guns get bonuses.

Nortel to ask court to approve US$23M in bonuses
Lawyers for Nortel Networks Corp. are scheduled to appear in a Toronto bankruptcy court tomorrow to ask for approval of a controversial US$23-million bonus plan for its top executives.

Earlier this month, courts in Canada and the U.S. gave the green light to US$22 million in payments to about 900 key engineers and other professionals at the telecommunications equipment giant, about five per cent of its workforce.

A Nortel spokesman said the company will take the list of top executives to court for approval, but it will not include chief executive Mike Zafirovski.

Nortel (TSX: NT) said the bonus payouts are intended to help it retain staff members who are receiving other job offers from outside and also to boost weakening morale at the company.

Losing key staff members often affects a company's ability to operate efficiently and hinders product development.

The bonus plan for executives would reward them for achieving cost reduction goals and tightening the organization's focus, based on their annual base salaries.

Nortel's creditors had objected to the inclusion of higher-paid executives, and urged the company to provide an earnings outlook for 2009.

Other lawyers involved in the case have either echoed the creditors' viewpoint or asked for reassurance that the incentive payments will reward employees, not simply encourage them to stick around during such uncertain times.

"Our clients take no objection so long as there is no incentive plan that rewards employees for simply staying with the company or that gives them an incentive to reduce benefits for former employees and retirees," said Mark Zigler, a lawyer at the Koskie Minsky law firm in Toronto, which represents former employees of Nortel.

Nortel spokesman Mohammed Nakhooda declined to comment specifically on the proceedings, but noted that the company has established a "goal-based" cash bonus program that it believes is in the best interests of its key stakeholders.

"This is in line with how other companies manage through a restructuring," he said in an email response.

Nakhooda noted that the company had publicly said it was always planning to resubmit the proposal for executive pay.

Nortel, which has been restructuring under court protection since January, is seeking to sell non-core businesses during the bankruptcy protection process and is expected to outline its restructuring plan publicly in April or May.

The company is required to seek the most value for creditors as part of the proceedings, which include holders of US$4.5 billion in debt, former staff members owed severance pay and retired managers who were paid through a company pension plan that used operating funds.

About 95 per cent of the company's employees fall under separate inventive programs which reward quarterly bonuses, though the funding of that plan has not been made public.

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