American International Group, Inc. (NYSE: AIG) has done what it could to keep top talent around at the company, and it has been able to get at least some exceptions on the restriction of pay that is being imposed on the firm because of it receiving extraordinary government support. Late on Wednesday came word that Anastasia Kelly, Vice Chairman for Legal, Human Resources, Corporate Affairs, and Corporate Communications, has formally resigned from the company. Ms. Kelly joined AIG in September 2006 as General Counsel. That is also not the only loss announced, and it is likely to not be the last. This may also signal more risk to the billions and billions of dollars the company has received from taxpayers.
The effectiveness of this resignation was immediate. The company noted that the resignation was for “Good Reason” under the company’s executive severance plan. The reduction in her base salary that was mandated by the Special Master for Executive Compensation for TARP Recipients allowed her to leave the company.
Usually losing the vice chairman of Human Resources and Legal and Corporate Affairs would not receive much notice. But in the case of AIG, Kelly’s departure marks a blow to morale. It also sends the message loud and clear that other AIG employees who feel they are being crimped too much that had nothing to do with the AIG blowup can walk out the door. This may also give them more “cause” if they are worried about contract repercussions.
In addition, AIG announced that Suzanne Folsom, Chief Compliance and Regulatory Officer, has left to pursue other opportunities. Ms. Folsom joined AIG in April 2008. She will have had nothing to do with the blow-up at AIG based on the April 2008 start date.
AIG’s new CEO Robert Benmosche said that AIG “expects a smooth transition and has already initiated the process to identify successors to both Ms. Kelly and Ms. Folsom.” There is just one problem here for AIG, or shall it be “at least one major problem” in this case. No one from the outside wants to go work at AIG. Can you imagine getting a call from a head hunter…. “Hi, now before you hang up I want you to think about this. How would you like to be an executive at AIG?”….. “Well, sure there are just a few restrictions and there is going to be constant scrutiny and criticism from, well, everyone.”… “Sure, there are some restrictions on your pay, well, or, if not, it will end up in the newspapers.”…
Some may say “good riddance” on these departures. Taxpayers and politicians do have the right to be upset with AIG. There are only billions and billions of reasons why. But someone still has to run the company even if the only goal is so that taxpayers do not get trounced. It is very unlikely that these positions can be run by charitable social workers in New York.
Maybe it is unfair to say that the compensation war at AIG is beginning. This has been ongoing. But this is a clear signal that the issue is not going away.
JON C. OGG
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