Embattled American International Group, Inc. chairman and CEO Edward Liddy is resigning as head of the insurance giant once a replacement is found, AIG announced today.
Liddy, who took over the troubled insurer in September, became the target of public and governmental outrage when he appeared before Congress to defend the company's doling out of millions of dollars in bonuses to executives despite AIG's near collapse which was only prevented by a government bailout.
The scandal touched off rebuke from the White House and even lead to death threats against company higher ups from a disgusted public.
“Much work remains to be done at AIG, but much has already been accomplished,” Liddy said in a statement. “We have made substantial progress in stabilizing AIG, reducing the systemic risk that led the government to rescue the company, protecting our policyholders and our businesses, and developing a plan to repay American taxpayers."
“I am proud that we are now implementing this repayment plan," the statement said. "It is likely to take several years. AIG should have a leadership team committed to a similar time horizon and prepared to carry the plan to completion.”
Before announcing his intention to resign, Liddy had recommended that the roles of Chairman and CEO be separate -- a suggestion the AIG board said it agreed with.
AIG has received $182.5 billion in financial support from the government since September. As part of the loan package, the government has also taken a roughly 80 percent stake in the huge insurance company.
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On Thursday, company officials described Liddy's coming departure as a "return to retirement."
“In mid September 2008, Ed Liddy answered the call of his country and the needs of AIG without reservation amid one of the darkest periods of the current financial crisis,” said Stephen A. Bollenbach, AIG’s lead director. “Coming out of retirement, he has led AIG effectively and courageously – and without compensation...we are deeply grateful for Ed’s accomplishments and his leadership, and we wish him well in his return to retirement. He deserves it.”
Liddy, who agreed to run the company for an annual salary of $1, refused an equity grant he was expected to receive as compensation. According to a proxy filing with the Securities and Exchange Commission, Liddy received no bonus, stock-based compensation or other direct compensation from AIG last year.
He did receive about $460,500 worth of perquisites, notably an apartment in New York City paid for by AIG (Liddy lives in Chicago). He also received compensation for travel between New York and Chicago, financial, tax and legal planning and tax-related payments. The tax payments were made to avoid having Liddy end up paying to work at AIG, the filing said.
Treasury Secretary Timothy Geithner praised Liddy's public service.
"In accepting the stewardship of AIG at the request of the U.S. government, Mr. Liddy took on one of the most challenging jobs in the American financial system today," Geithner said. "He shouldered this burden out of a strong sense of duty and patriotism, and I am grateful for his hard work and service."
Geithner said the Treasury Department looks forward to continuing to work with Liddy as the new board searches for successors.
