AIG’s outgoing chief executive Peter Hancock is in line for a $5m payment on top of his regular pay deal, part of an exit package that the insurer said was “consistent with a termination without cause”.
The disclosure comes a week after AIG rocked the insurance sector when the company said its chief was leaving after less than three years at the helm following a series of setbacks capped by a $3bn quarterly loss.
The second-biggest US insurance company by market capitalisation said last week that Mr Hancock had “informed the board of directors of his intention to resign”. The chief, who had come under pressure from activist investor Carl Icahn, acknowledged he lacked “wholehearted shareholder support”.
In a regulatory filing published on Friday evening, AIG said the Englishman would “receive benefits consistent with a termination without cause”.
Despite the wording, a spokeswoman reiterated that Mr Hancock was not being fired. The $5m payment was “for service through the transition period” and was contingent on him staying on until the company found a successor.
The chief executive’s problems culminated last month when AIG booked a $5.6bn reserve charge because of swelling claims costs on commercial insurance policies. A day later Mr Hancock told investors the company was lowering targeted returns.
AIG has yet to provide fuller details of the pay deal for Mr Hancock. It is due to do so in a proxy statement scheduled for release in about two weeks.
The filing on Friday said Mr Hancock would not receive a short-term incentive award for 2016, which could have been worth $3.2m.
While the company did not provide a reason, directors’ decision not to pay the bonus is a sign of how the insurer has fallen short of its financial targets.
Mr Hancock had sought to restore AIG’s fortunes after its $185bn financial crisis bailout with asset sales and accelerated cost cuts. But returns have remained subpar and the company was targeted for break-up by activist investors Mr Icahn and John Paulson, who secured seats on the board.
Mr Hancock received $12.5m in total remuneration for 2015, the most recently disclosed pay deal. His package included stock awards worth $8.23m and short-term incentives of $2.5m, as well as a base salary of $1.66m.
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