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Hank Greenberg: AIG Bonuses Were "Based On Performance"

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WASHINGTON — Former AIG chief executive officer Hank Greenberg said the company under his leadership never had the kind of retention bonus system that has subjected it to withering criticism.

"When I was there, nobody had a contract with the company, including me," Greenberg said in a nationally broadcast interview Friday. "If you didn't do the job, you didn't deserve to be there. We had a bonus plan based on performance."

Greenberg's interview was broadcast on CBS's "The Early Show" a day after the Democratic-led House approved a bill that would impose punitive taxes on big employee bonuses from AIG and other firms bailed out by taxpayers.

"We want our money back and we want our money back now for the taxpayers," declared House Speaker Nancy Pelosi, D-Calif.

The bonuses, totaling $165 million, were paid to employees of the troubled insurer, including to traders in the financial unit that nearly caused the company's collapse.

"Mr. Greenberg is again trying to re-write history in order to distance himself from the Financial Products group he personally created and oversaw," AIG spokesman Mark Herr said in an e-mail Friday. "The fact is that, under his watch, guaranteed compensation arrangements for (Financial Products group) employees were put in place."

On Wednesday, the current chairman and CEO of AIG, Edward Liddy, told Congress under oath that his predecessor was responsible for the financial problems the company now is experiencing, saying mistakes had been made on a scale few could have imagined.

There have been two other executives at the top of AIG since Greenberg left and Liddy took charge.

Martin Sullivan, a native of England who had worked with AIG for 37 years, replaced Greenberg as CEO in March 2005, when Greenberg was forced out amid accusations from then-New York State Attorney General Eliot Spitzer of fraudulent accounting.

Former Citigroup Inc. executive Robert Willumstad took over from Sullivan in June, and was succeeded in September by Liddy, former chairman of Allstate Corp.

In his CBS appearance Friday, Greenberg was asked directly if he would have paid out the retention bonuses had he still been at the helm of the company. "Absolutely not," he told the interviewer.

Greenberg also said he didn't think Liddy was qualified to run the company, but stopped short of calling for his firing.

"I think he should be replaced," he said. "You can call it what you want."

Greenberg has sued AIG, saying the company that he led for 38 years misled investors about its exposure to subprime mortgages and ruined his fortune by lying about its financial health.

The lawsuit filed earlier this month says Greenberg was the New York-based company's largest non-institutional shareholder. The company has said the suit is without merit.

Greenberg said that AIG once was "the greatest company in history." It had been the world's largest insurer with clients all over the globe.

"Was there fraud? Was there whatever. I think it's stupidity. Well, do you punish stupidity," he said.

The bill was passed on a 328-93 margin despite sharp Republican attacks calling it a legally questionable ploy to cover up Obama administration missteps on this issue.

House Minority Leader John Boehner, R-Ohio, said the bill was "a political circus" diverting attention from why the administration hadn't done more to block the bonuses before they were paid.

Although a number of Republicans cast "no" votes against the measure at first, there was a heavy GOP migration to the "yes" side in the closing moments. The bill now goes to the Senate.

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