Fox Business and Fox News are reporting that they have obtained 5 emails through the FOIA between the Bush Administration and AIG concerning executive bonuses.
In a Nov. 5 e-mail to a Treasury and Federal Reserve officials, an outside attorney working on the transaction wrote, “We indicated that UST (United States Treasury) … wants to put in place a limitation on annual bonuses that assure that (AIG: 1.2104, -0.3796, -23.87%) executives/employees will not be enriched out of TARP funds.”
But the e-mail indicates AIG officials pushed back on the proposal. In a section of the e-mail discussing proposed limits on severance packages for AIG employees, the attorney wrote, “They were slack jawed at the idea of imposing the restriction throughout the entire population, especially worldwide.” AIG proposed that Treasury apply such limits “to a class of partners and senior partners (700).”
At another spot in the e-mail, the attorney said about AIG executives, “They will think about ways to deal with the ‘no enrichment’ point. In this connection they again raised the size of the applicable group and kept coming back to ‘700’ as a meaningful, and possibly workable, group for limitations.”
The e-mail also indicates that in their deliberations, government officials were concerned about the effect of compensation on recruiting and retaining AIG employees.
“We also indicated that all parties understand that the restrictions must be designed so that the business can be operated in a reasonable way, including in terms of recruitment and retention of employees,” the attorney wrote in the e-mail.
A key argument in AIG’s defense of its bonus practices has been that bonuses are needed to recruit and retain key employees.
A Treasury official in the department’s general counsel office, Stephen Albrecht, wrote in response to the attorney’s e-mail, “See below. Looks like AIG has some creative thinking to do, but we’ll need to decide to what extent we’re willing to bend.”
Government officials eventually decided to restrict compensation at AIG to just the top 75 company executives. The Treasury agreed to invest $40 billion into AIG.