AIG to freeze some exec pay

American International Group Inc. agreed to freeze $19 million in compensation slated for a former chief executive and $600 million for other executives after it submitted to a U.S. government bailout last month.

New York Atty. Gen. Andrew Cuomo announced Wednesday that the insurer would withhold severance and bonus payments from former Chief Executive Martin Sullivan, the second of three CEOs the company has had since Maurice “Hank” Greenberg’s reign ended in 2005. It also will not distribute any of the $600 million in deferred-compensation and bonus pools at AIG Financial Products.

Cuomo last week demanded that AIG, once the world’s biggest insurer, stop “extravagant” expenditures and recover millions of dollars in unreasonable payments or face legal action. Since the New York-based insurer’s U.S. takeover, it has tapped two-thirds of its $122.8-billion credit line from the Federal Reserve.

“Until the taxpayers recoup their investment in AIG, which is now in excess of $120 billion plus interest, there should not even be any contemplation of bonuses for executive performance,” Cuomo said Wednesday.

Sullivan, 54, was replaced as CEO by AIG’s former chairman, Robert Willumstad, on June 15 after two straight record quarterly losses tied to bad bets on housing markets.

Sullivan last year said any losses tied to housing would be “manageable,” and during his three-year tenure, AIG lost 46% of its market value. When he was ousted, AIG agreed to award him $15 million in severance pay and a bonus of $4 million, the company said in a July 1 regulatory filing. He was also slated to get equity and long-term cash awards valued at about $28 million.