AIG Launches New System for Incentive Pay

admin — Thu, 11 Feb 2010 13:33:57 +0000

American International Group has launched a new system to determine how employees get incentive pay, a move that follows public outcry over retention payments the bailed-out insurer made to some staff.

Under the plan, which is being pushed by Chief Executive Robert Benmosche, AIG will rank employees on a scale of 1 to 4, based on how they do relative to their peers, a spokeswoman said Wednesday.

The top rank will go to only 10 percent of the employees, who will be eligible to get higher incentive pay. Rank “2″ will go to 20 percent of the employees and rank 3 will be given to 50 percent. Those who get rank 4 will get minimal incentive pay.

Benmosche’s plan differs from AIG’s current appraisal process in its use of an employee’s performance relative to peers. The new system is going to apply initially to several thousand of AIG’s roughly 100,000 employees for evaluating performance in 2009, with the insurer planning to roll out the system across the company over time.

“These ratings will help ensure that our people are accountable, recognized and rewarded for their achievements,” spokeswoman Christina Pretto said in a statement. “By motivating and driving our talent, it will also help us remain competitive and ensure a strong, growing enterprise.”

The plan was first reported by the Wall Street Journal.

AIG, propped up by a $182.3 billion U.S. taxpayer-funded aid package, has faced public outrage over retention payments it made to employees of its Financial Products unit, which was behind the insurer’s near collapse in September 2008.

AIG, which was contractually obligated to make those payments, paid out $165 million to employees of the unit last March and was paying out $100 million in retention payments this month. It still is on the hook to pay about $75 million by March 15.

Kenneth Feinberg, the U.S. Treasury Department’s special master for compensation hired to help sort out pay at firms that received government bailouts, has put restrictions on compensation levels at the insurer.

Earlier, AIG’s [AIG 26.92 --- UNCH (0) ] shares closed up 16.3 percent, or $3.78, at $26.92 on the New York Stock Exchange, in a run-up unrelated to the news about the performance management system. The reason behind the increase was not clear.

Wall Street cuts losses, ends up with techs, materials

admin — Sun, 07 Feb 2010 10:06:16 +0000

NEW YORK: Stocks erased a midday drop to end slightly higher on Friday, closing out a volatile week punctuated by mixed signals from the labor market data and growing anxiety over fiscal problems in Europe.

Major indexes turned positive heading into the close, as investors scooped up shares in the technology and materials sectors — two of the worst perforomers during the market’s latest pullback.

“It’s bargain hunting in an oversold market,” said Cleveland Rueckert, market analyst at Birinyi Associates in Stamford, Conneticut. “At least in the short term, selling was overdone.”

Earlier, the major indexes dropped more than 1 percent on the initial interpretation that January’s payrolls data was another sign of a sluggish job market recovery, and concerns about the euro zone’s sovereign debt problems persisted.

U.S. employers unexpectedly cut 20,000 jobs in January, but the unemployment rate dropped to a five-month low of 9.7 percent, the Labor Department reported.

The Dow Jones industrial average closed up 10.05 points, or 0.10 percent, at 10,012.23. The Standard & Poor’s 500 Index ended up 3.08 points, or 0.29 percent, at 1,066.19. The Nasdaq Composite Index gained 15.69 points, or 0.74 percent, to close at 2,141.12.

With some investors betting that the sell-off of recent days may have run its course, sectors that were beaten down headed higher late in the session.

Cisco Systems and Intel Corp ranked among the Dow’s top advancers, and helped the Nasdaq erase losses. Cisco rose 2.3 percent to close at $23.70 and Intel gained 2.4 percent to end at $19.47.

Materials stocks also rebounded after falling throughout most of the day, with Alcoa Inc up 2.1 percent at $13.18.

European policy-makers scrambled to reassure markets about the stability of the 16-nation currency bloc, and Portugal backed a law that may push its swollen deficit higher.

The biggest losers included industrial shares, with General Electric Co off 1.6 percent at $15.79 and Boeing Co down 1.6 percent at $58.40.

On Thursday, the Dow briefly slipped below the crucial 10,000 mark as stocks suffered their worst daily declines in more than nine months.

Total volume of 12.44 billion shares traded on the New York Stock Exchange, the American Stock Exchange and Nasdaq, well above last year’s estimated daily average of 9.65 billion. It was the heaviest trade since Dec 18.

Declining stocks outnumbered advancing ones on the NYSE by a ratio of 17 to 13, while on the Nasdaq, about seven stocks rose for every six that fell.

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AIG Launches New System for Incentive Pay

Wall Street cuts losses, ends up with techs, materials