As the third man to run American International Group (AIG) in its nine-decade history, Martin J. Sullivan oversaw its disastrous run from one scandal to another. He took over on the ouster of his mentor, Maurice “Hank” Greenberg, amid the last scandal to strike the company (and the insurance industry), and he was shown the door by irate investors in June 2008, the eve of the company’s unprecedented bail-out by Uncle Sam.
In September, he landed at Willis Holdings (WSH), the perennially third-place insurance brokerage, named as deputy chairman of the company and chairman and chief executive of a new “Global Solutions” unit consolidating the firm’s multinational accounts.
It’s a bit of a come-down for the man who abruptly inherited what was then the most powerful and influential insurance company in the world. But we trust the pay makes up for it, judging from the employment agreement Willis filed with its 10-Q on Friday afternoon.
Sullivan will get $750,000 in salary, and is guaranteed a bonus of between $250,000 and $375,000 for the four months of 2010 that he’s with the company. In 2011, he’s guaranteed a bonus of between $750,000 and $1.125 million, but after that he has to convince the board he’s worth a bonus. For signing on with Team Willis, he’s getting 75,000 restricted shares — $2.45 million at Friday’s close — that vest over three years. Next year, he’ll get 50,000 more restricted shares ($1.6 million now) tied to the company’s performance.
Round off the deal with five weeks of vacation, and it’s not a bad gig for a dropout-made-good who not that long ago was being excoriated by lawmakers over the costliest corporate bailout of the financial crisis. Still, it’s less than the $14.3 million or so he made in 2007 (his last full year on the job), according to AIG’s proxy from then, and a far cry from the $47 million Sullivan was reported to be receiving when he left AIG. (The proxy filed in 2009 is vaguer, and Andrew Cuomo, the New York governor-elect who was then attorney general, was pushing AIG to hold on to some of that.) It’s also worth noting that this isn’t the first time we’ve footnoted Sullivan’s pay.
In any case, the Peter Principle, that tongue-almost-in-cheek rule of management that suggests employees tend to settle at their level of incompetence, clearly has its exceptions: Scandal and disaster can shake anyone loose. But, at least in the insurance trade, those dislodged from the top don’t seem to sink too far too fast.
See more of what’s in the filings: Check out FootnotedPro, where we highlight unusual opportunities and potential problems well in advance of the market. For more information or to inquire about a trial subscription, email us at [email protected].