AIG Financial Products Corp.”™s motion to strike a complaint brought against it by former executives over money owed to them from their deferred compensation accounts has been denied by a state Superior Court judge.
The lawsuit was filed in 2019 against the Connecticut headquarters of the international company in Wilton by 46 former high level executive employees. It maintains that as AIGFP navigated the 2008 financial crisis, it required the plaintiffs who participated in certain bonus compensation plans to defer significant portions of their bonus and other compensation.
One of those plans required each plaintiff to defer payments of their already-earned compensation into deferred compensation accounts held by AIGFP in the name of each participant.
AIGFP was to make installment payments with interest on the plaintiffs’ Deferred Compensation Plan (DCP) and Special Incentive Plan (SIP) Account balances. The firm was also permitted to use the money in those DCAs and SIP Accounts as capital to fund its business, so long as it later restored and paid the money it took from those accounts.
“In or around 2007 through early 2009, AIG and AIGFP were reportedly at the brink of insolvency and needed to increase their liquidity,” the suit states. “Around the same time, AIGFP credited its losses against the plaintiffs’ DCAs and SIP Account balances — which resulted in the fiction that the DCA and SIP Account balances were negative — so as to avoid paying the plaintiffs their deferred compensation and bonuses. Thereafter, AIGFP stopped making installment payments to the plaintiffs.”
As a result of those actions, “the plaintiffs have been damaged in excess of $185 million,” the suit says.
AIGFP sought to dismiss the case on the grounds that it had acted in good faith and that the agreements with the former employees were open to interpretation.
Connecticut Superior Court Judge Sheila Ozalis rejected those arguments, allowing the case to continue.
Attorney Steven Perlstein of New York law firm Kobre & Kim is representing the plaintiffs.
