economics

January 20, 2010

A.I.G. Said to Look at Other Ways to Repay Bonuses

Filed under: Uncategorized — ktetaichinh @ 4:24 am
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January 19, 2010, 5:01 am

<!– — Updated: 3:25 pm –>

American International Group is exploring several ways to repay $26 million of the $45 million in bonuses that executives at its financial products unit pledged to return last year, including a plan to cut 2010 bonuses but pay them out early, according to press reports.

The plan being discussed is to make retention bonus payments to employees at the unit several weeks before they are scheduled in March if they agree to have it cut by up to 15 percent, Reuters reported, citing a source close to the matter.

By doing so, A.I.G. — which is obligated to pay out $195 million in retention bonuses in March to AIG Financial Products employees — would reportedly recoup the $26 million needed to cover the shortfall.

The news was first reported by The Wall Street Journal.

Last year, some employees of AIG Financial Products said they would repay portions of their March 2009 bonuses after a public outcry at the size of these payments. But a government audit from late 2009 said only $19 million of the total $45 million pledged has been collected.

“We remain committed to meeting our commitments to return a portion of the retention payments,” an A.I.G. spokeswoman told Reuters.

The current proposal is reportedly designed to meet pay czar Kenneth Feinberg’s demand that the remainder of the $45 million paid out as bonuses last year be recouped.

Mr. Feinberg is the U.S. Treasury Department’s special master for compensation, hired to help sort out exorbitant pay at firms that received bailout dollars.

Bad bets on toxic mortgages and credit default swap contracts made by the AIG Financial Products unit led to the insurer’s near collapse and the subsequent United States bailout. AIG Financial Products is in the process of winding down its derivatives business.

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