American International Group is preparing to pay next week millions of dollars more in bonuses to dozens of corporate executives, a source familiar with the development said.
AIG has been talking with Washington’s newly-appointed compensation czar Kenneth Feinberg about the bonuses, which are due to be paid on July 15, said the source.
The company is reviewing its compensation plans with Washington as it tries to avoid the national furor set off by $165 million in retention bonuses paid to employees of a financial products unit in March. Much of AIG’s $99 billion in losses last year stemmed from derivatives written by that unit.
Feinberg was appointed last month to oversee the compensation of top executives at seven firms that have received large federal bailouts.
The firms must convince Feinberg “they have struck the right balance to discourage excessive risk taking and reward performance for their top executives,” Treasury spokesman Andrew Williams said in a statement, responding to AIG’s pending bonus payments.
“That process is just beginning now, and Feinberg has begun consulting with those firms about their compensation plans,” the statement said, adding the Treasury will not “provide a running commentary on that process.”
AIG, which declined to comment, has received more than $80 billion in federal loans in successive bailouts since its near-collapse last September. In total, U.S. taxpayer aid of up to $180 billion has been extended to the insurer that once claimed global dominance.
The payments AIG is set to make next week were previously disclosed. About 40 senior managers were awarded some $9 million in performance bonuses for 2008 but payments were to be partly staggered throughout 2009, and contingent on certain targets related to AIG’s restructuring.
AIG is in the midst of reducing liabilities at its financial products unit, and selling or spinning off some of its prized insurance operations in a bid to repay taxpayers.
In total, AIG last year agreed to pay in excess of $1 billion in retention payments and performance bonuses to employees across the organization, including to the financial products employees.
Some financial products executives agreed to return their bonuses in full or in part after the payments spurned anger across the nation.
(Reporting by Joanne Allen and David Lawder in Washington, and Lilla Zuill in New York; Editing by Gary Hill and Muralikumar Anantharaman)
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