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Pay czar Kenneth Feinberg tough over AIG packages, wants $198 million in pay reduced

By Irina Waqar for CEOWORLD Magazine Updated:October 14, 2009

Government-appointed pay czar Kenneth Feinberg wants $198 million in American International Group Inc. (NYSE:AIG) retention pay reduced.

On Sept. 1, Feinberg started a sixty-day clock to review the pay packages for top executives and employees at seven large financial institutions, including AIG, which have received $200 billion in taxpayer funds.

AIG executives agreed to payback at least half of their retention bonuses back in March following a public outcry after the insurer had just been bailed out by the government, receiving more than a $100 billion in taxpayer’s money.

The move to repay a large chunk of the $168 million in retention bonuses also helped Congress in its decision not to levy a 100 percent tax on the bonuses, which had seriously been discussed.

According to the Inspector General’s report, the government came to AIG’s rescue well before it understood the insurer’s complex compensation policies.

After several months the Federal Reserve Bank of New York worked out the complicated policies, finding a total of 620 bonus programs adding up to $455 million in possible payouts.

The retention program for the AIG Financial Products employees began in January 2008 in an effort to keep skilled employees from leaving its highly complex derivatives business. The program is scheduled to last for two years, however it was put into place before the company received a government bailout.

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