Executives in the Financial Products Group at American International Group have paid back just over 40 percent of the $45 million in promised bonus repayments. However, now it looks as if the remaining $26 million in expected repayments hinges on the outcome of Pay Czar Kenneth Feinberg’s latest request to AIG, asking that the insurer reduce the $198 million in retention bonuses that are still due.
According to a report from the TARP Inspector General, $19 million of the pledged repayments have been as of the end of August.
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.
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.
The AIG bonus debacle was a main catalyst in the Obama Administration’s move to create a pay czar in order to police Wall Street compensation.
Pay Czar Kenneth Feinberg started his review of bonus packages back on September 1, analyzing seven financial companies that received more than $200 billion in Troubled Asset Relief Program funds.
