NU Online News Service, Oct. 26, 2:33 p.m. EDT
WASHINGTON–American International Group said in a filing with the Securities and Exchange Commission that it has paid $12.1 million in past-due executive retention payments, including $4 million to four top employees.
At the same time, AIG was highly critical of a special master's decision to slash payments for its top employees by 91 percent for the remainder of the year, saying the response to "public concerns" about high compensation at companies receiving federal aid may ultimately backfire.
The retention payment disclosure was made in a Form 8-k filed Friday with the SEC.
The filing was a reaction to a document released Thursday by special master Kenneth Feinberg slashing cash compensation to the top 25 AIG employees for the rest of the year by 91 percent.
Mr. Feinberg made the decision for 125 top employees at seven companies receiving large amounts of federal aid under the Troubled Asset Relief Program.
The decision affects pay for November and December.
Mr. Feinberg said in comments to reporters Thursday that the review of compensation programs for top executives at companies receiving TARP aide would continue annually until the government is paid off.
AIG said in its filing that Mr. Feinberg's action "may adversely affect AIG's ability to retain and motivate its highest performing employees."
It said the memorandum by Mr. Feinberg imposed "significant restrictions and limitations on compensation" on AIG employees.
It added that "an inability of AIG to retain and motivate its highest performing employees may impact its ability to stabilize its businesses, execute on its asset disposition plan, and prepare and make required filings with the Securities and Exchange Commission and other federal, state and foreign regulators."
The $4 million in payments were made to a group that includes David Herzog, executive vice president and chief financial officer, and Kristian Moor, executive vice president of the property and casualty group.
The total $12.1 million in payments went to its 25 most highly compensated executives.
The filing said that a special committee of AIG's board had argued that the payments were made because the employees "had achieved significant performance" under a program designed to keep them in the wake of the need last September for AIG to give the government 79.9 percent of its stock in exchange for cash in order to stave off insolvency.
The filing also noted that Mr. Feinberg had agreed that further restructuring of the compensation packages of the three top executives would "not be consistent" with the law passed by Congress in February requiring Treasury to oversee pay at companies that took bailout money.
He did so because AIG officials argued they were being paid under a previously existing agreement between the company and the employees.
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