The Obama administration's compensation czar said yesterday that he would continue to push for cutting the hefty bonus payouts to American International Group (AIG) executives but acknowledged he could do little against the guarantees the company made to employees years ago.
Kenneth R Feinberg said he was as troubled as Main Street by the contracts. He was referring to agreements entered into prior to the financial crisis that promised millions in retention bonuses to employees at AIG's troubled Financial Products unit.
He added that the administration had little leverage against valid, grandfathered contracts under which the payouts would be handed.
News that the bailed-out insurance company planned to pay $100 million to employees at its financial products unit, sparked a furore this week. This comes a year after $168 million in similar payments to the same set of employees triggered a national controversy.
About 97 per cent of the unit's current employees had agreed to a 10-per cent reduction in compensation, but the figure was much lower among former employees still eligible to receive payments. About 35 per cent agreed to accept a 20 per cent discount and together, the concessions amounted to about $20 million.
Meanwhile, Feinberg has urged that the insurer find a way to scale down the pending bonuses. He has also called on financial products employees to return $45 million of the bonus money they had agreed to pay back. Employees have agreed to return about $39 million.