Obama’s pay czar is cracking down on troubled insurer American International Group, telling it to reduce the $198 million in retention bonuses scheduled to be doled out to employees in March.
This is the public’s first peek at the recommendations Kenneth Feinberg is making about pay packages at seven big financial institutions that received billions in taxpayer funds.
Feinberg’s message comes as AIG officials struggle to recoup $45 million of last year’s $168 million bonus payments. The bonuses set off a national firestorm as taxpayers trashed the idea of giving lavish payouts to a firm that needed more than $180 billion in government rescue money just to stay afloat.
The $198 million to be paid out in March represents a reduction of 17 percent from the original plan to pay $238 million. AIG has said it will try to reduce next year’s planned pool by 30 percent.
Feinberg’s opinion came to light in a report from the office of Special Inspector General Neil Barofsky, who is overseeing the government’s $700 billion financial rescue plan.
Barofsky’s report, which was leaked to some news outlets yesterday, noted that AIG has collected just $19 million of the $45 million it promised to recoup from the most recent bonus debacle.
As the bonus payments are part of an iron-clad contract with employees, AIG has had to finagle employees to return the funds voluntarily, or cut staff to reduce future payments.
“AIG continues to discuss a variety of compensation issues with [Feinberg], including future payments to employees of AIG Financial Products,” the firm said in a statement. “Employees have until the end of the year to fulfill their commitments to return a portion of their March 2009 payment,” and AIG expects “employees will honor their commitments.”
Barofsky’s report blames the Treasury for the AIG bonus controversy, saying it invested billions of taxpayer funds “without having any detailed information about the scope of AIG’s very substantial, and very controversial, executive compensation obligations.”