Uh oh. Here we go again.
From The Associated Press:
After its bonus payments ignited a firestorm of criticism earlier this year, American International Group is asking the federal government to weigh in on the insurer’s plan to resume paying millions in promised retention incentives next week, according to media reports.
AIG, once the world’s largest insurer, has asked the Obama administration’s compensation czar, Kenneth R. Feinberg, to approve the payments in order to head off any public outrage, The Washington Post reported Thursday evening.
While the company isn’t required to get the government’s blessing because the payments are actually for 2008 employment contracts, the newspaper said executives are reluctant to move forward with installments coming due next week without official approval.
Feinberg has the power to reject pay plans he deems excessive at companies which benefited from large infusions from the government’s $700 billion bank bailout fund. Feinberg also has authority to review compensation for the top 100 salaried employees at those firms. AIG is among the companies whose pay practices the government now oversees.
New York-based AIG remains the focus of intense scrutiny, after becoming one in a string of corporate calamities and a touchstone for public fury. The huge volume of credit default swaps — a form of insurance against bond defaults — sold by AIG, coupled with rising levels of defaulted mortgage and other debt, threatened the company’s existence and prompted the government to step in.
Government aid to AIG totals about $180 billion.
The $450 million in bonuses that AIG allocated in 2008 for employees, including to traders in the financial products unit that brought it to the brink of collapse, fuelled public and congressional outrage. The first instalment of those payments earlier this year sparked legislation in Congress to slap punishing taxes on big bonuses at AIG and other companies bailed out by taxpayers, though the Senate didn’t act on that plan.
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