AIG employees agree to bonus cut, still receiving $100 million

Employees at American International Group are accepting a bonus reduction of $20 million, nearly a year after their bonuses received national attention, prompting a U.S. House of Representatives’ subcommittee hearing.

Today (Feb. 3), AIG plans to dole out another set of bonuses totaling $100 million to those in its Financial Products division, according to the Washington Post. That unit is seen by many as the part of the insurer that caused many of its financial problems.

The Post reports that the bonuses will go to those who agreed recently to accept 10% to 20% less in payments promised two years ago in return for payment a month ahead of schedule. The report estimates that 97% of the Financial Products unit reached this deal.

Last March, the House subcommittee on Capital Markets, Insurance, and Government Sponsored Enterprises held a hearing to explore the federal government’s nearly $182 billion investment in the failing insurer and how repayment to American taxpayers will occur. In addition, the panel looked at and was critical of the status of $165 million in bonuses AIG bestowed upon members of AIG Financial Products.

Following the hearing and the request of the former CEO of AIG, Edward Liddy, numerous employees returned their bonuses. Media reports indicate that $19 million was returned.

Talking to reporters following announcement of the bonuses, Sen. Chuck Grassley (R-Iowa), a ranking member of the Finance Committee, said the insurer “has taxpayers over a barrel.

“The Obama administration has been outmaneuvered,” he said, according to the report. “And the closed-door negotiations just add to the skepticism that the taxpayers will ever get the upper hand.”