AIG’s FP staff take $20m cuts

AIG will still pay around $100m in bonuses to some 200 employees of its troubled financial products unit this week even after they agreed to at least 10% cuts to defuse the political furore over bonuses, the FT reports.

AIG will used the saved cash to pay back US authorities and almost fulfil a pledge made by former CEO Ed Liddy to repay $45m due to employees of the financial product division to taxpayers.

AIG insiders said employees had agreed to reductions ranging from 10% to more than 20%. In return, their bonuses would be paid a month earlier - this week rather than in mid-March.

The reductions will save AIG $20m. This is on top of $19m in bonus cuts already agreed.

Volunteered

AIG said: “We are greatly appreciative that virtually all - some 97% - of active financial product employees have volunteered to reduce their upcoming 2010 payment to help achieve our giveback target.

“We have decided to begin these reduced payments to these active employees as well as those non-active employees who agreed to reductions. The reductions from these two groups stand at about $20m, and we believe this allows us to largely put this matter behind us.”