Cnn.com reports about new round AIG bonuses.

(emphasis mine) [my comment]

AIG bonuses: $235 million to go
Troubled insurer AIG has asked the government's 'pay czar' to review hundreds of millions more in bonus payments to employees of its most crippled division.
By David Goldman, CNNMoney.com staff writer

Last Updated: July 10, 2009: 2:07 PM ET

NEW YORK (CNNMoney.com) -- Bailed-out insurer AIG again found itself in the crosshairs of bonus rage on Friday over its plans to pay $2.4 million in executive bonuses next week.

But the larger issue is how AIG will deal with its obligation to pay roughly $235 million still owed to employees of its crippled financial products division.

The contentious issue of the bonuses resurfaced late Thursday after TheWashington Post reported that AIG was seeking the government's consent to make a scheduled performance bonus payment of $2.4 million to 43 of its top-ranking executives.

But there's still the $235 million in retention bonuses owed to about 400 employees of AIG's Financial Products (FP) division that the company has to deal with. Public furor erupted in March when it was revealed that AIG had paid out $165 million of retention bonuses to those employees.

AIG put the issue before Kenneth Feinberg, the Obama administration's pay czar [Now that is one job I absolutely wouldn't want to have]. Feinberg is tasked with reviewing bonuses and retirement packages for the 100 highest-paid executives at AIG (AIG), Citigroup (C), Bank of America (BAC), General Motors, GMAC, Chrysler and the now defunct Chrysler Financial. [That is going to be a fun job. On one side taxpayer rage and on the other you have executive greed. It is Feinberg job to not give both sides what they want]

A source close to the matter said Feinberg will be reviewing both the $2.4 million, as well as the much more controversial $235 million that is scheduled to be paid out to AIG-FP employees next year.

AIG-FP is the division that wrote insurance contracts on shaky derivatives that were at the root of the company's near-collapse. In September, the government bailed out AIG with funds now worth up to $182 billion.

The $165 million of bonus payments in March was the second installment of a larger, $454 million retention plan for the FP employees. The first -- $50 million -- was made in 2008, before the company was bailed out by the government.

After the uproar in March, FP employees returned about a third of their bonuses, and a dozen workers resigned. The reaction from the public and Congress consumed AIG, Treasury and Federal Reserve officials, and called into question what to do with the last payment that is scheduled to go out in 2010.

Feinberg only has to review payments that were contracted beginning in 2009, so the $235 million in FP payments -- contracted in 2008 -- do not officially fall under his purview. Still, a source close to the matter said that AIG wants Feinberg to take a look at those bonuses to make sure the government is completely comfortable with the company's compensation plan.

Feinberg was also asked to review the $2.4 million in performance bonuses set to be paid out to 43 of AIG's top executives. That is part of a larger bonus pool of $121 million, the vast majority of which was paid out in March to the company's most senior executives.

But with pressure mounting from Congress and the Obama administration, AIG restructured its bonus payments for the top 50 executives. The top seven AIG executives opted to forgo their bonuses. The other 43, set to receive $9.6 million in March, took home only half -- $4.8 million -- in March, and are set to receive $2.4 million July 15 and another $2.4 million Sept. 15.

Experts say asking Feinberg to review the bonuses takes the pressure off of AIG and turns Feinberg into a punching bag for criticism. Outgoing AIG Chief Executive Edward Liddy has said on many occasions that the public outrage about the bonuses has limited the company's ability to move forward with its plan to repay the government.

"If you have the government OK the plan, it makes AIG look less like they're flushing taxpayer money down the toilet," said Julie Grandstaff, managing director of insurance consultant StanCorp Investment Advisers. "There's no way the poor guy who is reviewing all of this can win." [Agreed]

A Treasury spokesman would not comment directly on AIG's bonuses, but suggested Feinberg can review those payments and the FP bonuses if he chooses, even though they were contracted in 2008, saying, "Mr. Feinberg has broad authority to make sure that compensation at those [seven] firms strikes an appropriate balance." [he also is responsible for absorbing all blame if it doesn't]

"Companies will need to convince Mr. Feinberg that they have struck the right balance to discourage excessive risk taking and reward performance for their top executives," the spokesman added.

AIG declined to comment for this article.

Prof. Elizabeth Warren, chair of the Congressional Oversight Panel created to oversee the bailout, told CNNMoney.com that AIG's lack of comment spoke to a larger disconnect between the insurer and the American public.

"If they're not commenting, that makes me very nervous, because what I would like to hear is 'no, that report is a mistake,'" Warren said. "Taxpayers are under enormous stress. There's going to be trouble over this."

My reaction: I just wanted to highlight that AIG is still trying to pay bonuses to the employees of the division responsible for its near-collapse.

1) Bailed-out insurer AIG again found itself in the crosshairs of bonus rage on Friday over its plans to pay $2.4 million in executive bonuses next week.

2) AIG also still has to deal with the $235 million in retention bonuses owed to about 400 employees of its Financial Products (FP) division.

3) These $235 million owed bonus payments are part of a $454 million retention plan signed last year.

4) AIG-FP is the division that wrote insurance contracts on shaky derivatives that were at the root of the company's near-collapse.

5) The government has bailed out AIG with funds now worth up to $182 billion.

6) When the $165 million second installment of the $454 million retention plan, the outraged reaction from the public and Congress consumed AIG, Treasury and Federal Reserve officials.

Worst job in the world?

1) AIG put the AIG bonus issu e before Kenneth Feinberg, the Obama administration's pay czar.

2) Feinberg is also tasked with reviewing bonuses and retirement packages for the 100 highest-paid executives at AIG (AIG), Citigroup (C), Bank of America (BAC), General Motors, GMAC, Chrysler and the now defunct Chrysler Financial.

3) It is Feinberg's job to mediate between taxpayer rage and executive greed, not giving either side what they want.

4) As Julie Grandstaff, managing director of insurance consultant StanCorp Investment Advisers, said, "There's no way the poor guy who is reviewing all of this can win."


Conclusion: I have already written pretty much everything I wanted to say about AIG in my past entries (links below).

Fed's Role In AIG Target Of Audit
*****AIG pays 58 Billion to foreign firms since receiving taxpayer bailout*****
Hedge Funds May Get AIG Cash
*****AIG Pays Bonuses For Ruining The Economy*****
*****AIG was a Ponzi scheme*****