Report: AIG holding $21 million in bonuses for Financial Products unit

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Set to dole out $195 million in bonuses to its current and former employees, American International Group is holding back $21 million owed to employees of its Financial Products unit, according to Reuters.

The news service cites a source familiar with the matter indicating that AIG will still pay out $46 million to nearly 70 employees of the unit largely blamed for the insurer’s near insolvency in 2008, leading to nearly $180 billion in federal aid.

By holding back some of the bonus money, AIG can surpass an expectation by White House “pay czar” Kenneth Feinberg, who demanded that $45 million in bonus money not be paid following public outcry last year, the report said.

AIG has already recovered $40 million of the $160 million in bonus cash it gave last year. The issuing of those bonuses led to congressional hearings, as well as picketing of the insurer’s headquarters and some of its executives’ homes.

Facing a deadline today (March 15) to pay another $195 million, many in AIG’s Financial Products unit agreed last month to take a $20 million cut in return for an early payment, according to Reuters. The payments are being made now for remaining employees eligible for the bonuses.

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