AIG Financial Product Employees Accept Retention Pay Cuts

Most current employees at the financial products unit of American International Group Inc. eligible for money owed them under a retention plan told the company they would accept less money in return for an earlier payout, a source familiar with the matter said Thursday.

Once the world’s largest insurer, AIG nearly collapsed from credit default swaps, derivatives the Financial Products business has sold.

AIG asked current Financial Products employees to take at least a 10 percent cut on the cash portion of the payment due them, according to proposals obtained by Reuters earlier this week.

More than 95 percent of current Financial Products employees eligible for the payments told AIG they would accept the cuts, the source said, adding that a few even volunteered to take a cut bigger than 10 percent.

The reductions for current employees would total roughly $13 million, or half the $26 million AIG is trying to recoup, said the source, who declined to be identified because of the current sensitivity of the situation around compensation.

AIG declined to comment.

News of the strong response to the award cuts was earlier reported by the Wall Street Journal on its website.

(Reporting by Paritosh Bansal; Writing by Martinne Geller, editing Bernard Orr)