The West

American International Group is set to pay up to $US100m in bonuses to its employees, according to reports in the New York Times.
American International Group is set to pay up to $US100m in bonuses to its employees, according to reports in the New York Times.

American International Group is set to pay out about $US100 million ($A113 million) in a fresh round of bonuses to employees of its financial products division, the unit whose risky bets helped sink the company leading to a $US180 billion ($A203 billion) government bailout, according to reports published overnight.

AIG agreed to cut the retention bonuses by $US20 million ($A22.57 million) but will still hand out $US100 million ($A113 million) tonight, The New York Times reported, citing people with knowledge of the negotiations.

The Washington Post, also citing people familiar with the situation, said the retention payments are for employees at the division who agreed to accept 10 to 20 per cent less than AIG had initially promised them two years ago. In return, they are getting their money more than a month ahead of schedule.

AIG is still due to pay out tens of millions of dollars more in March, mostly to former employees who did not agree to the concessions, the Post reported.

New York-based AIG faced intense public and Congressional criticism last March when it paid out hundreds of millions of dollars in retention bonuses to employees months after receiving the government bailout.

When the credit crisis hit in the fall of 2008, the US government rescued AIG from the brink of collapse in exchange for an 80 per cent stake in the insurer.

AIG's near collapse was not due to its traditional insurance operations, but instead risky derivatives contracts written by the financial products division.

Meanwhile, Tim Armstrong, chief executive of AOL, turned down a bonus of at least $US1.5 million ($A1.69 million) in 2009, the company reported on Tuesday.

In the filing with the Securities and Exchange Commission, the internet company said Armstrong was entitled to the bonus but the company's compensation committee accepted his request to forego it last week.

AOL, which separated from media conglomerate Time Warner in December and began trading once again as a stand-alone company, is slated to report its fourth-quarter results tonight.

AOL, which is based in New York, rose to fame in the 1990s with its legacy dial-up internet access business, and bought Time Warner at the height of the dot-com boom in 2001.

That corporate union didn't work out, though, and AOL's main business began to decline after peaking in 2002 - hurt by the rise of speedier broadband internet connections.

For the past several years, AOL has been trying to reinvent itself as a content and advertising company.

This has been difficult, though, as its advertising revenue has not been able to offset the drop in dial-up revenue.

The West Australian

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