AIG to revamp pay; Congress wants taxes

February 10, 2010

AIG has announced it is restructuring its incentive pay program.

AIG logo The insurance giant, which we taxpayers technically control thanks to our $90 billion investment, says it will use a a "forced distribution" system.

Thousands of AIG employees now will be ranked on a scale of 1 to 4 based on their performance relative to their peers. Then their annual variable compensation, which may include bonuses, will be determined by their rank.

Gone are the old retention awards that are based on just sticking around. Welcome to the brave new world of pay for performance.

Under the plan, only 10
percent of the ranked employees will get the top "1" ranking. By making that top tier, they'll
get much more year-end incentive pay.

Not surprisingly, the change to a payroll meritocracy isn't sitting well with some employees. But AIG hopes it will satisfy U.S. pay czar Kenneth Feinbeirg, who's been a critic of the company's previous retention bonuses
to some executives.

Congress looks to tax corporate payouts: The company also probably hopes that the move might stall Congressional action on corporate pay.

Last week, Sen. Barbara Boxer (D-Calif.) and Jim Webb (D-Va.) introduced legislation
that would impose a tax on large bonuses paid by Wall Street banks and other
firms that received more than $5 billion from the Troubled Asset Relief Program (TARP)
in 2009.

The Taxpayer Fairness Act would impose a 50 percent excise tax on the bonuses of
employees at TARP firms that exceeded $400,000 in 2009. Why $400,000? That just happens to be the U.S. president's salary.

Money from the tax, say Boxer and Webb, would be used to reduce the deficit or to help the nation recover from
the recession.

Just after Congress reconvened last month, Rep. Peter Welch (D-Vt.) introduced a similar bill, the Wall Street
Bonus Tax Act
. It's co-sponsored by 23 of his House colleagues.

Related posts:

Want to tell your friends about this blog post? Click the Tweet This or Digg This buttons below or use the Share This icon to spread the word via e-mail, Facebook and other popular applications. Thanks!

Share:

The More Tax Posts tab at the top of this page will take you to, well, more tax posts. You also can search below for a tax topic. 

Latest Posts
The latest Dirty Dozen tax scam list is familiar because too many are still falling for the schemes

March 5, 2026

Tax filing season is also peak time for tax scams. Be on the lookout for…

Read More
Hello Tax Season 2026

Happy New Tax Year! Are you ready to file your 2025 tax return? I know, too early to ask. But Tax Day 2026 will be here before we realize it. The Internal Revenue Service deadline to file and pay any tax we owe is the regular April 15 date this year. It’s also Tax Day for most of the states that collect income taxes from their residents, which is most of the states! If that seems too far away right now, don’t worry. As is the case every tax season, the ol’ blog’s tips and other tax reminders should help all of us meet our state and federal responsibilities. Procrastinators also will want to keep an eye on the countdown clock just below. It tracks how much time we have until April’s Tax Day, just in case we put off our annual tax task until the absolutely final hours and decide we need to instead get an extension request into the IRS by that date. (Note: I’m in the Central Time Zone, so adjust accordingly for where you live.)

Comments
Leave the first comment