AIG Reportedly to Pay $100M in Bonuses

Updated from 12:20 a.m. EST

NEW YORK (TheStreet) -- American International Group(AIG) agreed to cut employee bonuses by $20 million but will still distribute about $100 million on Wednesday, a report says.

AIG first promised the bonuses to retain people at its financial products unit, the division that made derivatives trades that went sour and which led to a U.S. government bailout of $180 billion.

The contracts, which were established in December 2007, called for the bonuses to be paid in regular installments to more than 400 employees in the unit, the New York Times reports. The final payment, of about $198 million, was due in mid-March, but was moved up to Wednesday as part of the agreement to reduce its size, according to the Times.

AIG employees who still work for the financial products unit will accept 10% percent cutbacks, while employees who have left the company must take 20% cuts. Those employees are still entitled to their bonuses under the contract, which adheres to the scheduled payments even if people have lost their jobs, the Times notes.

AIG told all the affected people they won't get a bonus if they don't accept the reduced amounts, the Times says, citing a person with knowledge of the agreement.

AIG shares were higher in premarket trading Wednesday to $24.26. The stock closed Tuesday at $23.97.

-- Written by Joseph Woelfel in New York.

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