Exec bonuses under TARP take fire

Geoghegan, however, defended herself in the strongest terms. For example, she said, AIG's average total compensation for its top 25 employees was at the 48th percentile of similar positions at similar companies.

She also said that the report "mischaracterizes" the information her office, known as OSM, provided SIGTARP. For example, she said the report criticizes OSM for having "no criteria" for allowing pay packages without any long-term restricted stock, calling this "misleading."

She also noted that AIG is the "most recent exceptional assistance recipient to repay its investments. Treasury sold its remaining stake in AIG by last November. "Not only did it exit TARP," Geoghegan said, "but it also repaid the Federal Reserve Bank of New York," noting that Treasury and the FedNY had made a $22 billion-profit on the deal.

In response to the report, Jim Ankner, an AIG spokesman, said that the company has "dramatically revamped its compensation practices to ensure that all employees are held directly accountable for clearly defined goals that reflect our commitment to properly balancing growth, profit, and risk."

He said that when AIG was subject to TARP restrictions, AIG worked closely with the Special Master to make sure we paid our employees market-based compensation, including appropriate amounts of incentive pay, under a rigorous review process that will continue into the future.

"This principle to pay market-based rates for well-defined performance is shared across the entire company and is continually reviewed by our board," Ankner said.

In addition, he said, "AIG remains highly focused to ensure we manage our risk profile in a strong and diligent manner and that the company's goals are clearly aligned and balanced between profit, growth and risk."

Ankner said that now, "AIG is evaluating certain pay structures to ensure the appropriate allocation of incentive compensation as a portion of total pay to employees that reflects our absolute commitment to pay for performance in a post-TARP environment."

Controls over compensation at troubled companies has been at place at Treasury since 2009, when disclosure that executives at the AIG Financial Products subsidiary were being paid $168 million in bonuses even though that division had played a prime role in forcing AIG to seek a government bailout.

AIG and Treasury officials defended the action at the time, noting that the payments were contractual.

At that time, a special outside overseer of executive pay for companies receiving TARP aid was created. It was headed by Kenneth Feinberg, a New York lawyer. Geoghegan has succeeded him.