NEW YORK (Bloomberg) — American International Group Inc., the bailed-out insurer, may be allowed by the US paymaster to boost salaries for some of its highest-compensated executives, two people with knowledge of the matter said.

Among AIG's 25 top-paid managers, some will get raises of less than ten percent, while others will have their pay cut, according to one of the people, who declined to be identified because final determinations haven't been made. The reductions would be smaller than in 2009, the person said. An announcement may be made this month, the people said.

AIG's top leaders had their cash salaries slashed by an average of 91 percent last year as Kenneth Feinberg, the Obama administration special master for executive compensation, used more stock to link awards to company performance. AIG chairman Harvey Golub told shareholders last week that the cuts made "little business sense" because the firm couldn't keep some of its best mangers.

"Feinberg realises that to retain talent, you can't be as confining as they were last year," said Jeanne Branthover, a managing director at Boyden Global Executive Search Ltd. in New York. "For AIG to be successful and pay back the government, it's all about their people."

Feinberg, a Washington lawyer, controls pay for the 25 top- earners at AIG and advises on the compensation for the next 75 workers. Less than half of the group of 25 may get raises, and overall individual awards, including deferred compensation, won't necessarily increase, said one of the people. Mark Herr, an AIG spokesman, declined to comment.

"We are in the middle of discussions with AIG and nothing has been decided," Andrew Williams, a Treasury spokesman, said in an e-mailed statement. "As we have said before, we are not going to provide a running commentary on Mr. Feinberg's work."

In October, Feinberg instituted a $500,000 base salary cap for most employees of AIG, which is majority owned by the government after a bailout that swelled to $182.3 billion.

Exceptions were made for those considered essential to AIG's success, including chief executive officer Robert Benmosche, 65, and Peter Hancock, the former chief financial officer of a predecessor to JPMorgan Chase & Co. Benmosche secured a salary of $3 million in cash and $4 million in stock last year. Hancock, who oversees finance and risk, is getting $1.5 million in cash and $2.4 million in stock, AIG said last month.

More than 60 managers have left AIG since its 2008 rescue, including general counsel Anastasia Kelly, who told Fortune magazine last month that her $900,000 base salary would have been slashed to $500,000 and that she might have jeopardised a severance payment if she stayed.

About half the executives on the previous top-25 list have departed since the insurer's September 2008 bailout, and several managers who had been in the group of 75 last year are now among the top 25 earners, said one of the people.

"AIG owes the taxpayer a huge amount of money and we want to make sure that my compensation practices take into account the need for AIG to thrive," Feinberg said in a December 11 interview with Bloomberg Television.