NEW YORK (Bloomberg) — American International Group Inc., the insurer bailed out by the US government, will pay some executives in units whose value is tied mostly to debt, rather than common stock, as it seeks to retain managers.

Some compensation for the 25 top earners can be paid in units "designed to serve as a proxy for AIG's long-term value," the New York-based insurer said in a May 28 filing. The units are 80 percent tied to junior debt that pays 8.175 percent annual interest, and 20 percent to common stock, AIG said.

The insurer is seeking to retain staff while responding to lawmakers who said it rewarded employees without regard to performance. AIG, which is repaying loans within its $182.3 billion bailout, is under the jurisdiction of US paymaster Kenneth Feinberg, who has set a $500,000 cash base salary cap for most executives.

"AIG is committed to compensation practices that allow the company to attract and retain capable and experienced professionals and motivate them to achieve strong business results," Mark Herr, a spokesman for AIG, said in an e-mail.

AIG's so-called long-term performance units will be paid in cash, the insurer said. Executives including chief financial officer David Herzog, property-casualty chief Kristian Moor and Rodney Martin, who heads a non-US life unit, are among those getting the new units, AIG said.

The composition of the units was reported earlier by the Wall Street Journal.