NEW YORK (Bloomberg) — American International Group Inc., the insurer criticised by lawmakers for giving bonuses to executives after a US bailout, started an incentive plan that will give the top 10 percent of employees the largest awards.

AIG's system will rank employees on a scale of 1 to 4 based on performance compared with colleagues, Christina Pretto, an AIG spokeswoman, said yesterday. About 10 percent of the New York-based company's workers will be placed in the top rank, getting the biggest bonuses, while 70 percent will fall in the middle tiers, she said. The bottom 20 percent of performers will get the lowest payouts.

Chief executive officer Robert Benmosche, 65, must retain valued employees while responding to lawmakers who said the insurer rewarded employees without regard to performance. A backlash about bonuses given to employees in the AIG derivatives unit blamed for the company's losses peaked in March with President Barack Obama criticising the awards.