Kenneth Feinberg, the Obama administration's pay czar, will exempt some executives at American International Group from a $500,000 salary cap after at least five employees threatened to quit, Bloomberg reported citing people familiar with the matter.

Feinberg may issue a ruling as early as next week on pay limits for 75 of the insurer's executives, Bloomberg said.

AIG was not immediately available for comment.

Feinberg has cut average compensation for the 25 best-paid employees at companies, including AIG, that received multiple bailouts from the government and is setting guidelines for pay for the next 75.

Last week, five senior executives at AIG told the company they may quit if their compensation was cut significantly by the U.S. pay czar, the Wall Street Journal reported on Sunday.

(Reporting by A.Ananthalakshmi in Bangalore; Editing by Lincoln Feast)

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