WASHINGTON BUREAU — American International Group Inc. now has paid $12.1 million in past due executive retention payments, including $4 million to 4 top employees.

AIG, New York, (NYSE:AIG), disclosed the payments in a document filed with the U.S. Securities and Exchange Commission.

In the document, AIG criticized a decision by Kenneth Feinberg, the federal Troubled Asset Relief Program “pay czar,” to slash payments for 25 top AIG employees by 91% for the remainder of the year.

Feinberg said in a memorandum released Thursday that he was mandating executive compensation cuts at AIG and other TARP recipients in response to public concern about high executive compensation levels at companies receiving federal aid.

That kind of response may ultimately backfire, by adversely affecting “AIG’s ability to retain and motivate its highest performing employees,” AIG says in its filing.

The Feinberg memorandum imposed “significant restrictions and limitations on compensation” on AIG employees, AIG says.

Those sorts of limits could affect AIG’s ability to stabilize its businesses, and even its ability to file the documents required by the SEC and by other federal, state and foreign regulators, AIG says.

The $4 million in payments were made to a group that includes David Herzog, executive vice president and chief financial officer, and Kristian Moor, executive vice president of the property-casualty group.

The $12.1 million in total payments went to AIG’s 25 most highly compensated executives.

A special AIG board committee said the payments were made because the compensated employees “had achieved significant performance” under a program designed to keep them in the wake of the September 2008 federal bailout.