After much public outcry, AIG [AIG] has developed a new way to determine who receives annual incentive pay and how much, according to recent reports.

Under the new initiative, called a "forced distribution" system, thousands of AIG employees will be ranked on a scale of 1 to 4 based on their performance relative to their peers, says The Wall Street Journal, which also says a similar forced-ranking system has been used by General Electric Co.

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