NEW YORK (Reuters) - Five senior executives at American International Group told the insurer last week they may quit if their compensation was cut significantly by the US pay czar, the Wall Street Journal reported.

The five senior AIG executives indicated on December 1, in written notices, that they were prepared to leave by year-end, the paper report, citing unnamed sources. Two of them changed their minds over the weekend, the paper added.

AIG, which was propped up by the government with some $180 billion in taxpayer funds, has been sparring with the Obama administration's pay czar, Kenneth Feinberg, over executive compensation.

Even chief executive Robert Benmosche reportedly threatened to quit last month, in part because he did not have discretion over pay packages for top executives.

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

For AIG in particular, Feinberg has vowed to limit bonuses at the company's financial products unit, whose massive payouts earlier this year sparked huge outrage.