AIG chief to remain after reported quit threat
Posted: 12 November 2009 0920 hrs

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WASHINGTON: The chief executive of bailed-out insurance giant AIG said on Wednesday he would remain at the helm after reportedly threatening to step down over compensation limits imposed by the government.

At a board meeting last week, Robert Benmosche told fellow AIG directors that he was "done", but agreed to think it over after other board members reacted with shock, The Wall Street Journal reported on Wednesday, quoting people familiar with the matter.

Benmosche, who took the job three months ago, was unhappy with constraints imposed by AIG's government overseers, particularly a recent compensation review by President Barack Obama's pay czar, Kenneth Feinberg, said the paper.

AIG is 80 per cent government-owned since it offered a financial lifeline last year to the company on the brink of bankruptcy amid a financial crisis.

"Let me be clear: I and the board remain totally committed to leading AIG through its challenges and to continuing to fight on your behalf," Benmosche said in a note to staff, a copy of which was sent to AFP.

"We are all working aggressively to overcome this compensation barrier that stands in the way of restoring AIG's value and allowing us to live up to our obligations to all stakeholders," he said.

He admitted that he and the company board "are indeed frustrated and we are in ongoing discussions" with the government over compensation "to resolve the uncertainty surrounding this issue".

AIG bosses reportedly met with Feinberg in New York last week and discussed difficulties of complying with pay policies and retaining talent at the company, the Journal said.

Benmosche was said to be prepared to step down in August, when his own pay package had not yet been formally approved by Feinberg.

His 10.5-million-dollar pay package, including cash salary of three million dollars, was later finalised and is the largest compensation package approved under the Treasury Department's recent curbs on executive pay, the report said.

AIG was the largest single recipient of US bailouts with the government pumping more than 170 billion dollars into the firm to keep it afloat and taking a controlling stake in the group in the process.

The company was in trouble after backing trillions of dollars in risky financial products amid a US home mortgage meltdown that triggered a global financial crisis.


- AFP/so