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Frustrated AIG CEO tells employees he’ll stay

American International Group Inc.'s CEO Robert Benmosche said Wednesday he plans to stay in his job at the embattled insurer.
/ Source: staff and news service reports

American International Group Inc.'s CEO Robert Benmosche said Wednesday he plans to stay in his job at the embattled insurer.

Benmosche announced his intentions in a letter to employees released by AIG following a report in The Wall Street Journal saying he was threatening to quit. The Journal said Benmosche has been frustrated by heavy government scrutiny and cumbersome restrictions on executive pay.

In the letter, Benmosche said that while he was frustrated by the regulatory oversight, he and the board of directors "remain totally committed to leading AIG through its challenges and to continuing to fight on your behalf."

AIG is in the process of trying to sell assets, streamline its operations and improve profitability in an effort to repay the government after being bailed out last fall at the peak of the credit crisis.

New York-based AIG received an aid package worth up to $180 billion from the government in exchange for an 80 percent stake in the company. That bailout package also includes restrictions on compensation for the insurer's 100 highest-paid employees.

Benmosche said he is in discussions about compensation packages with the Treasury Department and Kenneth Feinberg, who was appointed by the government to oversee pay packages for the seven companies that received the most bailout money.

Under the government's pay plan, cash salaries for the top 25 highest-paid executives will be limited in most cases to $500,000. The plan also calls for perks in most cases to be capped at $25,000.

"We are all working aggressively to overcome this compensation barrier that stands in the way of restoring AIG's value," Benmosche wrote in the letter.

Analysts have speculated that the restricted pay could drain talent at companies like AIG as talented employees take better paying jobs at companies without compensation caps.

Benmosche took over as CEO in August, replacing Edward Liddy, who was appointed CEO after the government bailed out the insurer in September 2008. Benmosche received a pay package from AIG valued at around $10.5 million for taking over as head of the insurer. The CEO's compensation deal was approved by Feinberg.

Shares of AIG rebounded sharply after Benmosche's letter was released, but remained lower for the day. Shares were down 75 cents, or 2 percent, to $36.84 in afternoon trading after falling as low as $36.02 earlier in the session.