NEW YORK — After just three months as head of battered insurer American International Group, Robert Benmosche has threatened to leave his post as he struggles to deal with heavy government oversight and restrictions on what the bailed-out company wants to pay employees, according to a published report.
Citing unnamed people familiar with the matter, The Wall Street Journal reported online late Tuesday that Benmosche told AIG's board he was "done" with the job, although he reportedly is reconsidering his stance in the face of the board's dismay.
According to the people, the former MetLife CEO is frustrated with the constraints of leading a company majority-owned by the government, the paper said. The Journal said Benmosche has complained to AIG's board about the outcome of the Treasury Department's pay review which slashed pay for a number of AIG executives by 91 percent from 2008. WSJ:
Last week, Mr. Benmosche and other AIG board members met with Mr. Feinberg in New York. During the three-hour meeting, board members discussed difficulties of complying with pay policies and retaining talent at the company. Mr. Benmosche's frustrations "hit a crescendo," said a person familiar with the matter. "Bob feels he is in an impossible situation," the person added.
When the credit crisis hit last year, the U.S. government rescued AIG from the brink of collapse with a loan bailout package worth up to $182.5 billion in exchange for an 80 percent stake in the insurer. It is one of seven big companies the Treasury Department ordered to cut top executives' salary and bonuses in half, starting this month. Under the plan, cash salaries for the top 25 highest-paid executives will be limited in most cases to $500,000 and, in most cases, perks will be capped at $25,000.
For the already struggling companies, the plan has introduced concerns about so-called brain drain, as the executives targeted by "pay czar" Kenneth Feinberg rank among the most talented and productive at their companies.
Benmosche took over from Edward Liddy in August, making him AIG's third CEO in less than a year. Under a package approved by Feinberg over the summer, the AIG CEO will get compensation of about $10.5 million. Benmosche will take home just $3 million per year in cash. The rest of the CEO's pay package is divided between stock options ($4 million) and a performance bonus ($3.5 million).
Benmosche spent his first couple of weeks on the job telecommuting from his villa on the Adriatic Sea as he oversaw wine production at his vineyard. The New York Daily News:
Wearing flip-flops, khaki shorts and a green polo shirt, the new chief executive of bailed-out insurer American International Group Inc. says he's getting a lot of work done from his massive villa overlooking the Adriatic.
"People criticize me for being on vacation. I actually started work a week before I was actually supposed to."
In Septbember, The AIG board reportedly refused Benmosche's request to use a company-owned jet for private use, saying use of the plane for purposes other than company business would require an exemption from the U.S. Treasury.
Benmosche has criticized New York Attorney General Andrew Cuomo as being "incredibly wrong" for drawing attention to $165 million in retention bonuses given to AIG employees. Bloomberg:
"What he did is so unbelievably wrong," Benmosche said during the Aug. 11 remarks, according to a record obtained by Bloomberg. "He doesn't deserve to be in government, and he surely shouldn't be the attorney general of the state of New York. What he did is criminal. You don't create lynch mobs to go out to people's homes and do the things he did."
Last week, AIG said it was profitable for the second straight quarter as its core insurance operations continue to stabilize, and reported that the amount of its government financial assistance dropped by 4 percent during the period.
Its results got a lift from the increasing value of investments it still holds that soured last year and helped drive it to the brink of collapse. But Benmosche has warned that earnings will remain choppy as the company executes its restructuring plan. AIG is spinning off two major life insurance businesses – American International Assurance Co., or AIA, and American Life Insurance Co., also known as ALICO – as it looks to repay the government.