Ailing AIG Gets Good News: Benmosche to Stay

American International Group put out a short, but important, statement after its board meeting today: it will implement chief executive Robert Benmosche's compensation agreement. The somewhat erratic CEO has signed a non-compete agreement making it likely that he will stay around for awhile. Non-compete means that he can't go to work for any other insurer, but since Battling Bob was brought out of retirement to run AIG, that probably wouldn't have happened anyway.

To those who feel AIG executives are already overpaid, his salary and bonus is likely to stick in their craw. Benmosche will get $3 million in cash, $4 million in AIG stock and an additional $3.5 million (not mentioned in the release) in long-term compensation this year.

But the news should make AIG's investors and employees breathe easier. Just two weeks ago Benmosche said he was ready to quit, according to sources in the boardroom that were quoted in The Wall Street Journal.
Benmosche was reportedly frustrated by President Obama's executive pay czar Kenneth Feinberg, who was looking over his shoulder and threatening to limit executive pay at AIG to $500,000, which needless to say, is quite a bit less than Benmosche earns. After that story broke, Benmosche sent a letter to AIG's 100,000 employees saying that he was committed to the company ... and to them.

Hopefully, he's even more so now, because AIG desperately needs leadership. Of the past four executives, Hank Greenberg and Martin Sullivan were ousted, Robert Willumstad served just three months, and Ed Liddy resigned after only one very trying year.

The government remains an 80 percent owner of AIG, which owes it about $83 billion, far more than its $4.7 billion market value. And both its life and property casualty insurance businesses have yet to rebound. Given the current situation, Benmosche will earn his money.