AIG boss Robert Benmosche today voiced frustration with the Obama administration's crackdown on executive pay at companies that have received government bailouts, but in an internal letter to employees obtained by ABC News, he said he would continue to lead the insurance giant.
AIG is one of seven companies receiving what the administration deems "exceptional assistance." As part of the deal, the pay for their top executives was slashed last month by the Treasury Department's Special Master for Executive Compensation, Kenneth Feinberg.
In his letter today, Benmosche acknowledged, "I and the Board are indeed frustrated and we are in ongoing discussions with Treasury and the Special Master to resolve the uncertainty surrounding this issue."
But Benmosche made clear that he intends to stay on as CEO despite reports that he was considering stepping down from his post.
"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," he wrote to employees.
90 Percent Pay Cuts
The company, after receiving government approval for a record $180 billion in government aid, is now 80 percent owned by American taxpayers and subjected to Feinberg's jurisdiction. In his first rulings last month, Feinberg cut AIG's cash payments to their 25 highest-paid executives by $34 million, a 90 percent drop from 2008 levels. The company's total direct compensation to these 25 executives was slashed by $28 million, a decline of 57 percent.
Feinberg is also working to reduce $198 million in retention payments -- money to keep top employees from going elsewhere -- that the company is set to hand out this March. The insurance giant came under fire for dishing out $165 million in retention payments last March.
In his letter to employees today, Benmosche criticized the pay cuts as a "barrier" that is preventing the company from living up to its obligations to shareholders.
AIG Chief 'Frustrated' at Exec Pay Cuts After Bailout
"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: our customers, who have remained loyal; our nearly 100,000 employees, including 46,000 here in the US; our shareholders and creditors," wrote Benmosche.
Click here to see a copy of Benmosche's letter
The CEO touted AIG's recent improvements, noting that "our results for the last two quarters have demonstrated greater stability and our businesses are recovering." He told the company's employees "not to be distracted by speculative media stories and to maintain your focus on the important work you are doing."
The Wall Street Journal reported earlier Wednesday that Benmosche was considering vacating his post. The Journal, quoting unnamed sources, said Benmosche had told AIG board members at a meeting last week that he was "done", but then agreed to rethink his decision.
Benmosche only took the reins at AIG three months ago after former CEO Ed Liddy stepped aside. Despite Benmosche's objections to Feinberg's work, the pay czar did approve the CEO's $10.5 million pay package this year, the largest package agreed to thus far by Feinberg.
The company can appeal Feinberg's rulings should it so choose.
The Treasury Department did not respond to calls and emails requesting comment, but government offices are closed Wednesday for the Veterans Day holiday.