Time for Benmosche to pack it up and go home

Robert Benmosche, who perhaps underestimated the challenge before him when he answered the call last August to become the chief executive of government-controlled AIG, should do everyone a favor and call it quits before he has another temper tantrum.

When he decided to step out of retirement to run bailed-out American International Group Inc., he obviously was aware that the firm had received $180 billion of federal aid, including more than $80 billion in loans, and was 80% owned by U.S. taxpayers.

What’s more, he must have read or heard that President Obama appointed Kenneth Feinberg to be the so-called pay czar and that Mr. Feinberg’s job was to keep an eye on compensation practices at seven companies that had received “exceptional assistance” from taxpayers.

It had to be no secret to Mr. Benmosche that AIG was the largest single recipient of bailout money.

The bottom line is, the guy knew exactly what he was walking into when he took the reins at AIG, and that means he has to play by the government’s rules.

And yet after all this, Mr. Benmosche told the company’s board that he may step down because he is unhappy over a recent compensation review by Mr. Feinberg, The Wall Street Journal reported last week.

In an effort to do a little damage control, Mr. Benmosche last Wednesday issued an internal memo to AIG employees in which he said he remains “totally committed” to leading the troubled insurer.

He also wrote that he and the board “are indeed frustrated” over pay oversight matters. Mr. Benmosche called the issue a “barrier” that “stands in the way of restoring AIG’s value.”

He added that he and the board are “in discussions with the Treasury Department to resolve the uncertainty surrounding this issue.”

Mr. Benmosche apparently doesn’t want an AIG recovery to be threatened by pay limits that aren’t consistent with his goal of turning the company around.

Incidentally, it’s not the first time the tightly wrapped Mr. Benmosche has stomped his feet and threatened to take his ball and go home.

He was apparently prepared to step down in August when his compensation package had not yet been formally approved by Mr. Feinberg.

Meanwhile, his $10.5 million pay package, which was later finalized, is the largest approved under the Treasury’s recent curbs on executive pay.

Proving he just doesn’t get it, Mr. Benmosche reportedly asked AIG’s board of directors to allow him to use corporate jets for personal travel. He also supposedly boasted that he would tell Congress “to stick it where the sun don’t shine” if they criticized him the way they did his predecessor, Ed Liddy.

At an Aug. 4 meeting with AIG employees, Mr. Benmosche reportedly said his “first priority” would be to secure competitive pay that would reward performance. He also said he was committed to rebuilding the company and limiting U.S. intervention.

The government deal called for AIG to disentangle itself from the financial system and pay back the money taxpayers loaned it in two years.

This will not happen if Mr. Benmosche continues to demonstrate that he is unwilling to work with the government. He needs to understand that it is part of his job since AIG is 80% owned by taxpayers.

Mr. Benmosche’s latest outburst has made it increasingly clear he is not interested in cooperating with the government. And that’s not productive, as the government will be AIG’s largest shareholder for a long time to come.

Jim Pavia is the editor of InvestmentNews.

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