salary

By Hugh Son Aug. 21 (Bloomberg) — Robert Benmosche said he turned down the job of leading American International Group Inc. three times before accepting it to help restore confidence in capitalism. Benmosche, named chief executive officer this month, said that a Bosnian friend chided him during a meal in Croatia over actions by U.S. regulators to prop up financial firms. AIG needed four bailouts totaling $182.5 billion to avoid collapse. “He said, ‘How does it feel, here we are moving forward, and you guys are becoming socialists,’” Benmosche said during an Aug. 4 staff meeting, according to a recording obtained by Bloomberg. “I said, ‘What the hell are you talking about?’ I started to think about the motivation I had to doing this job.” Benmosche, AIG’s fifth CEO since 2005, has said he will resist Federal Reserve pressure to sell assets at unfavorable prices. He needs to retain customers and employees to preserve the value of units that will be sold to repay AIG’s government loans. The insurer has struck deals to sell $9.3 billion in assets and owes more than $40 billion on a Fed credit line. U.S. firms have to “start rebuilding themselves, without government regulation, government control, government decisions on how you pay people,” Benmosche said. “If we do it the right way, I’m convinced we can restore credibility in our industry, as well as for our country.” The Treasury’s Troubled Asset Relief Program has doled out about $220 billion to more than 600 banks, savings and loans, insurers and credit-card companies, according to Bloomberg data. So far, about $70 billion has been returned by firms including Goldman Sachs Group Inc. , JPMorgan Chase & Co. and U.S. Bancorp, freeing them from restrictions on dividends, share repurchases and executive compensation. ‘I’m Angry’ Benmosche said it was “unfair” that employees who had nothing to do with the insurer’s losses were blamed for AIG’s bailouts. Benmosche said the lambasting that his predecessor, Edward Liddy , received during congressional hearings in March and May over employee bonuses initially discouraged him from wanting the AIG position. “I wasn’t interested in this job, I’ve got to tell you, I said ‘no’ three times,” Benmosche told staff. “I said to all the key people in Washington I met over the last two weeks, ‘Why in God’s name would you want me to be your CEO? I’m angry about everything you did. There isn’t anything you did right.’” AIG is in no position to complain about federal oversight after the firm needed government relief because of bad bets tied to subprime loans, said Gary Wolfer , senior vice president and chief economist at Univest Wealth Management & Trust Services. ‘Beggars Can’t Be Choosers’ The government may make money on its investments bailing out financial firms “and I don’t think they’re as stupid as people think,” Wolfer said of regulators. “Beggars can’t be choosers, and AIG is a beggar.” Benmosche, who ran life insurer MetLife Inc. for eight years through 2006, was awarded a salary of $7 million by AIG, after Liddy agreed to work for $1 a year. Liddy, who joined AIG in September after the initial bailout, served as both CEO and chairman, and the board accepted his recommendation that the jobs be split. The insurer’s new chairman, Harvey Golub , will work with lawmakers, Benmosche said, allowing him to focus on operations and deciding which units should be kept. Christina Pretto , a spokeswoman for New York-based AIG, declined to comment. “Somebody has to go to Washington and talk to them, I’m not doing it,” Benmosche said. “I’ll shake a few hands, and wish them well, and say ‘You do your thing with the chairman.’” Benmosche bought a Croatian villa, with 8,000 square feet of living space located along the Adriatic Coast, after visiting Dubrovnik in 1999, according to a 2004 Forbes magazine article . He paid about $1 million for the property, which was built in 1934 for the treasurer of the king of Yugoslavia and included four buildings and 150 feet of waterfront, the magazine said. ‘A Beautiful Place’ “People say, why would you want to live in Croatia?,” Benmosche told staff during the meeting, adding that before taking the AIG job, he spent six months of the year there. “Because it’s a beautiful place and it’s safe.” The executive also owns a 12.5 acre vineyard with Zinfandel grapes on the Peljesac peninsula, Benmosche said during an Aug. 20 interview in Croatia. He said he was there this month to tend to the vineyard’s harvest. Benmosche suggested to government officials that he start at AIG in October, after the harvest, and was told to begin in August, he said in the interview. He plans on returning to Croatia for about a month every year and eventually growing wine grapes full-time after retiring from AIG, Benmosche said. ‘More Vineyards’ Restoring confidence in insurers by helping turn AIG around would benefit Benmosche in two ways, he said. “It affects me personally because, quite frankly, I still got a lot of MetLife stock . And if I can improve everything here, I can make some money here, and I can make a lot of money there too,” he told employees. “And then I can add more vineyards.” Benmosche may get as much as $3.5 million a year in long- term incentive awards from AIG in addition to his salary. He has about 500,000 MetLife shares and 2.1 million options, AIG said in a regulatory filing. The shares of MetLife, the biggest U.S. life insurer, were valued at more than $18 million based on yesterday’s closing price on the New York Stock Exchange. Benmosche agreed to recuse himself from any negotiations with MetLife over unit sales. AIG said in the filing that Benmosche’s salary and potential long-term awards are “strong incentives” for him to perform in the best interests of the company. “If Mr. Benmosche were to act in a manner other than in AIG’s best interests, his financial interests would suffer, he could be fired and he might not receive any of that discretionary payment,” AIG said in the filing. To contact the reporters on this story: Hugh Son in New York at hson1@bloomberg.net ;