The agreement elaborates on a so-called Luxury Expenditure Policy that AIG put into effect at the end of December. That agreement already allowed Mr. Benmosche personal use of corporate aircraft if the use "is incidental to a business trip and the incremental cost is paid by the AIG CEO," according to that agreement. Personal use of company aircraft otherwise is "strictly prohibited," the December agreement said.
The agreement, signed last week and filed with the Securities and Exchange Commission on Monday, spells out the details, including all the incremental expenses Mr. Benmosche must cover, from lodging and ground transportation for the crew to in-flight food and beverages. In addition, Mr. Benmosche must pay an additional charge equal to all the itemized incremental expenses of the trip.
The agreement settles a reported dispute between Mr. Benmosche, who took the helm of AIG in August, and government regulators overseeing AIG's bailout.
According to a Wall Street Journal report last month, when AIG's board was recruiting Mr. Benmosche, three board members promised that when he used AIG aircraft for business travel he could make personal detours as long as he reimbursed the company. Later, the U.S. Treasury wouldn't approve that deal, forcing Mr. Benmosche to use commercial aircraft for personal trips.
The Benmosche exception reportedly was finally approved after the executive grew frustrated when commercial-flight schedules caused him to miss a family event.
The agreement also calls for AIG to maintain at least $300 million in aircraft liability insurance coverage, as well as aircraft hull insurance.