AIG President and CEO Robert Benmosche has won formal approval for a pay package worth up to $US10.5 million ($11.8 million).

Mr Benmosche, who took the reins of the troubled insurer in August, will receive $US3 million ($3.4 million) in cash annually and $US4 million ($4.5 million) in stock.

He is also eligible for an annual performance incentive worth $US3.5 million ($3.9 million).

The US Government’s Special Master for Troubled Asset Relief Program, Kenneth Feinberg, has approved the package, saying it falls within program guidelines and is “appropriate when compared to the total packages” of other senior executives.