He is to receive an annual salary of $3 million as well as being given $4 million worth of AIG stock.
However, under the terms of the agreement Mr Benmosche will not be able to sell off the stock until August 10th 2014, five years after his start date at AIG.
Last week, Mr Benmosche told staff that he remained "totally committed" to the company after it was reported he had threatened to quit the organization over government restrictions on how much he could pay staff.
"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 shareholders," he promised employees in a leaked memo.
Earlier this week, the Wall Street Journal reported that US pay czar Kenneth Feinberg is coming under pressure from federal officials to relax remuneration restrictions at AIG.
By Gary Cooper