The $10.5 million pay package for American International Group Inc's new chief executive Robert Benmosche will likely be approved formally by the U.S. government's compensation czar Kenneth Feinberg next week, the Wall Street Journal said, citing people familiar with the matter.

Benmosche's pay will likely be approved before other rulings about pay at AIG are made, the paper said.

AIG, the recipient of $80 billion in taxpayer loans, said last week that its pay agreement for Benmosche had been approved in principle.

The bailed-out insurer said it will pay Benmosche, who became CEO on August 10, a salary of $3 million in cash and $4 million in fully vested stock. He also could receive a bonus valued as high as $3.5 million.

(Reporting by Ajay Kamalakaran in Bangalore; Editing by Muralikumar Anantharaman)