Activist investors are looking to block the re-election of American International Group Inc director James Orr, chairman of the insurer's board's compensation committee, the Wall Street Journal said.

The newspaper cited a letter sent to U.S. government-appointed trustees for the insurer.

Officials representing big union and public pension funds wrote to the trustees late on Tuesday, urging them to unseat Orr, saying he failed to adequately oversee $165 million in retention bonuses approved in early 2008, according to the paper.

The bonuses were paid to employees in AIG's Financial Products unit after the insurer had accepted up to $180 billion in government aid, sparking outrage from the public, politicians and President Barack Obama

The U.S. government appointed the three trustees after taking a stake in the insurer last year, and in early March the voting rights for the nearly 80 percent stake was transferred to them, the paper said.

The letter to the trustees comes from Gerald McEntee, president of the American Federation of State, County and Municipal Employees union; Richard Trumka, secretary-treasurer of the American Federation of Labor and Congress of Industrial Organizations (AFL-CIO); and Denise Nappier, treasurer for the state of Connecticut, the paper said.

The letter also recommends the trustees cast an advisory vote against AIG's 2008 compensation practices, the paper said adding that the insurer is required to give investors such a say on pay vote as part of its government bailout.

An AIG spokeswoman could not be immediately reached for comment by Reuters.

(Reporting by Ajay Kamalakaran in Bangalore; editing by John Stonestreet)

Barack obama Aig