For five years, American children have grown accustomed to Martin T Sherman's voice as Thomas the Tank Engine, the central character of the hit animated series Thomas and Friends. But now Sherman, who also voices Thomas' sidekick Percy and the villainous Diesel, has quit after contract negotiations with the show's production company, Hit Entertainment, broke down.

Sherman announced his decision in an open letter to fans of the show, posted to a fan-run blog. “For the last five years it has been my great honour and pleasure to create the American voices of Thomas the Tank Engine and Percy,” it said. “Unfortunately, I must now quit the show. It is embarrassing but the reason is that they are paying a very low wage. The terms they are offering are so poor, and this with the immense success of Thomas, that the only right thing for me to do is walk away.”

“I have felt exploited for a while now,” it continued. “I believe it is important to move on from a situation if you are not valued.” In the letter, first reported by the Tampa Bay Times, Sherman went on to apologise to fans who might be affected by the change.

In an interview, Sherman, a Florida native who now lives in London, told the Guardian that he had never had a meaningful raise. “The money was really survival money,” Sherman said. “Were it not for my other jobs as an actor here in London I would have really really struggled to survive.”

Sherman pointed to the disparity between his pay, which he described as “a small percentage” of what he would be getting if he had a US Screen Actor's Guild contract, and the amount of money that the show makes every year for the company, an estimated $250m. He said that the pay they had offered him was “a quantum leap” below Screen Actors Guild rates; only just enough money to live on.

“As an actor you start off, and the first season is supposed to be survival money,” he said. “[But] the second season, you're supposed to get a raise. The third season – it's supposed to be commensurate with what happens to the show.”

Sherman told the Guardian that the only way he managed to get by was by subsidising his income with money from other things, such as performing radio plays on British radio, or doing voice-overs for video games. He is also an inventor, with a patent for a new type of tidal power generation system.

Hit Entertainment, which also owns Bob the Builder and Barney the Dinosaur, Angelina Ballerina and Mike the Knight, was sold to Mattel in October 2011 for $680m. Thomas the Tank Engine is by far its most valuable property.

In the US, Thomas and Friends is broadcast once a day, six days a week on the kids channel of public service broadcaster PBS, and five times a day, seven days a week on Sprout, a nationwide 24-hour cable channel for children owned by NBC Universal. It began in 1984, when the character was voiced by Ringo Starr both in the UK, where it originated, and the US.

In a statement, Hit Entertainment told the Guardian that it does not disclose information about contracts with talent. “After a lengthy negotiation period, unfortunately, we could not reach an agreement with Martin T Sherman and have decided to part ways,” the company said in a statement. “We wish him the best in his future professional endeavours.”

But in the meantime, Sherman told the Guardian, Hit Entertainment had contacted him through his agent to threatened legal action if his open letter was not removed from the fan site. “I feel so bullied,” he told the Guardian. “Very bullied, and silenced.”

A spokesperson for Hit Entertainment declined to either confirm or deny the ultimatum, and for the moment the post remains online while Sherman takes legal advice.

“I find it ironic,” Sherman said, “that most of the shows that Hit Entertainment puts out are about worlds where good people get rewarded, justice happens, and bad things happen to bad people.”

“They themselves don't live up to that world in any way.”