Ex-AIG Chief Greenberg Voted Against AIG Board of Directors Re-Election

By | May 16, 2008

Maurice “Hank” Greenberg, the former head of American International Group Inc, said in an interview on Wednesday he voted against the reelection of the company’s board because directors have not made sure management met expectations.

“I represent the largest shareholders, and the shareholders own the company, not the board,” said Greenberg, 83, in an interview with Reuters at his Park Avenue office.

Greenberg, through companies that he controls and a personal stake, holds about 12 percent of outstanding AIG shares.

“The performance is very, very poor,” he added. “We voted against the board because (it) has a responsibility to make sure management meets their responsibility, which is returns to shareholders, and that has not been done.”

An AIG spokesman said each director had received a majority of shareholder votes.

Earlier on Wednesday, at AIG’s annual meeting, Chairman Robert Willumstad said the giant global insurer’s directors stood behind management, including Chief Executive Martin Sullivan, fending off concerns raised by investors frustrated by two quarters of record losses.

Sullivan, who replaced Greenberg as chief executive about three years ago, told investors he realized there was frustration over record losses over the past two quarters, but pledged to turn things around.

Asked in the interview if Sullivan should be replaced, Greenberg said the results spoke for themselves.

“I think a lot of change has to be made,” he added. He said he had a number of possible CEO candidates in mind, but declined to name any publicly.

Greenberg said he chose not to attend the meeting, but did follow the event, which was webcast. “It was almost a staged affair… It was a little more comprehensive and substantive in the past,” he said.

In a May 11 letter, Greenberg asked AIG to postpone the meeting to give shareholders more time to digest the $7.8 billion loss recorded in the first quarter and what to do about it.

The losses stemmed largely from write-downs of the value of assets linked to subprime investments, but Greenberg said the problems at AIG were wider than problems with these investments.

Greenberg said AIG turned down his request for a delay of the annual meeting, citing too little time, and the high cost of rescheduling. “Given the amount of money that has been lost, that seems ironic,” he said.

“I had hoped the board would recognize the unfairness in shareholders not having that (first-quarter) information before (sending in their proxies), or to be able to change their vote, or rescind their vote,” Greenberg added.

While a handful of investors at the meeting did ask questions of AIG’s board and management, Greenberg said he felt investors would have been more probing if they had had more time. AIG reported its first-quarter loss last Thursday, and held the annual meeting this week, as is customary.

Greenberg said he has not been back to his old work place in recent years, calling the environment “hostile.”

AIG and Greenberg have been locked in a legal tussle since he quit, with numerous lawsuits outstanding between the two sides over a range of issues, including the shares held by an entity that Greenberg now controls.

Greenberg said he doesn’t currently have plans to sell the AIG holdings that he controls, citing the low price.

AIG shares have fallen 45 percent over the past year. The shares closed 28 cents higher at $39.44 on Wednesday on the New York Stock Exchange.

Greenberg, who ran AIG for nearly four decades, parted ways with the insurer in 2005, after then-attorney general Eliot Spitzer and the SEC accused the company and him of financial misconduct.

After the split, Greenberg retained control of, and now runs, several entities that had been affiliated with AIG, including investment companies Starr International Co Inc and C.V. Starr & Co Inc, that together have assets of about $23.5 billion.

(Editing by Jeffrey Benkoe, Phil Berlowitz)

Topics AIG

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