Probably the best part of being an author is getting to discuss the issues you write about with an informed group of people. That was the case at the Metropolitan Club in Washington, D.C., where I was the luncheon speaker last week, talking to a very sophisticated audience that knows both Wall Street and Washington.
There were lots of questions—Hank Greenberg may be gone from AIG, but everyone still wants to know what he is doing and how he is doing. While I spoke about many facets of AIG, most of the questions were about Greenberg. One question I hadn’t heard before was: Is there any connection between Greenberg’s settlement with the SEC and the fraud case again him, which was filed back in 2005 by then-New York Attorney General Eliot Spitzer? A judge recently called that case “devastating” and told Greenberg’s lawyer he saw big problems with establishing a defense. In August 2009, Greenberg agreed to pay $15 million to settle SEC accusations that he altered AIG's financial records to inflate its earnings.
At the time, the SEC did not talk about whether the settlement might have any impact on the related civil fraud charges brought by Spitzer. I noted that in that settlement with the SEC, Greenberg publicly declared that he never engaged in fraud and had no responsibility over accounting issues. That irritated the SEC, which said corporate leaders can’t use accounting gimmicks and sign off on distorted financial reports. Greenberg then released a subsequent statement saying that the size of his fine was “a reflection of the importance of the charge to the SEC.”
I also was asked about last year’s bonus controversy, which I think is finally becoming old news. And even though AIG seems to be on the road to recovery, I was asked if the company still plans to rebrand itself. My answer was probably not, since key subsidiaries, both the Asian ones and ALICO are being sold off and the core business has been renamed Chartis. So AIG remains only as the name of the holding company.
Perhaps the most interesting part of the event was when I was chatting after lunch with people who wanted their books signed. Someone mentioned that when Greenberg was CEO, he put Barber Conable, former congressman and head of the World Bank, as head of the audit committee of AIG’s Board of Directors. Conable reportedly then hired another accounting firm to advise the committee. (PwC had been AIG’s long-time auditor) and Greenberg reportedly strongly objected. People probably don’t remember that the audit committee said that it couldn't vouch for AIG's accounting in 2001 and 2002. The committee said it couldn't be sure that the audits had been carried out according to normal standards or even that PwC was in fact "independent," according to the Washington Post.
Today, because of Sarbanes Oxley, boards are much more independent. And thanks to the current crisis, they will be even more independent. All the D&O insurance in the world won't protect directors and their reputations. Challenging a CEO instead of signing off on whatever he wants is becoming the norm. The Wall Street Journal reportedly recently that a special board committee at AIG, which includes directors with experience in restructuring and workout situations, has engaged investment-banking firm Rothschild as an independent adviser. If AIG’s board had been that independent, proactive, and knowledgeable in financial matters ten years ago, it could have stood up to Greenberg’s domination of the board and AIG today just might be in a very different place.
Tuesday, May 25, 2010
Friday, April 30, 2010
Will a U.S. Government Selloff of AIG Shares Help Investors?
During my 12 years as an executive at AIG, my salary was never great, but all of us knew that our stock holdings would make up for that many times over. We were destined to become millionaires if we hadn’t already. Well, we all know how that turned out.
Just yesterday, Bloomberg reported that the SEC is looking into whether AIG’s former general counsel deemed the stock worthless when negotiating executives’ compensation. She reportedly told the U.S. pay czar in January that employees preferred cash to common stock. I can certainly understand that sentiment.
Still, that “worthless” stock is now up about 34% for the year. And the market reacted favorably to last week’s Bloomberg report that the government is considering a two-year plan to dispose of its’ nearly 80% stake in the company. I’ve been holding on to my shares, despite the doubts of my investment advisor, and all of us who have stuck it out this long have to be wondering what a government exit will mean. The sale of stock by the government won’t change the number of shares outstanding, so mathematically, there would be no impact on earnings per share. But AIG would be able to operate independently again.
John Frankola of Vista Investment Management has been watching AIG stock closely. He says, “From a transactional perspective, the U.S. government’s sale shouldn’t change the value of AIG. However, since most investors perceive the government’s ownership and influence as negative, there is a possibility that AIG will be viewed in a more favorable light, which could move the stock price higher.”
For me, the biggest issue has always been why the government had to take 80% of the company to begin with. Former CEO Hank Greenberg has argued repeatedly if the government would bring its share down to 30% or so, AIG could attract investment from sovereign wealth funds and others.
Frankola agrees that in hindsight, the government’s decision to take 80% ownership in AIG was a disaster for shareholders, especially compared to other deals struck later. He says, “It’s easy to make an argument that the stock would be much higher today if the government took a less punitive ownership interest, the satisfaction of claims against AIG (like those of Goldman Sachs) were settled at a discount to face value, and they waited for a recovery in prices before forcing management to unload assets.”
Frankola offers a negative overall assessment of AIG: “In my opinion, for long-term investors who lost the majority of their investment in AIG, there is little hope for a significant recovery. Even if AIG returned to its previous peak earnings level, long-time shareholders would likely experience a stock recovery to just 20% of their previous value, due to the 80% dilution resulting from shares issued to the U.S. Considering the recently announced sales of two of AIG’s best businesses (which means less earnings potential going forward) and the sale of stock by Greenberg in the mid-30s (unquestionably the person who knows AIG best), the current price likely provides a good exit point for long-suffering investors.”
Even so, I prefer to remain one of those stubborn AIGers who still believe in the dream and that there will be a greater recovery. I’d like to hear what you think.
Just yesterday, Bloomberg reported that the SEC is looking into whether AIG’s former general counsel deemed the stock worthless when negotiating executives’ compensation. She reportedly told the U.S. pay czar in January that employees preferred cash to common stock. I can certainly understand that sentiment.
Still, that “worthless” stock is now up about 34% for the year. And the market reacted favorably to last week’s Bloomberg report that the government is considering a two-year plan to dispose of its’ nearly 80% stake in the company. I’ve been holding on to my shares, despite the doubts of my investment advisor, and all of us who have stuck it out this long have to be wondering what a government exit will mean. The sale of stock by the government won’t change the number of shares outstanding, so mathematically, there would be no impact on earnings per share. But AIG would be able to operate independently again.
John Frankola of Vista Investment Management has been watching AIG stock closely. He says, “From a transactional perspective, the U.S. government’s sale shouldn’t change the value of AIG. However, since most investors perceive the government’s ownership and influence as negative, there is a possibility that AIG will be viewed in a more favorable light, which could move the stock price higher.”
For me, the biggest issue has always been why the government had to take 80% of the company to begin with. Former CEO Hank Greenberg has argued repeatedly if the government would bring its share down to 30% or so, AIG could attract investment from sovereign wealth funds and others.
Frankola agrees that in hindsight, the government’s decision to take 80% ownership in AIG was a disaster for shareholders, especially compared to other deals struck later. He says, “It’s easy to make an argument that the stock would be much higher today if the government took a less punitive ownership interest, the satisfaction of claims against AIG (like those of Goldman Sachs) were settled at a discount to face value, and they waited for a recovery in prices before forcing management to unload assets.”
Frankola offers a negative overall assessment of AIG: “In my opinion, for long-term investors who lost the majority of their investment in AIG, there is little hope for a significant recovery. Even if AIG returned to its previous peak earnings level, long-time shareholders would likely experience a stock recovery to just 20% of their previous value, due to the 80% dilution resulting from shares issued to the U.S. Considering the recently announced sales of two of AIG’s best businesses (which means less earnings potential going forward) and the sale of stock by Greenberg in the mid-30s (unquestionably the person who knows AIG best), the current price likely provides a good exit point for long-suffering investors.”
Even so, I prefer to remain one of those stubborn AIGers who still believe in the dream and that there will be a greater recovery. I’d like to hear what you think.
Wednesday, April 21, 2010
A Devastating Twist for Hank Greenberg
This is a bad week for Hank Greenberg. He must be pretty stunned after his hearing Tuesday before a New York State Supreme Court justice. For years, Hank Greenberg has been saying he didn’t bring down AIG, but now he’s facing a “devastating” case in a lawsuit accusing him of using bogus transactions to improperly inflate the company’s finances and mislead analysts. This isn’t just a personal matter for Greenberg--the entities he controls are AIG’s biggest shareholders and he advises current CEO Robert Benmosche.
The New York Times is reporting that Justice Charles E. Ramos said the fraudulent transactions AIG was involved with were “a criminal enterprise” and called the case against Greenberg “devastating.” Up until now, Greenberg has won most of the cases and legal maneuvers he’s faced since his ouster from AIG in 2005. The biggest was between AIG and SICO, a Bermuda-based holding company, over who owned a disputed $16 billion block of AIG stock. In that case, a jury sided with Greenberg.
The irony about this week’s hearing on sham transactions is the case was originally brought by Elliot Spitzer. Many thought Greenberg would walk away from this, and it would become yet another example of how Spitzer overreached in going after corporate executives. But Judge Ramos indicates this case could now be heading to an appellate court. If Greenberg wins, his reputation is finally restored. But this week, he took one of his biggest hits since he was forced out of the company he built.
The New York Times is reporting that Justice Charles E. Ramos said the fraudulent transactions AIG was involved with were “a criminal enterprise” and called the case against Greenberg “devastating.” Up until now, Greenberg has won most of the cases and legal maneuvers he’s faced since his ouster from AIG in 2005. The biggest was between AIG and SICO, a Bermuda-based holding company, over who owned a disputed $16 billion block of AIG stock. In that case, a jury sided with Greenberg.
The irony about this week’s hearing on sham transactions is the case was originally brought by Elliot Spitzer. Many thought Greenberg would walk away from this, and it would become yet another example of how Spitzer overreached in going after corporate executives. But Judge Ramos indicates this case could now be heading to an appellate court. If Greenberg wins, his reputation is finally restored. But this week, he took one of his biggest hits since he was forced out of the company he built.
Thursday, April 15, 2010
Robert Benmosche-- AIG’s third great leader?
For 86 years, AIG had just two leaders—C.V. Starr, who started the company in Shanghai in 1919 and ran it for nearly half a century, and Hank Greenberg, who spent 37 years building AIG into one of the world’s largest companies. Starr created AIG by taking an unprecedented gamble that an American could make money selling insurance to the Chinese. Greenberg diversified the company, growing it into the most successful insurer in history. Now it appears AIG has finally found its third great leader—the man who somehow has been able to revitalize a company that was virtually left for dead.
After Greenberg was forced out in 2005, three men took over AIG in quick succession, as the company nearly collapsed before being bailed out by the government. None of those CEOs was able to gain the confidence of the government, investors, or the public. Then, last fall, the former head of MetLife was called out of retirement for perhaps the most thankless CEO job in America.
At first, it seemed as though Robert Benmosche would be yet another short-term CEO mired in controversy. He was attacked for running the company from his vineyard in Croatia, and in November, after just three months on the job, he threatened to quit because he didn’t want the government telling him what to pay employees. It didn’t help when he publicly complained about the “crazies down in Washington."
Now, less than six months later, there’s been a remarkable turnaround. Over the past month, the company sold off two major businesses, bringing in more than $51 billion to help pay back its government bailout money. Standard & Poor’s has even raised its outlook for A.I.G.’s credit rating. Last week, Benmosche told Bloomberg News he expects to be around at least another year or two. Shares of AIG rose nearly one percent afterwards.
Benmosche’s success got me thinking about how similar he is to Greenberg. They are both very self confident and have a large ego, which I consider the perquisite of a great leader. They both use rewards to motivate people. When I worked for Greenberg, salaries weren’t great, but you could make a fortune in stock. Benmosche took Metlife from a mutual to a public company, which meant employees could get stock options and make more money. Almost from the moment he joined AIG, Benmosche argued fiercely with the government pay czar to get his employees the compensation he felt they deserved. He also recently implemented a new performance system designed to better compensate exceptional performers.
I haven’t worked with Benmosche, but we know he’s blunt and has a hands-on style. He’s been visiting employees around the world and holding town meetings. Greenberg was extremely hands on with everyone and everything, from who got to eat in the corporate dining room to what the company had to do to make its quarterly earnings. Greenberg was hard driving and it wasn’t uncommon for him to yell at people. Benmosche can’t spend too much time in New York for tax reasons, so I’m guessing he doesn’t micromanage things at headquarters.
Both men are creative, visionary, and have that “never say die” spirit. Even after Greenberg was pushed out of the company he spent his life building, he showed a fierce loyalty to AIG, and has worked to get the government out of the company. In his short tenure, Benmosche has also fought the government and resisted pressure to sell parts of AIG at fire sale prices.
Obviously the two men became leaders of AIG at very different points in their career. Benmosche is 65 years old, and seemed happy making wine in Croatia until he was asked to turn around the company. His tenure at AIG will end up being only a fraction of Greenberg’s. But if Benmosche can continue the kind of progress he’s made at AIG since August, he’ll be seen as the man who saved the company Starr and Greenberg spent nearly a century building.
After Greenberg was forced out in 2005, three men took over AIG in quick succession, as the company nearly collapsed before being bailed out by the government. None of those CEOs was able to gain the confidence of the government, investors, or the public. Then, last fall, the former head of MetLife was called out of retirement for perhaps the most thankless CEO job in America.
At first, it seemed as though Robert Benmosche would be yet another short-term CEO mired in controversy. He was attacked for running the company from his vineyard in Croatia, and in November, after just three months on the job, he threatened to quit because he didn’t want the government telling him what to pay employees. It didn’t help when he publicly complained about the “crazies down in Washington."
Now, less than six months later, there’s been a remarkable turnaround. Over the past month, the company sold off two major businesses, bringing in more than $51 billion to help pay back its government bailout money. Standard & Poor’s has even raised its outlook for A.I.G.’s credit rating. Last week, Benmosche told Bloomberg News he expects to be around at least another year or two. Shares of AIG rose nearly one percent afterwards.
Benmosche’s success got me thinking about how similar he is to Greenberg. They are both very self confident and have a large ego, which I consider the perquisite of a great leader. They both use rewards to motivate people. When I worked for Greenberg, salaries weren’t great, but you could make a fortune in stock. Benmosche took Metlife from a mutual to a public company, which meant employees could get stock options and make more money. Almost from the moment he joined AIG, Benmosche argued fiercely with the government pay czar to get his employees the compensation he felt they deserved. He also recently implemented a new performance system designed to better compensate exceptional performers.
I haven’t worked with Benmosche, but we know he’s blunt and has a hands-on style. He’s been visiting employees around the world and holding town meetings. Greenberg was extremely hands on with everyone and everything, from who got to eat in the corporate dining room to what the company had to do to make its quarterly earnings. Greenberg was hard driving and it wasn’t uncommon for him to yell at people. Benmosche can’t spend too much time in New York for tax reasons, so I’m guessing he doesn’t micromanage things at headquarters.
Both men are creative, visionary, and have that “never say die” spirit. Even after Greenberg was pushed out of the company he spent his life building, he showed a fierce loyalty to AIG, and has worked to get the government out of the company. In his short tenure, Benmosche has also fought the government and resisted pressure to sell parts of AIG at fire sale prices.
Obviously the two men became leaders of AIG at very different points in their career. Benmosche is 65 years old, and seemed happy making wine in Croatia until he was asked to turn around the company. His tenure at AIG will end up being only a fraction of Greenberg’s. But if Benmosche can continue the kind of progress he’s made at AIG since August, he’ll be seen as the man who saved the company Starr and Greenberg spent nearly a century building.
Wednesday, March 17, 2010
Why AIG should NOT hold back bonuses
The news that AIG will hold back $21 million in bonuses may be sweet to the outraged American public that now owns most of the firm, but it’s bad for business.
It’s easy to hate the employees of AIG’s financial products unit that helped set off the global financial meltdown. But, despite their bad decisions, some of them have been making only a dollar or two a year for two years now. And they themselves lost fortunes when AIG’s stock dropped nearly 70% in one day. Without those bonuses, there’s little incentive for them to stay at their jobs. A lot of good people have already left.
It’s critical that AIG retain talent in this unit because AIG still has a trillion (yes, trillion) dollars in credit swap derivatives. These investments are actually turning around and should bring in profits over the years ahead.
AIG also needs to worry about lawsuits. A year ago today, I had an OpEd published in the Wall Street Journal stating:
(These bonuses) are part of legally binding employment contracts between these executives and AIG. Even if Mr. Liddy (then CEO of AIG) wanted some way out of awarding these bonuses, under current law he could not. If he tried, AIG would be sued by the executives.
And that’s what we can expect now, with an attorney representing a dozen AIG employees calling the holdback “a breach of their contract and a violation of the Connective Wage Act.” As a Wall Street Journal article points out, AIG potentially risks paying out double the amount it withheld in bonuses if it is found liable for violating wage laws. AIG acknowledged this risk a year ago, but apparently, it can’t ignore the demands from federal pay czar Kenneth Feinberg.
Feinberg told Fox Business News yesterday that in the next few weeks he’ll be prescribing pay guidelines that will be "tough medicine" for AIG and the other four companies that received help under TARP. He said, "Congress decided that since the American people saved these companies and are the chief creditors of these companies, they have a right to have a say, in just these five companies in individual compensation."
Maybe Feinberg has the right to make these demands, but they won’t help AIG hold onto the talented people needed to rebuild the company. And if AIG has to pay out on those employee lawsuits, it will have an even harder time paying back taxpayers.
It’s easy to hate the employees of AIG’s financial products unit that helped set off the global financial meltdown. But, despite their bad decisions, some of them have been making only a dollar or two a year for two years now. And they themselves lost fortunes when AIG’s stock dropped nearly 70% in one day. Without those bonuses, there’s little incentive for them to stay at their jobs. A lot of good people have already left.
It’s critical that AIG retain talent in this unit because AIG still has a trillion (yes, trillion) dollars in credit swap derivatives. These investments are actually turning around and should bring in profits over the years ahead.
AIG also needs to worry about lawsuits. A year ago today, I had an OpEd published in the Wall Street Journal stating:
(These bonuses) are part of legally binding employment contracts between these executives and AIG. Even if Mr. Liddy (then CEO of AIG) wanted some way out of awarding these bonuses, under current law he could not. If he tried, AIG would be sued by the executives.
And that’s what we can expect now, with an attorney representing a dozen AIG employees calling the holdback “a breach of their contract and a violation of the Connective Wage Act.” As a Wall Street Journal article points out, AIG potentially risks paying out double the amount it withheld in bonuses if it is found liable for violating wage laws. AIG acknowledged this risk a year ago, but apparently, it can’t ignore the demands from federal pay czar Kenneth Feinberg.
Feinberg told Fox Business News yesterday that in the next few weeks he’ll be prescribing pay guidelines that will be "tough medicine" for AIG and the other four companies that received help under TARP. He said, "Congress decided that since the American people saved these companies and are the chief creditors of these companies, they have a right to have a say, in just these five companies in individual compensation."
Maybe Feinberg has the right to make these demands, but they won’t help AIG hold onto the talented people needed to rebuild the company. And if AIG has to pay out on those employee lawsuits, it will have an even harder time paying back taxpayers.
Monday, March 1, 2010
Selling off a crown jewel
In its race to pay back billions in bailout funding, AIG has agreed to sell one its biggest assets, American International Assurance (AIA), the only wholly foreign owned insurer in China. AIA was founded in Hong Kong back in the forties and has been a tremendous moneymaker for decades.
AIG had planned to raise $20 billion from a planned IPO for its Asian life insurance business, so accepting Prudential of Britain’s offer of more than $35 billion is a no-brainer. AIG CEO Robert Benmosche says the deal will allow AIG to repay taxpayers more quickly and give the company "greater flexibility" with its restructuring plans. The reaction from analysts is this move will eliminate some of the pressure on AIG. Certainly, there are few CEO’s facing more pressure than Benmosche.
But I see the sale as yet another tragic chapter in the AIG saga. Founder C.V. Starr was an American who started his company in China in 1919 and built it into a worldwide empire, a remarkable achievement. Now, AIG has been forced to sell off one of its crown jewels, a vibrant company that had nothing to do with the mistakes that led to AIG’s near collapse and bailout.
It would have been nice to see AIG retain one of its most profitable operations in a growing region, eventually bringing in enough revenue to help pay back taxpayers. But right now, there’s little patience for AIG, and I can’t blame Benmosche for taking advantage of a good offer.
AIG had planned to raise $20 billion from a planned IPO for its Asian life insurance business, so accepting Prudential of Britain’s offer of more than $35 billion is a no-brainer. AIG CEO Robert Benmosche says the deal will allow AIG to repay taxpayers more quickly and give the company "greater flexibility" with its restructuring plans. The reaction from analysts is this move will eliminate some of the pressure on AIG. Certainly, there are few CEO’s facing more pressure than Benmosche.
But I see the sale as yet another tragic chapter in the AIG saga. Founder C.V. Starr was an American who started his company in China in 1919 and built it into a worldwide empire, a remarkable achievement. Now, AIG has been forced to sell off one of its crown jewels, a vibrant company that had nothing to do with the mistakes that led to AIG’s near collapse and bailout.
It would have been nice to see AIG retain one of its most profitable operations in a growing region, eventually bringing in enough revenue to help pay back taxpayers. But right now, there’s little patience for AIG, and I can’t blame Benmosche for taking advantage of a good offer.
Friday, February 26, 2010
The Number One Thing AIG Needs for Recovery
The AIG rollercoaster ride had investors screeching after today's news that it lost nearly $9 billion in the fourth quarter of 2009. Yes, the loss was due primarily to billions of dollars in restructuring costs, and yes, AIG warned us the road to recovery would have some big dips, but still, the number was bigger than analysts expected and the stock fell in early trading. Ironically, earlier this week, AIG was actually the top percentage gainer in the S&P 500 following a Bloomberg article trumpeting the “end of the AIG death spiral.”
But investors may be worried that AIG’s insurance business isn’t bouncing back as much as it needs to for the company to pay back the government. Still, I think AIG is making real headway.
CEO Robert Benmosche is the first leader since Hank Greenberg who knows what he’s doing. He’s aggressive and outspoken, and most importantly, he won’t allow himself to be bullied into selling off divisions that should become profitable in the long term. For example, Edward Liddy, the last CEO, sold off AIG’s headquarters art deco building for a fourth of its value. Benmosche isn’t going to make panicked decisions. He’s not about taking the easy way out and in many ways, he reminds me of Greenberg.
But for AIG to recover fully, the most important thing that can happen is for the government to start cutting back on its ownership. Right now, taxpayers own nearly 80% of AIG, and as long as that continues, stock growth will be limited. Greenberg has advocated dropping government ownership to 20 or 30%. If that happens, AIG can attract more capital, especially from overseas, and invest and grow businesses. And taxpayers will be paid back sooner.
Another reason AIG needs to get rid of its government bosses is to make compensation more competitive. Sure, right now the public is outraged over bonuses going to the same people who set off a global financial meltdown. But overall, AIG probably isn’t rewarding many of its employees well enough. AIG was never the kind of company that paid the highest salaries in the industry, but employees could make millions from stock options. Imagine being an AIG executive who worked there for twenty years, making a relatively modest salary, but building up a comfortable nest egg in stock. Then, he goes to bed one night and the next day he wakes up to find 95% of his money is gone. If he’s still at AIG today, what’s his incentive? More than sixty executives have left since the rescue. A few months ago, Benmosche threatened to quit over the issue of pay restrictions, but fortunately reconsidered.
I’m optimistic AIG is going to recover fully and will be able to eventually pay off most of the bailout money. But until the government relinquishes majority ownership, AIG won’t have the independence it needs to become the global Goliath it once was. And we can expect more gut-wrenching days ahead for investors.
But investors may be worried that AIG’s insurance business isn’t bouncing back as much as it needs to for the company to pay back the government. Still, I think AIG is making real headway.
CEO Robert Benmosche is the first leader since Hank Greenberg who knows what he’s doing. He’s aggressive and outspoken, and most importantly, he won’t allow himself to be bullied into selling off divisions that should become profitable in the long term. For example, Edward Liddy, the last CEO, sold off AIG’s headquarters art deco building for a fourth of its value. Benmosche isn’t going to make panicked decisions. He’s not about taking the easy way out and in many ways, he reminds me of Greenberg.
But for AIG to recover fully, the most important thing that can happen is for the government to start cutting back on its ownership. Right now, taxpayers own nearly 80% of AIG, and as long as that continues, stock growth will be limited. Greenberg has advocated dropping government ownership to 20 or 30%. If that happens, AIG can attract more capital, especially from overseas, and invest and grow businesses. And taxpayers will be paid back sooner.
Another reason AIG needs to get rid of its government bosses is to make compensation more competitive. Sure, right now the public is outraged over bonuses going to the same people who set off a global financial meltdown. But overall, AIG probably isn’t rewarding many of its employees well enough. AIG was never the kind of company that paid the highest salaries in the industry, but employees could make millions from stock options. Imagine being an AIG executive who worked there for twenty years, making a relatively modest salary, but building up a comfortable nest egg in stock. Then, he goes to bed one night and the next day he wakes up to find 95% of his money is gone. If he’s still at AIG today, what’s his incentive? More than sixty executives have left since the rescue. A few months ago, Benmosche threatened to quit over the issue of pay restrictions, but fortunately reconsidered.
I’m optimistic AIG is going to recover fully and will be able to eventually pay off most of the bailout money. But until the government relinquishes majority ownership, AIG won’t have the independence it needs to become the global Goliath it once was. And we can expect more gut-wrenching days ahead for investors.
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