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Mar
31

Notes on Mr. Greenberg’s departure

Hank Greenberg is gone from AIG; or at least, gone from part of AIG. It is not yet clear what his role will be at CV Starr and other entities that have significant influence over AIG’s operations, executive compensation, and other key matters. My bet is the association will not be long-lived.
His resignation letter is public; it does not say anything surprising (it was, after all, crafted by his attorney). What will be much more interesting is what the Board does after Mr. Greenberg’s departure, and if they adopt the oft-used strategy of blaming everything on the departed.
Not that Mr. Greenberg isn’t primarily responsible for any wrongdoing on his watch; especially in today’s post-Sarbanes-Oxley world he is certainly legally, as well as ethically liable. However, the other Board members also bear responsibility. I would not be in the least surprised if there are additional changes to AIG’s Board in the near future.
Clearly, Greenberg dominated the company through his force of will, intense, brutal management style, brilliance and overwhelming ambition; my few brief meetings with the man did not leave me with any desire to make them a regular event. That said, he built the most successful insurance company on the planet. Those two factors make it both unfair and inappropriate to fault the Board, or anyone else, for their apparent inability or unwillingness to prevent Greenberg from crossing the line into (apparently) unethical or inappropriate stock manipulation.
What does this mean for you?
If you are stockholder, who knows. (I used to be, until last week.) It is all too easy to look back and say should have, would have, but in today’s Spitzer-Sarbanes/Oxley world, all managers may want to re-examine their business practices to ensure they are not even close to, much less over, the ethical/legal line.


Joe Paduda is the principal of Health Strategy Associates

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