AIG: Big Shareholders UpsetBy Reuters - | Posted 2008-06-16 Email Print
Re-Thinking HR: What Every CIO Needs to Know About Tomorrow's Workforce
AIG named veteran former Citigroup banker Robert Willumstad, who was already AIG chairman, as its new CEO, effective immediately.
BIG SHAREHOLDERS UPSET
AIG is also being investigated by the U.S. Securities and Exchange Commission on whether it may have overvalued the derivatives that have led to its costly write-downs.
AIG on Sunday said Sullivan was also quitting the board, where he has had a seat since 2002. Sullivan started with the company in London as a 17-year-old clerk.
"Bob's broad managerial and financial services experience makes him the right person to lead AIG through today's turbulent markets, drive further organizational change and rebuild shareholder value," George Miles, chairman of AIG's nominating and corporate governance committee, said in a statement.
In an interview, Miles characterized Willumstad's financial experience as "world class."
Willumstad said he had every intention of a long career at AIG, and might even last as long as former CEO Greenberg, who was almost 80 when he left the company in 2005.
"I am a very young 62," Willumstad said.
Stephen Bollenbach, chairman of U.S. homebuilder KB Homes and a former Hilton executive, who was named to AIG's board earlier this year, will become lead director, the company said. Bollenbach is favored by some of AIG's most critical shareholders, including billionaire Eli Broad.
Broad, a former AIG director, said the appointments of Willumstad and Bollenbach were a "positive step forward."
Broad, together with fund managers Shelby Davis of Davis Selected Advisers LP and Bill Miller of Legg Mason Inc, wrote in a letter seen by Reuters last week that "significant and immediate changes at both the management and board level are clearly called for."
The group holds about 4 percent of AIG's shares.
Sullivan, 53, replaced Greenberg as chief executive in 2005, after then-New York state Attorney General Eliot Spitzer and the U.S. Securities and Exchange Commission accused Greenberg and the company of financial misconduct.
Greenberg, through a spokesman, on Sunday declined to comment on the changes at AIG.
Sullivan, a quick-witted Englishman who spent almost 36 years with the insurer, ushered AIG through the difficult process of reaching a settlement with regulators, paying $1.64 billion to settle charges of fraud, bid rigging and improper accounting, one of the largest regulatory settlements in U.S. history.
Sullivan initially won investor favor by seeing AIG through the regulatory probe, but more recently saw his reputation become tarnished as losses mounted and AIG's stock plunged.
AIG's shares closed on Friday at $34.18. A year ago, they were trading at $72.91.
(Additional reporting by Dan Wilchins, Editing by Jonathan Oatis & Kim Coghill)
© Thomson Reuters 2008 All rights reserved