Posted on 22 May 2009
American International Group Inc. (AIG) said Thursday that Chairman and Chief Executive Edward Liddy will step down as soon as successors are chosen, which people familiar with the matter estimated could take roughly three to six months.
Mr. Liddy, in an interview on Thursday, said the decision to leave AIG was his. He added that the company had reached an "inflection point" and needed a CEO who was ready to commit long term. He recently said in an interview with The Wall Street Journal that he planned to leave within a year.
Mr. Liddy has led the insurer since a government bailout in September, through more than eight tumultuous months that have included three subsequent expansions of the rescue plan. The government has committed up to $173.3 billion in aid to AIG.
Mr. Liddy has had to answer to multiple overseers, motivate thousands of employees at a low point in the company's history, try to dismantle a massive conglomerate amid a financial crisis and navigate a public-relations minefield. In a statement expressing gratitude to Mr. Liddy for taking "stewardship of AIG" at the government's request, Treasury Secretary Timothy Geithner called it "one of the most challenging jobs in the American financial system today."
The chairman and CEO jobs are likely to be separated when Mr. Liddy leaves, and Mr. Liddy said the new board head is likely to play an important behind-the-scenes role in Congress, where AIG has endured sharp criticism in recent months.
"We need to spend considerably more time in Washington," said Mr. Liddy, who was grilled last week in the House of Representatives for the second time in three months.
In addition to answering to Congress and AIG's board, Mr. Liddy has also worked with the Federal Reserve Bank of New York, which has agreed to lend AIG up to $60 billion in the bailout.
The Fed, in consultation with the Treasury Department, has also appointed three trustees to oversee the nearly 80% stake the government got due to the bailout. This week, the company nominated six new directors, who will be voted on at the June 30 annual meeting. The new chairman likely will come from the ranks of those newcomers, who include four former chief executives.
Mr. Liddy, who came out of retirement from the insurance industry to take the CEO job, agreed to a salary of $1 a year. But he said his successor as CEO should be paid "commensurate with the complexity of the company." The company has operations in 130 countries, over 100,000 employees, and businesses ranging from insurance to aircraft leasing. Yet Mr. Liddy has said even he was surprised at how complicated the company has proven to be.
For the next CEO, he says, a background in insurance would be "good to have but not necessary." Leadership skills, he says, are important, as is experience in financial services generally.
Mr. Liddy is the third CEO to run AIG since Maurice R. "Hank" Greenberg left the firm abruptly in 2005, as the company came under investigation for its accounting, and all three got the job amid crises.
The newly nominated AIG directors are expected to begin looking for the next CEO informally before their election, according to a person familiar with the situation. Recruiters Spencer Stuart handled the search for AIG's new board members.
AIG on Thursday also said in a Securities and Exchange Commission filing that it is proposing a reverse stock split that would exchange every 20 shares of common stock for one new share, in an effort to increase the per-share trading price and attract institutional investors. AIG's stock price has slid since the end of 2007. It closed Thursday at $1.80 a share on the New York Stock Exchange.