More Self-Inflicted Drama at AIG

Posted by: Nanette Byrnes on November 13, 2009

Robert Bermosche has made plenty of waves in his three months at the helm of troubled insurer AIG, starting with his early bluster about not being pushed into selling assets too soon. On Nov. 11 Bermosche got into hot water again after the Wall Street Journal reported that he’d threatened in front of board members to quit his post over the pay limitations being imposed by the Federal Government. Following an emergency bailout in September 2008, the government now owns 80% of AIG. In a letter to employees sent out after the story surfaced, Benmosche didn’t deny the reports, though he termed them “speculative.” He admitted his frustration with the pay caps, but tried to assure employees that “I and the Board remain totally committed to leading AIG through its challenges and to continuing to fight on your behalf.”

Bemosche’s earlier controversies had been read positively for the most part, signals that he was rallying the troops and would go to bat for them. During his tenure the stock had risen over 170% prior to this news. But Bemosche lost sympathy in some quarters in October when he secured a rather healthy pay package. On top of a $3 million salary, he’ll get $4 million worth of stock options, and be eligible for $3.5 million in bonus. And AIG's stock took a hit on this most recent round of corner-office theatrics; it closed today at $36.75, down 84 cents, or 2.2%.

Board members, some of whom were described as “shocked” by his threat, may be feeling some strain. AIG’s performance has improved over the past six months, but it remains challenged as business and talent continue to drain away and competitors grow stronger. That’s more than enough to worry a board now stocked with veteran corporate leaders such as Dennis Dammerman, former head of GE Capital, former American Express CEO Harvey Golub (who is non-executive chair of AIG’s board), former Sears CEO Arthur C. Martinez, and turnaround specialist Robert Miller. They don't need self-inflicted bad news added to the mix.

Reader Comments

Strategery

November 11, 2009 8:27 PM

Boo Hoo. AIG should have been allowed to crash last year, instead of the slow but inevitable demise it now faces.

Ruth

November 11, 2009 9:56 PM

Oh please cry me a river. There should be no problem replacing Bermosche. There are plenty of out of work eligible candidates that would work for less. Cut the ties with the joker!

KJeroH

November 11, 2009 10:44 PM

The notion AIG is suffering a talent drain is iffy at best. There have already been admissions that all of these bonus babies can be replaced; and with the widespread bloodletting the financial services industry has experienced over the past year, there is more than enough. What is also clear is that these CEOs are also replaceable. When a threat to quit is made, the board should wave bye bye.

Ed Parker

November 12, 2009 12:03 AM

It is always interesting to me when an individual that is supposed to be very intelligent makes such a threat. A very intelligent Dealer Principal (I spent 30+ yrs in the automotive industry) once told me that regardless of how good a particular manager was, if a threat like that was given, the only real solution was to let him go immediately, as his mind set is that he is already gone or ready to go and therefore is no longer any use to the dealership, and shows no loyalty to the company or even his position of leadership.

Tony

November 15, 2009 3:29 PM

Bank bailouts are great. WTf is the government when my business went under. Oh I forget the banks run the governments as we will all see in the end....LOL in the meantime

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Ricky

November 19, 2009 4:05 PM

AIG should have been taken down last year to much tax payer money being pumped into a faulire of a company
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Mark

November 25, 2009 4:00 AM

Having Chaired the Board of Directors for a not for profit organisation with a turn over of 10M per year, if a CEO gave the board that threat - then the Baord go shopping for a new CEO - no if's, buts or else's - simply replacement.

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Bob

November 29, 2009 2:35 PM

The guy should be gone. He's not doing AIG any good.

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Thom

November 30, 2009 3:43 PM

Not only was this bailout of AIG unconstitutional, but the U.S. government itself is bankrupt! And has been since the early 1930s. This is all smoke and mirrors, being orchestrated by a public relations blitz. This so-called government is a fake and a fraud.

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Alex Dail

December 4, 2009 4:19 AM

The article was unclear as to whether or not Robert Bermosche was willing to accept the constraints of working within the goverment mandates for AIG. He has a variety of experience that does give him the necessary technical expertise, but is he able to function in the cultural shift to strong goverment control?

Alex Dail

December 4, 2009 4:22 AM

The article was unclear as to whether or not Robert Bermosche was willing to accept the constraints of working within the goverment mandates for AIG. He has a variety of experience that does give him the necessary technical expertise, but is he able to function in the cultural shift to strong goverment control? It would be interesting to hear his view point beyond paying the goverment back. How does he feel about working for a company 80% owned by the goverment? And did he adequately consider how the environment of AIG changed with the shift in ownership?

Alex Dail

December 4, 2009 4:23 AM

The article was unclear as to whether or not Robert Bermosche was willing to accept the constraints of working within the government mandates for AIG. He has a variety of experience that does give him the necessary technical expertise, but is he able to function in the cultural shift to strong government control? It would be interesting to hear his view point beyond paying the government back. How does he feel about working for a company 80% owned by the government? And did he adequately consider how the environment of AIG changed with the shift in ownership?

Bill

December 6, 2009 12:08 PM

I am Disgusted with these guys.
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richard cavessa

December 30, 2009 3:40 PM

from hell you came, and soon shall return

OXYGEN

March 28, 2010 7:30 AM

Boo Hoo. AIG should have been allowed to crash last year, instead of the slow but inevitable demise it now faces.

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