AIG CEO Sullivan Seen Stepping Down
American International Group is expected to hold a board meeting Sunday to decide the fate of Chief Executive Martin Sullivan, CNBC has learned.
On Friday, CNBC reported that the board of AIG was considering whether to hold a meeting this weekend, and decide whether Sullivan would continue as CEO.
People with knowledge of the board's activities say Sullivan could be possibly be removed from his job within the coming days.
As reported, should Sullivan step down from the top post at AIG, the board is likely to consider several replacements, including Chairman Robert Willumstand, a former top Citigroup executive.
On Saturday, Nicholas Ashooh, AIG senior vice president of communications, said he would not deny the CNBC report, and said he isn't authorized to comment on whether a board meeting had taken place or would take place this weekend. Ashooh reports directly to Sullivan.
Sullivan has come under intense criticism of late over his management of the insurance giant. AIG recently announced billions of dollars in writedowns from losses after Sullivan and the company assured investors the writedowns would be minimal.
Would Be Victory for Greenberg
If Sullivan is removed, as expected, this is a huge victory for Maurice "Hank" Greenberg, the man Sullivan replaced as CEO back in 2005.
Greenberg was ousted amid an accounting scandal that forced AIG to restate earnings, pay huge fines and craft civil settlements with the Securities and Exchange Commission and the then New York Attorney General, Eliot Spitzer.
Greenberg immediately went on the offensive, attacking AIG's board, and Sullivan, in particular, to caving into regulators' demands and costing shareholders billions of dollars. His criticism extended not just to regulatory matters. Greenberg, who is still the company's largest shareholder, began attacking the management skills of the new team - and Sullivan, in particular - for not being able to grow AIG's business and for the firm's sagging share price.
Last year, in a Forbes magazine article on the battle, Greenberg sized up Sullivan this way: "He's Irish and good with insurance brokers...he has little education … I thought he had street smarts."
An AIG spokesman countered that Sullivan "is not Irish, but English," and said while Sullivan didn't graduate from college, he spent 34 years in many jobs at AIG.
Both AIG and Greenberg have taken their claims to court, and Greenberg at one point weighed whether to mount a proxy challenge to remove board members and even Sullivan.
New Attacks Come With Credit Crunch
The subprime crisis and its imapct on AIG's bottom line opened up a new line of attack for Greenberg. Sullivan initially said AIG's exposure to bad debt was minimal, but later he was proven wrong when AIG had to writedown billions of dollars in bad loans.
Once again, Greenberg went on the offensive, so forecfully, in fact, that he drew the attention of New York State Insurance Commissioner Eric Dinallo. Under New York State law, large shareholders of insurance companies cannot publicly attack management unless they register with the state.
Greenberg is not registered with the state, and his license would likely be denied since he faces possible civil charges from the SEC over the alleged accounting irregularities that AIG was forced to settle.
In recent weeks Greenberg has been negotiating with the office to possibly sell part of his stake, or put it in a trust, in order to enable him to continue his attacks.
CNBC was first to report that Sullivan's job was in jeopardyback in February, citing sources close to the company. Later CNBC reported that board member and shareholder discontent with his management was growing beyond Greenberg to include other big investors.