AIG Board May Meet Soon On Fate of CEO Sullivan

American International Group is weighing whether to have an emergency board meeting this weekend to determine the fate of CEO Martin Sullivan, according to a senior Wall Street executive with knowledge of the company.

Martin Sullivan

AIG shareholders are demanding changes to the management and board of the world's largest insurer, which has been struggling with the fallout of the subprime mortgage mess.

AIG spokesman Nick Ashooh, who reports to Sullivan, would neither confirm nor deny that the board may meet.

The possible ouster of Sullivan comes just a month after AIG Chairman Robert Willumstad said that directors stand behind Sullivan, fending off concerns raised by investors frustrated by two quarters of record losses.

Willumstad, speaking at AIG's annual shareholder meeting on May 14, acknowledged the disappointing losses, which prompted former CEO Maurice "Hank" Greenberg to call on management to explain why it raised $11.9 billion of equity and convertibles—deals that dilute existing shareholdings—rather than shed assets.

"No one is pleased with the financial results and we would certainly expect them to improve," Willumstad said. (Learn more in the accompanying CNBC video.)

Willumstad is considered a likely successor to Sullivan, but that would mean AIG would have to find a new chairman. The firm separated the two jobs following an accounting scandal at AIG that cost Greenberg his job.

--Reuters contributed to this report.