FORMER American International Group Inc head Maurice "Hank" Greenberg was skipping yesterday's annual shareholders meeting, having convinced some investors that the world's biggest insurer may need to change management.
AIG, the New York-based company Greenberg once led as chief executive officer, is "in crisis," he said, adding pressure on successor Martin Sullivan to turn the insurer around after two quarterly losses. Greenberg's word carries weight with shareholders because he ran AIG for 38 years before being forced out in 2005, and he controls the largest stake, Bloomberg News said.
"He fired everybody up," said William Fitzpatrick at Optique Capital Management in Racine, Wisconsin, which manages US$1.5 billion including 400,000 shares of AIG. "Whereas they may have been inclined to give this CEO a little more time, shareholders are increasingly pushing for changes." Sullivan, 53, may be gone by the end of this year unless AIG's stock price performance improves, Fitzpatrick said.
AIG rose 28 cents to US$39.44 in German trading yesterday. The company lost about US$80 billion of market value during the past 12 months as the shares slumped 46 percent, partly because of write downs tied to credit markets and subprime home loans.
Greenberg's stake
Greenberg, 83, asked AIG to delay the shareholders meeting so investors could consider the impact of a US$7.81 billion first-quarter loss and the decision to raise about US$17 billion in capital. The company declined, and Greenberg said he's not going to the meeting in Manhattan.
"Shareholders' value has been diluted," Greenberg said in a telephone interview on Tuesday. "That makes you unhappy, to say the least. Is it unreasonable for a shareholder to say, 'Gee, I'd like to see the share price go back to where it was?'"
Greenberg's remarks "promote the attitude that they don't know what they're doing," said Mark Adelmann, portfolio manager at Denver Investment Advisors LLC.
The ex-CEO controlled at least 9.8 percent of AIG as of May 1, according to data.
Greenberg said he voted against AIG's current board and he wants investors to recast director votes made before the loss was known.