AMERICAN International Group (AIG) CEO Robert Benmosche, who clashed with chairman Harvey Golub over AIG's restructuring, might find less resistance at the company after forcing Mr Golub's departure, analysts said yesterday.
Mr Benmosche told the board of New York-based AIG his relationship with the chairman had become "ineffective and unsustainable", Mr Golub wrote in his resignation letter, dated Wednesday.
One of the directors, Steve Miller, replaced Mr Golub.
Mr Benmosche pushed for Mr Golub's removal after directors rebuffed a reduced takeover bid, endorsed by the CEO, for an Asia division, two informed sources said last month.
"It clears the deck" for Mr Benmosche, said Gary Wolfer, senior vice-president at Univest Wealth Management & Trust Services, which owns bonds of AIG subsidiaries. "He has a very strong personality and I think he feels he was in a tough spot. It's going to be the 'Benmosche Show' going forward."
Mr Benmosche, who joined AIG last year, weeks after Mr Golub, must divest the Asia unit, known as AIA Group, and increase profits at remaining operations to repay the firm's 182,3bn bail-out. AIG had planned an initial public offering of AIA until Mr Benmosche struck a $35,5bn deal with Prudential. That agreement collapsed as the London-based insurer's investors balked at the price.
"I'm resigning for the simple reason I believe it's easier to replace a chairman than a CEO," Mr Golub said in his letter. "Asking the board to choose between us would be an abdication of my responsibility to lead."
Mr Golub's resignation was announced late on Wednesday during a board meeting, a source said. The insurer was proceeding with a public offering of AIA, while remaining open to bids for all or part of the company, said another person with knowledge of the plans.
Mr Benmosche demanded more control over AIA, including the ability to make top-level management changes, during the June 25 board meeting in which he threatened to quit unless Mr Golub left, two people said. Mr Benmosche pushed for the dismissal of AIA's chief, Mark Wilson, a proponent of the public offering.
Mr Benmosche has threatened to depart before. He said last year he might leave after Kenneth Feinberg, US President Barack Obama's special master on compensation, slashed the pay of AIG executives, impeding the CEO's ability to keep managers.
AIG's share price has climbed about 38% on the New York Stock Exchange since August 7 last year, the last trading day before Mr Benmosche replaced Edward Liddy as CEO.
That compares with the 34% decline under Mr Liddy and the almost 90% plunge under Robert Willumstad, who was ousted before he could unveil a plan to restructure AIG. The Standard & Poor's 500 index has advanced about 8,4% since August 7.
Mr Benmosche is the longest-serving CEO since Martin Sullivan, who was forced out in 2008.
"Mr Benmosche's done an excellent job of stewarding the company," KBW analyst Cliff Gallant said. "He's very popular with the employees."
AIG owes about $24bn on a US Federal Reserve credit line and more than $49bn to the US Treasury. It turned over a stake of almost 80% to the US as part of its 2008 rescue.
The insurer, once the world's largest, is committed to "repaying taxpayers, meeting all of the company's obligations to its various stakeholders, and restructuring". Bloomberg