July 15 (Bloomberg) -- American International Group Inc. Chairman Harvey Golub stepped down from the bailed-out insurer after feuding with Chief Executive Officer Robert Benmosche over the stalled divestiture of an Asia division.
Golub was replaced as chairman by Steve Miller, 68, an AIG director, the firm said yesterday in a statement. Benmosche had threatened during a June 25 board meeting to resign unless Golub leaves, according to two people with knowledge of the dispute. Golub and the board had rebuffed Benmosche by rejecting Prudential Plc’s reduced bid for the Asia unit and pushing for a public offering of the business, the people said.
“Asking the board to choose between us would be an abdication of my responsibility to lead,” Golub, 71, said in a letter yesterday to George Miles, an AIG director. “I’m resigning for the simple reason I believe it’s easier to replace a chairman than a CEO.”
Golub, the former American Express Co. CEO, became the board’s fifth chairman since 2005 when he joined New York-based AIG in 2009 with the approval of trustees overseeing the government’s majority stake in the firm. AIG split the chairman and CEO posts last year after Edward Liddy stepped down from both jobs, saying the dual tasks were too much for one person.
Miller was CEO of auto-parts maker Delphi Corp. when it filed for bankruptcy protection in 2005 and is the ex-chief financial officer of Chrysler Corp. Last year, he joined the board of AIG, which is selling assets to repay a $182.3 billion government rescue.
“AIG has established strong momentum over the last year,” Miller said in the statement. “We remain fully committed to delivering on AIG’s core priorities: repaying taxpayers, meeting all of the company’s obligations to its various stakeholders, and restructuring the company so that it emerges as a smaller, more focused enterprise worthy of investor confidence.”
Golub’s departure will increase Benmosche’s influence, said Gary Wolfer, senior vice president and chief economist at Univest Wealth Management & Trust Services, who said he is a bondholder of two AIG subsidiaries. Wolfer said Benmosche was right to push for a sale of the unit rather than an IPO.
The resignation “clears the deck” for Benmosche, said Wolfer. “Having a clearer field, it’s going to be the Benmosche Show going forward.”
AIG had planned an initial public offering of the Asia unit, AIA Group Ltd., earlier this year until Prudential agreed in March to buy the business. After Prudential investors balked at the $35.5 billion price, the board rejected a reduced bid that Benmosche had supported, the people said.
AIG is again proceeding with plans to hold an IPO of the division, according to a person with knowledge of the situation, who declined to be identified because discussions were private. The Wall Street Journal reported yesterday that the insurer’s board discussed plans to hold an offering later this year. Mark Herr, a spokesman for the company, declined to comment.
The board improved AIG “from a company being dissolved to one on the cusp of having an implementable strategy to pay back the government and stand on its own,” Golub said in his resignation letter.
AIG owes about $24 billion on a Federal Reserve credit line and more than $49 billion to the Treasury Department, which holds a preferred stake. The company turned over a stake of almost 80 percent to the U.S. as part of its 2008 rescue.
“We welcome Steve Miller,” said Deputy Treasury Secretary Neal Wolin said in a separate statement. “His extensive corporate restructuring experience will serve both AIG and the taxpayers very well.” The Federal Reserve Bank of New York is “confident” in AIG’s management, the regulator said in a statement. Miller was unavailable for comment, AIG said.
Maurice “Hank” Greenberg was chairman and CEO before stepping down in 2005 amid regulatory probes. Frank Zarb and then Robert Willumstad became chairman. Willumstad later became CEO too and was forced out of both jobs by the U.S. after AIG agreed to the federal bailout in 2008. Liddy held both jobs until August 2009.
Benmosche, 66, had told employees at an Aug. 11, 2009, meeting that he would focus on operations and asset sales while Golub would work with lawmakers.
Golub and Benmosche shared the belief that federal limits on executive pay were hindering the company’s recovery. Golub wrote to shareholders in a Feb. 26 letter that Obama administration restrictions make “little business sense.” Benmosche previously threatened in November 2009 to quit because of limits on what he could pay his top lieutenants, according to a person familiar with the matter.
The board was expanded to 13 members in April when the Treasury picked Donald H. Layton and Ronald A. Rittenmeyer. The Treasury was allowed to add directors after AIG skipped dividend payments on the government’s holdings for four quarters.
“The workload required of the board is as high as I’ve ever seen in any company, and is likely to continue for some time,” Golub said in the letter to shareholders.
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