AIG's Benmosche Threatens to Quit

Today's Wall Street Journal reports that AIG CEO Bob Benmosche told board members that he was "done," having reached a high pitch of frustration over government constraints, and in particular compensation limits. After shocking the board, he said he would think it over but doubts remain as to his continued tenure. The article reports:

Last week, Mr. Benmosche and other AIG board members met with [federal "pay czar"] Mr. Feinberg in New York. During the three-hour meeting, board members discussed difficulties of complying with pay policies and retaining talent at the company. Mr. Benmosche's frustrations "hit a crescendo," said a person familiar with the matter. "Bob feels he is in an impossible situation," the person added. Mr. Benmosche didn't respond to a request for comment.

The article also notes that this isn't the first time Benmosche has threatened to quit, and that he has a reputation for making incendiary remarks calculated to motivate others to adopt his recommendations.

That may be, but this is surely the Mother of All Incendiary Remarks, the "nuclear option" of threats. A correspondent of mine argues that one "can't shake the devil's hand and then say you're kidding." Another argued that perhaps the meaning of the story is that Benmosche is a big personality chafing at what he should have known: that this situation requires a kind of submission to a higher authority that previous positions have not. Some question whether Benmosche is just in it for the money.

No doubt an ego such as Benmosche's chafes at having to submit to AIG's new federal overlords. But maybe he is sincere in his complaint that he's been put in an impossible situation. And even if the threat is a maneuver to trigger a policy change, surely we can appreciate that he is earnestly worried about the effects the policy may have on AIG's chances for success. The charge that Benmosche's antics reflect that he's in it for the money strikes me as absurd. Even if he were just in it for the money, then his behavior would indicate his genuine belief that government policy was going to undermine AIG's, and therefore his, success.

Let's say your brother-in-law nearly drove his business into the ground. You step in as an investor for the sake of the family, pouring in a significant portion of your own money into the enterprise. To punish your B-in-L for being such a good-for-nothing, you proceed cut the salaries of all the company's sales reps, even though they can command a better salary at competitors. No one in his right mind would do this, including the decision-makers of the federal government. But then they're not investing their own money in AIG.Let's say your brother-in-law nearly drove his business into the ground. You step in as an investor for the sake of the family, pouring in a significant portion of your own money into the enterprise. To punish your B-in-L for being such a good-for-nothing, you proceed cut the salaries of all the company's sales reps, even though they can command a better salary at competitors. No one in his right mind would do this, including the decision-makers of the federal government. But then they're not investing their own money in AIG.

Anthony O'Donnell has covered technology in the insurance industry since 2000, when he joined the editorial staff of Insurance & Technology. As an editor and reporter for I&T and the InformationWeek Financial Services of TechWeb he has written on all areas of information ... View Full Bio