When the going gets tough, the tough get going. That's true in life and in troubled corporations, such as American International Group Inc. (AIG).
Only three out of the 11 directors who oversaw the New York-based company as it began its death spiral remain on the board following yesterday's shareholder's meeting, according to CNN/Money. Six of the board members decided not to seek reelection. They apparently didn't show up at the meeting either.According to corporate governance expert Nell Minow, the board is probably keeping on some former members to allow for some continuity, but they should eventually quit as well. She added that "it would be unthinkable" for them to stay.
"Everything about the current situation is unprecedented," Minow, editor of the Corporate Library, told DailyFinance. "This will be a business school case study forever."
Chief Executive Edward Liddy, who was recently pummeled by outraged members of Congress over the company's bonus payments, told shareholders that there was an "excellent chance" that the insurer would be able to pay back the more than $180 billion it received from the federal government to avoid going bankrupt. The trouble is that he won't be sticking around for AIG's rebirth. As soon as a replacement is named, Liddy, a former CEO of Allstate Corp. (ALL), is riding off into the sunset -- again.
Some have argued that Liddy, who took his job after the company's problems were discovered, was unfairly maligned, an argument rejected by Minow.
"I think he was necessarily beaten up by members Congress," she said. "The buck stops with him."
Morale has to be awful at AIG. The company's name has become a punch line for late-night comics looking for a cheap laugh about corporate greed. Unfortunately for AIG, its shareholders and employees, the government is calling the shots these days since it owns about about 80 percent of the insurer. Shareholders, in particular, will be getting shafted.
The company pulled its shares from penny-stock land through a 1-for-20 stock split. Wall Street is not buying the gimmick and sent the insurer's stock down more than 13 percent to $20. However, the stock has rebounded considerably from its 52-week low of 33 cents.
Shareholder Kenneth Steiner is quoted by CNN/Money as saying he will not miss the departing directors.
"They left like rats leaving a sinking ship," he said. "Well, goodbye and good riddance."
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