On Nov. 25, AIG and Greenberg agreed to settle all of the outstanding legal issues between them. According to an 8-K filed with the SEC, Greenberg and AIG's former CFO will receive reimbursement of their legal fees of up to $150 million. AIG also dropped a $1 billion claim against Greenberg. Some of Greenberg's property, much of it from his old office, was returned to him. He will also have access to some AIG files "to write his memoirs."
The deal has the fingerprints of AIG's new CEO, Robert Benmosche, all over it. He was smart enough to understand that an ongoing fight with Greenberg was expensive, wasted AIG management resources, and hurt its image. The insurer needed to put the most troubling parts of its past behind it, in part to show investors, customers, and regulators that its only concern is to fix the firm and return taxpayers' money.
Why did the dispute go on for so long? That question may never be answered. It may have been the egos of the parties involved. It may have been some sense on the part of Benmosche's predecessors that it was important to punish Greenberg. No matter what the reason, it kept some of AIG's worst problems in the headlines, undermining any efforts to change the public's perception of the company.
Douglas A. McIntyre in an editor at 24.7 Wall St.
