AIG Update: Barbarians Inside the Gates

Today AIG's lawyers revealed new and more shocking allegations regarding past practices of AIG and its Executives by suing former CEO, Maurice Greenberg or as his buddies on the Board of Directors called him "Hank", for looting a measly $4.3 Billion dollars in stock on his way out the door in 2005. He took this stock even though he left under a cloud of suspicion of accounting irregularities. He was able to do this through his participation in C. V. Starr & Co., Inc., which beneficially owned 396,000,000 shares of AIG stock according to the 2006 Prospectus. It is very clear in reading the prospectus that the AIG auditors had difficulty with the exact ownership of AIG stock by AIG executives through the Starr Group.

The AIG Board, whom has consistently failed to earn their paychecks for governing AIG on behalf of the stockholders was motivated in 2005 by the irregularities and ambiguities to enact a comprehensive set of corporate reforms to guarantee proper governance and independence of board committees. When you read through what they enacted, it is even harder to fathom the collapse to come and the gross compensation given out after failure. It's not light reading, but it's all laid out in the 2006 proxy.
http://www.ezonlinedocuments.com/aig/2006/proxy/HTML2/default.htm

If you read my earlier blog on AIG, you are already aware of their lack of proper governance on behalf of the shareholders of the corporation.
http://rightofcenter-pmoshei.blogspot.com/2009/03/lack-of-governance-is-real-story-in.html

You will note that since my last blog on AIG, there has been tremendous turn over on the Board at AIG. According to AIG's 2009 Proxy Statement; "Ms. Rometty and Mr. Sutton resigned on May 7, 2009, and Messrs. Bollenbach, Feldstein and Orr informed AIG in May 2009 that they would not be standing for reelection. Mr. Tse submitted his resignation in March 2009 to become effective at the 2009 Annual Meeting of Shareholders."

The leaves only George L. Miles, Jr. from my bandit list of those board members responsible for governance left standing. Miles (2008 compensation of $412,000) and Morris W. Offit (2008 compensation of $274,200) are the only board members remaining from the glory days of AIG.

By the way, the share holders of AIG are attempting to bring some sanity to the situation through initiatives requiring executive compensation to require long-term ownership of AIG stock and requiring special "shareholder" meetings for certain types of corporate actions. Needless to say, both of these measures were opposed by the board.