AFL-CIO Urges AIG: Remove Greenberg As Chairman

By Michael Ha

NU Online News Service, March 23, 9 :12 p.m. EST?The AFL-CIO, whose member unions are major stockholders in American International Group, has called on board members of the insurance giant to remove Maurice Greenberg from his remaining post at the company.[@@]

In a letter, the labor organization asked that former AIG Chief Executive Officer Greenberg now serving as non-executive chairman be replaced by the chairman of the board's executive committee, independent director Frank Zarb.

Mr. Greenberg was replaced last week as CEO by Martin J. Sullivan as scrutiny by the Securities and Exchange Commission and New York Attorney General's Office has intensified.

The authorities are looking over transactions suspected of giving a false financial picture of AIG that Mr. Greenberg may have been closely involved with

"From our point of view, if a CEO is considered to be a liability to the company, we just don't see how he can remain as board chairman. What AIG needs at this point is a strong, independent board leadership to respond to the crisis before the company," said Brandon Rees, research analyst at AFL-CIO's office of investment, commenting on the union's decision to ask for Mr. Greenberg's ouster.

AFL-CIO's view may have considerable sway in the AIG boardroom, since the union advises 1,500 union-sponsored pension plans with assets of $400 billion and significant AIG shares.

"Chairman Maurice Greenberg's decision to step down as CEO of American International Group Inc. initiates a dramatic period of transition for the Company," AFL-CIO stated in its letter sent last week to Bernard Aidinoff, the AIG board director who chairs nominating and corporate governance committees.

The union said that for AIG to successfully manage its current crisis and respond to various regulatory, accounting and legal challenges, the company needs a strong, independent board leadership.

"AIG needs a strong and independent board to steer the company through this transition period. We believe this will require an independent chairman who can not only ask tough questions and hold management accountable, but also earn the respect of regulatory and legal authorities," the AFL-CIO letter said.

"We therefore write as an institutional investor to urge the election of AIG director Frank Zarb as chairman of the board."

AFL-CIO noted that naming an independent chairman will provide the necessary leadership to review AIG's transactions with C.V. Starr & Co. and Starr International, both private entities run largely by Mr. Greenberg and other AIG insiders which have sway over AIG.

Additionally, an independent chairman will strengthen the board's ability to monitor and direct AIG's ongoing accounting review, the AFL-CIO wrote.

Special Reports /

AFL-CIO Urges AIG: Remove Greenberg As Chairman

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