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The Randian and the Bailout

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Even Greenberg started to seem happy with the plan. “I talk to him once a month or so,” Ben­mosche says. “I call and say, ‘I just want to tell you something, I’m really pissed. You always talk about what great people you had and they’re not so great when it comes to this.’ He says, ‘I’m gonna come over there and stick this up your ass and rarararrararararra,’ ” he growls, then smiles. “We really go at it. It’s fun.”

Then Benmosche was diagnosed with cancer.

He wouldn’t say what kind. As the head of a public company, he had to admit he was ill, but he wouldn’t give specifics, otherwise the actuaries on the company’s own payroll would begin to tally up how long he had left to live. Some people were anyway. “Joann Lublin wrote in The Wall Street Journal implying I should have done the right thing and resigned,” Benmosche sniffs. “Because I’m going to die anyway. Why make it awkward?”

Benmosche says he was “devastated” by the diagnosis. But outwardly, he did for himself what he had been doing for AIG: projected an image of health. “I feel good,” he told interviewers while trying to suppress hiccups from the chemotherapy. When the treatment gave him a skin condition, he grew a beard to cover it and went back to work. “I just didn’t want to spend a lot of time thinking about cancer.”

There was plenty to focus on at AIG, starting with the ongoing saga of AIA. At the beginning of that year, the chairman of AIG’s board, Harvey Golub, was furious when Benmosche nonchalantly informed him that Prudential had offered $34 billion, most of it cash, for the Asian life-insurance property, which he had all but accepted without the board’s input. “He said, ‘Why didn’t you ask me first?’ ” Benmosche shrugs. “I said, ‘I had nothing to ask you.’ ”

Benmosche and Golub, the former CEO of American Express, had never gotten along. Golub was a little too hands-on for his taste, and Golub felt Benmosche made rash, emotional decisions. “Harvey is so analytical,” says Russo, who counts Golub as a friend. “He felt as chairman that he should know things and question things.”

When they brought the offer to the board to vote on, Golub voted against it. He was skeptical of Prudential’s ability to come up with the cash, and suspected it was the first in a series of negotiations that, if they went any lower, might spoil the value of an IPO down the line. When half the board sided with the chairman, Benmosche simmered. What really pissed him off was Golub turned out to be right: Prudential’s shareholders balked at the price. When Benmosche came back with its reduced offer, the entire board voted against him, an episode that Businessweek called an “embarrassment for Benmosche.”

At the next board meeting, he presented the board with another ultimatum: Either the chairmen went or he did. “Only one of us is going to make it through this,” he said, with Golub sitting right next to him. “You have to make a choice.”

Once again, the board panicked. That night, Millstein took Golub, an old friend, for dinner to gently nudge him in the direction of the door. “You really want to put this company through its fifth CEO in five years?” he asked. Golub chewed thoughtfully.

“He’s going to do this again six months from now, you know.” he said. “Every year from now.”

When Millstein arrived the next day, he was told the issue had been resolved. He was relieved that Golub had done as he asked. At the end of the day, he packed up his things and waved good-bye to Ben­mosche, who beckoned him over. “I won’t be here when you get back,” the CEO hissed. “I have written my letter of resignation. It’s not resolved.”

Millstein stared at him. “Go to your office,” he said through gritted teeth. Then he called Golub out of the meeting.

“What’s going on?” he asked.

“I haven’t decided,” Golub said. “If he’s decided, that’s the decision.’”

“You go to your office,” Millstein snapped. He went to inform the board they needed to make a decision. He’d barely finished speaking when the boardroom doors swung open. “And there’s Harvey,” Millstein recalls. “And he says, ‘I would like the opportunity to talk to my board.’ So Sarah Dahlgren and I go to get up, and he says, ‘No, I want you and Sarah to be here. I really think this is important we all think this through together. Don’t get up.’ I’m like, please let me get up.”

Golub was emotional as he relayed his concerns about Benmosche, and he spoke at length. When he stopped, one of the directors, Morris Offit, stood up. “He said, ‘Harvey, I don’t think there is anyone on this board that Bob likes less than me,’ ” recalls Millstein. “ ‘And I don’t think there’s any member of this board that likes Bob less than I like Bob. But he’s done a great job, rebuilding the management team, rebuilding the spirit of the firm, giving these guys energy and direction and a sense of purpose again. Harvey, I think the world of you, but I think for the good of the firm you have to resign, and I reach this conclusion reluctantly because I count you as a friend, and Bob and I are not friends.’ ”


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