Mr Maurice "Hank" Greenberg, whose three decades at the helm of American International Group (AIG) have made him a revered and feared figure in the financial services industry, seemed this week like a corporate King Lear. His plans for handing over his realm to his children have gone awry.
Early this year, it seemed that the 75-year-old patriarch of the world's largest public insurer had capped the many triumphs of his career by anointing his 45-yearold son Evan as his successor, cementing a corporate dynasty with the blessing of AIG's directors and investors.
Last week, things suddenly changed. Evan Greenberg, who was set to become only the third chairman in AIG's 81-year history, resigned abruptly as its president. He left behind tens of millions of dollars of potential share option profits, and a father without an obvious successor.
Evan's sudden departure, aged 45, was all the more remarkable because it echoed the resignation five years before of his older brother. Jeffrey Greenberg, a talented lawyer, who had been similarly set up to succeed his father before jumping ship without warning to run Marsh & McLennan, the rival insurer. Headhunters with links to AIG say both sons chafed at the demands placed on them by their exacting father, who was unwilling to cede enough responsibility.
Whatever the truth of this, the event did not appear to worry investors too much. Shares in AIG, which is worth $200 billion (€227 billion), rose on the announcement of Evan's departure. Even some Wall Street admirers had harboured misgivings that the succession plans smacked of nepotism.
Nor is there an immediate succession crisis, for Hank Greenberg remains in rude health. Company legend has it that the AIG jet is equipped with an exercise bicycle, and Mr Greenberg has cultivated his image as a fitness fanatic who eats grilled fish each day, and enjoys out-skiing men half his age at Stowe, the Vermont resort owned by AIG.
Cornelius Van Der Starr, who founded AIG in Shanghai in 1919, ran the company for 49 years before handing over to his successor. Hank Greenberg is a similar believer in executive longevity. But some investors still wonder whether the company can outlast him, just as there are questions about how General Electric will do without Jack Welch, its chairman, who is due to step down next year.
"Hank is the glue. He's the brain. He's the guy that put this incredible thing together, and makes sure it hums," says Evan Lindsey, who runs the insurance headhunting practice at Heidrick & Struggles. But some corporate governance experts question whether this can be entirely healthy for a public company. "Any culture based around an individual is vulnerable to that individual's human frailty. Even the great stumble at some point," says Charles Elson, professor of corporate governance at the University of Delaware.
Critics see AIG as a throwback to an era before corporate America adopted the mantra of meritocracy. The majority of its 18 directors are former AIG employees or consultants, and Mr Greenberg has steadfastly resisted pressure to bring in independent directors. "Typically, you see this kind of dynasty where the father owns a huge chunk of the stock," Prof Elson says, "But Hank Greenberg owns very little stock. That is what is so shocking."
Mr Greenberg's reported stake is under 3 per cent, although he controls more than 20 per cent of AIG through a complex trust that provides generous stock incentives for the company's senior managers. Most investors have been happy to overlook such concerns because of the performance Hank Greenberg has delivered. He is credited with transforming AIG from a life insurer with little clout in its home market to a global financial services powerhouse, spanning asset management, aircraft leasing and currency trading.
Meanwhile, AIG's net income has risen almost 14 per cent a year for 10 years, and the company's market value has soared from $300 million when Mr Greenberg took it public in 1969 to more than $200 billion now. In the last five years alone, the stock has risen more than fourfold. Even critics say Mr Greenberg deserves much of the credit. "He is extremely demanding, he has no patience and he has a strong sense of urgency. He absolutely will not tolerate failure," Mr Lindsey says.
As a result, AIG has been fertile terrain for headhunters eager to pluck seasoned insurance executives who no longer want to work under the demanding Mr Greenberg. Although analysts still praise the depth of its management talent, AIG has lost many talented individuals. Mr Lee Pomeroy, president of Executive References and a former partner of Egon Zehnder, the headhunting company, says that Mr Greenberg balances a warm human touch with another side. He can be relied on to remember personal and family details of employees but is equally willing to administer bruising public dressings-downs to those who fall short of his expectations.
It seems few people felt this pressure more than Evan Greenberg, who would prepare for meetings with his father by insisting colleagues give him detailed briefings. Evan's style could be similarly robust, associates say, but the differences were notable. Whereas Hank was part of the second World War Normandy invasion force, Evan ducked out of university to travel around America for three years and work as a bartender.
Hank Greenberg's command of AIG, and his network of political contacts, should mean Evan's departure has little immediate impact on its performance. But with Wall Street already wondering whether AIG is gearing up for a transforming acquisition, investors will not be satisfied by Mr Greenberg's health alone.
