What's good for Greenberg

31 March 2008 By Robert Cyran Follow @rob_cyran

The insurer s massive incentive plan surely motivated employees. It also created conflicts of interest. Intertwining the fortunes of AIG and its executives may have created wealth, but it ensured an acrimonious split.

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AIG has filed suit against several former company officials, including exchief executive Hank Greenberg, for allegedly misappropriating a $20bn block of shares. The defendants all are officials of Starr International, which holds a 10% stake in AIG. The insurance company claims Starr was an executive compensation vehicle which the defendants improperly seized control of in 2005.

The suit was lodged in New York State Court. A US Federal Court has examined the same issue. A judgement in that case is awaited shortly.

Hank Greenberg was AIG's chief executive from 1968 until 2005. At the time of Greenberg's exit, Starr International owned 12% of AIG. Another private investment vehicle run on behalf of executives, C.V. Starr, owned 1.8%. It is also the subject of litigation.

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