In the last few weeks, it looks as if corporate boards of all stripes are taking as their mantra Shakespeares famous line: “Now is the winter of our discontent.” The result is that CEOs who had become celebrities are getting the boot. And while getting the boot is never comfortable, many of these dispatched CEOs have been shown the door most unceremoniously.
The most dramatic boot, of course, was the resignation last week of Maurice Greenberg as CEO of American International Group. But before that Carly Fiorina was summarily dispatched at Hewlett-Packard. Then Michael Eisner found his departure date moved up a year by the Disney board. And lets not forget Jeffrey Greenbergs being forced to leave as CEO of Marsh & McLennan Cos.
It also happens that Im writing this column the day after Bernie Ebbers, the once high-flying chief of WorldCom, was convicted on all nine counts which the government had brought against him.
But back to insurance. To most observers, Greenbergs departure meant that the once unthinkable actually had come to pass. Greenberg and AIG were all but one in the public mindand the companys extraordinary track record was judged to be a product of Greenbergs extraordinary managerial talent. No one foresaw Greenberg leaving until he wanted to and since no succession plan appeared to be in place at AIG, it looked as if he would never want to leave.
Analysts still are struggling with what might be the repercussions of AIG without Greenberg. I believe the company will manage quite well and a lot of my confidence comes from the two mega-deals that Greenberg engineered on the life side of the business. These were the acquisition of American General and SunAmerica, which gave AIG enormous heft in the life insurance and annuity arenas. When these were added to AIGs already formidable life presence, we saw the emergence of a blockbuster.
What Greenbergs resignation shows is that the world has indeed changed in the post-Enron era and that even autocratic CEOs are vulnerable when regulators and prosecutors start looking over their shoulders.
When the prosecutor is as tenacious and ambitious as New York Attorney General Eliot Spitzer, the chain of events set in motion by investigations can produce results that were once unimaginable.
The conviction of Ebbers has raised considerably the stakes for CEOs. I remember my utter incredulity when I read that Ebbers testified, “I dont know about technology and I dont know about finance and accounting.” If these areas were minor details in a telecommunications company, unworthy of the CEOs notice, then the visionary thing must pay awfully well, I remember thinking at the time.
Kenneth Lay, former chairman of Enron, may want to reconsider his I didnt know nothing stance in light of how unconvincing Ebbers jury found it to be.
What is satisfying about the Ebbers verdict is that responsibility is finally being attached to the top decision-maker as opposed to having lesser beings take the fall.
Pundits can talk all they want about how Spitzer and others have pushed the pendulum too far. But if putting responsibility squarely in the lap of those executives who get paid mega-bucks for steering a company is what these prosecutors have wrought, I have no problem with that.
With all thats happened, chiefs should now be fully aware that creating profit is only one part of their job, alongside making sure that their company is on the up and up.
Reproduced from National Underwriter Edition, March 17, 2005. Copyright 2005 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.