In 2009 former MetLife (MET) CEO Bob Benmosche was called out of retirement, which he was enjoying at his sun-swept villa in Croatia, to head up troubled AIG. The giant insurance company had precipitated the financial crisis of 2008 and survived only because of an unprecedented $182 billion government bailout. Benmosche was the fifth CEO in as many years. At the time he took over, few believed taxpayers would ever get their money back.
In five years at the helm, Benmosche downsized AIG (AIG), returned it to profitability, and repaid the government, plus interest. But his tenure was a rocky one, characterized by conflicts with the U.S. Congress, his board, and his board chairman, former American Express (AXP) CEO Harvey Golub. Benmosche felt Golub got more involved in management decisions than he should have. Golub, for his part, complained Benmosche was making major strategic decisions without consulting the board.
Benmosche died from cancer on Feb. 27, 2015. In the last year of his life, he told the story of his career to Peter Marks and Valerie Hendy for his posthumous memoir, which will be published in April. What follows is an excerpt from that book.
We have chosen this excerpt because it involves one of the hottest debates in corporate governance today. Should companies have a chairman of the board who is separate from the CEO? Many shareholder advocates argue yes. But a number of chief executives say the dual authority can lead to the kinds of conflicts that precipitated the following events.
Fortune reached out to Harvey Golub for his take on the events in the narrative that follows. He declined to comment.
It was July 14, 2010. Bastille Day. Weirdly apt for the board meeting to occur on a holiday celebrating liberation. Because one way or another, it was going to end in freedom for me. “Either he goes or I go” may be a cliché, but it perfectly suited this particular day at the office.
Maybe—and it’s a long shot—if Golub and I were both less headstrong we could have forged some kind of authentic partnership. We both liked to spend leisure time in Florida, and perhaps, if we had gotten together over golf … ah, I don’t even play golf. Ultimately, our visions were in such serious conflict that I concluded it was pointless to continue down this path.
I needed to do something drastic.
And so I did.
In the annals of corporate showdowns, the one that ensued was kind of wild. It put knots in the stomach of hard-nosed people with stern constitutions tested over years of tough business and fiscal decisions.
“We had the most dramatic board meeting of my career,” said Jim Millstein, the restructuring expert recruited by the Obama administration. “I’ve never seen anything like it.”
The board met on the 18th floor of 70 Pine Street. The directors were all there. I went point by point through the changes I’d made since becoming CEO, beginning with my efforts to get the workforce to believe in AIG again, the battles with [government pay czar] Kenneth Feinberg over compensation, the clawback of the bonus money, the improving situation with AIG’s financial products unit [which sold the toxic securities that precipitated the meltdown], the subsequent hiring of new talent, the sale of American Life Insurance Company. And then I launched into a discussion of future plans: the proposal for an IPO of American International Assurance in the fall; the sales of other units, such as the Star and Edison insurance companies in Japan and Nan Shan in Taiwan; the need for our investment department to make improvements.
The board, though, had a question for me, one that, of course, I figured was coming.
How, they wanted to know, was I going to get along with Harvey Golub?
“I don’t get along with Harvey,” I said. Golub was sitting right there. It could not have come as a shock to him; as recently as the day before, some of my senior people had been in a conversation with him about how untenable the situation was. I explained that it was about more than getting along, that the conflicts between us were serious. “Look,” I added. “We really need to think about leadership and vision because we’ve really come through a terrible time. We can’t continue to have these battles. It’s not working well.”
By this point, lawyers had been summoned to the room, attorneys from powerhouse firms: Simpson, Thacher for the board and Davis, Polk for the Fed. I was asked to make it clear right then and there that I was not going to submit my resignation.
“I don’t know that I’m not going to resign,” I said. “But we’ll find out today.”
The room tensed up. Was I in or out? What was crazy Bob up to? The fact was I was not up to anything. I didn’t want to resign, but I would if I had to. Croatia in the summertime was looking mighty tempting.
“You can’t have a company without a CEO, and without it being announced,” one of the lawyers said.
And with that, the board asked both Golub and me to leave the room. They were going to meet without us in executive session and try to figure out what the hell to do.
Back in my office, I really wasn’t sure what would happen next—whether this really was my last day at AIG. As the board met behind closed doors, Golub walked through my open one.
“You know,” Golub said, “I think I need to work on my relationship with you.”
What the f–k?
“Harvey, we don’t have a relationship,” I said. “We’re not going to have one. All I can tell you is that the board needs to make a decision today where we’re going. But I think only one of us can be here tomorrow.”
The conversation was without rancor. Golub seemed alternately to want to mollify me and keep me on the ropes.
I added, “So if you want to be the CEO …”
“No, look,” he said. “The fact is I know it’s easier to get a chairman than a CEO. There’s no contest here. But I really feel that we should work together. It’s going to take time—the next three or four months—to do that.”
But we were out of time, and I saw no advantage in prolonging the agony. “It’s just not going to work, Harvey. And so if the board wants you to stay on, that’s great. Then I’m going to leave at the end of the day and go to Croatia, and you’re running the company. It’s yours. I’m done.”
What I was thinking was, I’ve got to get the hell out of here. I could no longer see any upside in staying. Here I was trying to save this company, and I was being treated as if I was the problem. F–k it, life’s too short, I said to myself. I considered all the money I had coming to me, a lot of it, from my tenure at MetLife: a $100,000-a-month pension after taxes for the next 20 years; I had close to $20 million in deferred compensation and 401(k)s.
I had 1.7 million MetLife stock options and owned almost half a million shares.
“What am I doing to myself?” I thought. The feelings I wrestled with weren’t pleasant: If I did leave, I would go out as someone who tried to save AIG but couldn’t get the job done on his watch. “That’s my legacy?” I asked myself. “How terrible.” But rather that than stick around. Prolonging this turmoil and letting AIG go down as a result was no option at all.
With that, Golub left my office. Millstein would later fill me in on the events that followed, which he described as “like the third act of Shakespeare, where everybody goes crazy. Eventually order is restored, but in the third act, shit happens that you just can’t believe.”
Golub went to talk to the board, and his misgivings about me spilled out. “I’m not sure if leaving Bob in charge of the firm is the right thing to do,” he said, according to those present. “You know, after all, he’s threatened to resign a couple of times, and I’m really uncertain, and I think if I do it, I’m just leaving you guys open to this again, being held hostage. He’s very unpredictable, he’s very volatile, and I’m not sure he’s really fit to run the company, and I feel like it would be dereliction of my duty as a director and as a fiduciary officer to allow this to go on.”
The strained silence in the room was broken by an unlikely voice addressing Golub directly: that of Morris Offit, a director who had never been a big fan of mine.
“I’ve got to say, for the good of the firm and the future of this company, I think you have to resign,” Offit told Golub. “We can’t go through another CEO change. We’ve had five in five years. Bob has got the loyalty of his team, he’s gotten the company to stand up and fly right, and despite the fact that he and I have disagreed on important matters, as have you, he’s the right leader for this firm.”
Other directors spoke up, echoing Offit, telling Golub that the only way for him to lead now would be to leave.
And at last he did.
While Shakespeare was happening in the conference room on the other side of the 18th floor, I was still cooling my heels in my office. An hour or so passed, and no one had come to get me. So finally I wandered over to the conference room to see if I could get an update on my fate.
To my astonishment, everyone had left.
“Where’s the board?” I asked someone.
“The meeting’s over,” they said.
Little did I know that Harvey was out and a new chairman installed: Steve Millier. Nobody called me in, nobody discussed it with me. I did find a draft of Golub’s resignation letter on a desk, so I knew I still had a job. But it’s a fact that no one on the board, on that day or ever, spoke to me about Golub’s departure.
Excerpted from “Good for the Money: My Fight to Pay Back America,” by Bob Benmosche, with Peter Marks and Valerie Hendy, St. Martin’s Press, April 2016.
Bob Benmosche was president and CEO of AIG from 2009 to 2014. Previously, he served as CEO of MetLife, where he was instrumental in taking the insurer public, and was an executive at Paine Webber and Chase Manhattan. Shortly after taking the top job at AIG, Benmosche was diagnosed with cancer. He died in February 2015 at the age of 70.