Old guard’s doubtful revival of past glory

Old guard’s doubtful revival of past glory

A week after former Merrill Lynch & Co. Inc.’s executives joined the chorus for chief executive officer Stan O’Neal’s ouster, Maurice Greenberg, 82, is rattling the cage of American International Group Inc. (AIG), the insurer he ran for some 40 years. It’s understandable that former bosses with time on their hands and a slug of their former employer’s stock would want to get back in the game.

That’s especially true of deposed chiefs like Greenberg who, while not AIG’s founder, made it the formidable corporation it is today. But whether these former chieftains can revive the glory days of their past stewardship is doubtful.

The legacy of former boardroom superstars—think Citigroup Inc.’s Sandy Weill or General Electric Co.’s (GE) Jack Welch—is easier to gauge after they have left the building. While Citi, AIG and GE shares are well below the peaks they reached under their larger-than-life ex-bosses, reinstalling them wouldn’t obviously change that.

Welch benefited from investor willingness to accord GE a price-to-earnings premium that it no longer commands under Welch’s successor, even though GE today is stronger and more diversified than ever. Weill was rewarded for empire building—a skill-set the bank clearly doesn’t need in its present condition.

As for Greenberg, he left amid concerns about AIG’s accounting. While these may have dissipated, the former chairman’s confrontational stance with regulators wouldn’t necessarily aid AIG’s cause. That doesn’t mean he can’t serve as an activist with lots of stock and some strong ideas for improving performance. But any investor expecting that Greenberg’s reappearance will be enough to get the stock back to above the $100 (Rs3,930) he once enjoyed would be mistaken.