AIG's Liddy to step down
CEO and chairman Edward Liddy, who came under fire for the hundreds of millions of bonuses the company paid out, will leave when a replacement is found.
NEW YORK (CNNMoney.com) -- AIG Chief Executive Edward Liddy announced Thursday that he plans to step down from the company once the insurer's board of directors finds a replacement.
"Much work remains to be done at AIG, but much has already been accomplished," Liddy said in a statement. He noted that the company's recovery "is likely to take several years [and] AIG should have a leadership team committed to a similar time horizon and prepared to carry the plan to completion."
Liddy had previously indicated that he would stay at the company for a limited amount to time, but he did not give an exact time frame. "[He] said he would know when the time was right," said AIG spokesman Mark Herr. "He stabilized the company, reduced its risk issues, and institued a plan to pay back the taxpayers. He decided now the time is right for someone else to oversee the next phase for the company."
Liddy, who serves as both chairman and CEO, was appointed by the Federal Reserve to head the company in September, after the troubled insurer received billions of dollars in federal aid.
Liddy also recommended that the CEO and chairman roles be split -- a move the current board has indicated it will do.
AIG will elect six new board members at its annual meeting on June 30. The slate of six includes former executives from American Express, Boeing, KPMG, Delphi, Sears and Northwest Airlines. On Thursday, the company also announced it will vote on a 20-1 reverse stock split at the meeting.
Liddy had come under intense scrutiny from lawmakers and the public in March after it was revealed that AIG (AIG, Fortune 500), recipient of $182 billion of taxpayer funds, had paid out $165 million to executives in the company's financial products division, the unit that dragged the company to its knees.
Liddy had argued that all of the bonuses were needed to retain top talent, to prevent an "uncontrolled collapse" of the financial products unit and to maximize return on taxpayers' near-80% stake in the company.
But after much prodding by Congress and the Obama administration, Liddy asked employees who took home more than $100,000 in bonuses to return at least half. So far, AIG said about a third of the bonuses were returned.
AIG's board and trustees have said all along that they support Liddy and his plan to spin off some of the insurer's most valuable assets to pay back the government. Earlier this week, the company said it would speed up plans to list its Asian subsidiary through an IPO that could raise more than $4 billion
Liddy "answered the call of his country and the needs of AIG without reservation amid one of the darkest periods of the current financial crisis," said Stephen Bollenbach, AIG's lead director, in a statement. "We wish him well in his return to retirement. He deserves it."