All the Devils Are Here [46]
Greenberg’s passion for AIG went well beyond the norm—and woe to any company executive who didn’t share that passion. He thought nothing of calling executives at three a.m. to discuss business—behavior for which he made no apologies. One Thanksgiving he called AIG executive Ed Matthews, his longtime consigliere. “We’re just about to sit down for dinner,” Matthews told him. “I just finished my dinner,” replied Greenberg, who then proceeded to talk business for so long that Matthews’s family had finished their own Thanksgiving dinner by the time the conversation ended. He would have weekly meetings with his key lieutenants, the main point of which sometimes seemed to be to give Greenberg the opportunity to berate them in front of their peers. “He could be unmerciful,” recalls a longtime AIG hand. Fortune magazine, in one of the many AIG profiles it has published over the years, told of a time an executive being assailed by Greenberg couldn’t take it anymore. “You know?” he finally conceded. “You’re right.” Greenberg shot back, “I don’t need you to tell me I’m right.”
Indeed, Greenberg felt sure he had a better understanding of the different divisions than the men running those divisions did. After all, it was Greenberg who had come up with the brainstorms, pushed into the new businesses, and engineered the mergers that had turned AIG into an insurance behemoth. AIG operated 300 insurance subsidiaries in 130 countries, and Greenberg had his finger on the pulse of every last one of them. Or so, at least, it seemed. “A lot of the strategy was run out of Hank’s head,” says a former AIG executive. “He had most of the ideas about how to run the businesses.” And he fully expected his executives to carry out those ideas, no questions asked.
One famous story involved Iranian-American executive K. C. Shabani, who Greenberg sent to Iran in the early 1970s. Because Shabani knew some family members of the shah of Iran, Greenberg assigned him the task of convincing the shah to allow AIG to operate inside the country, something no foreign insurance company was then allowed to do. Once in Tehran, Shabani discovered that the only way AIG could get into Iran was if the parliament passed a law inviting it in. He returned to the United States and told Greenberg that the chances of this happening were remote. “If I were you, I’d give up,” he said, according to Fortune.
“I didn’t ask you what was necessary to do this,” replied Greenberg. “I just asked you to get it done.” He did. Among other things, Shabani married the shah’s social secretary, having at some point gotten divorced from his American wife. Sure enough, the law was passed in 1975, and AIG ran a profitable business in Iran until the Iranian revolution four years later.1
To put it another way, Greenberg didn’t so much manage his executive team as control them, running AIG as a not-so-benevolent dictatorship. One way he did this was by establishing for the top AIG brass one of the most generous—yet most onerous—bonus plans ever devised. Each year, the three hundred top executives were granted “units of participation” in a company called Starr International Company, or SICO. SICO, which was based in Panama, was AIG’s largest shareholder, and its value rose as AIG’s shares rose. Greenberg, in turn, was SICO’s biggest shareholder, with 25 percent of the company, and SICO’s board was made up almost entirely of AIG executives. Here, however, was the catch: you couldn’t get your hands on your accumulated SICO