AIG CEO didn’t hesitate to slash compensation at Allstate

When Edward Libbey was CEO of Allstate, he cut compensation costs by firing 6,000 agents, without bothering about legal niceties either. The agents sued twice, he fought and won the lawsuits.

But now at AIG he’s suddenly all anguished about how, darn it, he simply must follow the law and give huge bonuses to the incompetents who destroyed the company?

He could do what he did it Allstate. Simply fire them. Then the bonuses don’t have to be paid. Better yet, the government should fire him and then cancel the bonuses. Then find something to indict him about.

New bill would tax AIG bonuses at 100 percent


  • william czander PhD

    (This is from a book I am writing)
    Federal regulators found another celebrity CEO to take over failing AIG. In September, 2008, the U.S. government gave AIG a loan of $85 billion to save it from doom and they installed Edward M. Liddy, the former chief executive of Allstate. Liddy is credited with shaking up Allstate’s rigid, conservative culture, and expanded it into new businesses like banking. Shortly before he became CEO in 1999, he told a roomful of the company’s 200 top managers that a number of them would be gone within the year. About 6,400 Allstate agents sued the insurer the next year, after Mr. Liddy reclassified them as independent contractors, ending their health and pension benefits. The lawsuit eventually collapsed (Walsh, 2008). Liddy retired from Allstate in the spring of 2008, leaving the company on top of the list as the worse insurance company in America in a report published by American Association for Justice (AAJ). According to DiCello (2008), the AAJ’s report states, “there is no greater poster child for insurance industry greed than Allstate.” He states, “AAJ’s investigation revealed that when Allstate policyholders file a claim, they are often offered an unreasonably low payment for their injuries. This offer is generated by a secretive claim-evaluation computer program called Colossus. Those who refuse the low offer usually get the “boxing gloves” treatment; an aggressive litigation strategy aimed at denying the insured’s claim at any cost. Allstate implemented this unconscionable practice while Edward Liddy was at the helm from 1999 to 2006 when he retired, receiving more than $25 million in benefits. Liddy was paid almost $19 million in salary for 2006.” (DiCello, 2008). .” For his efforts, the Board of AIG appointed Liddy CEO in September, 2008.

    • Pamela Steele

      Hi Dr. Czander,

      Are you the professor who used to teach Organizational Behavior at the Manhattan colledge MBA program years ago?

      If you are that person, I would like to contact you. I’m in need of some consultation/therapy as I’m having some issues at my current job that I’d like to speak with you about. I’d like to set up some sessions with you, or if you know a therapist that speciallizes in Org. Behavior in the NYC area, I’d like to know.

      Pam Steele

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