Leadership: Greenberg exit puts boards in spotlight.

• Author: Marshall, Jeffrey
• Position: BusinessBRIEFS

Are we entering the twilight of the "imperial CEO?" That's an argument that's been heard quite a bit lately, especially since the whirlwind that accompanied the sudden end of Maurice "Hank" Greenberg's 37-year reign at American International Group (AIG). A shadow has even fallen over Warren Buffett, everybody's favorite CEO as head of Berkshire Hathaway, following suggestions that he may have known about the "finite insurance" arrangements made between AIG and his own General Re unit.

The sudden, shocking departure of Greenberg underscored in bold letters a new era in which boards of directors are being required to act quickly and decisively, even if there are no precedents. "You could see the storm clouds gathering--it appeared to be increasingly impossible for the board to allow [Greenberg] to remain" as CEO, says Institutional Shareholder Services executive vice president Patrick McGurn.

The dust-up at AIG was especially notable in that published reports paint a picture of a board that had been deferential to the powerful insurance company CEO for many years. All that changed when Greenberg himself was linked to some questionable insurance contracts and when New York Attorney General Eliot Spitzer threatened a criminal indictment of the firm. The board then acted quickly on the notion that AIG's survival, and not Greenberg's, was the critical...