Marsh CEO Steps Down at Emergency Board Meeting
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NEW YORK – Jeffrey W. Greenberg resigned yesterday as chairman and chief executive officer of insurance broker Marsh & McLennan Companies Inc., the company said, in a move that appeared aimed at positioning the company to negotiate a settlement of bid-rigging and price-fixing charges with New York Attorney General Eliot Spitzer.
The resignation was accepted at an emergency board meeting at the company’s New York headquarters.
Mr. Spitzer responded to the company’s announcement by saying that the board’s action “permits Marsh and this office to move forward toward a civil resolution of our lawsuit.” He added that any criminal action would not be against the company but against individuals.
The board said Mr. Greenberg will be replaced by Michael Cherkasky, 54, who just last week was named head of Marsh Inc., the company’s insurance brokerage unit. Before that, Mr. Cherkasky had been chief executive of Marsh Kroll, the Marsh & McLennan risk consulting subsidiary.
Mr. Cherkasky had joined Kroll in 1994 after 16 years in the criminal justice system, some of them as Mr. Spitzer’s boss in the New York district attorney’s office. Kroll was purchased by Marsh & McLennan in July 2004.
The board also said yesterday that it will announce “significant reforms” in the way its Marsh Inc. subsidiary does business.
The reforms, the board said, “will be rooted in transparency” and will ensure that “Marsh will receive compensation for its services from only one party – its clients.”
Mr. Spitzer filed a civil suit against Marsh & McLennan on October 14, charging that the company was rigging bids and fixing prices in the sale of property and casualty insurance to businesses. Mr. Spitzer also charged that the company’s commission system – which included payments from insurance companies in exchange for more deals – was the equivalent of accepting payoffs.
Mr. Spitzer had said he wouldn’t negotiate with Marsh & McLennan’s management, alleging his office was “misled at the very highest levels of that company.”
The announcement came after several days of reported negotiations between Mr. Spitzer’s office and independent directors on Marsh & McLennan’s 16-member board.
Mr. Greenberg, 53, had been CEO of Marsh & McLennan since November 1999. He added the title of chairman in 2002.
He is a member of an insurance family dynasty that includes his father, Maurice Greenberg, who heads American Insurance Group Inc., and his brother Evan Greenberg, who heads ACE Ltd., which is based in Bermuda.
Marsh & McLennan’s shares ended the day down 37 cents at $26.42 on the New York Stock Exchange. That’s down 43% from the $46.13 that Marsh & McLennan shares traded at before Mr. Spitzer’s probe was announced.