How do you keep so fit?

Exercise mostly every day.

Were you pleased that Attorney General Cuomo announced he was dropping the charges brought by former Governor Elliot Spitzer?

The fact is that we have won most of everything, but one or two issues are left hanging.  But this attorney general is not that different from Spitzer. Why he is keeping this alive, I can’t imagine. I find it outrageous. I have some hopes it will be resolved shortly.

You have always been a builder of businesses so what are you doing now that gets you excited?

Both CV Starr and Starr International are our private companies, both are very significant enterprises and they go back a long way. CV Starr, of course, is named after the founder of AIG, and as a matter of record, we operate a number of general insurance agencies that predate AIG. Since I left AIG, we have been building a very global organization, and have created operations across the U.S., Europe and Asia. We have a new venture in China we are really excited about.

Anything outside insurance that interests you?

We have a significant investment business outside of traditional insurance. We operate a private equity portfolio as well as make direct investments. We operate as a private merchant bank that has been the model for successful investing since JP Morgan.

How did you finally fare with your AIG holdings?

We lost a great deal of money after the collapse as we were the largest shareholder. While that was unpleasant in the extreme, there may be a misconception about our position. When we sold our shares, the media neglected to mention that we maintained the right to repurchase our shares at the same price plus two-percent interest.

In perpetuity?

Let’s say for a long time.

What about the intrusion of government into your business under the former Attorney General?

Our story is straightforward. It became convenient for Eliot Spitzer to try to destroy a business publicly in order to further his own political career, and he took the opportunity. We pride ourselves on preaching the rule of law to everyone around the world. We should be looking in a mirror. This should trouble people; I know it does me.

Why does the New York attorney general hold such power over the financial service industry?

New York’s Martin Law gives the state’s attorney general the broadest law-enforcement powers without any need for proof of intentional or negligent activity. There is a serious question as to whether the law is even constitutional.

Could you start over and rebuild a similar organization today?

I don’t see how it could be done today. Remember, AIG operated in 130 countries many of which we basically opened. China, Russia, many of the emerging markets, you can’t do that a second time. And it is my belief the business environment that encouraged entrepreneurship doesn’t exist any more.

What other factors under your leadership played a major role in the company’s success?

We had an organization with the best compensation structure in the industry. It is the model the investment activists are talking about today. No one made a lot of cash compensation, we all had shares, and we kept them until retirement. In effect, we had the best of all worlds. The entrepreneurship you usually find in a private company where management is an owner but with the responsibility of a public company to its broader shareholders.

So without high cash compensation–which most companies claim they need for retention –how did you manage to keep people?

First, I set the example. I did not have a contract, nor did anyone else in management. Our contract was with the company as shareholders. Then let’s not forget the intangibles. We had an entrepreneurial spirit that attracted the right kind of people. It was an exciting and prestigious place to work. People came there because of our tradition of innovating new products all the time, opening new markets. We were trailblazers.

Aggressive?

Of course. We managed our aggressiveness rationally.

How did you manage to keep tabs on all the risk activity?

Let’s establish that there is a great difference between a company that is managed properly versus a one-man show. We had a process that evolved over the years but which came to provide real transparency into the company’s workings. Every Monday, I held a meeting of the top 15 leaders in the company. Every fact of our business was discussed. Everyone left that meeting, including me, knowing what was happening in the company worldwide. Then monthly, we had a larger meeting of roughly 30-40 people and discussed everything from business regulation to new products, acquisitions, new markets, everything that could be known was discussed, and every question that could be asked was asked. Everyone was informed. I shudder to think about the stories of these investment banks where the CEO delegated all of risk management to mid-level employees and traders. Not on my watch.

Much has been written about the London subsidiary.

Too much has been made of the fact that there was this smaller group on London acting apart from the company. We always had a subsidiary in London. After I left, the company lost its AAA rating. The CEO was Martin Sullivan who was in the job to make sure risk management was functioning as it had previously. The significant move into credit default swaps was both unfortunate in terms of timing as well as volume. When I was there, our business in these instruments was smaller but, more importantly, closely supervised by senior management.

As for financial services, what’s the verdict, more regulation?

We had sufficient regulation in place before. The problem was that regulators failed to do their job, not too little regulation. That’s just a convenient excuse.

What have you learned about dealing with adversity?

Be stubborn, I suppose. Everyone handles it differently. I am just unable to choose expediency over integrity, which is what I was asked to do. I just can’t settle an issue when it is about something I did not do. So I am willing to fight an uphill battle, and I happen to have the courage and tenacity to do so. I think that is the right thing – the only thing – that I can do for myself, my family, and frankly, my country. I will never give in to get out of the way.

How much a factor was your AIG wealth in going into battle against the attorney general?

I never sold a share of AIG stock while I was at AIG.

What did you do to get through some of the more frustrating periods?

Exercise. Tennis. It is possible I even argued once or twice with my wife.

What we also discovered in putting the list together was that in some instances, it became impossible to separate the captain from the team. This year’s D100 is a case in point: Our editors and board of advisors were nearly unanimous in our selection of President Barack Obama as this year’s most powerful corporate governance influence. And yet, to do justice to the seismic shift his policies have brought about in the boardroom, we also had to recognize the many other  “New Voices” in the Administration who are now leading the greatest financial reform of American business since the 1930s.

So, we ask that in the pages ahead you pay more attention to who counts, and less to how we count, in arriving at our final selection of individuals and institutions that have met the requirement to be “most influential.” We think you’ll agree it’s an intricate and impressive mosaic where the whole equals much more than the sum of its parts, which may or may not be greater than 100.

Regulators & Rulemakers

Team Obama
It is often written that reasonable people may disagree, and with Americans and their Presidents, it is practically a way of life. But even an unreasonable person could only conclude that this President and his Administration are having a profound and lasting influence over the boardroom. President Barack Obama has demonstrated an enormous capacity for calm in uncertain times. His relative youth leads to frequent comparisons to John F. Kennedy and his communications skills to those of Ronald Reagan. But it is his aggressive response to the unparalleled economic challenges that greeted him at the dawn of his young presidency that harkens back to an earlier figure of towering influence,  Franklin D. Roosevelt.

FDR’s massive social and financial reform programs—the creation of Social Security as part of the New Deal, the establishment of the Securities and Exchange Commission (SEC) and the Federal Deposit Insurance Company (FDIC)—helped restore confidence in the nation’s banking system coming out of the Great Depression. One could plausibly take major portions of FDR’s New Deal and substitute his name with President Obama’s.  The implementation of the $787-billion American Economic Recovery Act one month after Obama took office, coupled with his handling of the Troubled Asset Relief Program (TARP), which sought to strengthen the financial sector by buying up the assets and equity from troubled banks, has clearly helped the nation avoid further financial disaster and put the economy on the path to recovery.

And finally, turning again to the FDR playbook, Obama assembled a team of wise men and women, formidable economic and business minds, whose decisions are having a lasting effect on the role of the corporate director. Preeminent among them was the choice of Rahm Emanuel as chief of staff. Described as a veritable “influence machine,” within the Administration and Congress, the former Congressman from Obama’s home state of Illinois is known as a hard-charging, brutally candid, sometimes combative, acutely intelligent man who can get things done and knows the ways of the Capitol and the boardroom.

The Enforcers
Perhaps second only to Obama in terms of her influence on boards and corporate governance, career regulator Mary Schapiro heads up the 75-year-old SEC. Before the crisis, the agency’s very existence was in question: “Obsolete,” “out of touch,” and “behind the times” were just some of the many terms uttered by detractors. The Commission, under former chairman Christopher Cox, was pilloried for missing the Madoff scandal.

As former SEC chairman and Directorship 100 Hall of Famer, Arthur Levitt described her: “She has the skills, the intellect, and the character to be a superb SEC chair.” But Schapiro will face a new kind of challenge in the role, not just that of proving her own qualifications, but also instituting a significant remodeling of the SEC itself, as she works to bring it into the new regulatory era.

Moving swiftly to address regulatory concerns in the wake of the financial crisis, the SEC has rolled out a series of proposals that could embody the biggest change to the rules of the game for directors in some time. Schapiro, who is no stranger to the boardroom, having served on the boards of Duke Energy and Kraft Foods, has overseen proposed rule changes on proxy access, broker voting, say on pay, and new requirements for disclosure on executive compensation and director qualifications. It’s now up to her and fellow commissioners Kathleen Casey, Elisse Walter, Luis Aguilar, and Troy Paredes to determine the final regulations that emerge from the proposals.

Other key players Schapiro has brought into the SEC include Senior Advisor Kayla Gillan, Chief Accountant James Kroeker, and Director of Enforcement Robert Khuzami. Gillan was a founding board member of the Public Company Accounting Oversight Board (PCAOB) and former general counsel to CalPERS. Kroeker joined the SEC as deputy chief accountant in 2007 from Deloitte and Touche where he had been a partner in the firm’s national accounting services group. Kroeker recently said that the proposed road map for the convergence of International Financial Reporting Standards,pushed to the back burner amid the larger issues of market reform, would be restored as another top priority. Khuzami is a former federal prosecutor, has pledged to improve the SEC’s enforcement performance by creating specialized units to provide “structure and resources for staff to ‘get smart’ about certain products, markets, regulatory regimes, practices and transactions.”

TARP Overseers
Another example of Obama’s preference for brains over politics was his reappointment of Sheila Bair to chair the FDIC. Another fiscally conservative Republican, on Bair’s watch alone this year, 94 banks have failed, creating a new challenge:  how to replenish the fund. Bair has also been an integral part of the team overseeing TARP. Neil Barofsky is a former New York assistant attorney general confirmed by the Senate in December as special inspector general. Dubbed the “TARP Cop,” his job is to figure out how and where the $700-billion TARP funds are spent, reporting directly to the President and providing updates to the Congressional Oversight Panel chaired by bankruptcy expert and Harvard Law School professor, Elizabeth Warren. COP’s first report, released in February, casti-  gated then-Treasury Secretary Henry Paulson for his performance and lack of transparency, reporting that the Treasury Department  had overpaid by $78 billion for the assets it bought from banks.

Interestingly, while Obama sponsored and was a strong proponent of  “say on pay” legislation while a senator, since appointing Kenneth Feinberg special master of compensation, he has appeared unwilling to make the issue a top priority. Feinberg, who has immersed himself in some of the country’s most troublesome and high-profile cases, is considered a superb choice, both in terms of skill and temperament, by Capitol Hill insiders. His most noteworthy case was the 33 months of pro-bono work he did following the 2001 terrorist attacks to determine how much each victim would receive from the federal government’s September 11th Victim Compensation Fund.

Feinberg may in fact be perfectly suited for a job that most compensation specialists see as thankless, and possibly as a “no win” situation. As the Obama Administration’s comp expert, Feinberg was called on to monitor the compensation of executives in what were once some of America’s most prestigious corporations, now TARP recipients, including American International Group (AIG), Bank of America, Citibank, Chrysler, GMAC, and General Motors.

Fed to the Rescue
To prevent American capitalism from spiraling deeper into the abyss, nine months after President Obama made his first Cabinet announcement, he re-nominated Ben Bernanke as Federal Reserve chairman. The former Princeton economics professor was selected by Bush in 2005 to succeed Alan Greenspan. In 2008 after the market crashed, Bernanke invoked emergency powers, slashed interest rates, and spent trillions of dollars to right the financial system. Just last month, he declared the recession “likely over.” Though he seldom gives interviews, Bernanke is never far from the public eye and has been a stalwart in the transition between presidential administrations and in the effort to stem the economic slide.

When then President-elect Obama named his economics team, it included players who, like Bernanke, were already steeped in the crisis details, demonstrated a studied understanding of Depression-era economics, or some combination of both. Enter Treasury Secretary Timothy Geithner and Chief White House Economic Advisor Lawrence H. Summers. Geithner, who is currently pushing legislation to provide more systematic regulation of financial institutions, including new limits on executive compensation, recently told one interviewer that he is optimistic major reforms will be passed.

Prior to his appointment replacing Henry Paulson, Geithner was president of the Federal Reserve Bank of New York and part of the team central to the critical negotiations that resulted in Bear Stearns being tucked into JPMorgan Chase, Merrill Lynch going to Bank of America, Lehman Bros. disappearing, and Citigroup and other struggling banks getting a lifeline.

Summers, the former Harvard University economist who became its president following his tenure as Treasury Secretary to President Clinton, is director of the Cabinet’s National Economic Council. The group was established in 1993 to coordinate and ensure that the President’s economic policy agenda is carried out.

Rounding out the team, Paul Volcker, the former Fed chief under Clinton, was selected to chair the president’s economic recovery advisory board. And Christina Romer, a former UC Berkeley economist, who administration sources suggest is well- regarded by both parties, chairs the Council of Economic Advisers. Her appointment was seen as a further triumph of brain over politics in Obama’s approach to talent recruitment.