[WASHINGTON] American International Group’s announcement last week that it was parting ways with incoming President John Neal stunned insurance industry observers and raised questions about what caused the veteran executive to lose a US$17 million job before he’d even started.
This week, they got an answer.
Lloyd’s of London, the giant insurance marketplace where Neal served as chief executive officer until earlier this year, said on Wednesday that it has been investigating his conduct since last month. The Wall Street Journal reported the same day that AIG withdrew its offer to Neal after learning of the probe, which centred on a relationship he allegedly had with a Lloyd’s employee.
That appeared to be one office romance too many. It was already publicly known the board of Australian insurer QBE Insurance Group, where Neal was previously CEO, docked his 2016 bonus by more than US$354,000 after it learned he hadn’t disclosed a relationship with a subordinate. And Bloomberg had previously reported that the woman in question had replaced Neal’s previous assistant – after he had married her.
AIG declined to comment, and Neal didn’t reply to messages seeking comment.
The swift reversal underscores the fraught nature of workplace relationships. Recent instances have felled CEOs at companies including Nestlé, Kohl’s and Astronomer, where Andy Byron lost the top job in July after being caught on a stadium “kiss cam” with the firm’s chief people officer at a Coldplay concert.
It’s also a particularly stark example of how even the world’s largest companies can be caught out when it comes to high-stakes hires – even ones that have been headhunted, vetted and promised millions of dollars in compensation.
“Workplace culture has become one of the biggest risk factors in the financial sector,” Ian Hargreaves, partner at commercial disputes specialist Quillon Law, told Bloomberg.
“Many firms have rewritten rules on workplace relationships, and some have moved close to outright bans,” Hargreaves said. “With that level of scrutiny, the idea that this latest issue slipped through the gaps is surprising.”
A potential US$17.2 million pay package had been awaiting Neal at AIG. He would have collected roughly US$5 million in salary and bonuses for his first year, along with a target annual equity award of US$5 million, a Day 1 restricted-stock grant of US$4.5 million with a three-year vesting period, and a US$2.7 million cash bonus. BLOOMBERG
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