Liddy’s Short-Lived PE Career Was Much More Comfortable

With all the hubbub over yesterday’s testimony from AIG CEO Edward Liddy (which varying news outlets referred to as a “scalping” and a “lynching” and “dunk tank”) I thought it’d be nice to revisit a time when Liddy wasn’t in the hot seat, but rather a soft recliner, at buyout firm Clayton Dubilier & Rice.

It’s been less than a year since took on the role of operating partner at CD&R after running Allstate Corp. It’s only been six months since he abandoned that role and, in his words “came out of retirement” to take on his current gig as the CEO of AIG.

Below, we compare some of the questions and statements fired at him yesterday with a much more comfortable Q&A from the May 12, 2008 issue of Buyouts magazine. There’s no doubt that in accepting his current gig, he took the hard road and plenty of buyout pros are not jealous of the pressure he’s under. Regardless, kudos to Liddy for taking the heat (for five hours of interrogation!) and coming out alive, with a $1 dollar salary to show for it.

Some highlights from yesterday’s testimony:

  • Rep. Paul Hodes, (D-N.H.) stated, “AIG stands for Arrogance. Incompetence. Greed.”
  • Rep. Carolyn Maloney (D-N.Y.) said AIG was “morally reprehensible and irresponsible to expect bonus money for bringing a corporate giant to its knees and paralyzing the national economy.”
  • Rep. David Scott (D-Ga.) said, “It seems to me that somebody was asleep at the switch. This was a profound issue that borders on fraud and criminality.”

Liddy’s response included:

“Americans are asking quite simply, Why pay these people anything at all?” Liddy told a House of Representatives subcommittee on Wednesday. “Here’s why: I am trying desperately to prevent an uncontrolled collapse of that business.”

“I need all the help I can get.”

“We basically said to people, you have a job, and that job is going to go away after you wind down the book of business that you managed,” Liddy said. “The arrangement is, if you stay, wind down your particular business, do a good job of it and we’re comfortable with the job that you’ve done, you’ll get that retention bonus.”

Looking back, from Buyouts May 12, 2008 (view full interview here, sub req.):

You just joined CD&R as an operating partner, having previously served as the chairman and CEO of insurance giant Allstate. How and why did you come to join the LBO firm?

I gave up the CEO role at Allstate in January 2007, and I remained chairman through April 2007. I had about a year and a half to ponder what I wanted my future to be and also who I wanted to be associated with. … It’s the right size firm in my judgment—not too big, not too small. The term I use to describe Clayton is “light heavyweight.” It can get in the ring with big players, and yet it’s small enough that you can get all the decision makers around the table on a Monday afternoon and decide what has to happen.

How do you picture the work environment at CD&R compared to a major corporation?

Allstate was a $38 billion company. You are on 24 by 7 by 52 when you’re the CEO. I mean, every single minute you are on. I think there’s intensity in the work environment at Clayton Dubilier but I think it’s a different kind of intensity. When you’re on the cusp of doing a deal, when you first buy a portfolio company and you’re trying to figure out the right strategy and whether we analyzed it correctly, I think things can get pretty intense. Then, as that business begins to evolve and you like what you see, I think things can be a little bit more relaxed. I think it’s a busy environment, I think it’s an intense environment, but I think it’s a different kind of busy and a different kind of intensity.

Image via Reuters.