Some of AIG’s (AIG) big investors wanted to throw out management. But, that was not enough for them. With the smell of blood in their nostrils they have decided that the board of directors should go as well.

The big players in the matter, which include billionaire Eli Broad and fund manager Shelby Davis "said in a letter sent to the board Wednesday that "significant and immediate changes at both the management and board level are clearly called for," according to The Wall Street Journal.

They have a point. The insurance company has lost $13 billion in the last two quarters and has had to raise $20 billion. The shares are down by more than 50% from their 52-week high and now trade at $33.26. That means about $100 billion in market cap has gone.

The activists probably have the wrong approach. Putting in a new board take time. The crowd would have to get up to speed on the company’s operations and troubles. If the board came in with new management, no one would know what is going on. That is unless they bring back Hank Greenberg, former CEO and one of the oldest men in the world.

The AIG board is not entirely made up of doofuses. One of the members is President of the American Museum of Natural History. That looks bad under the circumstances. Another is President and Chief Executive Officer of WQED Multimedia. He probably needs to go.

But, there are some smart CEO-types and the former COO of Citigroup (C) on the board, and they probably have a good idea of what to do with the mess.

Broad, Davis, and their friends don’t want to replace the board, no matter what they say. They have the current group sweating like hogs. They are going to do the right thing. They should be left alone.

Douglas A. McIntyre

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