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SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
[ ] Confidential, for the Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
AMERICAN INTERNATIONAL GROUP, INC.
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(Name of Registrant as Specified in Its Charter)
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(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
(5) Total fee paid:
------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
(3) Filing Party:
------------------------------------------------------------------------
(4) Date Filed:
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AMERICAN INTERNATIONAL GROUP, INC.
70 Pine Street, New York, N.Y. 10270
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 21, 1997
April 4, 1997
To the Shareholders of
AMERICAN INTERNATIONAL GROUP, INC.:
The Annual Meeting of Shareholders of AMERICAN INTERNATIONAL GROUP, INC.
("AIG") will be held at the offices of AIG at 72 Wall Street, Eighth Floor, New
York, New York, on Wednesday, May 21, 1997, at 11:00 o'clock A.M., for the
following purposes:
1. To elect 17 directors of AIG to hold office until the next annual
election and until their successors are elected and qualified;
2. To act upon a proposal to approve a Chief Executive Officer Compensation
Plan;
3. To act upon a proposal to amend the 1991 Employee Stock Option Plan;
4. To act upon a proposal to select Coopers & Lybrand L.L.P. as independent
accountants for 1997;
5. To act upon a shareholder proposal requesting AIG to change the
composition of the Nominating Committee;
6. To act upon a shareholder proposal requesting AIG to provide a report on
certain Board matters; and
7. To transact any other business that may properly come before the
meeting.
Shareholders of record at the close of business on March 25, 1997 will be
entitled to vote at the meeting. During the ten days prior to the meeting, a
list of the shareholders will be available for inspection at the offices of AIG
at 70 Pine Street, New York, New York.
By Order of the Board of
Directors
KATHLEEN E. SHANNON
Secretary
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If you cannot be present at the meeting, please sign the enclosed Proxy and
return it at once in the accompanying postage prepaid envelope.
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AMERICAN INTERNATIONAL GROUP, INC.
70 Pine Street, New York, N.Y. 10270
PROXY STATEMENT
April 4, 1997
The enclosed proxy is solicited on behalf of the Board of Directors for use
at the Annual Meeting of Shareholders of American International Group, Inc., a
Delaware corporation ("AIG"), to be held on May 21, 1997, or at any adjournment
thereof. It may be revoked at any time prior to its use. Proxies will be voted
as specified and, unless otherwise specified, will be voted for the election of
directors, for the proposal to approve a Chief Executive Officer Compensation
Plan, for the proposal to amend the 1991 Employee Stock Option Plan, for the
selection of Coopers & Lybrand L.L.P. as independent accountants for 1997,
against the shareholder proposal requesting AIG to change the composition of the
Nominating Committee, and against the shareholder proposal requesting AIG to
provide a report on certain Board matters. These proxy materials are being
mailed to shareholders of AIG commencing on or about April 4, 1997.
Only shareholders of record at the close of business on March 25, 1997 will
be entitled to vote at the meeting. On that date, 469,537,611 shares (exclusive
of shares held by AIG and certain subsidiaries) of common stock, par value $2.50
per share ("AIG Common Stock"), were outstanding, each such share of stock
having one vote.
Proxies marked as abstaining, and any proxies returned by brokers as
"non-votes" on behalf of shares held in street name because beneficial owners'
discretion has been withheld as to one or more matters on the agenda for the
Annual Meeting, will be treated as present for purposes of determining a quorum
for the Annual Meeting. With respect to the election of directors, any shares
not voted as a result of an abstention or a broker non-vote will have no impact
on the vote. With respect to the approval of the Chief Executive Officer
Compensation Plan, the amendments to the 1991 Employee Stock Option Plan, the
selection of Coopers & Lybrand L.L.P. as independent accountants and the two
shareholder proposals, a broker non-vote will have no impact on the vote and an
abstention will be effectively treated as a vote against the proposal.
I. ELECTION OF DIRECTORS
Seventeen directors are to be elected at the meeting to hold office until
the next annual election and until their successors are elected and qualified.
It is the intention of the persons named in the accompanying proxy to vote for
the election of the nominees listed below, all of whom except for Mr. Smith are
currently members of your Board of Directors. It is not expected that any of the
nominees will become unavailable for election as a director, but if any should
prior to the meeting, proxies will be voted for such persons as your Board of
Directors shall recommend. Directors will be elected by a plurality of the votes
cast. The nominees and certain information supplied by them to AIG are as
follows:
LOGO M. BERNARD AIDINOFF SENIOR COUNSEL, SULLIVAN & CROMWELL
(Attorneys)
Director since 1984 Age 68
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LOGO LLOYD M. BENTSEN PARTNER, VERNER, LIIPFERT, BERNHARD,
MCPHERSON & HAND (Attorneys);
Director since 1995 FORMER UNITED STATES SECRETARY OF THE
TREASURY AND FORMER MEMBER,
UNITED STATES SENATE
Age 76
Director, IVAX Corp.
PanEnergy Corp.
LOGO PEI-YUAN CHIA RETIRED VICE CHAIRMAN, CITICORP
AND CITIBANK, N.A.
Elected September 11, 1996
Age 58
Director, Baxter International, Inc.
Case Corporation
LOGO MARSHALL A. COHEN COUNSEL, CASSELS BROCK & BLACKWELL (Barristers
and Solicitors); FORMER PRESIDENT AND CHIEF
Director since 1992 EXECUTIVE OFFICER,
THE MOLSON COMPANIES LIMITED
(Brewing, Chemical Specialties, Retail
Merchandising and Sports and Entertainment)
Age 61
Director, Barrick Gold Corporation
Lafarge Corporation
LOGO BARBER B. CONABLE, JR. RETIRED; FORMER PRESIDENT, WORLD BANK, AND
FORMER MEMBER, UNITED STATES HOUSE OF
Director since 1991 REPRESENTATIVES
Age 74
Director, First Empire State Corp.
Manufacturers & Traders Trust Co.
LOGO MARTIN S. FELDSTEIN PROFESSOR OF ECONOMICS, HARVARD UNIVERSITY;
PRESIDENT AND CHIEF EXECUTIVE OFFICER, NATIONAL
Director since 1987 BUREAU OF ECONOMIC RESEARCH
(Nonprofit Economic Research Center)
Age 57
Director, TRW, Inc.
J. P. Morgan & Co. Incorporated
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LOGO LESLIE L. GONDA CHAIRMAN, INTERNATIONAL LEASE FINANCE
CORPORATION ("ILFC")
Director since 1990 (a wholly-owned subsidiary of AIG)
Age 77
Also serves as a director of ILFC
LOGO EVAN G. GREENBERG EXECUTIVE VICE PRESIDENT--FOREIGN GENERAL
INSURANCE, AIG
Director since 1996
Age 42
Also serves as a director of C.V. Starr & Co.,
Inc. ("Starr") and Starr International Company,
Inc. ("SICO"), private holding companies (see
"Ownership of Certain Securities")
LOGO MAURICE R. GREENBERG CHAIRMAN AND CHIEF EXECUTIVE OFFICER, AIG
Director since 1967 Age 71
Director, Transatlantic Holdings, Inc.
("Transatlantic"), which is owned
49 percent by AIG
Also serves as Chairman of Transatlantic, a
director, President and Chief Executive Officer
of Starr, and a director of SICO and ILFC
LOGO CARLA A. HILLS CHAIRMAN AND CHIEF EXECUTIVE OFFICER,
HILLS & COMPANY; FORMER UNITED STATES
Director since 1993 TRADE REPRESENTATIVE
(Hills & Company provides international
investment, trade and risk advisory services)
Age 63
Director, Lucent Technologies Inc.
Chevron Corporation
Time Warner Inc.
LOGO FRANK J. HOENEMEYER FINANCIAL CONSULTANT;
RETIRED VICE CHAIRMAN,
Director since 1985 PRUDENTIAL INSURANCE COMPANY OF AMERICA
Age 77
Director, Ariad Pharmaceuticals, Inc.
Mitsui Trust Bank (USA)
Cincinnati, Inc.
Wellsford Residential Property Trust
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LOGO EDWARD E. MATTHEWS VICE CHAIRMAN -- INVESTMENTS AND FINANCIAL
SERVICES, AIG
Director since 1973
Age 65
Director, Transatlantic
Also serves as a director of Starr, SICO and
ILFC
LOGO DEAN P. PHYPERS RETIRED SENIOR VICE PRESIDENT,
INTERNATIONAL BUSINESS MACHINES CORPORATION
Director since 1979
Age 68
Director, Bethlehem Steel Corporation
Cambrex
Church & Dwight Co. Inc.
LOGO JOHN J. ROBERTS VICE CHAIRMAN--EXTERNAL AFFAIRS, AIG
Director since 1967 Age 74
Director, The Adams Express Company
Petroleum & Resources Corporation
Also serves as a director of Starr and SICO
LOGO HOWARD I. SMITH EXECUTIVE VICE PRESIDENT, CHIEF FINANCIAL
OFFICER AND COMPTROLLER, AIG
Age 52
Director, Transatlantic
Twentieth Century Industries
Also serves as a director of Starr, SICO and
ILFC
LOGO THOMAS R. TIZZIO PRESIDENT, AIG
Director since 1986 Age 59
Director, Transatlantic
Also serves as a director of Starr and SICO
LOGO EDMUND S.W. TSE EXECUTIVE VICE PRESIDENT -- LIFE
INSURANCE, AIG
Director since 1996
Age 59
Also serves as a director of Starr and SICO
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The principal occupation or affiliation of the nominees is shown in bold
face type. Each of the directors who is also an executive officer of AIG has,
for more than five years, occupied an executive position with AIG or companies
that are now its subsidiaries, and, except as hereinafter noted, each other
director has occupied an executive position with his company or organization
listed above for at least five years. Mr. Bentsen served as United States
Secretary of the Treasury from January 20, 1993 until December 22, 1994, and as
United States Senator from Texas from 1971 until 1993. Mr. Chia retired from
Citicorp on September 1, 1996. Mr. Cohen became counsel to Cassels Brock &
Blackwell on September 12, 1996. Mrs. Hills served as United States Trade
Representative from 1989 until 1993. E.G. Greenberg is the son of M.R.
Greenberg.
There were four regularly scheduled meetings, comprising all the meetings
of the Board, during 1996. All of the directors attended at least 75% of the
aggregate of all meetings of the directors and of the committees of the Board on
which they served.
The Audit Committee, which held four meetings during 1996, gives general
advice to the Board and the officers in matters relating to the audits of the
records of account of AIG and its subsidiaries. The Committee reviews the
performance and scope of audit and non-audit services provided by the
independent accountants during the fiscal year and recommends to the Board the
nomination of the independent public accountants as auditors for the ensuing
fiscal year. In addition, the Committee reviews reports issued by the internal
auditing department and the independent accountants. Messrs. Aidinoff, Conable,
Hoenemeyer and Phypers and Mrs. Hills are the current members of the Audit
Committee.
The Stock Option and Compensation Committee, which held eleven meetings
during 1996, administers the various AIG stock option plans, establishes the
compensation of the Chief Executive Officer and sets policy for compensation for
senior management. Current members of the Committee are Messrs. Cohen, Conable
and Hoenemeyer.
The principal function of the Executive Committee, which held six meetings
in 1996, is to act for the Board between Board meetings. Although the Executive
Committee formally serves as a nominating committee, in practice the Board
serves as a committee of the whole in determining nominees for membership. Any
member of the Board can present names for consideration, and no action is taken
on any candidate until that candidate is discussed with each non-employee member
of the Board. All proposed nominees for membership on the Board of Directors
submitted in writing by shareholders to the Secretary of AIG will be brought to
the attention of the Executive Committee. Messrs. Aidinoff, M.R. Greenberg,
Hoenemeyer, Matthews, Roberts and Tizzio are the current members of the
Executive Committee.
The Finance Committee, which oversees the financial affairs and investment
activities of AIG and its subsidiaries, held twelve meetings during 1996.
Messrs. Bentsen, Chia, Conable, Feldstein, M.R. Greenberg, Hoenemeyer, Matthews
and Phypers currently serve as members of the Finance Committee.
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OWNERSHIP OF CERTAIN SECURITIES
The following table summarizes the ownership of equity securities of AIG
and its parents by the directors and nominees, by the executive officers named
in the Summary Compensation Table (as set forth under the caption "Compensation
of Directors and Executive Officers") and by the directors and executive
officers as a group.
EQUITY SECURITIES OF AIG AND ITS PARENTS
OWNED BENEFICIALLY AS OF JANUARY 31, 1997(1)
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STARR SICO
AIG COMMON STOCK VOTING STOCK
COMMON STOCK -------------------------- --------------------------
-------------------------------- AMOUNT AND AMOUNT AND
AMOUNT AND NATURE OF PERCENT NATURE OF PERCENT NATURE OF PERCENT
BENEFICIAL OF BENEFICIAL OF BENEFICIAL OF
DIRECTOR OR EXECUTIVE OFFICER OWNERSHIP(2)(3)(4)(5) CLASS OWNERSHIP(6) CLASS OWNERSHIP CLASS
- ----------------------------- --------------------- ------- --------------- ------- --------------- -------
M. Bernard Aidinoff.......... 15,372 (7) 0 -- 0 --
Lloyd M. Bentsen............. 9,760 (7) 0 -- 0 --
Pei-yuan Chia................ 1,224 (7) 0 -- 0 --
Marshall A. Cohen............ 9,525 (7) 0 -- 0 --
Barber B. Conable, Jr. ...... 12,675 (7) 0 -- 0 --
Martin S. Feldstein.......... 19,843 (7) 0 -- 0 --
Leslie L. Gonda.............. 5,092,296 1.08 0 -- 0 --
E.G. Greenberg............... 53,921 .01 1,250 6.10 10 9.09
M. R. Greenberg.............. 10,710,188 2.28 5,000 24.39 10 9.09
Carla A. Hills............... 10,586 (7) 0 -- 0 --
Frank J. Hoenemeyer.......... 20,439 (7) 0 -- 0 --
Edward E. Matthews........... 381,748 .08 2,250 10.98 10 9.09
Dean P. Phypers.............. 16,869 (7) 0 -- 0 --
John J. Roberts.............. 1,222,859 .26 500 2.44 10 9.09
Howard I. Smith.............. 59,590 .01 1,250 6.10 10 9.09
Ernest E. Stempel............ 6,205,208 1.32 750 3.66 10 9.09
Thomas R. Tizzio............. 210,650 .04 1,750 8.54 10 9.09
Edmund S.W. Tse.............. 109,469 .02 1,375 6.71 10 9.09
All Directors and Executive
Officers of AIG as a Group
(30 individuals)........... 28,244,849 6.01 16,125 78.65 90 81.82
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(1) Amounts of equity securities of Starr and SICO shown represent shares as to
which the individual has sole voting and investment power. With respect to
shares of AIG Common Stock, totals include shares as to which the
individual shares voting and investment power as follows:
Feldstein -- 5,625 shares with his wife, E.G. Greenberg -- 14,337 shares
with co-trustees, M.R. Greenberg -- 10,119,749 shares with his wife and
26,704 shares with co-trustees, Tizzio -- 94,102 shares with his wife, and
all directors and executive officers of AIG as a group -- 10,262,074
shares.
(2) Amount of equity securities shown includes shares of AIG Common Stock
subject to options which may be exercised within 60 days as follows:
Aidinoff -- 7,500 shares, Bentsen -- 7,500 shares, Cohen -- 7,500 shares,
Conable -- 7,500 shares, Feldstein -- 7,500 shares, E.G.
Greenberg -- 13,156 shares, M.R. Greenberg -- 374,375 shares,
Hills -- 7,500 shares, Hoenemeyer -- 7,500 shares, Matthews -- 117,563
shares, Phypers -- 7,500 shares, Roberts -- 10,000 shares, Smith -- 51,218
shares, Stempel -- 69,852 shares, Tizzio -- 129,750 shares, Tse -- 45,718
shares, and all directors and executive officers of AIG as a
group -- 1,051,666 shares.
(3) Amount of shares shown for each of Messrs. M.R. Greenberg, Roberts and
Stempel does not include 4,890,037 shares held as trustee for the Starr
Trust, as to which they disclaim beneficial ownership. Inclusion of these
shares would increase the total ownership shown for each of the trustees by
1.04 percent.
(4) Amount of equity securities shown also excludes the following securities
owned by members of the named individual's immediate family as to which
securities such individual has disclaimed beneficial ownership:
Aidinoff -- 562 shares, Matthews -- 4,850 shares, Tizzio -- 13,302 shares,
and all directors and executive officers of AIG as a group -- 21,395
shares.
(5) Amount of shares shown for Mr. M.R. Greenberg also excludes 1,547,428 shares
owned directly by Starr (representing 24.39 percent of the shares owned
directly by Starr) as to which Mr. M.R. Greenberg disclaims beneficial
ownership.
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(Footnotes continued from preceding page)
(6) As of February 1, 1997, Starr also had outstanding 4,750 shares of Common
Stock Class B, a non-voting stock. None of the nominees holds such shares.
Shares of Starr's Series A, Series B, Series C, Series D, Series E, Series
F, Series G, Series H, Series I, Series J, Series K, Series L, Series M,
Series N and Series O Preferred Stock and its 5% Subordinated Preferred
Stock were held by the nominees as follows on January 31, 1997: Preferred
Stock, Series A--M.R. Greenberg (5,000), Matthews (1,500) and Roberts
(2,500); Preferred Stock, Series B--M.R. Greenberg (5,000), Matthews
(1,750) and Roberts (2,500); Preferred Stock, Series C--M.R. Greenberg
(5,000), Matthews (1,750), Roberts (2,500) and Tizzio (125); Preferred
Stock, Series D--M.R. Greenberg (5,000), Matthews (1,750), Roberts (2,500)
and Tizzio (375); Preferred Stock, Series E--M.R. Greenberg (5,000),
Matthews (2,000), Roberts (2,500), Smith (125), Tizzio (625) and Tse (125);
Preferred Stock, Series F--M.R. Greenberg (5,000), Matthews (2,000),
Roberts (2,500), Smith (250), Tizzio (1,000) and Tse (125); Preferred
Stock, Series G--M.R. Greenberg (5,000), Matthews (2,250), Roberts (2,250),
Smith (375), Tizzio (1,000) and Tse (250); Preferred Stock, Series H--E.G.
Greenberg (125), M.R. Greenberg (5,000), Matthews (2,250), Roberts (1,500),
Smith (500), Tizzio (1,000) and Tse (250); Preferred Stock, Series I--E.G.
Greenberg (125), M.R. Greenberg (5,000), Matthews (2,250), Roberts (1,500),
Smith (500), Tizzio (1,000) and Tse (250); Preferred Stock, Series J--E.G.
Greenberg (250), M.R. Greenberg (5,000), Matthews (2,250), Roberts (1,500),
Smith (625), Tizzio (1,000) and Tse (500); Preferred Stock, Series K--E.G.
Greenberg (375), M.R. Greenberg (5,000), Matthews (2,250), Roberts (1,500),
Smith (625), Tizzio (1,250) and Tse (750); Preferred Stock, Series L--E.G.
Greenberg (375), M.R. Greenberg (5,000), Matthews (2,250), Roberts (1,500),
Smith (625), Tizzio (1,250) and Tse (750); Preferred Stock, Series M--E.G.
Greenberg (500), M.R. Greenberg (5,000), Matthews (2,250), Roberts (1,250),
Smith (750), Tizzio (1,500) and Tse (1,000); Preferred Stock, Series
N -- E.G. Greenberg (750), M.R. Greenberg (5,000), Matthews (2,250),
Roberts (1,000), Smith (1000), Tizzio (1,500) and Tse (1,125); Preferred
Stock, Series O -- E.G. Greenberg (750), M.R. Greenberg (5,000), Matthews
(2,250), Roberts (1,000), Smith (1000), Tizzio (1,500) and Tse (1,125); and
5% Subordinated Preferred Stock--M.R. Greenberg (100) and Roberts (50). The
total outstanding shares were: Preferred Stock, Series A (15,240),
Preferred Stock, Series B (15,055), Preferred Stock, Series C (15,555),
Preferred Stock, Series D (16,430), Preferred Stock, Series E (17,930),
Preferred Stock, Series F (19,555), Preferred Stock, Series G (19,500),
Preferred Stock, Series H (19,000), Preferred Stock, Series I (19,500),
Preferred Stock Series J (20,500), Preferred Stock, Series K (21,375),
Preferred Stock, Series L (21,375), Preferred Stock, Series M (21,000),
Preferred Stock, Series N (21,625), Preferred Stock, Series O (21,625) and
5% Subordinated Preferred Stock (340).
(7) Less than .01%.
The only person who, to the knowledge of AIG, owns in excess of five
percent of the AIG Common Stock is SICO, P.O. Box 152, Hamilton, Bermuda. At
January 31, 1997, SICO held 75,703,697 shares, or 16.12 percent of the
outstanding AIG Common Stock. The Starr Foundation and Starr (both having
executive offices at 70 Pine Street, New York, New York) held 16,158,528 shares
and 11,234,595 shares (including 4,890,037 shares held by the C. V. Starr & Co.
Inc. Trust), or 3.44 percent and 2.39 percent, respectively, of the outstanding
AIG Common Stock on that date.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
directors, executive officers and 10 percent holders of AIG Common Stock to file
reports concerning their ownership of AIG equity securities. Based solely on the
review of the Forms 3, 4 and 5 furnished to AIG and certain representations made
to AIG, AIG believes that the only filing deficiencies under Section 16(a) by
its directors and executive officers during 1996 were one late report filed by
Mr. Sandler, an executive officer of AIG, which reflected a sale of 3,000 shares
and a gift of 4,000 shares by Mr. Roberts which was not reported on a timely
basis.
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
Directors who are employees of AIG or its subsidiaries do not receive fees
for service on the Board or the committees. Each other director of AIG receives
director's fees of $15,000 per year, plus $1,500 for each Board meeting
attended. An annual fee of $3,500 is paid to each member of each committee of
the Board. Members of each committee also receive $1,500 for each committee
meeting attended. In addition, directors who are not employees of AIG or its
subsidiaries each purchase 450 shares of AIG Common Stock per year, for which
they are reimbursed by AIG. Certain directors who are not employees of AIG also
serve as directors of various subsidiaries of AIG and receive fees for their
service in that capacity. During September 1996, Mr. Chia was granted an option
to purchase 5,000 shares of AIG Common Stock at $98.75 per share, and in
December 1996, each of Mrs. Hills and
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Messrs. Aidinoff, Bentsen, Cohen, Conable, Feldstein, Hoenemeyer and Phypers was
granted an option to purchase 5,000 shares of AIG Common Stock at $108.25 per
share.
Mr. Aidinoff retired as a partner in the law firm of Sullivan & Cromwell on
December 31, 1996, and Mr. Bentsen is a partner in the law firm of Verner,
Liipfert, Bernhard, McPherson & Hand, each of which in 1996 provided legal
services to AIG and its subsidiaries, receiving normal fees for services
rendered. In connection with services provided to the AIG-GE Capital Latin
American Infrastructure Fund, L.P., Mr. Bentsen may receive future consideration
from AIG or its subsidiaries. Mr. Chia has received payments from AIG for
services provided pursuant to a consulting arrangement. Mrs. Hills has entered
into a consulting arrangement with AIG through Hills & Company, whereby she
provides services to AIG.
The following Summary Compensation Table sets forth the compensation
accrued for services in all capacities to AIG and its subsidiaries by M.R.
Greenberg, the Chairman and Chief Executive Officer of AIG, and the other four
most highly compensated executive officers of AIG at December 31, 1996.
SUMMARY COMPENSATION TABLE
LONG TERM
COMPENSATION
ANNUAL COMPENSATION ---------------------------------
NAME AND ------------------------ AWARDS PAYOUTS ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS STOCK OPTIONS(#) LTIP PAYOUTS(1) COMPENSATION(2)
- ----------------------------- ---- ---------- ---------- ---------------- ---------------- ------------------
M.R. Greenberg............... 1996 $1,000,000 $3,150,000(3) 50,000 $ 10,825,000 $ 9,500
Chairman and Chief 1995 1,000,000 3,150,000(3) 50,000 -- 6,923
Executive Officer 1994 1,000,000 2,750,000(3) 37,500(4) 8,330,000 3,080
E.E. Matthews................ 1996 516,924 470,000 20,000 3,788,750 9,500
Vice Chairman -- Finance 1995 466,924 470,000 15,000 -- 7,844
1994 416,924 350,000 15,000(4) 2,940,000 3,080
T.R. Tizzio.................. 1996 506,624 470,000 20,000 3,788,750 9,500
President 1995 456,624 410,000 15,000 -- 7,835
1994 416,239 300,000 22,500(4) 2,450,000 3,080
E.S.W. Tse................... 1996 302,942 292,500 15,000 1,732,000 37,868
Executive Vice President -- 1995 285,000 277,500 10,000 -- 35,625
Life Insurance 1994 275,000 195,834 10,500(4) 1,176,000 34,375
E.E. Stempel................. 1996 275,000 290,000 -- 2,165,000 --
Vice Chairman -- Life 1995 250,000 290,000 15,000 -- --
Insurance 1994 225,000 250,000 15,000(4) 1,960,000 --
through May 20, 1996; Senior
Advisor thereafter
- ---------------
(1) Amounts shown in 1994 represent the value, based on the closing sale price
of AIG Common Stock on December 31, 1994 ($65.33), of shares of AIG Common
Stock allocated but not distributed under a Deferred Compensation Profit
Participation Plan (the "SICO Plan") provided to certain senior AIG
employees, including AIG executive officers, by SICO. The SICO Plan came
into being in 1975 when the voting shareholders and Board of Directors of
SICO, a private holding company whose principal asset consists of AIG Common
Stock, decided that a portion of the capital value of SICO should be used to
provide an incentive plan for the current and succeeding managements of all
American International companies, including AIG. Participation in the SICO
Plan by any person, and the amount of such participation, is at the sole
discretion of SICO's Board of Directors, and none of the costs of the
various benefits provided under such plan is charged to or absorbed by AIG.
The SICO Plan provides that shares may be set aside by SICO for the benefit
of the participant and distributed upon retirement. The SICO Board of
Directors may permit an early pay-out of units under certain circumstances,
but none of the individuals named in the Summary Compensation Table is
eligible for such early pay-out with respect to units awarded to them. Prior
to pay-out, the participant is not entitled to vote, dispose of or receive
dividends with respect to such shares, and shares are subject to forfeiture
under certain conditions, including but not limited to the participant's
voluntary termination of employment with AIG prior to normal retirement age.
In addition, SICO's Board of Directors may elect to pay a participant cash
in lieu of shares of AIG Common Stock. In March, 1995, a determination was
made as to the number of AIG shares allocable to the accounts of the
participants in the SICO Plan with respect to units awarded in December,
1992. The values shown for the year 1994 represent the number of AIG shares
allocated to named executive officers as follows: Greenberg -- 127,500
shares; Matthews -- 45,000 shares; Tizzio -- 37,500 shares; Tse -- 18,000
shares; Stempel -- 30,000 shares. All 1994 share amounts and sale prices are
adjusted to reflect the stock split effected as a 50 percent stock dividend
in July, 1995. Amounts shown in 1996 represent the value, based on the
closing sale price of AIG Common Stock on the New York Stock Exchange on
December 31, 1996 ($108.25), of shares of AIG Common Stock allocated in
March, 1997 but not distributed under the SICO Plan with respect to units
awarded in December, 1994. The number of shares allocated to named executive
officers is as follows: Greenberg -- 100,000 shares; Matthews -- 35,000
shares; Tizzio -- 35,000 shares; Tse -- 16,000 shares; Stempel -- 20,000
shares.
(2) Amounts shown for Messrs. Greenberg, Matthews and Tizzio represent matching
contributions under AIG's 401(k) Plan. Amounts shown for Mr. Tse reflect
contributions by AIG to the American International Companies (Hong Kong)
Staff Provident Plan.
8
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(3) Paid pursuant to the Chief Executive Officer Performance Based Compensation
Plan approved by the shareholders in May, 1994.
(4) Adjusted to reflect stock split effected as a 50 percent stock dividend in
1995.
The following table summarizes certain information with respect to grants
of options to purchase AIG Common Stock which were granted during 1996 to the
five individuals named in the Summary Compensation Table, to all executive
officers of AIG as a group, and to all employees.
OPTION GRANTS IN 1996
POTENTIAL REALIZABLE VALUE*
AT ASSUMED ANNUAL RATES OF
PERCENTAGE OF STOCK PRICE APPRECIATION
TOTAL OPTIONS FOR OPTION TERM
OPTIONS GRANTED TO EXERCISE ---------------------------
DATE GRANTED EMPLOYEES PRICE EXPIRATION 5
NAME OF GRANT (1) DURING 1996 PER SHARE DATE PERCENT(2) 10 PERCENT(3)
- -------------------- --------- ------- ------------- --------- ---------- ----------- -------------
M.R. Greenberg...... 12/11/96 50,000 7.91 $ 109.625 12/11/06 $ 3,447,250 $ 8,735,750
E.E. Matthews....... 12/11/96 20,000 3.16 109.625 12/11/06 1,378,900 3,494,300
T.R. Tizzio......... 12/11/96 20,000 3.16 109.625 12/11/06 1,378,900 3,494,300
E.S.W. Tse.......... 12/11/96 15,000 2.37 109.625 12/11/06 1,034,175 2,620,725
E.E. Stempel........ -- -- -- -- -- -- --
All Executive
Officers of AIG
as a Group (20
individuals)...... 12/11/96 155,600 24.61 109.625 12/11/06 10,727,842 27,185,654
All Employees....... Various 632,100 N/A 108.550(4) Various 43,153,467 109,353,300
All Shareholders
Stock
Appreciation(5)... N/A N/A N/A N/A N/A $32.0 billion $81.0 billion
All Unaffiliated
Shareholders Stock
Appreciation(5)... N/A N/A N/A N/A N/A $22.9 billion $58.0 billion
- ---------------
* Options would have no realizable value if there were no appreciation or if
there were depreciation from the price at which the options were granted,
.
(1) All options were granted pursuant to the 1991 Employee Stock Option Plan at
an exercise price equal to the fair market value of such stock at the date
of grant. The option grants provide that 25 percent of the options granted
on any date become exercisable on each anniversary date in each of the
successive four years.
(2) Appreciated price would be $178.57 per share for the individuals named,
$178.57 per share for all executive officers and a weighted average of
$176.82 per share for all employees.
(3) Appreciated price would be $284.34 per share for the individuals named,
$284.34 per share for all executive officers and a weighted average of
$281.55 per share for all employees.
(4) Weighted average exercise price per share.
(5) Calculated using the 469,441,146 shares of AIG Common Stock outstanding at
December 31, 1996.
The following table summarizes certain information with respect to the
exercise of options to purchase AIG Common Stock during 1996 by the five
individuals named in the Summary Compensation Table and the unexercised options
to purchase AIG Common Stock held by such individuals at December 31, 1996.
AGGREGATED OPTION EXERCISES DURING THE YEAR ENDED DECEMBER 31, 1996
AND DECEMBER 31, 1996 OPTION VALUES
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT IN-THE-MONEY OPTIONS
SHARES DECEMBER 31, 1996 AT DECEMBER 31, 1996(2)
ACQUIRED ON VALUE ------------------------- -------------------------
NAME EXERCISE REALIZED(1) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
- ----------------------- ----------- ----------- ------------------------- -------------------------
M.R. Greenberg......... 56,250 $5,027,186 374,375/115,625 $ 26,606,721/$1,841,407
E.E. Matthews.......... 11,250 818,562 131,625/ 42,500 9,136,095/ 680,313
T.R. Tizzio............ 7,031 472,815 129,750/ 46,250 8,797,314/ 844,063
E.S.W. Tse............. 1,125 90,700 45,719/ 30,000 2,805,592/ 452,188
E.E. Stempel........... -- -- 69,852/ 21,750 4,371,337/ 643,500
- ---------------
(1) Aggregate market value on date of exercise (closing sale price as reported
in the New York Stock Exchange Composite Transactions Report) less aggregate
exercise price.
(2) Aggregate market value on December 31, 1996(closing sale price as reported
in the New York Stock Exchange Composite Transactions Report) less aggregate
exercise price.
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The following table summarizes certain information with respect to benefits
that the proxy rules classify as granted under Long-Term Incentive Plans which
were granted during 1996 (with respect to the 1997-1998 period) to the five
individuals named in the Summary Compensation Table.
LONG-TERM INCENTIVE PLANS -- AWARDS IN 1996(1)
NAME NUMBER OF UNITS PERFORMANCE PERIOD ESTIMATED FUTURE PAYOUTS
- ------------------------------------------------------------ ------------------ -------------------------
M. R. Greenberg.............................. 10,000 Two years 100,000 shares
E. E. Matthews............................... 3,000 Two years 30,000 shares
T. R. Tizzio................................. 4,000 Two years 40,000 shares
E.S.W. Tse................................... 2,000 Two years 20,000 shares
E. E. Stempel................................ 1,000 Two years 10,000 shares
- ------------
(1) Awards represent grants of units under the SICO Plan described in Note 1 to
the Summary Compensation Table with respect to the two-year period from
January 1, 1997 through December 31, 1998. The SICO Plan contains neither
threshold amounts nor maximum payout limitations. The number of shares of
AIG Common Stock allocated to a unit upon payout is based on a percentage
selected by SICO's Board of Directors of between 20 percent and 100 percent
of the increase of SICO's retained earnings attributable to the AIG Common
Stock held by SICO over the two-year period. As a result, the number of
shares to be allocated with respect to units held for the 1997-1998 period
and the value of such shares cannot be determined at this time. The number
of shares shown under "Estimated Future Payouts" represent the number of
shares allocable to the named individuals based upon the units awarded to
them for the 1997-1998 period, assuming the percentage selected by the SICO
Board of Directors and the increase in SICO's retained earnings for the
1997-1998 period were the same as those used to allocate the shares of AIG
Common Stock for the 1995-1996 period. As noted in the description of the
SICO Plan in Note 1 to the Summary Compensation Table, prior to pay-out,
the participant is not entitled to vote, dispose of or receive dividends
with respect to such shares, and the shares are subject to forfeiture under
certain conditions, including but not limited to the participant's
voluntary termination of employment with AIG prior to normal retirement
age.
In order to facilitate the performance of their management
responsibilities, AIG provides to Messrs. M.R. Greenberg and Roberts automobiles
and drivers and to these individuals and other officers and employees the use of
a yacht and corporate aircraft, club memberships, recreational opportunities and
clerical and investment management services. These facilities are provided for
use for business purposes and the costs thereof are considered ordinary and
necessary business expenses of AIG. Any personal benefit any of these persons
may have derived from the use of these facilities or from the services provided
is regarded as incidental and the amount thereof has therefore not been included
in the compensation shown in the Summary Compensation Table.
Messrs. E.G. Greenberg, M.R. Greenberg, Matthews, Roberts, Smith, Stempel,
Tizzio and Tse or certain of them, are directors and officers of SICO, directors
and members of the Starr Foundation and directors and officers of Starr. These
individuals also receive compensation as officers of Starr for services rendered
to Starr as well as compensation from SICO for services rendered to SICO. These
services are not considered to detract materially from the business time of
these individuals available for AIG matters and such compensation is not
included in the compensation for services to AIG shown in the Summary
Compensation Table.
AIG maintains a policy of directors and officers liability insurance for
itself, its directors and officers, its subsidiaries, and their directors and
officers. The premium for the year ending May 24, 1997 is approximately
$2,500,000.
PENSION BENEFITS
Through March 31, 1985, when such plan was terminated, employees of AIG and
its subsidiaries who are citizens of the United States or non-citizens working
in the United States were covered under the American International Group, Inc.
Pension Plan, a contributory, qualified, defined benefit plan ("Original Pension
Plan"). The annual pension for a participant was equal to 1.75% of Average Final
Compensation multiplied by years of credited service as a participant (up to 40
years) less 1.4286% of his Social Security Benefit multiplied by years of
credited service (limited to 35 years). Average Final Compensation was defined
as the average annual compensation of a participant during the 3 consecutive
years in the last 10 years of his credited service affording the highest such
average, or during all of the years of his credited service if less than 3
years. Benefits were paid monthly during the life of the participant, or, if
applicable, during the joint lives of the participant and his contingent
annuitant. The annual retirement allowance for participants with at least 10
years of credited service was not less than 50% of 1.75% of Average Final
Compensation, multiplied by years of credited service, or $1,200, whichever was
greater. On April 1, 1985, a new non-contributory, qualified, defined benefit
plan ("Current Retirement Plan") was established, with provisions substantially
the same as the Original Pension Plan, except for the non-contributory feature
and except that in the annual pension formula described above, 1.25% of Average
Final Compensation is multiplied by years of credited service as a participant
(up to 44 years) less 1.25% of his Social Security Benefit multiplied by
10
13
years of credited service (limited to 35 years). The 1.25% of Average Final
Compensation is also used in the determination of the minimum retirement
allowance. Effective January 1, 1989, the Current Retirement Plan formula
changed in accordance with government mandated regulations from a Social
Security offset to a Social Security integration method of computation where the
offset is the average of the final three years' compensation but no greater than
150% of the employee's "covered compensation" (the average of the Social
Security Wage bases during the 35 years preceding the Social Security retirement
age) times credited service up to 35 years, multiplied by an applicable Social
Security retirement age factor. For employees terminating from active service
after January 1, 1993, the benefit formula for credited service on and after
April 1, 1985 changed from 1.25% to 1.35% of Average Final Compensation.
Effective January 1, 1996, the Current Retirement Plan formula now equals 1.25%
times Average Final Compensation up to 150% of the employee's "covered
compensation" plus 1.75% times Average Final Compensation in excess of 150% of
"covered compensation" times years of credited service prior to April 1, 1985
(up to 35 years) plus 1.75% times Average Final Compensation times years of
credited service in excess of 35 years but limited to 40 years; plus .925% times
Average Final Compensation up to 150% of the employee's "covered compensation"
plus 1.425% times Average Final Compensation in excess of 150% of "covered
compensation" times years of credited service after April 1, 1985 (up to 35
years) plus 1.425% times Average Final Compensation times years of credited
service in excess of 35 years but limited to 44 years.
As a result of the termination of the Original Pension Plan, all benefits
accruing to the termination date became vested regardless of an employee's years
of service and annuities were purchased for benefits payable under that plan.
AIG was entitled to receive the surplus remaining in the Original Pension Plan,
other than the portion of the surplus attributable to employee contributions.
The AIG savings plan ("401(k) Plan") for employees provides for salary
reduction contributions by employees and matching contributions by AIG. The
retirement benefits for most employees who participate in both the Current
Retirement Plan and the 401(k) Plan will be substantially greater than the
benefits which would have been received under the Original Pension Plan.
Annual amounts of normal retirement pension commencing at normal retirement
age of 65 based upon Average Final Compensation and credited service under the
Current Retirement Plan and the Supplemental Plan are illustrated in the
following table:
ESTIMATED ANNUAL PENSION AT AGE 65
TOTAL YEARS OF CREDITED SERVICE AS A PLAN PARTICIPANT
3 YEAR AVERAGE ---------------------------------------------------------------------------------
FINAL COMPENSATION 10 YEARS 15 YEARS 20 YEARS 25 YEARS 30 YEARS 35 YEARS 40 YEARS
- ------------------ --------- --------- --------- --------- --------- --------- ---------
$ 125,000..................... $ 14,088 $ 29,088 $ 44,088 $ 59,088 $ 59,088 $ 59,088 $ 59,088
$ 150,000..................... 20,088 38,088 56,088 74,088 74,088 74,088 74,088
$ 175,000..................... 26,088 47,088 68,088 89,088 89,088 89,088 89,088
$ 200,000..................... 32,088 56,088 80,088 104,088 104,088 104,088 104,088
$ 225,000..................... 38,088 65,088 92,088 119,088 119,088 119,088 119,088
$ 250,000..................... 44,088 74,088 104,088 134,088 134,088 134,088 134,088
$ 300,000..................... 56,088 92,088 128,088 164,088 164,088 164,088 164,088
$ 375,000..................... 74,088 119,088 164,088 209,088 209,088 209,088 209,088
$ 400,000..................... 80,088 128,088 176,088 224,088 224,088 224,088 224,088
$ 500,000..................... 104,088 164,088 224,088 284,088 284,088 284,088 284,088
$ 750,000..................... 164,088 254,088 344,088 434,088 434,088 434,088 434,088
$1,000,000..................... 224,088 344,088 464,088 584,088 584,088 584,088 584,088
$1,375,000..................... 314,088 479,088 644,088 809,088 809,088 809,088 809,088
- ------------
With respect to the individuals named in the Summary Compensation Table,
other than Mr. Tse, their respective years of credited service (under both
plans) through December 31, 1996 are as follows: Greenberg--36 years;
Matthews--23.2 years; Stempel--44 years; Tizzio--28.7 years. Pensionable salary
includes only the regular salary paid by AIG and its subsidiaries and does not
include amounts attributable to bonuses or overtime pay. For such named
individuals, pensionable salary during 1996 was as follows:
Greenberg--$1,000,000; Matthews--$516,924; Stempel--$275,000; Tizzio--$506,624.
During 1986, AIG adopted the Supplemental Plan to provide additional
retirement benefits to designated executives and key employees. Under the
Supplemental Plan, annual benefits, not to exceed 60% of Average Final
Compensation, accrue at a rate of 2.4% of Average Final Compensation for each
year of service or fraction thereof for each full month of active employment.
The benefit payable under the Supplemental Plan is reduced by payments from the
Original Pension Plan, the Current Retirement Plan, Social Security Benefit and
any payments from a qualified pension plan of a prior employer. Messrs.
Greenberg, Matthews, Stempel and Tizzio were participants in the Supplemental
Plan at December 31, 1996. Federal legislation limits the benefits which may be
payable from the Current Retirement Plan. Effective January 1, 1991, the
Supplemental Plan was amended to provide a benefit to Current Retirement Plan
participants in an amount equal to the reduction in the benefit payable as a
result of the Federal limitation.
11
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Mr. Tse participates in the American International Companies (Hong Kong)
Staff Provident Plan, a defined contribution plan which requires employee
contributions of five percent of salary. Contributions to this plan by AIG vary
based on employee service. During 1996, AIG contributed 12.5 percent of Mr.
Tse's pensionable salary of $302,942 to the plan based on his 35.6 years of
service.
CERTAIN TRANSACTIONS
Certain transactions in 1996 effected in the ordinary course of business
between AIG and its subsidiaries and SICO and Starr are summarized in the
following table:
SICO STARR
AND AND
SUBSIDIARIES SUBSIDIARIES
------------ ------------
(in thousands)
AIG and Subsidiaries Paid:
For production of insurance business*................................... $ -- $ 48,400
For services (at cost)**................................................ 1,200 34
Rentals................................................................. 4,400 --
AIG and Subsidiaries Received:
For services (at cost)**................................................ 1,000 15,300
Rentals................................................................. -- 3,600
- ------------
*From these payments, which constituted approximately 40% of Starr's gross
revenues for the year, Starr is required to pay its operating expenses and
commissions due originating brokers. The amounts are paid at terms available
to unaffiliated parties, and represent approximately .02% of the gross
revenues of AIG.
**These services are provided and obtained at a cost which, in the opinion of
the management of AIG, does not exceed the cost of obtaining such services
from unaffiliated sources.
REPORT OF THE STOCK OPTION AND COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
The Stock Option and Compensation Committee, currently comprised of Messrs.
Cohen, Conable and Hoenemeyer, is the committee of the Board responsible for
establishing the compensation of the Chief Executive Officer and setting policy
for compensation at the senior levels of AIG, as well as administering AIG's
various employee stock option plans.
In determining the compensation which is appropriate for both the Chief
Executive Officer and other members of senior management, the Stock Option and
Compensation Committee's starting point is AIG's salary administration
philosophy, which is to pay within a range that helps meet business objectives
while considering external and internal influences and the level of funding
allocated to employee compensation. At senior positions, one of the objectives
is to pay at a level that allows AIG to attract, retain and motivate key
executives by paying them competitively compared to peers within a selected
group of major companies in the insurance industry while comparing AIG's
performance to the performance of those companies. In so doing, a variety of
factors are considered, including the performance of AIG relative to those
companies as measured by standards such as net income and its growth over prior
periods, return on equity and property and casualty underwriting performance;
the level of compensation paid to senior officers within the selected group of
companies; the level of individual contribution by these senior officers to the
performance of AIG; and, in the case of the Chief Executive Officer, his
compensation as a percentage of net income. In determining 1996 compensation,
the Committee did not use a specific formula in evaluating the various factors,
in determining the specific amount of compensation payable or in determining the
allocation of compensation to salary, bonus and stock option grants but believes
that such compensation is commensurate with the services rendered. The weight
given to each factor with respect to each element of compensation is within the
individual discretion and judgment of each member of the Committee. Each member
also takes the appropriateness of the entire package into account when
evaluating each element of compensation. With respect to the Chief Executive
Officer, the compensation in excess of the salary was determined under the
formula included in the performance-based compensation plan (the "1994 Plan")
adopted and approved by the shareholders in 1994, based upon the pre-tax return,
with certain adjustments, on AIG's consolidated common shareholders' equity as
of December 31, 1995, with certain adjustments.
AIG's after-tax return on equity (excluding capital gains) was 13.6 percent
for each of 1995 and 1996. The average after-tax return on equity (excluding
capital gains) of AIG's peer group, which is the same as the peer group used for
the performance graph presented below, was reported by Conning & Company, a
leading insurance research and asset management company, to be 9.8 percent for
1995 and estimated by Conning to be 9.3 percent for 1996, respectively. AIG
evaluates underwriting performance on the basis of the combined ratio
12
15
(which is the sum of the statutory loss ratio and the statutory expense ratio),
a measure of underwriting performance commonly used by property and casualty
insurers. AIG's property and casualty underwriting performance for 1995 and
1996, as measured by its combined ratio, exceeded that of AIG's peer group.
AIG's combined ratios for 1995 and 1996 were 97.04 and 96.87, respectively,
while those for its peer group averaged 109.3 and 106.5, respectively. The total
compensation of the Chief Executive Officer for 1996 represented approximately
.14 percent of net income of AIG for that year. The cash compensation for both
the Chief Executive Officer and the executive officers in general ranked at
approximately the 80th percentile when compared to the compensation of
executives of the companies included within the peer group for 1995, the last
year for which comparable information is publicly available.
As part of its consideration of the Chief Executive Officer's compensation,
the Committee also reviewed the activities and accomplishments of the Chief
Executive Officer in promoting the long-term interests of AIG through
participation in the debate on the future of the financial services and
insurance industries, in discussions on trade relations and international
affairs and in other similar endeavors.
On the basis of the general factors set forth above, the Committee
determined in 1995 the base salaries and participation in the supplementary
bonus program for 1996 and bonuses for 1995 performance, and in 1996, the base
salaries and participation in the supplementary bonus program for 1997 and the
bonuses for 1996 performance.
The Committee has recognized, in making these compensation determinations,
that AIG has traditionally encouraged long-term strategic management and the
enhancement of shareholder value by providing high performing key executives the
opportunity for superior capital accumulation over the course of their careers
with AIG in the form of stock options. This is a tradition that the Committee
believes to have contributed significantly to AIG's considerable success over
the years.
Section 162(m) of the Internal Revenue Code (the "Code") denies a tax
deduction to any publicly-held corporation such as AIG for compensation paid to
the chief executive officer and four most highly compensated officers of a
corporation in a taxable year to the extent that any such individual's
compensation exceeds $1,000,000 unless certain requirements for
performance-based compensation are satisfied. It is currently the intention of
AIG that all compensation for the Chief Executive Officer in excess of
$1,000,000 will be performance-based and therefore will be deductible in
accordance with Section 162(m). Bonus payments to the Chief Executive Officer
for 1996 pursuant to the 1994 Plan will be deductible by AIG for federal income
tax purposes.
No member of the Committee is a former or current officer or employee of
AIG or any of its affiliated companies or is receiving compensation from AIG in
any capacity other than as a director of AIG and certain of its subsidiaries or
as a committee member of a committee of directors.
Stock Option and Compensation Committee
American International Group, Inc.
Marshall A. Cohen
Barber B. Conable, Jr.
Frank J. Hoenemeyer
13
16
PERFORMANCE GRAPH
The following Performance Graph compares the cumulative total shareholder
return on AIG Common Stock for a five year period (December 31, 1991 to December
31, 1996) with the cumulative total return of the Standard & Poor's 500 stock
index (which includes AIG) and a peer group of companies (the "Peer Group")
consisting of seven multi-line or property/casualty insurance companies to which
AIG has traditionally compared its business and operations: Chubb Corporation,
CIGNA Corporation, CNA Financial Corporation, General Re Corporation, ITT
Hartford Group, Inc., The St. Paul Companies and USF& G Corporation. The prior
years' Performance Graphs included Aetna Life & Casualty Company, which was
acquired by The Travelers Corporation. ITT Hartford Group, Inc. was not included
in prior years' Performance Graphs because prior to becoming a publicly-traded
company in December 1995, it was included in ITT Corporation, and AIG did not
believe that ITT Corporation was comparable to AIG in its overall business and
operations. In light of the lack of any historical trading information with
respect to ITT Hartford Group, Inc., the addition of ITT Hartford Group, Inc. to
the peer group had no impact on the returns set forth below, other than on the
returns for the year ended December 31, 1996. Dividend reinvestment has been
assumed and, with respect to companies in the Peer Group, the returns of each
such company have been weighted to reflect relative stock market capitalization.
FIVE YEAR CUMULATIVE TOTAL RETURNS
VALUE OF $100 INVESTED ON DECEMBER 31, 1991
TOTAL SHAREHOLDER RETURNS
[GRAPH]
YEARS ENDING
---------------------------------------------------
1991 1992 1993 1994 1995 1996
---------------------------------------------------
AIG 100.00 118.57 135.13 151.62 215.54 253.17
S&P 500 100.00 107.62 118.46 120.03 165.13 203.05
PEER GROUP 100.00 111.43 106.99 111.36 155.70 179.38
II. APPROVAL OF A CHIEF EXECUTIVE OFFICER COMPENSATION PLAN
It is proposed by the Board of Directors that a new performance-based Chief
Executive Officer compensation plan (the "1997 Plan") adopted by the Board of
Directors be approved by shareholders.
The 1997 Plan provides that for each calendar year beginning with 1997 a
bonus shall be paid to the Chief Executive Officer based upon performance goals
established for such year by the Stock Option and Compensation Committee. The
performance goals for each year shall be selected no later than March 30 of each
year using one or more of the following criteria: return on equity; net income;
increases in net income over one or more prior years; earnings per share;
increases in share value as measured by stock price performance; underwriting
loss and expense experience; and expansion of geographic and product markets.
For purposes of the 1997 Plan, net income is AIG's net income for the calendar
year, including realized capital gains and losses as reflected in the financial
statements of AIG and its consolidated subsidiaries for such year, but excluding
the effect of catastrophic losses for such period in excess of $50,000,000 and
the effect of any changes in accounting principles that may be required by the
Financial Accounting Standards Board subsequent to March 17, 1997 ("Adjusted Net
Income") and return on equity is Adjusted Net Income expressed as a percentage
of common shareholders' equity at the beginning of the calendar year, exclusive
of unrealized appreciation or depreciation of investments, net of taxes. The
Committee has established performance goals for the Chief Executive Officer for
1997 pursuant to the terms of the 1997 Plan.
14
17
The maximum bonus for any 1997 Plan year may not exceed five times the Chief
Executive's annual base salary for such year which salary may not exceed
$1,000,000 for any calendar year. The Stock Option and Compensation Committee
shall have the authority to reduce such bonus, but may not increase the bonus
payable pursuant to the 1997 Plan without the approval of holders of AIG Common
Stock. Had the 1997 Plan been in effect for 1996, the maximum amount payable
pursuant to the 1997 Plan, subject to review and possible reduction by the Stock
Option and Compensation Committee, would have been $5,000,000.
Under the requirements for performance-based compensation set forth in
Section 162(m) of the Code, compensation paid under the 1997 Plan will be
deductible for federal income tax purposes if the 1997 Plan is approved by the
holders of AIG Common Stock. It is the intent of AIG to operate the 1997 Plan so
that all amounts paid thereunder are deductible for federal income tax purposes.
Approval of this proposal requires approval by a majority of the holders of
AIG Common Stock present and entitled to vote at the meeting.
Your Board of Directors recommends a vote FOR this proposal.
III. APPROVAL OF PROPOSAL TO AMEND THE 1991 EMPLOYEE STOCK OPTION PLAN
The Board of Directors has adopted, subject to approval of the
shareholders, certain amendments to the 1991 Employee Stock Option Plan (the
"1991 Plan"). The first amendment increases the aggregate number of shares
available for grant under the 1991 Plan from 4,500,000 shares (as such shares
have been adjusted since 1991 pursuant to the stock splits effected as stock
dividends in 1993 and 1995) to 7,875,000 shares to assure that an adequate
number of shares is available for grant during the remaining term of the 1991
Plan. A second amendment to the 1991 Plan limits the maximum number of shares as
to which stock options may be granted to any employee in any one year to 90,000
shares. This amendment is intended to allow grants under the 1991 Plan to
qualify as "performance-based" compensation for purposes of Section 162(m) of
the Code. No other substantive amendments are being made to the 1991 Plan. An
amended and restated copy of the 1991 Plan (the "Amended 1991 Plan") is attached
as Appendix A.
The purpose of the Amended 1991 Plan is to advance the growth and
prosperity of AIG and its subsidiaries by providing their officers and other key
employees with additional incentives. The Amended 1991 Plan is to be
administered by a committee of the Board of Directors (the "Committee") drawn
solely from its members who are not eligible to participate in such plan.
Under the Amended 1991 Plan, options may be granted to such officers and
other key employees to purchase up to an aggregate of 7,875,000 present shares
of AIG Common Stock (which reflects adjustment for the stock splits in the form
of 50 percent stock dividends paid in July 1993 and July 1995), at exercise
prices not less than the fair market value of such stock at the dates of grant.
Shares to be reserved for issuance under the Amended 1991 Plan will consist of
newly issued shares or shares acquired by AIG from time to time and held as
treasury stock. Options may be exercisable for periods not exceeding ten years
from grant dates and shall be granted upon such other terms and conditions as
the Committee may approve. No cash consideration will be received for the
granting of options. Options will not be transferable otherwise than by will or
the laws of descent and distribution. The Amended 1991 Plan provides that the
Committee shall determine at the time of grant whether all or any part of a
stock option shall be an incentive stock option. The number of shares available
for options or issuable upon the exercise of options, and option prices, will be
subject to antidilution and similar adjustments. Shares subject to options which
terminate or expire prior to exercise will be available for further options
under the Amended 1991 Plan. No options may be granted under the Amended 1991
Plan after December 31, 2001. The Board may from time to time amend the Amended
1991 Plan, but no alteration or amendment may be made without the approval of
shareholders if such approval is required by applicable law, stock exchange rule
or Section 162(m) of the Code.
Because the granting of options under the provisions of the Amended 1991
Plan will be entirely within the discretion of the Committee, it is not possible
to designate the employees to whom options will be granted under the Amended
1991 Plan or the number of shares to be covered by such options. It is expected
that the aggregate number of optionees under the Amended 1991 Plan is not likely
to exceed 1,000. Grants of options under the 1991 Plan made during 1996 are
shown in the table on page 9.
The market value of the AIG Common Stock on March 31, 1997 was $117.375 per
share.
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TAX MATTERS
Upon the grant or exercise of an incentive stock option, no income will be
realized by the optionee for federal income tax purposes, and AIG will not be
entitled to any deduction. If the shares received on the exercise of an
incentive stock option are not disposed of within the one-year period beginning
on the date of the transfer of such shares to the optionee, nor within the
two-year period beginning on the date of the grant of the option, any profit
realized by the optionee upon the disposition of such shares will be taxed as
long-term capital gain. In such event, no deduction will be allowed to AIG. If
the shares are disposed of within the one-year period from the date of transfer
of such shares to the optionee or within the two-year period from the date of
the grant of the option, the excess of the fair market value of the shares on
the date of exercise or, if less, the fair market value on the date of
disposition, over the exercise price will be taxable as ordinary income of the
optionee at the time of disposition, and AIG will be entitled to a corresponding
deduction at such time.
Upon the grant of an option which is not an incentive stock option, no
income will be realized by the optionee. Upon the exercise of such an option,
the amount by which the fair market value of the shares at the time of exercise
exceeds the exercise price will be taxed as ordinary income of the optionee and
AIG will be entitled to a corresponding deduction. The optionee may be required
to pay to AIG the applicable withholding taxes with respect to the ordinary
income realized on exercise of a nonqualified stock option.
Approval of the amendment to the 1991 Plan requires approval by a majority
of the shares of AIG Common Stock present and entitled to vote at the meeting.
Your Board of Directors recommends a vote FOR the proposal to approve the
amendment to the 1991 Plan.
IV. SELECTION OF ACCOUNTANTS
The Audit Committee and the Board of Directors have recommended the
employment of Coopers & Lybrand L.L.P. as independent accountants of AIG for
1997. That firm has no direct or indirect financial interest in AIG or any of
its parents or subsidiaries. Representatives of that firm are expected to be
present at the Annual Meeting with an opportunity to make a statement if they
desire to do so and to be available to respond to appropriate questions.
Approval of the selection of accountants requires approval by a majority of
the shares of AIG Common Stock present and entitled to vote at the meeting.
Your Board of Directors recommends a vote FOR the proposal to employ
Coopers & Lybrand L.L.P.
V. SHAREHOLDER PROPOSAL
The Presbyterian Church (U.S.A.), 100 Witherspoon Street, Louisville,
Kentucky 40202, which states that it owns 87,975 shares of AIG Common Stock, has
notified AIG in writing that it intends to present a resolution for action by
the shareholders at the Annual Meeting. The Adrian Dominican Sisters, 1257 East
Siena Heights Drive, Adrian, Michigan 49221, Catholic Healthcare West, 1700
Montgomery Street, Suite 300, San Francisco, California 94111, and The Domestic
and Foreign Missionary Society of the Protestant Episcopal Church in the United
States of America, Episcopal Church Center, 815 Second Avenue, New York, New
York 10017-4594, who state that they hold 150 shares, 15,850 shares and 8,400
shares, respectively, of AIG Common Stock, have notified AIG that they are
joining as proponents of the resolution to be proposed by the Presbyterian
Church (U.S.A.). The text of the resolution and the supporting statement
submitted by the sponsors are as follows:
"AMERICAN INTERNATIONAL GROUP INDEPENDENT NOMINATING COMMITTEE
WHEREAS, American International Group has, as a practical matter, no Nominating
Committee, the full Board acting on the recommendation of the Executive
Committee, most of whom are top management officials of American International
Group;
WHEREAS, we believe our company would benefit from the leadership of directors
who have been nominated through an independent process;
WHEREAS, last year two Board members retired and were replaced by employees of
the company;
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WHEREAS, we believe the creation of a Nominating Committee composed of
independent directors would strengthen the possibility of having directors who
will bring a fresh and independent viewpoint when needed to the deliberations of
our Board;
Therefore let it be Resolved that the Board of Directors create a Nominating
Committee of at least four members. All members of the Nominating Committee
shall be independent directors who:
1. have not been an executive of the company or its affiliates during
the last five years;
2. is not, and have not been, a member of a company that is one of the
company's advisors or consultants;
3. is not employed by a significant customer or supplier;
4. do not, and did not, have a personal services contract with the
company;
5. are not employed by a tax-exempt organization that receives
significant contributions from the company;
6. are not a relative of any management of the company;
7. are not officers of a corporation on which the Chairman, CEO,
President, or any other officer of American International Group
serves as directors.
SUPPORTING STATEMENT
We believe that directors who are free of any relationships which influence
or preclude their ability to exercise oversight of management and operations
when needed are beneficial to a corporation. Such independence can serve the
shareholders in numerous ways including resolution of conflicting views within
management, or raising financial, public policy or issues of corporate policy
and practice, such as equal employment opportunity and workforce diversity,
which need addressing.
Corporate leaders and institutional investors recognize the value of
independence. A November 1992 survey of 600 directors of Fortune 1,000
corporations, conducted by Directorship and endorsed by the Business Roundtable,
found that 93 percent believed that a majority of the board should consist
entirely of outside, independent directors. We agree.
A Nominating Committee composed solely of independent directors should
remove any question that candidates for the Board have been selected solely by
the current management. The use of the American International Group Executive
Committee, most of whose members are current management, to initially screen
possible Board members may result in a Board with independent, impartial
directors. This is not guaranteed, however. The adoption of this proposal would
establish an unclouded process and insure that candidates are proposed through a
thoroughly independent, objective process. We ask for your support."
MANAGEMENT'S STATEMENT IN OPPOSITION
Your Board of Directors opposes this proposal. Your current Board and its
predecessors have led AIG to prosperity and growth in value for all
shareholders; AIG's long-term performance has consistently outpaced that of its
competitors. Your Board of Directors does not believe that there would be any
demonstrable improvement in the composition of the Board or the performance of
AIG if the proposal were to be adopted. Your Board of Directors stresses the
complete participation of all members in the Board decision-making process,
without distinction based on employee or independent status. Your Board believes
that the views of management are critically important to the nominating process
at AIG, where management directors have substantial personal ownership of AIG
shares and their interests as shareholders are entirely consistent with those of
nonaffiliated shareholders. There is no justification for excluding this
substantial interest from the nominating process. Because in practice your Board
serves as a committee of the whole in determining nominees for membership, the
views of the independent directors, who comprise a majority of the Board, are
well represented. Any member of the Board can present names for consideration,
and no action is taken on any candidate until that candidate is discussed with
each non-employee member of the Board. In sum, your Board of Directors believes
that its existing policies and practices with respect to the nominating process
have resulted in significant benefit to both AIG and its shareholders, and that
the suggested changes are neither necessary nor appropriate. Therefore, your
Board of Directors urges a vote against this proposal.
Approval of this proposal requires approval by a majority of the shares of
AIG Common Stock present and entitled to vote at the meeting.
Your Board of Directors recommends a vote AGAINST this proposal.
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VI. SHAREHOLDER PROPOSAL
Christian Brothers Investment Services, Inc., 675 Third Avenue, 31st Floor,
New York, New York 10017-5704, which states that it owns 54,991 shares of AIG
Common Stock, has notified AIG in writing that it intends to present a
resolution for action by the shareholders at the Annual Meeting. The
Congregation of the Holy Cross, Southern Province, 2111 Brackenridge Street,
Austin, Texas 78704-4322; the Evangelical Lutheran Church in America, on behalf
of the Lutheran Theological Seminary, 7301 Germantown Avenue, Philadelphia,
Pennsylvania 19119; the Sisters of Charity of the Incarnate Word Health Care
System, 2600 North Loop West, Houston, Texas 77092; the Mercy Consolidated Asset
Management Program, 20 Washington Square North, New York, New York 10011; the
Sisters of Mercy of the Americas, Regional Community of St. Louis, 2039 North
Geyer Road, St. Louis, Missouri 63131-3399; the Sisters of Notre Dame de Namur,
California Province, 14800 Bohlman Road, Saratoga, California 95070-6399; the
Sisters of the Presentation, 2340 Turk Boulevard, San Francisco, California
94118-4340; the Sisters of St. Dominic, Congregation of the Most Holy Name, 1520
Grand Avenue, San Rafael, California 94901-2236; and United States Trust Company
Boston, 40 Court Street, Boston, Massachusetts 02108, who state that they hold
500 shares, 3,000 shares, 12,350 shares, 150 shares, 16,500 shares, 2,812
shares, 1,143 shares, 600 shares and over 75,000 shares, respectively, of AIG
Common Stock, have notified AIG that they are joining as proponents of the
resolution to be proposed by the Christian Brothers Investment Services, Inc.
The text of the resolution and the supporting statement submitted by the
sponsors are as follows:
"SHAREHOLDER RESOLUTION
We believe board composition of major corporations should reflect more
closely the population in the workforce and marketplace if our company is going
to remain competitive. The bipartisan Glass Ceiling Commission, "Good For
Business: Making Full Use of the Nation's Human Capital," reported diversity and
inclusiveness in the workplace has a positive impact on the bottom line based on
Covenant Fund Report on Standard and Poor 500 companies: "...Firms that succeed
in shattering their own glass ceiling racked up stock market records that were
nearly 2 1/2 times better than otherwise comparable companies."
In 1994 Investor Responsibility Research Center reported inclusiveness at
senior management and board levels at only 9% in Fortune 500 companies, the
Glass Ceiling Commission reported that companies select from only half of the
talent of our workforce. If we are to be prepared for the twenty-first century,
we must learn how to compete in an increasingly diverse global marketplace by
selecting the best people regardless of race, gender or physical challenge. We
believe the judgments and perspectives of a diverse board would improve the
quality of corporate decision-making. Since the board is responsible for
representing shareholder interests, we urge our corporation to enlarge its
search for qualified board members.
A growing proportion of stockholders attach value to board inclusiveness.
The Teachers Insurance and Annuity Association and College Retirement Equities
Fund, the largest institutional investor in the United States, recently issued a
set of corporate governance guidelines including a call for "diversity of
directors by experience, sex, age and race."
Robert Campbell, CEO of Sun Oil, stated in The Wall Street Journal on
August 12, 1996 that, "Often what a woman or minority person can bring to the
board is some perspective a company has not had before -- adding some modern-day
reality to the deliberation process. Those perspectives are of great value, and
often missing from an all white-male gathering. They can also be inspiration to
the company's diverse workforce."
W.R. Grace's 1996 proxy states their Board "...recognizes that its
composition should reflect the global nature of the Company's operations and the
diversity of its workforce. The Board also recognizes that it is in a unique
position to "set the tone at the top" and to demonstrate its belief that
diversity makes good business sense."
We request the Nominating Committee of the Board make a greater effort to
find qualified women and minority candidates for nomination to the Board.
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THEREFORE BE IT RESOLVED THAT SHAREHOLDERS REQUEST:
1. The Board issue a policy publicly committing the company to board
inclusiveness, a program of steps, and the timeline expected to move in
that direction.
2. The company issue a report by September 1997 summarizing:
a) efforts to encourage diversified representation on our board
b) criteria for board qualification
c) the process of selecting the board candidates
d) the process of selecting the board committee members including the
nominating committee."
MANAGEMENT'S STATEMENT IN OPPOSITION
Your Board of Directors opposes this proposal. In the selection of
candidates for Board membership, your Board seeks to select and recommend the
best qualified persons based upon their individual talents, experience and
abilities without regard to race, religion, national origin or gender. In your
Board of Directors' judgment, providing reports or establishing formalistic
procedures and arbitrary deadlines would not enhance the current Board selection
process and would therefore not serve shareholder interests.
Approval of this proposal requires approval by a majority of the shares of
AIG Common Stock present and entitled to vote at the meeting.
Your Board of Directors recommends a vote AGAINST this proposal.
VII. SHAREHOLDER PROPOSALS FOR 1998 ANNUAL MEETING
All suggestions from shareholders are given careful attention. Proposals
intended for inclusion in next year's proxy statement should be sent to the
Secretary of AIG at 70 Pine Street, New York, New York 10270 and must be
received by December 5, 1997.
VIII. OTHER MATTERS
Your Board of Directors knows of no other matters to be presented at the
meeting. If the proposal that was excluded from this proxy statement in
accordance with Rule 14a-8 promulgated under the Securities Exchange Act of
1934, as amended, is properly brought before the meeting, it is intended that
the persons named in the accompanying proxy form will use their discretionary
authority to vote the proxies against such proposal. If any other matters
properly come before the meeting, it is the intention of the persons named in
the accompanying proxy form to vote the proxy in accordance with their judgment
on such matters.
INCORPORATION BY REFERENCE
To the extent that this Proxy Statement has been or will be specifically
incorporated by reference into any other filing by AIG under the Securities Act
of 1933, as amended, or the Securities Exchange Act of 1934, as amended, the
sections of this Proxy Statement entitled "Report of the Stock Option and
Compensation Committee on Executive Compensation" and "Performance Graph" shall
not be deemed to be so incorporated, unless specifically otherwise provided in
such filing.
PROXY SOLICITATION
AIG will bear the cost of this solicitation of proxies. Proxies may be
solicited by mail, personal interview, telephone and telegraph by directors,
their associates, and approximately eight officers and regular employees of AIG
and its subsidiaries. In addition to the foregoing, AIG has retained Morrow &
Co. to assist in the solicitation of proxies for a fee of approximately $10,000
plus reasonable out-of-pocket expenses and disbursements of that firm. AIG will
also reimburse brokers and others holding stock in their names, or in the names
of nominees, for forwarding proxy materials to their principals.
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APPENDIX A
AMERICAN INTERNATIONAL GROUP, INC.
AMENDED AND RESTATED 1991 EMPLOYEE STOCK OPTION PLAN
(THE "PLAN")
1. Purpose. The purpose of this Plan is to advance the interests of
American International Group, Inc. ("AIG") by providing certain of the key
employees of AIG and of any subsidiary corporation of AIG, upon whose judgment,
initiative and efforts the successful conduct of the business AIG largely
depends, with an additional incentive to continue their efforts on behalf of
such corporations, as well as to attract such corporations people of training,
experience and ability.
2. Administration. The Plan shall be administered by a committee (the
"Committee") of the board of Directors of AIG (the "Board") to be drawn solely
from members of the Board who are not eligible to participate in the Plan and
who have not been eligible for one year prior to serving on the Committee. The
Committee is authorized, subject to the provisions of the Plan, to establish
such rules and regulations as it deems necessary for the proper administration
of the Plan and to make such determinations and interpretations and to take such
action in connection with the Plan and any stock options granted thereunder as
it deems necessary or advisable. All determinations and interpretations made by
the Committee shall be binding and conclusive on all optionees and on their
legal representatives and beneficiaries. The Committee shall have the authority,
in its absolute discretion, to determine which of the eligible employees of AIG
and any subsidiary corporation of AIG shall receive stock options, the time when
stock options shall be granted, the terms of such options and the number of
shares for which options shall be granted.
3. Stock Subject to the Plan. Subject to adjustment as provided in
Section 7 hereof, the maximum number of shares as to which options may at any
time be granted under the Plan is 3,500,000 shares of the common stock of AIG of
the par value of $2.50 per share (the "Common Stock") as such shares shall exist
on December 19, 1991 which shares of Common Stock may, in the discretion of the
Committee, be either authorized but unissued shares or shares previously issued
and reacquired by AIG. AIG may acquire by purchase all or any portion of the
shares which it will need to satisfy stock options, either at the time such
options are exercised or from time to time in advance whenever such purchases
are deemed advisable by the Committee or by such officer or officers of AIG as
the Committee may from time to time designate. Upon the expiration or
termination (in whole or in part) of unexercised options, shares of Common Stock
subject thereto shall again be available for option under the Plan.
4. Eligibility. Key employees of AIG or any subsidiary corporation of
AIG, including officers (whether or not directors), shall be eligible to receive
stock options under the Plan. Directors who are not employees or officers of AIG
or any subsidiary corporation of AIG shall not be eligible to receive stock
options under the Plan.
5. Grant of Stock Options. Stock options may be granted to eligible
employees in such number and at such times during the term of this Plan as the
Committee shall determine; provided, however, that (i) the maximum number of
shares of Common Stock as to which stock options may be granted under this Plan
to any one employee in any one year may not exceed 40,000 shares and (ii)
options under this Plan to purchase more than 10% of the aggregate shares of
Common Stock set forth in Section 3 above (as adjusted pursuant to the
provisions of Section 7) shall not be granted to any one employee.
At time of grant, the Committee shall determine (a) whether all or any part
of a stock option granted to an eligible employee shall be an incentive stock
option and (B) the number of shares subject to such incentive stock option. The
form of any stock option which is all or in part an incentive stock option shall
clearly indicate that such stock option is an incentive stock option or, if
applicable, the number of shares subject to the incentive stock option. The
aggregate fair market value (determined as of the time the option is granted) of
the stock with respect to which incentive stock options are exercisable for the
first time by an eligible employee during any calendar year (under all such
plans of AIG and of any subsidiary corporation of AIG) shall not exceed
$100,000. The term "incentive stock option" means an option meeting the
requirements of Section 422 of the Internal Revenue Code of 1986, as amended
(the "Code").
6. Terms and Conditions of Stock Options. All stock options granted under
the Plan shall be in such form as the Committee may from time to time determine
and shall be subject to the following terms and conditions:
(a) Option Price. The option price per share with respect to each
option shall be determined by the Committee but shall not be less than 100%
of the fair market value of the Common Stock on the date the option is
granted, as determined by the Committee.
(b) Term of Option. In no event shall any stock option be
exercisable after the expiration of 10 years from the date on which the
stock option is granted.
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(c) Exercise of Stock Option and Payment for Shares. Except as
provided in paragraphs (e) and (f) of this Section below, the shares
covered by each stock option may not be purchased for one year after the
date on which the stock option is granted, but thereafter may be purchased
in such installments as shall be determined by the Committee at the time
the stock option is granted. Any shares not purchased on the applicable
installment date may be purchased thereafter at any time prior to the final
expiration of the stock option. To exercise a stock option, the optionee
shall give written notice to AIG specifying the number of shares to be
purchased and accompanied by payment of the full purchase price therefor:
(i) in cash or by certified or official bank check, (ii) in shares of
Common Stock, valued as of the date of exercise, of the same class as those
to be granted by exercise of the option, or (iii) in a combination of (i)
and (ii). The Common Stock will be valued on the date of exercise at the
fair market value as determined by the Committee. Any person exercising a
stock option shall make such representations and agreements and furnish
such information as the Committee may in its discretion deem necessary or
desirable to assure compliance by AIG, on terms acceptable to AIG, with the
provisions of the Securities Act of 1933, as amended, and any other
applicable legal requirements. If an optionee so requests, shares purchased
may be issued in the name of the optionee and another jointly with the
right of survivorship.
(d) Non-transferability of Options. No stock option granted under
the Plan shall be transferable by the optionee other than by will or the
laws of descent and distribution, and such option shall be exercisable,
during his lifetime, only by the optionee.
(e) Termination of Employment. No part of any option may be
exercised after the termination of employment of an optionee with AIG or
subsidiary corporation of AIG, except that
(i) if such termination of employment is at or after normal
retirement age or due to disability, any portion of an option, whether
or not exercisable at the time of such termination, may be exercised by
the optionee at any time within the term of the option; and
(ii) if such termination of employment is not at or after normal
retirement age or due to disability or death, with the approval of the
Board, any portion of an option may be exercised by the optionee within
three months after such termination, but only to the extent such option
was exercisable at the time of such termination.
(f) Death of Optionee. In the event of the death of the optionee
(whether during or after the termination of his employment) any portion of
an option exercisable at the time of death may be exercised within 12
months after the death of the optionee (but in no event after the
expiration of the term of the option) by the person or persons to whom the
optionee's rights under such option are transferred by will or the laws of
descent and distribution. In the event of the death of the optionee during
his employment but prior to the time an option would normally become fully
exercisable, such option shall be considered fully exercisable at the time
of death.
7. Adjustment in Event of Changes in Capitalization. In the event of a
recapitalization, stock split, stock dividend, combination or exchange of
shares, merger, consolidation, rights offering, separation, reorganization or
liquidation, or any other change in the corporate structure or shares of AIG,
subsequent to December 19, 1991, the Committee shall make such equitable
adjustments, designed to protect against dilution or enlargement of rights, as
it may deem appropriate, in the number and kind of shares authorized by the Plan
and, with respect to outstanding stock options, in the number and kind of shares
covered thereby and in the option price.
8. Rights as a Shareholder. An optionee shall have no rights as a
shareholder with respect to any shares covered by a stock option until the date
of issuance of a stock certificate for such shares.
9. Withholding Taxes. Whenever shares of Common Stock are to be issued in
satisfaction of stock options granted under the Plan, AIG shall have the right
to require the recipient to remit to AIG an amount sufficient to satisfy all
applicable withholding tax requirements prior to the delivery of any certificate
or certificates for shares.
10. Terms of Plan. No stock options shall be granted pursuant to the Plan
after December 31, 2001 but stock options theretofore granted may extend beyond
the date and the terms and conditions of the Plan shall continue to apply
thereto.
11. Termination or Amendment of Plan. The Board may at any time terminate
the Plan with respect to any shares of Common Stock of AIG not at the time
subject to option, and may from time to time alter or amend the Plan or any part
thereof, provided that no change may be made in any stock option theretofore
granted which would impair the rights of an optionee without the consent of such
optionee, and further, that no alteration or amendment may be made without the
approval of shareholders if such approval is required by applicable law, stock
exchange rule or Section 162(m) of the Code.
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12. Approval of Shareholders. This Plan was originally approved by the
shareholders of AIG at the Annual Meeting of Shareholders held on May 13, 1992,
an amendment was approved by the shareholders of AIG at the Annual Meeting of
Shareholders held on May 16, 1994 and the amendment giving rise to this Amended
and Restated Plan has been adopted on March 17, 1997 by the Board subject to
approval by the shareholders of AIG at the Annual Meeting of Shareholders to be
held on May 21, 1997.
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27
AMERICAN INTERNATIONAL GROUP, INC.
-----------------------------
ANNUAL MEETING OF SHAREHOLDERS
MAY 21, 1997
-----------------------------
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
The undersigned hereby appoints M.R. Greenberg, Edward E. Matthews and
Thomas R. Tizzio, and each of them, with full power to act without the other
and with full power of substitution, as proxies to represent and to vote, as
directed herein, all shares the undersigned is entitled to vote at the annual
meeting of the shareholders of American International Group, Inc. to be held at
Eighth Floor, 72 Wall Street, New York, New York 10270, on Wednesday May 21,
1997 at 11:00 a.m., and all adjournments thereof, as follows:
PLEASE MARK, DATE AND SIGN THIS PROXY ON THE REVERSE SIDE AND RETURN IT
PROMPTLY USING THE ENCLOSED POSTAGE PREPAID ENVELOPE.
UNLESS OTHERWISE MARKED, THE PROXIES ARE APPOINTED WITH AUTHORITY TO VOTE "FOR"
ALL NOMINEES FOR ELECTION, "FOR" THE PROPOSAL TO ADOPT A CEO COMPENSATION
PLAN, "FOR" THE PROPOSAL TO AMEND THE 1991 EMPLOYEE STOCK OPTION PLAN,
"FOR" THE APPOINTMENT OF INDEPENDENT ACCOUNTANTS AND
"AGAINST" ITEM 5 AND ITEM 6.
(CONTINUED AND TO BE SIGNED ON THE REVERSE SIDE.)
American International Group, Inc.
P.O. Box 11486
New York, NY 10203-0486
28
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" ALL NOMINEES IN ITEM 1, "FOR"
ITEMS 2, 3, AND 4, AND "AGAINST" ITEMS 5 AND 6.
1. Election as Directors of the following identified in the Proxy Statement:
M. Aidinoff, L. Bentsen, P. Chia, M. Cohen, B. Conable, M. Feldstein, L. Gonda,
E. Greenberg, M. Greenberg, C. Hills, F. Hoenemeyer, E. Matthews, D. Phypers,
J. Roberts, H. Smith, T. Tizzio, E. Tse
Withhold
For / / Authority / / Exceptions* / /
*INSTRUCTION: To withhold authority to vote for any of the foregoing
individuals, mark the exceptions box. Write the name(s) on the following lines.
...............................................................................
...............................................................................
2. Approval of CEO Compensation Plan
For / / Against / / Abstain / /
3. Approval of amendment to the 1991 Employee Stock Option Plan
For / / Against / / Abstain / /
4. Appointment of Independent Accountants
For / / Against / / Abstain / /
5. Shareholder Proposal Described in the Proxy Statement
For / / Against / / Abstain / /
6. Shareholder Proposal Described in the Proxy Statement
For / / Against / / Abstain / /
If you have noted either an Address Change or made
Comments on the reverse side of the card, mark here.
Address Change and/or Comments Mark Here / /
In their discretion to vote upon other matters that may properly come before
the meeting.
Please sign exactly as your name appears to the left.
DATED ___________________________________________________________ , 1997
___________________________________________________________________________
Signature
___________________________________________________________________________
Signature
When signing as attorney, executor, administrator, trustee or guardian, please
give your full title. If shares are held jointly, each holder should sign.
VOTES MUST BE INDICATED
(x) IN BLACK OR BLUE INK. / /
SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED ENVELOPE.
