UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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. )
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Soliciting Material Pursuant to § 240.14a-12 |
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American International Group, Inc.
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[AIG Letterhead] April 5, 2006 [NAME] [ADDRESS] Re: AIG - Corporate Governance Dear [NAME]: On behalf of Frank G. Zarb, Chairman of the Board of Directors of American International Group, Inc. (“AIG”), Martin J. Sullivan, President and Chief Executive of AIG, and M. Bernard Aidinoff, Chairman of AIG’s Nominating and Corporate Governance Committee (the “Committee”) enclosed are (i) a copy of a letter from Arthur Levitt addressed to the members of the AIG Board and (ii) a copy of AIG’s Proxy Statement to be used in connection with AIG’s 2006 Annual Meeting of Shareholders. Mr. Levitt, a former Chairman of the Securities and Exchange Commission, was retained as a special advisor to the Board of Directors and the Committee with respect to governance issues. Mr. Levitt’s letter sets forth his comments with respect to AIG’s progress in the area of corporate governance. The AIG Proxy Statement contains, among other things, a report of the Committee that includes a description of many of the Corporate Governance measures implemented by AIG over the past year. In addition, attached as annexes to the Proxy Statement are AIG’s recently amended Corporate Governance Guidelines, which includes AIG’s Director Independence Standards, the Charter of the Committee, the Compensation Committee Charter, the Audit Committee Charter, the Public Policy and Social Responsibility Committee Charter and the Regulatory, Compliance and Legal Committee Charter,
each of which has been recently amended or newly adopted. We believe that a review of the enclosed materials will be helpful in your understanding of the corporate governance at AIG. If
you have any questions with respect to corporate governance at AIG, please contact
me (eric.litzky@aig.com or 212-770-6918). Very truly yours, Eric N. Litzky (Enclosures) cc: M. Bernard Aidinoff Martin J. Sullivan Frank G. Zarb
Arthur Levitt March 21, 2006 Board of Directors Dear Members of the Board: After nearly eight months of
coordinated efforts by AIG’s board and management, I wish to comment upon the
progress of our efforts to develop governance standards that will be responsive
to investor concerns. I say “our” because under Frank Zarb’s courageous
leadership - and prior to my retention as a special advisor to the board - the
board of AIG had already commenced the process of implementing important
reforms, including: the separation of the roles of Chairman and CEO as well as
an intense effort to recruit strong, independent directors. My role has been to
work with the board and its Nominating and Corporate Governance Committee and
AIG senior management to continue and accelerate the pace of change with the
ultimate goal of making AIG a company whose governance, transparency, and
ethical standards are second to none. An essential foundation for
sound governance is a strong and engaged board that approaches its important
role as a steward for shareholders with a sense of mission and commitment. Its
members must have a determination to work with and assist management through
constructive skepticism, not “nit-picking” interference. Guided by this belief
in a strong board, we have canvassed the views of directors, shareholders,
governance experts, and shareholder activists for recommendations. Fortunately, changes in the
make-up of the board since the beginning of 2005 have added the fresh
perspective of a group of experienced professionals, who can provide management
insights and guidance drawn from the wealth of their experience. I am confident
that this diversified and multi-faceted group will be supportive of management,
while creating a healthy environment of constructive criticism, when desirable. As part of our dialogue, the
board has adopted, or in some cases modified in an acceptable fashion, and then
adopted, substantially all of my recommendations and initiated a number of
corporate governance measures on their own. These include: • Each regularly scheduled
board meeting will be accompanied by an executive session of outside
directors, presided over by the Chairman of the Board • An emphasis on providing
timely and relevant information to members of the board and the development
of a focused program on director orientation Page 2 • A mandatory retirement age
of 73 for all directors • The elimination of the
executive committee, often a symbol of board cronyism • Strengthening the board’s focus and independence by limiting
the number of boards on which a director can serve; requiring attendance
at a minimum of 75 percent of board and committee meetings; improving
the process of self-assessment of the board, of committees, and of individual
members; and providing that no former CEO can serve as a director of the
company • Reinforcing, recognizing,
and detailing the critical functions of the Chairman of the Board who will be
selected from among the directors and who will receive additional
compensation for his or her vital services • Evaluating the amount and
form of compensation payable to directors in a way that will further align
their interests with shareholders Additional responsibilities: • A commitment by the board
to full, fair, and transparent disclosure of executive compensation, a
critical element of sound governance • A series of important
guidelines on charitable giving and improved reporting of charitable and
political contributions One subject merits a
separate and specific comment - the topic of shareholder participation in the
nomination and election of directors. As you know, companies, regulators,
academics, and shareholder advocates have been actively exploring and debating
different approaches to afford shareholders with a more meaningful role in the
election process. The guidelines recognize the benefits of a dialogue between
the Nominating and Corporate Governance Committee and shareholders in the
selection of nominees. Moreover, I recommended and the board has adopted, the
so called “Pfizer Paradigm” under which, in an uncontested election, if a
nominee for director receives a greater number of votes “withheld” from his or
her election than votes in favor of it, that nominee must submit his or her
resignation to the Nominating and Corporate Governance Committee for its
review. I believe that this will be a reasonable and potent weapon for
shareholders to exercise oversight of directors. For a number of reasons, I did
not now recommend the adoption of a majority voting system or shareholder
access to the company’s proxy statement. Clearly this is a very important subject
to be thoughtfully revisited in a dialogue between investors, management and
the board. Page 3 “Now” is a small, but
critical word in my conclusion on this topic. Do not forget that corporate
governance principles are neither engraved in stone tablets for the ages nor
written in erasable ink. Governance is an evolutionary
process and should take into account changing best practices, new
challenges - whether technological or financial - and the strengths and
weaknesses of management and of the board itself. Indeed, what may appear to be
a superb governance regime will almost
certainly not stand the test of time. That
is why periodic reviews and testing of guidelines as to their function in the
“real” world are critical.
Governance standards must be adapted to the genius and the unique culture of
each company. Nevertheless,
while today’s wisdom may quickly become tomorrow’s foolishness, there are some
enduring principles for good corporate governance in the modern corporation:
the role of managers as
custodians acting on behalf of shareholders, the commitment to full and fair
disclosure, and compensation plans that fairly reward the creation of real
value for the company and its shareholders. In sum, the remarkable
transformation of AIG’s board of directors and of its corporate culture is
proof of what is possible in today’s corporate environment of chastened
investors, active shareholder advocates,
interested media, and careful regulators. The events of the past few years have
created a culture in which the good governance practices adopted by the AIG
board are both demanded and praised. In addition, it has put a premium on a certain type of leader -
thoughtful, ethical, tough-minded and
determined. The AIG board is fortunate to have Frank Zarb as its Chairman,
a man whose decency and respect for the public interest is reflected by his
constant advocacy of the significant corporate governance changes that have
been implemented. I also
wish to acknowledge the vital contribution of M. Bernard Aidinoff, the Chairman
of AIG’s Nominating and Corporate Governance Committee. The timely
participation of the board and management in the implementation of broad and far reaching change would
not have been possible without Bernie’s insight, wisdom and knowledge of AIG. I am
gratified to have been part of this
extraordinary exercise in leadership, responsibility, and respect for the public interest. Sincerely, cc: Eric N. Litzky Vice
President - Corporate Governance
43 Owenoke Park
Westport, Connecticut 06880
American International Group, Inc.
70 Pine Street
New York, N.Y. 10270
March 21, 2006
AIG Board Letter
March 2l, 2006
AIG Board Letter
Arthur
Levitt
and
Special Counsel and Secretary to
the Board of Directors