Section 240.14a-101 Schedule 14A.
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
[ ] Confidential, for Use of the Commission Only (as permitted
by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section
American International Group, Inc.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
(1) Title of each class of securities to which transaction
(2) Aggregate number of securities to which transaction
(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
(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:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
AMERICAN INTERNATIONAL GROUP, INC.
70 Pine Street, New York, N.Y. 10270
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 15, 2002
April 5, 2002
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 15, 2002, at 11:00 o'clock A.M., for the
1. To elect 20 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 adopt a 2002 Stock Incentive Plan;
3. To act upon a proposal to ratify the selection of PricewaterhouseCoopers
LLP as independent accountants for 2002;
4. To act upon a shareholder proposal requesting AIG to change the Board
nomination process; and
5. To transact any other business that may properly come before the meeting.
Shareholders of record at the close of business on March 22, 2002 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
KATHLEEN E. SHANNON
If you plan on attending the meeting, please remember to bring photo
identification with you. If you cannot be present at the meeting, please sign
the enclosed proxy card and return it at once in the accompanying postage
prepaid envelope or vote your shares by telephone or over the Internet.
AMERICAN INTERNATIONAL GROUP, INC.
70 Pine Street, New York, N.Y. 10270
April 5, 2002
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 15, 2002, 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 2002 Stock Incentive Plan, for the ratification of the
selection of PricewaterhouseCoopers LLP as independent accountants for 2002 and
against the shareholder proposal requesting AIG to change the Board nomination
process. These proxy materials are being mailed to shareholders of AIG
commencing on or about April 5, 2002.
Only shareholders of record at the close of business on March 22, 2002 will
be entitled to vote at the meeting. On that date, 2,612,763,368 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
AIG Common 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 2002 Stock Incentive Plan,
ratification of the selection of PricewaterhouseCoopers LLP as independent
accountants and the shareholder proposal, a broker non-vote and an abstention
will effectively be treated as a vote against the proposal.
I. ELECTION OF DIRECTORS
Twenty directors are to be elected at the meeting to hold office until the
next annual election and until their successors are duly elected and qualified.
It is the intention of the persons named in the accompanying form of proxy to
vote for the election of the nominees listed below, all of whom except Messrs.
Crandall and Sullivan 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 the persons named in the accompanying form of proxy may determine in
their discretion. Directors will be elected by a plurality of the votes cast.
The nominees and certain information supplied by them to AIG are as follows:
[Photo] M. BERNARD AIDINOFF RETIRED PARTNER, SULLIVAN & CROMWELL
Director since 1984 (Attorneys)
[Photo] ELI BROAD CHAIRMAN, SUNAMERICA INC. ('SUNAMERICA')
Director since 1999 (a wholly-owned subsidiary of AIG)
[Photo] PEI-YUAN CHIA RETIRED VICE CHAIRMAN, CITICORP
Director since 1996 AND CITIBANK, N.A.
Director, Baxter International, Inc.
[Photo] MARSHALL A. COHEN COUNSEL, CASSELS BROCK & BLACKWELL (Barristers
Director since 1992 and Solicitors); FORMER PRESIDENT AND CHIEF
EXECUTIVE OFFICER, THE MOLSON COMPANIES
Director, Barrick Gold Corporation
Collins & Aikman Corporation
Haynes International, Inc.
Lafarge North America Inc.
The Premcor Refining Group, Inc.
Premcor USA Inc.
Toronto Dominion Bank
[Photo] BARBER B. CONABLE, JR. RETIRED; FORMER PRESIDENT, WORLD BANK, AND FORMER
Director since 1991 MEMBER, UNITED STATES HOUSE OF REPRESENTATIVES
[Photo] ROBERT L. CRANDALL RETIRED CHAIRMAN, AMR CORPORATION AND
AMERICAN AIRLINES, INC.
Director, Anixter International, Inc.
Clear Channel Communications, Inc.
i2 Technologies, Inc.
[Photo] MARTIN S. FELDSTEIN PROFESSOR OF ECONOMICS, HARVARD UNIVERSITY;
Director since 1987 PRESIDENT AND CHIEF EXECUTIVE OFFICER, NATIONAL
BUREAU OF ECONOMIC RESEARCH
(Nonprofit Economic Research Center)
Director, Eli Lilly and Company
[Photo] ELLEN V. FUTTER PRESIDENT, AMERICAN MUSEUM OF NATURAL HISTORY
Director since 1999 Age 52
Director, Bristol-Myers Squibb Company
Consolidated Edison, Inc. (also serves
as Trustee of Consolidated Edison
Company of New York, Inc.)
J.P. Morgan Chase & Co.
[Photo] MAURICE R. GREENBERG CHAIRMAN AND CHIEF EXECUTIVE OFFICER, AIG
Director since 1967 Age 76
Director, Transatlantic Holdings, Inc.
('Transatlantic'), which is owned
59.8 percent by AIG
Also serves as Chairman of Transatlantic, a
director, President and Chief Executive Officer
of C.V. Starr & Co., Inc. ('Starr'), and a
director of Starr International Company, Inc.
('SICO') and International Lease Finance
Corporation ('ILFC'); Starr and SICO are private
holding companies (see 'Ownership of Certain
Securities'); ILFC is a wholly-owned subsidiary
[Photo] CARLA A. HILLS CHAIRMAN AND CHIEF EXECUTIVE OFFICER,
Director since 1993 HILLS & COMPANY; FORMER UNITED STATES
(Hills & Company provides international
investment, trade and risk advisory services)
Director, AOL Time Warner Inc.
Lucent Technologies Inc.
[Photo] FRANK J. HOENEMEYER FINANCIAL CONSULTANT;
Director since 1985 RETIRED VICE CHAIRMAN,
PRUDENTIAL INSURANCE COMPANY OF AMERICA
Director, Carey Fiduciary Advisors, Inc.
[Photo] RICHARD C. HOLBROOKE FORMER UNITED STATES AMBASSADOR TO THE UNITED
Director since 2001 NATIONS; FORMER VICE CHAIRMAN, CREDIT SUISSE
Director, Human Genome Sciences, Inc.
[Photo] EDWARD E. MATTHEWS SENIOR VICE CHAIRMAN -- INVESTMENTS AND
Director since 1973 FINANCIAL SERVICES, AIG
Also serves as a director of Starr, SICO and ILFC
[Photo] HOWARD I. SMITH EXECUTIVE VICE PRESIDENT AND CHIEF FINANCIAL
Director since 1997 OFFICER, AIG
21st Century Insurance Group ('21st
Century'), which is owned 62.6 percent
Also serves as a director of Starr, SICO and ILFC
[Photo] MARTIN J. SULLIVAN EXECUTIVE VICE PRESIDENT -- FOREIGN GENERAL
Also serves as a director of Starr and SICO
[Photo] THOMAS R. TIZZIO SENIOR VICE CHAIRMAN -- GENERAL
Director since 1986 INSURANCE, AIG
Also serves as a director of Starr and SICO
[Photo] EDMUND S.W. TSE SENIOR VICE CHAIRMAN -- LIFE INSURANCE, AIG
Director since 1996 Age 64
Also serves as a director of Starr and SICO
[Photo] JAY S. WINTROB PRESIDENT AND CHIEF EXECUTIVE OFFICER, SUNAMERICA
Director since 1999 Age 45
Director, AIG SunAmerica Life Insurance Company
(doing business as Anchor National Life
Insurance Company) and First SunAmerica
Life Insurance Company, wholly-owned
subsidiaries of AIG
Also serves as a director of Starr and SICO
[Photo] FRANK G. WISNER VICE CHAIRMAN -- EXTERNAL AFFAIRS, AIG
Director since 1997 Age 63
Director, EOG Resources, Inc.
Ethan Allen Interiors Inc.
[Photo] FRANK G. ZARB FORMER CHAIRMAN, NATIONAL ASSOCIATION OF
Director since 2001 SECURITIES DEALERS, INC. AND THE NASDAQ STOCK
MARKET, INC.; SENIOR ADVISOR, HELLMAN & FRIEDMAN
LLC (Private Equity Investment Firm)
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 except
for Mr. Wisner 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. Wisner served as a
career foreign service officer with the United States Department of State from
1961 through July 1997, with his last position being Ambassador to India. Mr.
Crandall served as Chairman, President and Chief Executive Officer, AMR
Corporation and Chairman and Chief Executive Officer, American Airlines, Inc.
from 1985 until his retirement in May, 1998. Mr. Holbrooke served as United
States Ambassador to the United Nations from 1999 to 2001; prior to that he
served as Vice Chairman of Credit Suisse First Boston from 1996 to 1999, Chief
United States negotiator for the 1995 Dayton Peace Accords in Bosnia, and United
States Assistant Secretary of State for European and Canadian Affairs from 1994
to 1996. Mr. Zarb was Chairman, President and Chief Executive Officer of
Alexander & Alexander Services, a worldwide insurance brokerage and professional
services consulting firm, from 1994 to January 1997 and served as Chairman and
Chief Executive Officer of the National Association of Securities Dealers, Inc.
from February 1997 until October 2000 and The Nasdaq Stock Market, Inc. from
February 1997 until January 2001 and as Chairman of those organizations until
There were four regularly scheduled meetings and three special meetings of
the Board during 2001. All of the directors attended at least 75 percent of the
aggregate of all meetings of the Board and of the committees of the Board on
which they served.
The Audit Committee, which held four meetings during 2001, assists the
Board's oversight of AIG's financial reporting process. As part of its oversight
role, the Audit Committee recommends to the Board the nomination of the
independent accountants as auditors for the ensuing fiscal year. Messrs.
Aidinoff, Conable, Hoenemeyer, Zarb and Mrs. Hills were the members of the Audit
Committee during 2001.
The Stock Option and Compensation Committee, which held two meetings during
2001, administers the various AIG stock option and other compensation plans,
establishes the compensation of the Chief Executive Officer and sets policy for
compensation for senior management. Messrs. Cohen, Conable, Hoenemeyer and
Holbrooke and Ms. Futter were the members of the Stock Option and Compensation
Committee during 2001.
The principal function of the Executive Committee, which held one meeting in
2001, is to act for the Board between Board meetings. Messrs. Aidinoff,
Greenberg, Hoenemeyer, Matthews, Tizzio and Zarb are the current members of the
The Finance Committee, which oversees the financial affairs and investment
activities of AIG and its subsidiaries, held twelve meetings during 2001.
Messrs. Aidinoff, Broad, Chia, Conable, Feldstein, Greenberg, Hoenemeyer,
Holbrooke, Matthews, Smith, Wintrob and Zarb served as members of the Finance
Committee during 2001.
AIG's Board, acting as a whole, performs the functions of a nominating
OWNERSHIP OF CERTAIN SECURITIES
The following table summarizes the ownership of equity securities of AIG,
Starr and SICO by the nominees, the directors, all of whom are nominees and
which include all of the current 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 current executive officers as
EQUITY SECURITIES OF AIG, STARR AND SICO
OWNED BENEFICIALLY AS OF JANUARY 31, 2002(1)
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............ 91,302 (7) 0 -- 0 --
Eli Broad...................... 34,497,616 1.31 0 -- 0 --
Pei-yuan Chia.................. 41,224 (7) 0 -- 0 --
Marshall A. Cohen.............. 69,935 (7) 0 -- 0 --
Barber B. Conable, Jr. ........ 75,475 (7) 0 -- 0 --
Robert L. Crandall............. 5,000 (7) 0 -- 0 --
Martin S. Feldstein............ 113,462 (7) 0 -- 0 --
Ellen V. Futter................ 4,387 (7) 0 -- 0 --
M.R. Greenberg................. 45,270,172 1.73 5,000 21.74 10 8.33
Carla A. Hills................. 74,407 (7) 0 -- 0 --
Frank J. Hoenemeyer............ 111,996 (7) 0 -- 0 --
Richard C. Holbrooke........... 2,700 (7) 0 -- 0 --
Edward E. Matthews............. 1,636,641 .06 2,250 9.78 10 8.33
Howard I. Smith................ 399,945 .02 1,750 7.61 10 8.33
Martin J. Sullivan............. 64,729 (7) 750 3.26 0 --
Thomas R. Tizzio............... 1,033,965 .04 1,750 7.61 10 8.33
Edmund S.W. Tse................ 717,230 .03 1,750 7.61 10 8.33
Jay S. Wintrob................. 2,141,029 .08 750 3.26 0 --
Frank G. Wisner................ 20,790 (7) 0 -- 0 --
Frank G. Zarb.................. 2,400 (7) 0 -- 0 --
All Directors and Executive
Officers of AIG as a
Group (36 individuals)........ 87,749,960 3.33 19,250 83.70 60 50.00
(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 -- 23,727 shares
with his wife, Greenberg -- 43,658,596 shares with his wife and 121,804
shares with co-trustees, Tizzio -- 638,762 shares with his wife,
Tse -- 3,555 shares with his wife, and all directors and executive officers
of AIG as a group -- 44,510,718 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 -- 55,733 shares, Broad -- 15,407,098 shares, Chia --
24,093 shares, Cohen -- 55,733 shares, Conable -- 55,733 shares,
Feldstein -- 55,733 shares, Futter -- 3,000 shares,
Greenberg -- 1,489,648 shares, Hills -- 55,733 shares, Hoenemeyer -- 55,733
shares, Matthews -- 493,046 shares, Smith -- 229,471 shares,
Sullivan -- 33,215 shares, Tizzio -- 395,203 shares, Tse -- 359,101 shares,
Wintrob -- 1,152,570 shares, Wisner -- 20,186 shares, and all directors and
executive officers of AIG as a group -- 20,609,611 shares.
(3) Amount of shares shown for each of Mr. Greenberg, Mr. Matthews and Mr. Smith
does not include 18,885,999 shares held as trustee for the Starr Trust, as
to which each of them disclaims beneficial ownership. Inclusion of these
shares would increase the percentage ownership of AIG Common Stock shown
above for each of them by .72 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 -- 2,364 shares, Matthews -- 22,300 shares, and all directors and
executive officers of AIG as a group -- 31,664 shares.
(5) Amount of shares shown for Mr. Greenberg also excludes 6,189,475 shares
owned directly by Starr (representing 21.74 percent of the shares owned
directly by Starr) as to which Mr. Greenberg disclaims beneficial ownership.
(footnotes continued on next page)
(footnotes continued from preceding page)
(6) As of January 31, 2002, Starr also had outstanding 6,000 shares of Common
Stock Class B, a non-voting stock, and 3,838 shares of Preferred Stock,
Series X-1. None of the nominees holds such shares. As of January 31, 2002,
the nominees beneficially owned the following aggregate shares of various
series of Starr Preferred Stock (out of an aggregate total outstanding of
313,670 shares): Greenberg (105,000); Matthews (44,500); Smith (14,750);
Sullivan (2,850); Tizzio (23,375); Tse (15,000); and Wintrob (1,500). These
nominees received dividends of Starr Series T Preferred Stock in 2001 out of
a total issued of 27,000 shares as follows: Greenberg (5,000); Matthews
(2,250); Tizzio (1,750); Tse (1,750); Smith (1,750); Sullivan (750); and
Wintrob (750). Mr. Greenberg also beneficially owned 100 shares of Starr's
5% Subordinated Preferred Stock as of January 31, 2002.
(7) Less than .01 percent.
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,
2002, SICO held 313,852,309 shares, or 12.0 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 60,268,075 shares and 47,356,446 shares
(including 18,885,999 shares held by the C. V. Starr & Co. Inc. Trust), or 2.30
percent and 1.81 percent, respectively, of the outstanding AIG Common Stock on
At January 31, 2002, the nominees also held options which may be exercised
within 60 days with respect to shares of Transatlantic and 21st Century as
follows: Transatlantic common stock, $1.00 par value: Greenberg -- 120,000
shares, Matthews -- 60,000 shares, Smith -- 10,875 shares and Tizzio -- 60,000
shares; 21st Century common stock, without par value: Smith -- 20,000 shares.
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, executive officers and 10 percent holders during 2001 were two
late reports filed by Mr. Castelli, an executive officer, one reporting two
option exercises and one reporting one transaction; one late report filed by Mr.
Holbrooke reporting one transaction; one late report filed by Mr. Kanak, an
executive officer, reporting one option exercise; one late report filed by Mr.
Matthews reporting one transaction; one late report filed by Mr. Sandler, an
executive officer, reporting two option exercises; two late reports filed by Mr.
Smith, one reporting two option exercises and one reporting one transaction; two
late reports filed by Mr. Tizzio, one reporting two option exercises and one
reporting one option exercise; one late report filed by Mr. Wintrob, reporting
one option exercise; one late report filed by Mr. Wooster, an executive officer,
reporting two option exercises; and one late report filed by Mr. Zarb reporting
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 $40,000 per year, plus $1,500 for each Board meeting
attended. An annual fee of $5,000 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 receive annually 500 shares of AIG Common Stock and an option which
vests after one year and is exercisable for 10 years to purchase 2,500 shares of
AIG Common Stock at an option price equal to the fair market value of AIG Common
Stock on the date of grant, which is the date of the Annual Meeting of
Shareholders. Certain directors who are not employees of AIG also serve as
directors of various subsidiaries of AIG and receive fees for their service in
During the year ended December 31, 2001, Mrs. Hills provided services to AIG
under a consulting arrangement on trade issues through Hills & Company. This
agreement was terminated in early 2002.
The following Summary Compensation Table sets forth the compensation accrued
for services in all capacities to AIG and its subsidiaries by the 'named
executive officers' required to be disclosed pursuant to the proxy rules of the
Securities and Exchange Commission.
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION ------------------------------- SICO
NAME AND -------------------- AWARDS LTIP ALL OTHER LTIP PAYOUTS
PRINCIPAL POSITION YEAR SALARY BONUS(1) STOCK OPTIONS(#) PAYOUTS COMPENSATION(2) NOT PAID BY AIG(3)(4)
------------------ ---- ------ -------- ---------------- ------- --------------- ---------------------
M.R. Greenberg ........... 2001 $1,000,000 $ --(1) 375,000 $ -- $85,500 $ --
Chairman and Chief 2000 1,000,000 5,000,000(5) 200,000 -- 85,500 23,655,000
Executive Officer 1999 1,000,000 5,000,000(5) 225,000(6) -- 85,000 --
E.E. Matthews ............ 2001 700,000 480,000(1) 50,000 -- 32,900 --
Senior Vice Chairman -- 2000 700,000 545,000 40,000 -- 32,900 8,279,250
Investments 1999 680,769 520,000 45,000(6) -- 33,100 --
and Financial Services
T.R. Tizzio .............. 2001 654,700 480,000(1) 30,000 -- 33,600 --
Senior Vice Chairman -- 2000 654,700 580,000 20,000 -- 34,300 9,462,000
General Insurance 1999 654,700 530,000 22,500(6) -- 33,100 --
E.S.W. Tse ............... 2001 611,156 569,586(1) 50,000 -- 76,395 --
Senior Vice Chairman -- 2000 536,156 634,717 40,000 -- 76,395 8,279,250
Life Insurance 1999 462,130 597,157 45,000(6) -- 67,512 --
H. I. Smith .............. 2001 531,924 480,000(1) 40,000 -- 52,050 --
Executive Vice President 2000 480,000 425,000 35,000 -- 59,300 5,913,750
and Chief Financial 1999 422,308 400,000 37,500(6) -- 26,474 --
(1) AMOUNTS SHOWN FOR NAMED EXECUTIVE OFFICERS OTHER THAN THE CHIEF EXECUTIVE
OFFICER REPRESENT YEAR-END BONUSES AND BONUSES PAID QUARTERLY PURSUANT TO A
SUPPLEMENTARY BONUS PROGRAM. IN DECEMBER, 2001, IN LIGHT OF THE LOSSES
SUFFERED BY AIG AS A RESULT OF THE SEPTEMBER 11TH TERRORIST ATTACKS, MR.
GREENBERG WAIVED PAYMENT OF ANY BONUS WHICH MIGHT HAVE BEEN PAYABLE UNDER
THE CHIEF EXECUTIVE OFFICER COMPENSATION PLAN APPROVED BY THE SHAREHOLDERS
IN MAY, 1997. IN ADDITION, THE STOCK OPTION AND COMPENSATION COMMITTEE
ACCEPTED MANAGEMENT'S RECOMMENDATION THAT NO YEAR-END BONUSES BE PAID TO
OTHER MEMBERS OF SENIOR MANAGEMENT. FOR A DISCUSSION OF THE WAIVER, SEE THE
REPORT OF THE STOCK OPTION AND COMPENSATION COMMITTEE ON EXECUTIVE
COMPENSATION AT PAGE 15.
(2) Amounts shown for Messrs. Greenberg, Matthews and Tizzio represent matching
contributions under AIG's 401(k) Plan and amounts received as director's
fees from Transatlantic. Amounts shown for Mr. Tse reflect contributions by
AIG to the American International Companies (Hong Kong) Staff Provident
Plan. Amounts shown for Mr. Smith include matching contributions to AIG's
401(k) plan and amounts received as director's fees from Transatlantic and
(3) THE LTIP PAYOUTS WILL BE MADE BY SICO PURSUANT TO ITS DEFERRED COMPENSATION
PROFIT PARTICIPATION PLAN (THE 'SICO PLAN') AND WILL NOT BE PAID BY OR
CHARGED TO AIG. The values shown for the year 2000 with respect to the SICO
LTIP Payouts had decreased to the following amounts as of February 28, 2002:
Greenberg -- $17,752,800; Matthews -- $6,213,480; Tizzio -- $7,101,120;
Tse -- $6,213,480; and Smith -- $4,438,200.
(4) Amounts shown do not represent actual payments. Payments do not begin until
the employee retires after reaching age 65. Payments are subject to
forfeiture in the event of termination prior thereto. Amounts shown in 2000
represent the value, based on the closing sale price of AIG Common Stock on
December 31, 2000 ($98.5625), of shares of AIG Common Stock allocated with
respect to the January 1, 1999 to December 31, 2000 period but not
distributed under the SICO Plan. 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 PAID BY OR CHARGED TO AIG. The SICO Plan
provides that shares currently owned by SICO 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, 2001, 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, 1998 with respect to the January 1, 1999 to December 31, 2000
period. The values shown for the year 2000 represent the number of AIG
(footnotes continued on next page)
(footnotes continued from previous page)
allocated to the named executive officers as follows: Greenberg -- 240,000
shares; Matthews -- 84,000 shares; Tizzio -- 96,000 shares; Tse -- 84,000
shares; and Smith -- 60,000 shares.
(5) Paid pursuant to the Chief Executive Officer Compensation Plan.
(6) Adjusted to reflect stock split effected as a 50 percent stock dividend in
The following table summarizes certain information with respect to grants of
options to purchase AIG Common Stock which were granted during 2001 to the
individuals named in the Summary Compensation Table, to all executive officers
of AIG as a group, to all directors who are not executive officers of AIG as a
group, and to all employees other than executive officers as a group.
OPTION GRANTS IN 2001
POTENTIAL REALIZABLE VALUE* AT
PERCENTAGE OF ASSUMED ANNUAL RATES OF
TOTAL OPTIONS STOCK PRICE APPRECIATION FOR
OPTIONS GRANTED TO EXERCISE OPTION TERM
DATE GRANTED EMPLOYEES PRICE EXPIRATION ------------------------------
NAME OF GRANT (1) DURING 2001 PER SHARE DATE 5 PERCENT(2) 10 PERCENT(3)
---- -------- --------- ----------- --------- ---------- ------------ -------------
M.R. Greenberg................ 12/13/01 375,000 10.65 $79.61 12/13/11 $ 18,774,863 $ 47,579,189
E.E. Matthews................. 12/13/01 50,000 1.42 79.61 12/13/11 2,503,315 6,343,892
T.R. Tizzio................... 12/13/01 30,000 0.85 79.61 12/13/11 1,501,989 3,806,335
E.S.W. Tse.................... 12/13/01 50,000 1.42 79.61 12/13/11 2,503,315 6,343,892
H.I. Smith.................... 12/13/01 40,000 1.14 79.61 12/13/11 2,002,652 5,075,113
All Executive Officers of AIG
as a Group
(25 individuals)............. Various 724,250 20.99 79.62(4) Various 36,265,073 91,902,816
All Directors who are not
Executive Officers of AIG as
a Group (11 Individuals)..... 5/16/01 25,000 N/A 84.71 5/16/11 1,331,842 3,375,148
All Employees other than
Executive Officers as a
Group........................ Various 2,726,163 79.01 79.72(4) Various 136,689,813 346,359,009
All Shareholders Stock
Appreciation(5).............. N/A N/A N/A N/A N/A $130.6 billion $331.0 billion
All Unaffiliated Shareholders
Stock Appreciation(5)........ N/A N/A N/A N/A N/A $103.3 billion $261.8 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 1999 Stock Option Plan at an
exercise price equal to the fair market value of such stock at the date of
grant. The option grants to all executive officers including the named
individuals provide either that 25 percent of the options granted on any
date become exercisable on each anniversary date in each of the successive
four years or that all of the options granted on any date become exercisable
on the fifth anniversary of the date of grant.
(2) Appreciated price would be $129.68 per share for the individuals named, a
weighted average of $129.69 per share for all executive officers, $137.98
per share for non-employee directors and a weighted average of $129.86 per
share for all employees, other than executive officers.
(3) Appreciated price would be $206.49 per share for the individuals named, a
weighted average of $206.51 per share for all executive officers, $219.72
per share for non-employee directors and a weighted average of $206.77 per
share for all employees, other than executive officers.
(4) Weighted average exercise price per share.
(5) Calculated using the 2,615,431,999 shares of AIG Common Stock outstanding at
December 31, 2001.
Messrs. Greenberg, Matthews, Tizzio and Smith were granted options to
purchase 10,000 shares, 5,000 shares, 5,000 shares and 3,000 shares,
respectively, of common stock of Transatlantic at an exercise price of $90.99
per share (the fair market value of Transatlantic common stock on the date of
grant) on December 3, 2001 as compensation for services to Transatlantic. These
grants provide that 25 percent of the options granted become exercisable on each
anniversary date in each of the successive four years and that the option
expires ten years from the date of grant.
Mr. Smith and Messrs. Dooley and Sandler, executive officers, were each
granted options to purchase 4,000 shares of common stock of 21st Century at a
price of $18.15 per share (the fair market value of 21st Century common stock on
the date of grant) on June 6, 2001 as compensation for services to 21st Century.
These options become exercisable on June 6, 2002.
The following table summarizes certain information with respect to the
exercise of options to purchase AIG Common Stock during 2001 by the individuals
named in the Summary Compensation Table and the unexercised options to purchase
AIG Common Stock held by such individuals at December 31, 2001.
AGGREGATED OPTION EXERCISES DURING THE YEAR ENDED DECEMBER 31, 2001
AND DECEMBER 31, 2001 OPTION VALUES
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT IN-THE-MONEY OPTIONS
SHARES DECEMBER 31, 2001 AT DECEMBER 31, 2001(2)
ACQUIRED ON VALUE ------------------------- --------------------------
NAME EXERCISE REALIZED(1) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
---- ------------ ----------- ------------------------- -------------------------
M.R. Greenberg.............. 189,843(3) $13,680,805(3) 1,489,648/684,375 $75,247,150/$3,709,064
E.E. Matthews............... 85,428 7,262,567 493,046/114,219 26,595,164/ 818,852
T.R. Tizzio................. 160,815(4) 9,750,919(4) 395,203/ 63,282 21,321,916/ 447,962
E.S.W. Tse.................. 18,983 1,345,018 359,101/114,219 18,216,156/ 818,852
H.I. Smith.................. 28,476 1,842,790 229,472/ 92,032 11,416,073/ 592,525
(1) Aggregate market value on date of exercise (closing sale price as reported
in the New York Stock Exchange Composite Transactions Report) less aggregate
(2) Aggregate market value on December 31, 2001 (closing sale price as reported
in the New York Stock Exchange Composite Transactions Report) less aggregate
(3) Receipt of 158,768 shares with an aggregate value of $12,844,331 was
(4) Receipt of 65,319 shares with an aggregate value of $5,012,580 was deferred.
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 2000 (with respect to the 2001-2002 period) to the
individuals named in the Summary Compensation Table.
SICO LONG-TERM INCENTIVE PLANS -- AWARDS IN 2000(1)
NAME NUMBER OF UNITS PERFORMANCE PERIOD ESTIMATED FUTURE PAYOUTS
---- --------------- ------------------ ------------------------
M.R. Greenberg............................... 10,000 Two years 0 shares
E.E. Matthews................................ 4,000 Two years 0 shares
T.R. Tizzio.................................. 4,000 Two years 0 shares
E.S.W. Tse................................... 4,000 Two years 0 shares
H.I. Smith................................... 4,000 Two years 0 shares
(1) Awards represent grants of units under the SICO Plan described in Footnote 4
to the Summary Compensation Table with respect to the two-year period from
January 1, 2001 through December 31, 2002. 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 2001-2002 period
and the value of such shares cannot be determined at this time. For the year
ended December 31, 2001, there was no increase in SICO's retained earnings
attributable to the AIG Common Stock held by SICO. Therefore, if a
determination had been made based upon current estimates, there would be no
shares allocated for the 2001-2002 period. The number of shares allocable to
the named individuals based upon the units awarded to them for the 2001-2002
period, assuming the percentage selected by the SICO Board of Directors and
the increase in SICO's retained earnings for the 2001-2002 period were the
same as those used to allocate the shares of AIG Common Stock for the
1999-2000 period would be as follows: Greenberg -- 240,000 shares,
Matthews -- 96,000 shares, Tizzio -- 96,000 shares, Tse -- 96,000 shares and
Smith -- 96,000 shares. As noted in the description of the SICO Plan in Note
4 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. ANY PAYMENTS ULTIMATELY
DISTRIBUTED UNDER THE SICO PLAN WILL NOT BE PAID BY AIG AND WILL NOT BE
DILUTIVE TO AIG SHAREHOLDERS.
In order to facilitate the performance of their management responsibilities,
AIG provides to the individuals named in the Summary Compensation Table
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. In connection with his employment and relocation to
New York, AIG has paid certain expenses involved with Mr. Wisner's purchase of a
cooperative apartment and provided credit support for his mortgage. During 2001,
Mr. Sullivan was provided a mortgage loan by AIG in connection with his
relocation from London to New York. The maximum amount of such loan outstanding
during 2001 and at January 31, 2002 was $285,375 at an interest rate of 4.98
percent per annum. During 2001, Mr. R. Kendall Nottingham, an executive officer,
was provided a mortgage loan by AIG with an effective annual interest rate of
5.304 percent per annum. The maximum amount of such loan outstanding during 2001
was $734,531.29 and at January 31, 2002 was the yen equivalent of $731,077.
Messrs. Greenberg, Matthews, Smith, Sullivan, Tizzio, Tse and Wintrob 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, 2002 is approximately
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 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 a supplemental retirement plan (the 'Supplemental
Plan') are illustrated in the following table:
ESTIMATED ANNUAL PENSION AT AGE 65
FINAL COMPENSATION 10 YEARS 15 YEARS 20 YEARS 25 YEARS 30 YEARS 35 YEARS 40 YEARS
------------------ -------- -------- -------- -------- -------- -------- --------
$ 125,000.............. $ 10,080 $ 25,080 $ 40,080 $ 55,080 $ 55,080 $ 55,080 $ 55,080
$ 150,000.............. 16,080 34,080 52,080 70,080 70,080 70,080 70,080
$ 175,000.............. 22,080 43,080 64,080 85,080 85,080 85,080 85,080
$ 200,000.............. 28,080 52,080 76,080 100,080 100,080 100,080 100,080
$ 225,000.............. 34,080 61,080 88,080 115,080 115,080 115,080 115,080
$ 250,000.............. 40,080 70,080 100,080 130,080 130,080 130,080 130,080
$ 300,000.............. 52,080 88,080 124,080 160,080 160,080 160,080 160,080
$ 375,000.............. 70,080 115,080 160,080 205,080 205,080 205,080 205,080
$ 400,000.............. 76,080 124,080 172,080 220,080 220,080 220,080 220,080
$ 500,000.............. 100,080 160,080 220,080 280,080 280,080 280,080 280,080
$ 750,000.............. 160,080 250,080 340,080 430,080 430,080 430,080 430,080
$1,000,000.............. 220,080 340,080 460,080 580,080 580,080 580,080 580,080
$1,375,000.............. 310,080 475,080 640,080 805,080 805,080 805,080 805,080
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, 2001 are as follows: Greenberg -- 41 years;
Tizzio -- 33.7 years; Matthews -- 28.2 years; and Smith -- 16.8 years.
Pensionable salary includes the regular salary paid by AIG and its subsidiaries
and does not include amounts attributable to supplementary bonuses or overtime
pay. For such named individuals, pensionable salary during 2001 was as follows:
Greenberg -- $1,000,000; Matthews -- $700,000; Tizzio -- $654,700; and
Smith -- $530,000.
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, Smith and Tizzio were participants in the Supplemental Plan
at December 31, 2001. 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 most Current Retirement
Plan participants in an amount equal to the reduction in the benefit payable as
a result of the federal limitation.
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 2001, AIG contributed 12.5 percent of
Mr. Tse's pensionable salary of $611,156 to the plan based on his 40.7 years of
Certain transactions in 2001 effected in the ordinary course of business
between AIG and its subsidiaries and SICO and Starr are summarized in the
AIG and Subsidiaries Paid:
For production of insurance business*................... $-- $77,000
For services (at cost)* *............................... 1,400 --
Rentals................................................. 3,800 42
AIG and Subsidiaries Received:
For services (at cost)* *............................... 4,200 12,500
Rentals................................................. 168 1,500
* From these payments, which constituted approximately 36% 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 0.1% 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.
In addition, from time to time, a subsidiary of SICO may assume insurance
risks from third party reinsurers which may have assumed risks from AIG
The following Performance Graph compares the cumulative total shareholder
return on AIG Common Stock for a five year period (December 31, 1996 to
December 31, 2001) 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 insurance companies to which AIG compares its
business and operations: ACE Limited, Allstate Corporation, Chubb Corporation,
CNA Financial Corporation, Hartford Financial Services Group, Inc. (formerly
known as ITT Hartford Group, Inc.), Lincoln National Corporation and The
St. Paul Companies. The Performance Graph for 2001 and prior years included
American General Corporation, which was acquired by AIG in 2001. Dividend
reinvestment has been assumed and, with respect to companies in the peer groups,
the returns of each such company have been weighted to reflect relative stock
FIVE YEAR CUMULATIVE TOTAL RETURNS
VALUE OF $100 INVESTED ON DECEMBER 31, 1996
TOTAL SHAREHOLDER RETURNS
1996 1997 1998 1999 2000 2001
---- ---- ---- ---- ---- ----
AIG....................................... 100.00 151.14 201.91 282.99 387.61 312.87
S&P 500................................... 100.00 133.36 171.48 207.56 188.66 166.24
Peer Group................................ 100.00 147.73 138.04 112.74 174.72 149.40
REPORT OF THE STOCK OPTION AND COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
The Stock Option and Compensation Committee, comprised of Ms. Futter and
Messrs. Cohen, Conable, Hoenemeyer and Holbrooke for the year ended December 31,
2001, 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 and other compensation plans.
In determining the compensation which is appropriate for both the Chief
Executive Officer and other members of senior management, the 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 (which includes companies in addition to those in the Peer Group) 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 AIG's
senior officers to the performance of AIG, and, in the case of the Chief
Executive Officer, his compensation as a percentage of net income.
THE COMMITTEE'S COMPENSATION DECISIONS FOR 2001 WERE PRIMARILY INFLUENCED BY
THE VOLUNTARY WAIVER BY MR. GREENBERG OF ANY AMOUNT WHICH WOULD HAVE OTHERWISE
BEEN PAYABLE UNDER THE CHIEF EXECUTIVE OFFICER COMPENSATION PLAN, PREVIOUSLY
APPROVED BY THE SHAREHOLDERS, AND THE RECOMMENDATION BY MANAGEMENT THAT NO
YEAR-END BONUSES OR SALARY INCREASES BE GRANTED TO SENIOR MANAGEMENT. THE CHIEF
EXECUTIVE OFFICER INDICATED THAT, IN LIGHT OF THE LOSSES SUFFERED BY AIG AS A
RESULT OF THE SEPTEMBER 11TH TERRORIST ATTACKS, BONUSES FOR SENIOR MANAGEMENT
WOULD NOT BE APPROPRIATE. THE COMMITTEE WAS ALSO INFORMED THAT A SALARY FREEZE
HAD BEEN IMPOSED THROUGHOUT THE ORGANIZATION AND THAT AT LOWER LEVELS OF
MANAGEMENT, YEAR-END BONUSES HAD BEEN CAPPED TO 2000 LEVELS. THESE ACTIONS BY
SENIOR MANAGEMENT ARE EXTRAORDINARY IN LIGHT OF THE UNPRECEDENTED CHALLENGES
SUCCESSFULLY MET BY AIG'S SENIOR MANAGEMENT IN 2001. THESE CHALLENGES INCLUDED
THE COMPLETION OF AIG'S LARGEST ACQUISITION TO DATE (AMERICAN GENERAL
CORPORATION), AND THE STELLAR PERFORMANCE OF MANAGEMENT IN RESPONDING TO THE
ISSUES PRESENTED BY THE TERRORIST ATTACKS OF SEPTEMBER 11, DESPITE THE TEMPORARY
CLOSURE OF AIG'S PRINCIPAL EXECUTIVE OFFICES. ABSENT SENIOR MANAGEMENT'S
RECOMMENDATION, THE COMMITTEE WOULD HAVE AWARDED YEAR-END BONUSES AND SALARY
INCREASES TO AIG'S SENIOR MANAGERS, ALTHOUGH THE AMOUNT OF SUCH COMPENSATION IS
NOT DETERMINABLE BECAUSE NO SPECIFIC FORMULA IS UTILIZED TO EVALUATE 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. 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.
AIG's after-tax return on equity (excluding capital gains) was 15.3 percent
for 2000 (as restated to reflect the acquisition of American General
Corporation) and 11.9 percent for 2001. The average after-tax return on equity
(excluding capital gains) of the Peer Group was reported by Fox-Pitt, Kelton
Inc. to be 10.9 percent for 2000 and estimated by Fox-Pitt, Kelton Inc. to be a
negative return of 1.3 percent for 2001, respectively. AIG evaluates
underwriting performance on the basis of the combined ratio (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 2000 and 2001, as measured by
its combined ratio, exceeded that of the Peer Group. AIG's combined ratios for
2000 and 2001 were 96.73 and 100.71, respectively, while those for the Peer
Group averaged 102.2 and 121.9, respectively. The total compensation of the
Chief Executive Officer for 2001 represented approximately 0.02 percent of net
income of AIG for that year.
As discussed above, the Chief Executive Officer oversaw the completion and
integration of AIG's largest acquisition to date. Moreover, the Chief Executive
Officer played a leadership role both at AIG and on a national level in response
to the events of September 11. The Chief Executive Officer worked tirelessly to
keep AIG operating smoothly despite the closing of its principal executive
offices and to reassure clients of its commitment to meeting their needs. On a
national level, the Chief Executive Officer effectively represented the
interests of the insurance industry before Congress in connection with
legislation relating to September 11 and continued his
leadership role in discussions on trade relations and international affairs. The
Committee also believes that the Chief Executive Officer's successful completion
of negotiations resulting in the approval from China in late 2001 to expand
AIG's wholly-owned businesses into four additional cities may eventually be
viewed as his most significant single accomplishment of 2001 because of its
potential to accelerate AIG's growth and global expansion.
Using the general factors set forth above, the Committee determined the base
salary for the Chief Executive Officer and other senior executive officers for
2002 and determined that the senior executive officers other than the Chief
Executive Officer should continue to participate in the supplementary bonus
program at the levels established for 2001-2002.
The Committee has recognized 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.
The Committee believes that the actions of AIG senior management and the
Chief Executive Officer evidence the success of AIG's compensation program in
aligning the interests of senior management with AIG's shareholders and
demonstrate the value of providing senior management and the Chief Executive
Officer with the significant option grants made for 2001 performance.
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).
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.
Ellen V. Futter
Frank J. Hoenemeyer
Richard C. Holbrooke
REPORT OF THE AUDIT COMMITTEE
The role of the Audit Committee, comprised of Mrs. Hills and Messrs.
Aidinoff, Conable, Hoenemeyer, and Zarb for the year ended December 31, 2001, is
to assist the Board of Directors in its oversight of AIG's financial reporting
process. The Board of Directors, in its business judgment, has determined that
all members of the Committee are 'independent', as required by applicable
listing standards of the New York Stock Exchange. The Committee operates
pursuant to a Charter that was attached to the 2001 Proxy Statement. As set
forth in the Audit Committee's Charter, the management of AIG is responsible for
the preparation, presentation and integrity of AIG's financial statements, AIG's
accounting and financial reporting principles and internal controls and
procedures designed to assure compliance with accounting standards and
applicable laws and regulations. The independent accountants are responsible for
auditing AIG's financial statements and expressing an opinion as to their
conformity with generally accepted accounting principles.
In the performance of its oversight function, the Committee has considered
and discussed the audited financial statements with management and the
independent accountants. The Committee has also discussed with the independent
accountants the matters required to be discussed by Statement on Auditing
Standards No. 61, Communication with Audit Committees, as currently in effect.
Finally, the Committee has received the written disclosures and the letter from
the independent accountants required by Independence Standards Board Standard
No. 1, Independence Discussions with Audit Committees, as currently in effect,
has considered whether the provision of non-audit services by the independent
accountants to AIG is compatible with maintaining their independence and has
discussed with the accountants their independence.
The members of the Committee are not professionally engaged in the practice
of auditing or accounting and are not experts in the fields of accounting or
auditing, including in respect of auditor independence. Members of the Committee
rely without independent verification on the information provided to them and on
the representations made by management and the independent accountants.
Accordingly, the Committee's oversight does not provide an independent basis to
determine that management has maintained appropriate accounting and financial
reporting principles or appropriate internal controls and procedures designed to
assure compliance with accounting standards and applicable laws and regulations.
Furthermore, the Committee's considerations and discussions referred to above do
not assure that the audit of AIG's financial statements has been carried out in
accordance with generally accepted auditing standards, that the financial
statements are presented in accordance with generally accepted accounting
principles or that AIG's auditors are in fact 'independent'.
Based upon the reports and discussions described in this report, and subject
to the limitations on the role and responsibilities of the Committee referred to
above and in the Charter, the Committee recommended to the Board that the
audited financial statements be included in AIG's Annual Report on Form 10-K for
the year ended December 31, 2001 to be filed with the Securities and Exchange
American International Group, Inc.
M. Bernard Aidinoff
Barber B. Conable, Jr.
Carla A. Hills
Frank J. Hoenemeyer
Frank G. Zarb
II. APPROVAL OF A PROPOSAL TO ADOPT THE 2002 STOCK INCENTIVE PLAN
General. The Board of Directors (the 'Board') of AIG adopted the 2002 Stock
Incentive Plan (the 'Plan') which is attached as Appendix A, on March 13, 2002,
subject to approval of the shareholders. The Board believes that AIG's interests
are advanced by providing directors, officers and employees of AIG and its
subsidiaries with an additional incentive to continue their efforts on behalf of
AIG and its subsidiaries, as well as to attract people of training, experience
and ability to AIG and its subsidiaries.
The following is a summary of the Plan. This summary is not complete, and
you should refer to Appendix A for a complete copy of the Plan.
Administration. The Plan will be administered by a committee (the
'Committee') appointed solely from members of the Board who are not and have not
been officers of AIG or its subsidiaries. The Board, in its discretion, may also
administer the Plan and, in such a case, has all of the rights, powers and
authority of the Committee.
The Committee has broad discretion to administer the Plan. Among other
things, the Committee will select the persons to whom awards ('Awards') will be
made under the Plan, the time when Awards will be granted, the terms of the
Awards and the number of shares of AIG Common Stock subject to the Awards.
The Committee has the authority to construe, interpret and implement the
Plan, and prescribe, amend and rescind rules and regulations relating to the
Plan. The determination of the Committee on all matters relating to the Plan or
any Award is final and binding. The Committee will have no liability to any
person for any action taken, or omitted to be taken, in good faith.
Eligibility. Awards may be made to any director, officer or employee of AIG
and its subsidiaries, including any prospective employee, consultants and other
individuals who may perform services for AIG and its subsidiaries, in each case,
as selected by the Committee.
Because the granting of Awards under the Plan will be entirely within the
discretion of the Committee, it is not possible to designate the employees to
whom Awards will be granted under the Plan or the number of shares of AIG Common
Stock that will be subject to Awards that are granted under the Plan.
Stock Issuable Under the Plan. Subject to adjustment as described in the
next paragraph, the total number of shares of AIG Common Stock that may be
issued under the Plan through December 31, 2002 is 15,000,000 shares. In each
calendar year thereafter the total number of shares of AIG Common Stock that may
be issued under the Plan is the sum of (a) 1,000,000 shares and (b) the number
of shares of AIG Common Stock available for issuance under the Plan in the
previous calendar year but not issued in such year. Shares of AIG Common Stock
subject to any Award that expires, terminates or otherwise lapses will again
become available for issuance under the Plan. These shares may be authorized but
unissued AIG Common Stock or authorized and issued AIG Common Stock. There is no
limit on the amount of cash, securities (other than shares of AIG Common Stock)
or other property that may be delivered pursuant to any Award. No grantee,
however, may receive Awards covering more than 250,000 shares of AIG Common
Stock or stock appreciation rights with respect to more than 250,000 shares of
AIG Common Stock.
The Committee has the authority (but not the obligation) to adjust the terms
of any outstanding Award, and the number of shares of AIG Common Stock issuable
under the Plan, for any increase or decrease in the number of issued shares of
AIG Common Stock resulting from a recapitalization, stock split, stock dividend,
combination or exchange of shares of common stock, merger, consolidation, rights
offering, separation, reorganization or liquidation, or any other change in the
corporate structure or shares of AIG Common Stock.
Unless otherwise provided in an award agreement or determined by the
Committee, a successor to AIG as a result of a business combination may assume,
or replace with equivalent awards, all outstanding Awards.
Types of Awards. The Plan provides for grants of restricted stock,
restricted stock units, dividend equivalent rights and other equity-based or
equity-related Awards. Stock options, however, may not be awarded under the
Restricted Shares of AIG Common Stock. The Committee may grant
restricted shares of AIG Common Stock in amounts, and subject to terms
and conditions, as the Committee may determine. The grantee will have
the rights of a shareholder with respect to the restricted stock,
subject to any restrictions and conditions as the Committee may include
in the award agreement.
Restricted Stock Units. The Committee may grant restricted stock units
in amounts, and subject to terms and conditions, as the Committee may
determine. Recipients of restricted stock units have only
the rights of a general unsecured creditor of AIG and no rights as a
shareholder of AIG until the AIG Common Stock, cash, securities or
other property underlying the restricted stock units is delivered.
Dividend Equivalent Rights. The Committee may, in its discretion,
include in the award agreement a dividend equivalent right entitling
the grantee to receive amounts equal to the dividends that would be
paid, during the time such Award is outstanding, on the shares of AIG
Common Stock covered by such Award as if such shares were then
outstanding. The grantee of a dividend equivalent right will have only
the rights of a general unsecured creditor of AIG until payment of such
amount is made as specified in the applicable award agreement.
Other Stock-Based Awards. The Committee may grant other types of
equity-based Awards or equity-related Awards, including the grant of
unrestricted shares of AIG Common Stock in amounts, and subject to
terms and conditions, as the Committee may determine. These Awards may
involve the transfer of actual shares of AIG Common Stock, or the
payment in cash or otherwise of amounts based on the value of shares of
AIG Common Stock, and may include Awards designed to comply with, or
take advantage of certain benefits of, the local laws of non-U.S.
Nonassignability and No Hedging. Except to the extent otherwise provided in
the award agreement or approved by the Committee, no Award or right granted to
any person under the Plan may be sold, exchanged, transferred, assigned,
pledged, hypothecated or otherwise disposed of or hedged, in any manner
(including through the use of any cash-settled instrument), other than by will
or by the laws of descent and distribution. During the life of the grantee,
Awards may be exercised only by the grantee or the grantee's legal
Amendment and Termination. Except as otherwise provided in an award
agreement, the Board may from time to time suspend, discontinue, revise or amend
the Plan, and the Committee may amend the terms of any Award in any respect,
including in any manner that adversely affects the rights, duties or obligations
of any grantee of an Award. Unless previously terminated by the Board, the Plan
will terminate on March 13, 2012, but any outstanding Award will remain in
effect until it otherwise lapses or is satisfied.
Approval of the 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 adopt the
III. RATIFICATION OF SELECTION OF ACCOUNTANTS
The Audit Committee and the Board of Directors have approved the employment
of PricewaterhouseCoopers LLP as independent accountants of AIG for 2002.
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.
The fees billed by PricewaterhouseCoopers LLP for services rendered for the
fiscal year ended December 31, 2001 include the following:
Audit Fees. The aggregate fees billed by PricewaterhouseCoopers LLP for
professional services rendered for the worldwide audit of AIG's annual
financial statements for the fiscal year ended December 31, 2001 and for the
reviews of the financial statements included in AIG's Quarterly Reports on
Form 10-Q for that fiscal year were $15,500,447.
Financial Information Systems Design and Implementation Fees. The
aggregate fees billed by PricewaterhouseCoopers LLP for professional
services rendered for information technology services relating to financial
information systems design and implementation for the fiscal year ended
December 31, 2001 were $64,000.
All Other Fees. The aggregate fees billed by PricewaterhouseCoopers LLP
for worldwide services rendered to AIG, other than the services described
above, for the fiscal year ended December 31, 2001 were $11,410,456,
including approximately $5,600,000 related to tax advice, $2,300,000 related
to audits of other AIG Subsidiaries, $900,000 related to services in
connection with the acquisition of American General Corporation and $900,000
for other accounting assistance.
Ratification 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.
Neither AIG's Restated Certificate of Incorporation, as amended, nor By-Laws
require that the shareholders ratify the selection of PricewaterhouseCoopers LLP
as its independent accountants. AIG's Board is requesting shareholder
ratification as a matter of good corporate practice. If the shareholders do not
ratify the selection, the Board and the Audit Committee will reconsider
whether or not to retain PricewaterhouseCoopers LLP, but may retain
PricewaterhouseCoopers LLP. Even if the selection is ratified, the Board and the
Audit Committee in their discretion may change the appointment at any time
during the year if they determine that such change would be in the best
interests of AIG and its shareholders.
Your Board of Directors recommends a vote FOR the proposal to ratify the
selection of PricewaterhouseCoopers LLP.
IV. SHAREHOLDER PROPOSAL
The Presbyterian Church (USA), 100 Witherspoon Street, Louisville, Kentucky
40202, which states that it beneficially owns 253,689 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 text of the resolution and
the supporting statement submitted by the sponsor 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
WHEREAS, we believe our company would benefit from the leadership of directors
who have been nominated through an independent process;
WHEREAS, a majority of persons elected to the Board since 1996 have been AIG
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
THEREFORE, resolved that the Board of Directors create a Nominating Committee of
at least four members, all of whom shall be independent directors who:
1. Have not been executives of AIG or its affiliates during the last five
2. Are not, and have not been, members of organizations that are among the
company's paid advisors or consultants,
3. Are not employed by significant customers or suppliers,
4. Do not, and did not, have personal services contracts with the company,
5. Are not employed by tax-exempt organizations that receive significant
contributions from the company,
6. Are not relatives of any management of the company, and
7. Are not officers of corporations which the Chairman, CEO, President, or
any other officer of AIG serves as a director.
We religious shareholders believe that directors who are free of any
relationships which might influence or preclude their ability to exercise
oversight of management and operations when needed are beneficial to a
corporation. Such independence serves shareholders in numerous ways including
resolution of conflicting views within management, or raising important
financial, public policy or corporate policy and practice issues, such as equal
employment opportunity and workforce diversity or management transition.
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 be composed
of outside, independent directors. A majority also believed that the nominating
committee should consist entirely of outside, independent directors. We agree.
A Nominating Committee composed solely of independent directors would remove
any question that candidates for the Board had been selected only by current
management. The use of the AIG 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. Management controls nearly 30 percent of the shares voted, and wants
views taken into account. The views of shareholders supporting this proposal
(29.2 percent voted for this proposal in 2001) should be as well. We ask again
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
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
Your Board serves as a committee of the whole in the election process; the
views of the independent directors 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 fully discussed by 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
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.
V. SHAREHOLDER PROPOSALS FOR 2003 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 6, 2002. Under the AIG By-Laws, notice of any other
shareholder proposal to be made at the 2003 Annual Meeting of Shareholders must
be received not less than 90 nor more than 120 days prior to May 15, 2003 unless
the 2003 Annual Meeting is not scheduled to be held on a date between April 15,
2003 and June 14, 2003, in which case notice must be received no less than the
later of 90 days prior to the date on which such meeting is scheduled or 10 days
after the date on which such meeting date is first publicly announced. A copy of
the current AIG By-Laws may be obtained from the Secretary of AIG.
VI. OTHER MATTERS
Your Board of Directors knows of no other matters to be presented at the
meeting. 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', 'Report of the Audit
Committee' (to the extent permitted by the rules of the Securities and Exchange
Commission), and 'Performance Graph', shall not be deemed to be so incorporated,
unless specifically otherwise provided in such filing.
IMPORTANT NOTICE REGARDING DELIVERY OF SHAREHOLDER DOCUMENTS
In accordance with a notice sent to certain shareholders of AIG Common Stock
who hold AIG Common Stock through a broker or otherwise through a nominee and
who share a single address, only one copy of this Notice of Annual Meeting of
Shareholders and Proxy Statement and AIG's 2001 Annual Report to Shareholders is
being sent to that address unless AIG receives contrary instructions from any
shareholder at that address. This practice, known as 'householding', is designed
to reduce printing and postage costs. However, if any shareholder residing at
such address wishes to receive a separate copy of this Notice of Annual Meeting
and Proxy Statement or AIG's Annual Report to Shareholders, he or she may
contact the AIG Director of Investor Relations at 70 Pine Street, New York, New
York 10270, 212-770-6293 and AIG will deliver those documents to such
shareholder promptly upon receiving the request. Any such shareholder may also
contact the AIG Director of Investor Relations if he or she would like to
receive separate proxy materials and annual reports in the future. If
a shareholder receives multiple copies of AIG's proxy materials and annual
reports, he or she may request householding in the future by contacting the AIG
Director of Investor Relations.
AIG will bear the cost of this solicitation of proxies. Proxies may be
solicited by mail, personal interview, telephone and facsimile transmission by
directors, their associates, and approximately eight officers and regular
employees of AIG and its subsidiaries. In addition to the foregoing, AIG has
retained Georgeson Shareholder Communications Inc. to assist in the solicitation
of proxies for a fee of approximately $12,500 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.
AMERICAN INTERNATIONAL GROUP, INC.
2002 STOCK INCENTIVE PLAN
The purpose of the American International Group, Inc. 2002 Stock Incentive
Plan is to attract, retain and motivate officers, directors, employees
(including prospective employees), consultants and others who may perform
services for the Company, to compensate them for their contributions to the
long-term growth and profits of the Company, and to encourage them to acquire a
proprietary interest in the success of the Company.
1.2 Definitions of Certain Terms
'AIG' means American International Group, Inc. or a successor entity
contemplated by Section 3.5.
'Award' means an award made pursuant to the Plan.
'Award Agreement' means the written document by which each Award is
'Board' means the Board of Directors of AIG.
'Certificate' means a stock certificate (or other appropriate document or
evidence of ownership) representing shares of Common Stock of AIG.
'Code' means the Internal Revenue Code of 1986, as amended from time to
time, and the applicable rulings and regulations thereunder.
'Committee' shall have the meaning set forth in Section 1.3.1.
'Common Stock' means the common stock of AIG, par value $2.50 per share.
'Company' means AIG and its subsidiaries.
'Covered Person' shall have the meaning set forth in Section 1.3.3.
'Employment' means a grantee's performance of services for the Company, as
determined by the Committee. The terms 'employ' and 'employed' shall have their
'Exchange Act' means the Securities Exchange Act of 1934, as amended from
time to time, and the applicable rules and regulations thereunder.
'Fair Market Value' means, with respect to a share of Common Stock on any
day, the fair market value as determined in accordance with a valuation
methodology approved by the Committee.
'Plan' means the American International Group, Inc. 2002 Stock Incentive
Plan, as described herein and as hereafter amended from time to time.
1.3.1 Except as otherwise provided herein, the Plan shall be administered by
a committee (the 'Committee' ) of the Board to be drawn solely from members of
the Board who are not and have not been officers of the Company. 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 Award granted thereunder as it deems necessary
or advisable. All determinations and interpretations made by the Committee shall
be final, binding and conclusive on all grantees and on their legal
representatives and beneficiaries. The Committee shall have the authority, in
its absolute discretion, to determine the persons who shall receive Awards, the
time when Awards shall be granted, the terms of such Awards and the number of
shares of Common Stock, if any, which shall be subject to such Awards. Unless
otherwise provided in an Award Agreement, the Committee shall have the
authority, in its absolute discretion, to (i) amend any outstanding Award
Agreement in any respect, whether or not the rights of the grantee of such Award
are adversely affected, including, without limitation, to accelerate the time or
times at which the Award becomes vested, unrestricted or may be exercised, waive
or amend any goals, restrictions or conditions set forth in such Award
Agreement, or impose new goals, restrictions and conditions, or reflect a change
in the grantee's circumstances and (ii) determine whether, to what extent and
under what circumstances and method or methods (A) Awards may be (1) settled in
cash, shares of Common Stock, other securities, other Awards or other property
or (2) canceled, forfeited or suspended, (B) shares of Common Stock, other
securities, other Awards or other property, and other amounts payable with
respect to an Award may be deferred either automatically or at the election of
the grantee thereof or of the Committee and (C) Awards may be settled by the
Company or any of its designees. Notwithstanding anything to the contrary
contained herein, the Board may, in its sole discretion, at any time and from
time to time, grant Awards (including grants to members of the Board who are not
employees of the Company) or administer the Plan, in which case the Board shall
have all of the authority and responsibility granted to the Committee herein. To
the extent any Award is made to an 'officer' (as defined for purposes of
Rule 16a-1(f) under the Exchange Act) or director of AIG, the Award shall be
made by the full Board or a committee or subcommittee of the Board composed of
at least two 'non-employee directors' (as defined in Rule 16b-3 under the
1.3.2 Actions of the Committee may be taken by the vote of a majority of its
members. The Committee may allocate among its members and delegate to any person
who is not a member of the Committee any of its administrative responsibilities.
1.3.3 No member of the Board or the Committee or any employee of the Company
(each such person a 'Covered Person' ) shall have any liability to any person
(including any grantee) for any action taken or omitted to be taken or any
determination made in good faith with respect to the Plan or any Award. Each
Covered Person shall be indemnified and held harmless by AIG against and from
any loss, cost, liability, or expense (including attorneys' fees) that may be
imposed upon or incurred by such Covered Person in connection with or resulting
from any action, suit or proceeding to which such Covered Person may be a party
or in which such Covered Person may be involved by reason of any action taken or
omitted to be taken under the Plan or any Award Agreement and against and from
any and all amounts paid by such Covered Person, with AIG's approval, in
settlement thereof, or paid by such Covered Person in satisfaction of any
judgment in any such action, suit or proceeding against such Covered Person,
provided that AIG shall have the right, at its own expense, to assume and defend
any such action, suit or proceeding and, once AIG gives notice of its intent to
assume the defense, AIG shall have sole control over such defense with counsel
of AIG's choice. The foregoing right of indemnification shall not be available
to a Covered Person to the extent that a court of competent jurisdiction in a
final judgment or other final adjudication, in either case, not subject to
further appeal, determines that the acts or omissions of such Covered Person
giving rise to the indemnification claim resulted from such Covered Person's bad
faith, fraud or willful misconduct. The foregoing right of indemnification shall
not be exclusive of any other rights of indemnification to which Covered Persons
may be entitled under AIG's Restated Certificate of Incorporation or Bylaws, as
a matter of law, or otherwise, or any other power that AIG may have to indemnify
such persons or hold them harmless.
1.4 Persons Eligible for Awards
Awards under the Plan may be made to such officers, directors, employees
(including prospective employees), consultants and other individuals who may
perform services for the Company, as the Committee may select.
1.5 Types of Awards Under Plan
Awards may be made under the Plan in the form of (a) restricted stock,
(b) restricted stock units, (c) dividend equivalent rights and (d) other
equity-based or equity-related Awards which the Committee determines to be
consistent with the purposes of the Plan and the interests of the Company. AIG,
however, will not grant stock options pursuant to the Plan.
1.6 Shares of Common Stock Available for Awards
1.6.1 Common Stock Subject to the Plan. Subject to adjustment as provided in
Section 1.6.2 hereof, the maximum number of shares that may be issued under the
Plan through December 31, 2002 is fifteen million (15,000,000) shares of Common
Stock and in each calendar year thereafter shall be the sum of (a) one million
(1,000,000) shares of Common Stock and (b) the number of shares of Common Stock
available for issuance under the Plan in the previous calendar year but not
issued in such year. Such 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. If any Award shall expire, terminate or otherwise lapse,
in whole or in part, any shares of Common Stock subject to such Award (or
portion thereof) shall again be available for issuance under the Plan.
1.6.2 Adjustments. The Committee shall have the authority (but shall not be
required) to adjust the number of shares of Common Stock authorized pursuant to
Section 1.6.1 and to adjust equitably (including, without limitation, by payment
of cash) the terms of any outstanding Awards (including, without limitation, the
shares of Common Stock covered by each outstanding Award, the type of property
to which the Award is subject and the exercise or strike price of any Award), in
such manner as it deems appropriate to preserve the benefits or potential
benefits intended to be made available to grantees of Awards, for any increase
or decrease in the number of issued shares of Common Stock resulting from a
recapitalization, stock split, stock dividend, combination or exchange of shares
of Common Stock, merger, consolidation, rights offering, separation,
reorganization or liquidation, or any other change in the corporate structure or
shares of AIG. After any adjustment made pursuant to this Section 1.6.2, the
number of shares of Common Stock subject to each outstanding Award shall be
rounded down to the nearest whole number.
1.6.3 There shall be no limit on the amount of cash, securities (other than
shares of Common Stock as provided in this Section 1.6) or other property that
may be delivered pursuant to the Plan or any Award; provided, however, that
Awards with respect to no more than 250,000 shares of Common Stock may be
granted to any one grantee in any calendar year, and provided further, that
Awards of stock appreciation rights with respect to no more than 250,000 shares
of Common Stock may be granted to any one grantee in any calendar year.
AWARDS UNDER THE PLAN
2.1 Agreements Evidencing Awards
Each Award granted under the Plan shall be evidenced by a written document
which shall contain such provisions and conditions as the Committee deems
appropriate. The Committee may grant Awards in tandem with or in substitution
for any other Award or Awards granted under this Plan or any award granted under
any other plan of the Company. By accepting an Award pursuant to the Plan, a
grantee thereby agrees that the Award shall be subject to all of the terms and
provisions of the Plan and the applicable Award Agreement.
2.2 No Rights as a Shareholder
No grantee of an Award shall have any of the rights of a shareholder of AIG
with respect to shares of Common Stock subject to such Award until the delivery
of such shares. Except as otherwise provided in Section 1.6.2, no adjustments
shall be made for dividends, distributions or other rights (whether ordinary or
extraordinary, and whether in cash, Common Stock, other securities or other
property) for which the record date is prior to the date such shares are
2.3 Grant of Restricted Shares of Common Stock
The Committee may grant or offer for sale restricted shares of Common Stock
in such amounts and subject to such terms and conditions as the Committee shall
determine. Upon the delivery of such shares, the grantee shall have the rights
of a shareholder with respect to the restricted stock, subject to any
restrictions and conditions as the Committee may include in the applicable Award
Agreement. In the event that a Certificate is issued in respect of restricted
shares of Common Stock, such Certificate may be registered in the name of the
grantee but shall be held by AIG or its designated agent until the time the
2.4 Grant of Restricted Stock Units
The Committee may grant Awards of restricted stock units in such amounts and
subject to such terms and conditions as the Committee shall determine. A grantee
of a restricted stock unit will have only the rights of a general unsecured
creditor of AIG until delivery of shares of Common Stock, cash or other
securities or property is made as specified in the applicable Award Agreement.
On the delivery date specified in the Award Agreement, the grantee of each
restricted stock unit not previously forfeited or terminated shall receive one
share of Common Stock, or cash, securities or other property equal in value to a
share of Common Stock or a combination thereof, as specified by the Committee.
2.5 Grant of Dividend Equivalent Rights
The Committee may include in the Award Agreement with respect to any Award a
dividend equivalent right entitling the grantee to receive amounts equal to all
or any portion of the dividends that would be paid on the shares of Common Stock
covered by such Award if such shares had been delivered pursuant to such Award.
The grantee of a dividend equivalent right will have only the rights of a
general unsecured creditor of AIG until payment of such amounts is made as
specified in the applicable Award Agreement. In the event such a provision is
included in an Award Agreement, the Committee shall determine whether such
payments shall be made in cash, in shares of Common Stock or in another form,
whether they shall be conditioned upon the
exercise of the Award to which they relate, the time or times at which they
shall be made, and such other terms and conditions as the Committee shall deem
2.6 Other Stock-Based Awards
The Committee may grant other types of equity-based or equity-related Awards
(including the grant or offer for sale of unrestricted shares of Common Stock)
in such amounts and subject to such terms and conditions, as the Committee shall
determine. Such Awards may entail the transfer of actual shares of Common Stock
to Award recipients, or payment in cash or otherwise of amounts based on the
value of shares of Common Stock, and may include, without limitation, Awards
designed to comply with or take advantage of the applicable local laws of
jurisdictions other than the United States.
3.1 Amendment of the Plan
3.1.1 Unless otherwise provided in an Award Agreement, the Board may from
time to time suspend, discontinue, revise or amend the Plan in any respect
whatsoever, including in any manner that adversely affects the rights, duties or
obligations of any grantee of an Award.
3.1.2 Unless otherwise determined by the Board, shareholder approval of any
suspension, discontinuance, revision or amendment shall be obtained only to the
extent necessary to comply with any applicable law.
3.2 Tax Withholding
3.2.1 As a condition to the delivery of any shares of Common Stock pursuant
to any Award or the lifting or lapse of restrictions on any Award, or in
connection with any other event that gives rise to a federal or other
governmental tax withholding obligation on the part of the Company relating to
an Award (including, without limitation, FICA tax), (a) the Company may deduct
or withhold (or cause to be deducted or withheld) from any payment or
distribution to a grantee whether or not pursuant to the Plan or (b) the
Committee shall be entitled to require that the grantee remit cash to the
Company (through payroll deduction or otherwise), in each case in an amount
sufficient in the opinion of the Company to satisfy such withholding obligation.
3.3 Required Consents and Legends
3.3.1 If the Committee shall at any time determine that any consent (as
hereinafter defined) is necessary or desirable as a condition of, or in
connection with, the granting of any Award, the delivery of shares of Common
Stock or the delivery of any cash, securities or other property under the Plan,
or the taking of any other action thereunder (each such action being hereinafter
referred to as a 'plan action'), then such plan action shall not be taken, in
whole or in part, unless and until such consent shall have been effected or
obtained to the full satisfaction of the Committee. The Committee may direct
that any Certificate evidencing shares delivered pursuant to the Plan shall bear
a legend setting forth such restrictions on transferability as the Committee may
determine to be necessary or desirable, and may advise the transfer agent to
place a stop transfer order against any legended shares.
3.3.2 The term 'consent' as used in this Section 3.3 with respect to any
plan action includes (a) any and all listings, registrations or qualifications
in respect thereof upon any securities exchange or under any federal, state, or
local law, or law, rule or regulation of a jurisdiction outside the United
States, (b) or any other matter, which the Committee may deem necessary or
desirable to comply with the terms of any such listing, registration or
qualification or to obtain an exemption from the requirement that any such
listing, qualification or registration be made, (c) any and all other consents,
clearances and approvals in respect of a plan action by any governmental or
other regulatory body or any stock exchange or self-regulatory agency and
(d) any and all consents required by the Committee. Nothing herein shall require
AIG to list, register or qualify the shares of Common Stock on any securities
3.4 Nonassignability; No Hedging
Except to the extent otherwise expressly provided in the applicable Award
Agreement or determined by the Committee, no Award (or any rights and
obligations thereunder) granted to any person under the Plan may be sold,
exchanged, transferred, assigned, pledged, hypothecated or otherwise disposed of
or hedged, in any manner (including through the use of any cash-settled
instrument), whether voluntarily or involuntarily and whether by operation of
law or otherwise, other than by will or by the laws of descent and distribution,
and all such Awards (and any rights thereunder) shall be exercisable during the
life of the grantee only by the grantee
or the grantee's legal representative. Any sale, exchange, transfer, assignment,
pledge, hypothecation, or other disposition in violation of the provisions of
this Section 3.4 shall be null and void and any Award which is hedged in any
manner shall immediately be forfeited. All of the terms and conditions of this
Plan and the Award Agreements shall be binding upon any permitted successors and
3.5 Successor Entity
Unless otherwise provided in the applicable Award Agreement and except as
otherwise determined by the Committee, in the event of a merger, consolidation,
mandatory share exchange or other similar business combination of AIG with or
into any other entity ('successor entity') or any transaction in which another
person or entity acquires all of the issued and outstanding Common Stock of AIG,
or all or substantially all of the assets of AIG, outstanding Awards may be
assumed or a substantially equivalent award may be substituted by such successor
entity or a parent or subsidiary of such successor entity.
3.6 Right of Discharge Reserved
Nothing in the Plan or in any Award Agreement shall confer upon any grantee
the right to continued Employment by the Company or affect any right which the
Company may have to terminate such Employment.
3.7 Nature of Payments
3.7.1 Any and all grants of Awards and deliveries of Common Stock, cash,
securities or other property under the Plan shall be in consideration of
services performed or to be performed for the Company by the grantee. Awards
under the Plan may, in the discretion of the Committee, be made in substitution
in whole or in part for cash or other compensation otherwise payable to a
participant in the Plan. Only whole shares of Common Stock shall be delivered
under the Plan. Awards shall, to the extent reasonably practicable, be
aggregated in order to eliminate any fractional shares. Fractional shares shall
be rounded down to the nearest whole share and any such fractional shares shall
3.7.2 All such grants and deliveries shall constitute a special
discretionary incentive payment to the grantee and shall not be required to be
taken into account in computing the amount of salary or compensation of the
grantee for the purpose of determining any contributions to or any benefits
under any pension, retirement, profit-sharing, bonus, life insurance, severance
or other benefit plan of the Company or under any agreement with the grantee,
unless the Company specifically provides otherwise.
3.8 Non-Uniform Determinations
The Committee's determinations under the Plan and Award Agreements need not
be uniform and may be made by it selectively among persons who receive, or are
eligible to receive, Awards under the Plan (whether or not such persons are
similarly situated). Without limiting the generality of the foregoing, the
Committee shall be entitled, among other things, to make non-uniform and
selective determinations under Award Agreements, and to enter into non-uniform
and selective Award Agreements, as to (a) the persons to receive Awards,
(b) the terms and provisions of Awards and (c) whether a grantee's Employment
has been terminated for purposes of the Plan.
3.9 Other Payments or Awards
Nothing contained in the Plan shall be deemed in any way to limit or
restrict the Company from making any award or payment to any person under any
other plan, arrangement or understanding, whether now existing or hereafter in
3.10 Plan Headings
The headings in this Plan are for the purpose of convenience only and are
not intended to define or limit the construction of the provisions hereof.
3.11 Termination of Plan
The Board reserves the right to terminate the Plan at any time; provided,
however, that in any case, the Plan shall terminate March 13, 2012, and provided
further, that all Awards made under the Plan prior to its termination shall
remain in effect until such Awards have been satisfied or terminated in
accordance with the terms and provisions of the Plan and the applicable Award
3.12 Governing Law
THIS PLAN SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICT OF LAWS.
3.13 Severability; Entire Agreement
If any of the provisions of this Plan or any Award Agreement is finally held
to be invalid, illegal or unenforceable (whether in whole or in part), such
provision shall be deemed modified to the extent, but only to the extent, of
such invalidity, illegality or unenforceability and the remaining provisions
shall not be affected thereby; provided, that if any of such provisions is
finally held to be invalid, illegal, or unenforceable because it exceeds the
maximum scope determined to be acceptable to permit such provision to be
enforceable, such provision shall be deemed to be modified to the minimum extent
necessary to modify such scope in order to make such provision enforceable
hereunder. The Plan and any Award Agreements contain the entire agreement of the
parties with respect to the subject matter thereof and supersede all prior
agreements, promises, covenants, arrangements, communications, representations
and warranties between them, whether written or oral with respect to the subject
3.14 Waiver of Claims
Each grantee of an Award recognizes and agrees that prior to being selected
by the Committee to receive an Award he or she has no right to any benefits
hereunder. Accordingly, in consideration of the grantee's receipt of any Award
hereunder, he or she expressly waives any right to contest the amount of any
Award, the terms of any Award Agreement, any determination, action or omission
hereunder or under any Award Agreement by the Committee, the Company or the
Board, or any amendment to the Plan or any Award Agreement (other than an
amendment to this Plan or an Award Agreement to which his or her consent is
expressly required by the express terms of an Award Agreement).
3.15 No Third Party Beneficiaries
Except as expressly provided therein, neither the Plan nor any Award
Agreement shall confer on any person other than the Company and the grantee of
any Award any rights or remedies thereunder. The exculpation and indemnification
provisions of Section 1.3.3 shall inure to the benefit of a Covered Person's
estate and beneficiaries and legatees.
3.16 Successors and Assigns of AIG
The terms of this Plan shall be binding upon and inure to the benefit of AIG
and any successor entity contemplated by Section 3.5.
3.17 Date of Adoption and Approval of Shareholders
The Plan was adopted on March 13, 2002 by the Board subject to approval by
the shareholders of AIG at the 2002 Annual Meeting of Shareholders. Any Awards
granted under the Plan prior to the date of such shareholder approval are
expressly conditioned on such shareholder approval.
AMERICAN INTERNATIONAL GROUP, INC.
PRINTED ON RECYCLED PAPER
AMERICAN INTERNATIONAL GROUP, INC.
ANNUAL MEETING OF SHAREHOLDERS
MAY 15, 2002
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
P The undersigned hereby appoints M.R. Greenberg, Edward E. Matthews and
R Howard I. Smith and each of them, with full power to act without the
O other and with full power of substitution, as proxies to represent and to
X vote, as directed on the reverse side hereof, all shares the undersigned
Y is entitled to vote at the annual meeting of the shareholders of American
International Group, Inc. to be held at 72 Wall Street, Eighth Floor, New
York, New York, on Wednesday, May 15, 2002 at 11:00 a.m., and all
(change of address/comments)
(If you have written in the
above space, please mark the
corresponding box on the
reverse side of this card)
PLEASE MARK, DATE AND SIGN THIS PROXY ON THE REVERSE SIDE AND RETURN IT
PROMPTLY USING THE ENCLOSED POSTAGE PREPAID ENVELOPE.
[X] Please mark your 2742
votes as in this
Unless otherwise marked, the proxies are appointed with authority to vote "FOR" all nominees for election. "FOR" Item 2 and
Item 3, "AGAINST" Item 4, and in their discretion to vote upon other matters that may properly come before the meeting.
The Board of Directors recommends a vote "FOR" all nominees in Item 1 and "FOR" Item 2 and Item 3.
1. Election of FOR WITHHOLD 2. Adopt the 2002 FOR AGAINST ABSTAIN
Directors [ ] [ ] Election as Directors of the following Stock Incentive [ ] [ ] [ ]
identified in the Proxy Statement: Plan
For, except vote withheld from 01. M. Aidinoff 11. F. Hoenemeyer
the following nominee(s): 02. E. Broad 12. R. Holbrooke
03. P. Chia 13. E. Matthews 3. Ratification of [ ] [ ] [ ]
04. M. Cohen 14. H. Smith Independent
- ------------------------------ 05. B. Conable 15. M. Sullivan Accountants
06. R. Crandall 16. T. Tizzio
07. M. Feldstein 17. E. Tse
08. E. Futter 18. J. Wintrob
09. M. Greenberg 19. F. Wisner
10. C. Hills 20. F. Zarb
The Board of Directors recommends a vote "AGAINST" Item 4.
FOR AGAINST ABSTAIN
4. Shareholder Proposal [ ] [ ] [ ]
Described in the Proxy
If you have noted either an address
change or made comments on the reverse [ ]
side of the card, mark here.
Please Sign, Date and Return the
Proxy Card Promptly Using the
Please sign exactly as your name appears hereon. Joint owners should each sign.
When signing as attorney, executor, administrator, trustee, corporate officer or
guardian, please give full title as such.
FOLD AND DETACH HERE IF YOU ARE RETURNING YOUR VOTED PROXY CARD BY MAIL
American International Group, Inc.
American International Group, Inc. encourages you to take advantage of new and
convenient ways to vote your shares. You can vote your shares electronically
over the Internet or by telephone. By doing this, you will not need to return
the proxy card.
To vote your shares by telephone or electronically, you must use the control
number printed in the box above, just below the perforation. The series of
numbers that appear in the box above must be used to access the system. You may
vote by telephone or over the Internet 24 hours a day, seven days a week until
11:59 p.m., New York City time on May 14, 2002.
1. To vote by telephone: Using a touch-tone telephone, call 1-877-PRX-VOTE
2. To vote over the Internet: Go to the web site http://www.eproxyvote.com/aig
Your telephone or Internet vote authorizes the named proxies in the same manner
as if you marked, signed, dated and returned the proxy card.
If you choose to vote your shares by telephone or over the Internet, there is no
need for you to mail back your proxy card.
Your vote is important. Thank you for voting.