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SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Filed by the registrant /x/
Filed by a party other than the registrant / /
Check the appropriate box:
/ / Preliminary proxy statement
/x/ Definitive proxy statement
/ / Definitive additional materials
/ / Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
American General Corporation
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(Name of Registrant as Specified in Its Charter)
Kurt G. Schreiber
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(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
/x/ $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
/ / $500 per each party to the controversy pursuant to Exchange Act
Rule 14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transactions applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
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(4) Proposed maximum aggregate value of transaction:
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/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the form or schedule and the date of its filing.
(1) Amount previously paid:
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(2) Form, schedule or registration statement no.:
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(3) Filing party:
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(4) Date filed:
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American General Corporation
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Our Shareholders:
You are invited to attend the 68th annual meeting of the shareholders
of American General Corporation, on Thursday, April 28, 1994. The meet-
ing will be held in the Consort Ballroom of The Westin Oaks Hotel, 5011
Westheimer Road, Houston, Texas, at 9:00 a.m. CDT.
The meeting will be held for the following purposes:
. to elect nine directors for one-year terms;
. to ratify the appointment of Ernst & Young as independent auditors
for calendar year 1994;
. to approve the Performance-Based Plan for Executive Officers;
. to transact any other business that may properly come before the
meeting or any adjournment thereof.
YOUR VOTE IS IMPORTANT. Since many shareholders are not able to at-
tend the meeting, the board of directors solicits proxies so that each
shareholder has an opportunity to vote on the issues to be decided at
the meeting.
PLEASE RETURN THE ENCLOSED PROXY. We urge you to complete and return
your proxy as promptly as possible - even if you are planning to attend
the meeting. Prior to any vote taken at the meeting, you may change
your proxy or vote in person. RETURNING YOUR CARD PROMPTLY will save
the company the expense of a second mailing.
We hope you will be represented at the meeting, either in person or
by proxy. Thank you for your continued support.
For the board of directors,
[SIGNATURE APPEARS HERE] [SIGNATURE APPEARS HERE]
Kurt G. Schreiber Harold S. Hook
Corporate Secretary Chairman and Chief Executive Officer
March 22, 1994
[AMERICAN GENERAL LOGO APPEARS HERE]
1994 PROXY STATEMENT
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<PAGE>
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1994 PROXY STATEMENT
________________________________________________________________________________
[LOGO OF AMERICAN GENERAL APPEARS HERE]
<TABLE>
<S> <C>
GENERAL INFORMATION......................................................... 1
ELECTION OF DIRECTORS (Item 1).............................................. 1
GOVERNANCE OF THE COMPANY................................................... 4
COMPENSATION OF EXECUTIVE OFFICERS.......................................... 5
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS..................................................................... 13
SECURITY OWNERSHIP OF MANAGEMENT............................................ 14
CERTAIN RELATIONSHIPS AND TRANSACTIONS...................................... 15
SECURITIES REPORTING........................................................ 15
INDEPENDENT AUDITORS (Item 2)............................................... 15
PERFORMANCE-BASED PLAN (Item 3)............................................. 15
OTHER BUSINESS.............................................................. 16
PROXY SOLICITATION.......................................................... 17
VOTING OF THRIFT PLAN HOLDINGS.............................................. 17
</TABLE>
Copies of this Proxy Statement and the Company's
Annual Report and Form 10-K are available
to shareholders at no charge on request directed to:
First Chicago Trust Company of New York
P.O. Box 2500
Jersey City, NJ 07303-2500
Telephone: (800) 446-2617
(201) 324-0498
Fax: (201) 222-4892
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AMERICAN GENERAL CORPORATION
<PAGE>
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GENERAL INFORMATION
The accompanying proxy is solicited by the board of directors of American
General Corporation (the "Company" or "American General") for use at the
Company's annual meeting of shareholders on Thursday, April 28, 1994. The 1993
Annual Report to Shareholders has been mailed to shareholders. This proxy
statement and the proxy are being sent to shareholders beginning on March 22,
1994.
Shares represented by proxies that are properly executed and returned with
choices specified will be voted accordingly at the meeting or any adjournment
thereof. If a proxy is signed without choices specified, those shares will be
voted for the election of the director nominees named herein, for the ratifi-
cation of the appointment of the independent auditors for 1994, and for ap-
proval of the Performance-Based Plan.
If "abstain" is specified, the shares will be included for purposes of deter-
mining a quorum but will not be voted; therefore, abstentions are treated as
votes against a nominee or proposal.
A shareholder may revoke a proxy at any time before it is voted. Shareholders
who attend the meeting may vote by ballot at the meeting, thereby cancelling
any proxy previously given.
VOTING INFORMATION. The record date was March 9, 1994, and only shareholders
of record at the close of business on that date are entitled to vote at the
meeting. Each share of the Company's common stock (the "Common Stock") is en-
titled to one vote. As of March 1, 1994, there were 213,537,814 shares of Com-
mon Stock outstanding.
QUORUM. The bylaws of the Company require, for a quorum, the presence at the
meeting in person or by proxy of the holders of a majority of the shares of
capital stock of the Company entitled to vote. IN ORDER TO ENSURE THAT A QUO-
RUM WILL BE PRESENT, EACH SHAREHOLDER IS REQUESTED TO SIGN, DATE, AND RETURN
THE ENCLOSED PROXY CARD.
ELECTION OF DIRECTORS
(Item 1 on proxy card)
By resolution of the board of directors, the number of directors of the Com-
pany has been fixed at nine as of the date of the meeting.
The nine director nominees, all of whom currently are directors of the Compa-
ny, have been nominated for one-year terms ending at the next annual meeting
when their successors assume office. The affirmative vote of at least a major-
ity of the shares of Common Stock present at the meeting is required for the
election of each nominee to serve as a director of the Company for such term.
Of the nine director nominees, three -- Messrs. Harold S. Hook, James R.
Tuerff, and Robert M. Devlin -- are employees of the Company. Mr. Tuerff was
elected to the board of directors in August 1993 after election to serve as
President of the Company; and Mr. Devlin was elected to the board of directors
in September 1993 after election to serve as Vice Chairman of the Company.
Although the management of the Company has no reason to believe that any of
the nominees will be unable to serve, if such situation should arise prior to
the meeting, no replacement(s) will be named, and the number of directors to
be elected will be reduced accordingly.
Messrs. Hook, Tuerff, and Devlin, in addition to serving on the boards of di-
rectors listed on succeeding pages, serve as directors of American General Fi-
nance, Inc. Mr. Tuerff also serves as a director of American General Finance
Corporation. Each of these subsidiaries of the Company has publicly issued
debt securities outstanding.
On succeeding pages, information is presented about each nominee for director
including name, age, principal occupation during the past five years, certain
other directorships, and the period during which the director has served on
the board.
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1994 PROXY STATEMENT 1
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NOMINEES FOR ELECTION AS DIRECTOR
J. Evans Attwell, 62
[PHOTO] . Vinson & Elkins L.L.P. (attorneys), Partner Director
. Entire business career with that firm since 1956 since 1963
. Director: First City Bancorporation of Texas,
Galveston-Houston Company, and Seagull Energy
Corporation
. Member, Audit Committee
Brady F. Carruth, 36
[PHOTO] . Gulf Coast Capital Corporation (commercial Director
landscaping), President and CEO since 1986 since 1990
. Member, Audit Committee
W. Lipscomb Davis, Jr., 62
[PHOTO] . Hillsboro Enterprises (investments), Partner since Director
1985 since 1977
. Director: Genesco, Inc., Thomas Nelson, Inc., and
Third National Bank in Nashville
. Member, Audit Committee and Executive Committee
Robert M. Devlin, 53
[PHOTO] . American General Corporation, Vice Chairman since Director
1993 since 1993
. American General Life Insurance Company, President
and CEO, 1986 to 1993
. Joined American General in 1977
Harold S. Hook, 62
[PHOTO] . American General Corporation, Chairman and CEO Director
since 1978, President, 1975 to 1981 since 1972
. Joined American General in 1970 as President of a
subsidiary
. Director: Chemical Banking Corporation, Cooper
Industries, Inc., Panhandle Eastern Corporation,
and Sprint Corporation
. Chairman, Executive Committee
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2 AMERICAN GENERAL CORPORATION
<PAGE>
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NOMINEES FOR ELECTION AS DIRECTOR (CONTINUED)
Larry D. Horner, 59
[PHOTO] . Arnhold and S. Bleichroeder, Inc. (investment Director
banking), Managing Director since 1991 since 1991
. KPMG Peat Marwick (accounting and auditing), 1956
to 1991, Chairman and CEO, 1984 to 1990
. Director: Phillips Petroleum Company, The China
Light Industry Fund, and First Eagle International
Fund, Inc.
. Chairman, Personnel Committee; Member, Executive
Committee
Richard J. V. Johnson, 63
[PHOTO] . Houston Chronicle (newspaper publishing), Chairman Director
since 1990 and Publisher since 1987 since 1990
. With that organization since 1956, President, 1973
to 1990
. Advisory Director: Texas Commerce Bank N.A.
. Member, Personnel Committee
Robert E. Smittcamp, 52
[PHOTO] . Lyons-Magnus Co., Inc. (food processing), President Director
and CEO since 1971 since 1990
. Wawona Frozen Foods, Inc., Co-Owner since 1987,
President and CEO, 1963 to 1987; Wawona Orchards,
Co-Owner since 1960
. Director: Lyons Transportation Co. and Astec
Technology Engineering Co.
. Member, Personnel Committee
James R. Tuerff, 53
[PHOTO] . American General Corporation, President since 1993
. American General Life and Accident Insurance Director
Company, President, 1990 to 1993; Gulf Life since 1993
Insurance Company, President, 1988 to 1990
. Joined American General in 1967
. Member, Executive Committee
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1994 PROXY STATEMENT 3
<PAGE>
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GOVERNANCE OF THE COMPANY
In accordance with applicable Texas law, the business and affairs of the Com-
pany are managed under the direction of its board of directors.
At its October 1993 meeting, the board of directors amended the bylaws of the
Company to provide that non-employee directors must retire no later than the
annual meeting following their seventieth birthdays.
During 1993, the board of directors held 15 meetings, and each director at-
tended at least 83% of the aggregate number of meetings of the board of direc-
tors and of committees on which he served.
AUDIT COMMITTEE. The audit committee recommends to the board of directors the
independent auditors to be engaged by the Company and confers with the
independent auditors regarding their review of the annual financial state-
ments, their findings, and recommendations. The committee also reviews compli-
ance with the Company's Policy on Business Conduct; reviews the scope of the
audit to be performed for the following year; and reviews with the independent
auditors the accounting principles and policies of the Company.
The audit committee, the members of which are Messrs. Thomas D. Barrow
(chairman), Attwell, Carruth, and Davis, held three meetings in 1993.
EXECUTIVE COMMITTEE. The executive committee is authorized to exercise the
authority of the board of directors between regular meetings of the board, ex-
cept where action of the full board is required by law. The executive commit-
tee also is authorized by the board of directors to perform the functions of a
nominating committee and in this capacity recommends candidates for election
to the board of directors and to the committees of the board. Shareholders may
recommend nominees, as described in the section "Other Business-Shareholder
Proposals and Nominations."
The executive committee, which is presently composed of Messrs. Hook (chair-
man), Barrow, Davis, Horner, and Tuerff, met concurrently with the board of
directors in February 1993.
PERSONNEL COMMITTEE. The personnel committee reviews the contribution that
key officers and employees make to the Company's performance and prospects and
the salary and other compensation of these individuals. The committee deter-
mines the Company's matching contribution under the Employees' Thrift and In-
centive Plan, and the members of the committee administer the following plans:
the 1984 Stock and Incentive Plan (the "1984 Plan"); the 1984 Stock and Incen-
tive Plan (Amended and Restated Effective as of February 8, 1994) (the "1994
Plan"); and the Supplemental Thrift Plan.
The personnel committee, composed of Messrs. Horner (chairman), Johnson, and
Smittcamp, held two meetings in 1993.
COMPENSATION OF DIRECTORS
Each non-employee member of the board of directors receives an annual re-
tainer of $32,000, plus a fee of $1,500 for attendance at each meeting of the
board or a committee thereof. Committee chairmen receive an additional $5,000
annual retainer. No such fees or retainers are paid to any director who is an
employee of the Company.
The Retirement Plan for Directors provides that any non-employee director who
retires from the board of directors at age 65 or older, after serving at least
six years, receives an annual sum equal to the annual board retainer at the
time of retirement. Payments commence in May following the director's seventi-
eth birthday and continue for a period of years equal to the director's years
of service or until his death, whichever is earlier. Any director with at
least six years of service who ceases to be a director within two years of a
change of control of the company shall be deemed to have satisfied the age 65
service requirement.
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4 AMERICAN GENERAL CORPORATION
<PAGE>
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COMPENSATION OF EXECUTIVE OFFICERS
REPORT OF THE PERSONNEL COMMITTEE
COMPENSATION POLICY. The issue in executive compensation is whether to make
judgments of executive performance on a prospective or retrospective basis. It
is the view of the personnel committee that the retrospective approach permits
a more objective evaluation, retains the incentive value of compensation, and
best serves the long-term interests of shareholders.
This view is based upon the idea that organizations such as American General
are large, complex, dynamic systems. And, in such systems, the control of in-
puts does not guarantee the control of outputs. Put another way, results of a
given year are seldom the direct effect of executive action in that year.
In this process, the committee exercises its judgment in establishing the ex-
ecutive officers' salaries and their variable compensation, consisting of cash
bonuses and three types of long-term incentive awards: options, performance
awards, and restricted stock.
The committee's judgment is based on the policy that compensation should be
adequate to attract and retain qualified employees . . . that compensation
paid to such employees should be based on their individual duties and respon-
sibilities and their relative contribution to overall results . . . and that
compensation should take into account the level of compensation for comparable
positions inside and outside the organization.
In administering this policy the Company has, since 1975, used the perfor-
mance and salary review procedures of the Main Event Management(R) Salary Ad-
ministration Program. This program is made available to the Company through
Main Event Management Corporation, a company solely owned by Mr. Hook. Since
1985, the committee has retained KPMG Peat Marwick, as independent executive
compensation consultants, to assist in executing the Company's compensation
policy.
Each year, in the course of exercising its judgment with regard to compensa-
tion, the committee reviews the individual contribution and performance of
each of the key executive officers and the prior incentive awards granted to
them. In addition, the committee reviews overall corporate performance, in-
cluding the Company's growth in operating earnings per share, return on share-
holders' equity, cumulative total shareholder return, and other major accom-
plishments of the organization. For 1993, the committee, with the approval of
the board of directors, awarded to the CEO options to purchase shares of Com-
mon Stock and performance awards, and awarded a discretionary cash performance
bonus. Other named executive officers also received such awards. In arriving
at these awards, the committee took particular note of the Company's consis-
tent profitability and performance compared to peer companies and industry
norms, superior asset quality, and the rates and consistency of growth of
earnings per share, assets, and shareholders' equity.
The results of the Company are compared to those of a group of peer companies
that compete in the Company's primary lines of business, most of which are se-
lected from the non-bank companies in the S&P Financial Index. The peer group
is selected annually by the independent executive compensation consultant re-
tained by the Company. Currently there are 29 companies in this comparison
group, which is subject to change as the Company or its competitors change
their focus or as new competition emerges. The committee believes that the
Company's most direct competitors for executive talent are not necessarily all
of the companies that would be included in a peer group established to compare
shareholder return. Thus the compensation peer group is not the same as the
peer group index in the Comparison of Five-Year Cumulative Total Shareholder
Return graph included on page 11 of the proxy statement.
SALARIES. Base salaries of executive officers are reviewed individually on an
annual basis to determine if they should be increased, decreased, or left un-
changed. During the first quarter, the committee re-
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1994 PROXY STATEMENT 5
<PAGE>
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views the salaries of the 50 highest salaried employees. In determining the
salaries of the executive officers, the committee reviews the factors de-
scribed under "Compensation Policy" above, and the overall growth and long-
term progress of the organization. In addition, the committee compares the
CEO's base salary to that paid to chief executive officers in other companies
selected from the peer companies described above. The committee attempts to
position the CEO's salary in a middle range that reflects peer company prac-
tice.
The committee recommends to the board of directors for its approval salaries
for the 25 most highly salaried employees. The balance of the highest 50 sala-
ries are approved by the committee.
In keeping with the Company's strategy of maintaining stable base compensa-
tion and emphasizing variable reward opportunities, Mr. Hook did not receive
an increase in base salary in 1993 and had not received an increase in 1992.
BONUSES. Employees with salaries placing them in the top 3% of all American
General employees are deemed to be in a position to make a significant impact
on the growth and profitability of the organization. Therefore, these individ-
uals are eligible for consideration for a cash bonus annually. During the
first quarter of each year, the committee reviews recommendations for bonuses
for eligible employees, excluding the chairman, president, and vice chairman.
After reviewing the factors described under "Compensation Policy" above, the
committee acts on those recommendations and also determines the cash bonuses,
if any, to be paid to the chairman, president, and vice chairman. In March
1994, the committee awarded bonuses based on 1993 performance.
Approximately 73% of the eligible employees received bonuses totaling $4.6
million, or eight-tenths of one percent (.8%) of the Company's 1993 operating
earnings. Beginning in 1995, bonuses payable to the 15 highest salaried em-
ployees of the Company will be subject to limitations contained in the pro-
posed Performance-Based Plan for Executive Officers, if that Plan is approved
by shareholders at the 1994 annual meeting.
LONG-TERM INCENTIVE AWARDS. Incentive compensation at American General is in-
tended to promote long-term growth and profitability, since the Company's
businesses are long-term in nature. Awards under the Company's stock and in-
centive plans provide participants the opportunity to acquire stock in the
Company and thereby further align their personal interests with the interests
of other long-term shareholders and enable the Company to match long-term com-
pensation with long-term contribution. In determining these awards the Commit-
tee follows the process and reviews factors described under "Compensation Pol-
icy" above.
Long-term incentive awards have been made under the 1984 Plan and, beginning
February 8, 1994, are made under the 1994 Plan (the 1984 Plan and 1994 Plan
being together referred to herein as the "Plans"). The 1994 Plan makes avail-
able for issuance approximately 5.7 million shares of Common Stock and will
expire on February 7, 2004. Long-term incentive awards may include stock op-
tions, performance awards, and restricted stock.
Stock Options. Stock options are granted with an exercise price equal to 100%
of the fair market value of the Common Stock on the date of grant. Options be-
come exercisable six months after the date of grant, except that those granted
to the highest paid executives become exercisable in three equal annual in-
stallments beginning on the first anniversary of the grant. The Company has
never followed the practice of cancelling existing options and replacing them
with new options exercisable at lower prices.
In 1993, options were awarded to 131 employees for 516,305 shares, of which
212,293 were awarded to six named executive officers. The awards to the
six named executive officers represented one-tenth of one percent (0.1%) of
the Common Stock outstanding at the end of 1993.
Performance Awards. Performance awards are contingent awards of shares of
Common Stock that are
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6 AMERICAN GENERAL CORPORATION
<PAGE>
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earned over a three-year performance period. The committee determines the per-
centage of the performance award that is actually earned, which may range from
zero to 100%, based upon overall corporate performance during the three-year
performance period. This decision is based upon a review of key corporate per-
formance measures, including growth of operating earnings per share, total re-
turn on book value, return on shareholders' equity, and the overall growth and
profitability of the Company during the intervening three-year period. In ap-
plying these factors, the committee relies upon the judgment of its members
rather than upon a mathematical formula.
In 1993, the committee determined that the performance awards granted in 1990
should vest at 100%. A total of nine executive officers received vested per-
formance shares in 1993, valued at $1.75 million. This compares to a value of
$874 thousand when granted in 1990 and reflects the increase in the Common
Stock price over the three-year performance period.
Restricted Stock. The Plans also authorize the committee to make awards of
restricted stock. Restricted stock has never been granted to the CEO. In 1993,
a total of 45,000 shares of restricted stock were awarded to three other named
executive officers in keeping with the Company's practice in recent years of
granting restricted stock to the Company's executive officers in order to fur-
ther align their interests with those of the shareholders. The 1994 Plan lim-
its the aggregate number of shares of restricted stock that may be awarded an-
nually to one-tenth of one percent (0.1%) of the number of shares of Common
Stock outstanding as of the preceding December 31.
DEDUCTIBILITY OF COMPENSATION. Section 162(m) of the Internal Revenue Code,
enacted in 1993, generally disallows a tax deduction to public companies for
compensation over $1 million paid to their chief executive officers or to cer-
tain other highly compensated executive officers. However, a deduction is per-
mitted for compensation if it is paid on account of attainment of one or more
"performance-based" goals. Because Mr. Hook has agreed to defer a portion of
his 1994 compensation until the year following his retirement, all compensa-
tion paid by the Company in 1994 should be deductible.
If the proposed Performance-Based Plan for Executive Officers is approved by
the shareholders, cash bonuses paid in 1995 and subsequent years to the execu-
tive officers should be deductible. During 1994, the committee will review the
regulations as they are finalized and plans to take any additional steps nec-
essary to ensure continued full deductibility of the Company's executive com-
pensation.
PERSONNEL COMMITTEE OF THE BOARD OF DIRECTORS:
LARRY D. HORNER, CHAIRMAN
RICHARD J.V. JOHNSON
ROBERT E. SMITTCAMP
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1994 PROXY STATEMENT 7
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The following Summary Compensation Table sets forth compensation information
for the Company's chief executive officer, each of the four other most highly
compensated executive officers of the Company, including officers of certain
subsidiaries, and one former executive officer of the Company (the six being
herein referred to as the "named executive officers") for services performed
in 1993, 1992, and 1991.
SUMMARY COMPENSATION TABLE
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<TABLE>
<CAPTION>
Long-Term Compensation/1/
-------------------------------------------
Annual Compensation Awards Payouts
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Long-Term
Restricted Securities Incentive All Other
Stock Underlying Plan Compen-
Name and Principal Position Year Salary($) Bonus($) Awards ($)/2/ Options (#)/3/ Payouts ($)/4/ sation ($)/5/
- --------------------------- ---- --------- -------- ------------- -------------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Harold S. Hook, Chairman & 1993 $980,000 $784,000 -0- 79,675 $701,285 $47,922
CEO of the Company 1992 980,000 735,000 -0- 112,482 388,534 52,614
1991 931,447 637,000 -0- 111,506 274,230
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James R. Tuerff, President 1993 380,000 200,000 $610,000 32,000 134,378 16,570
of the Company 1992 293,308 135,000 -0- 20,000 53,495 14,842
1991 280,000 125,000 187,500 20,000 11,980
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Michael J. Poulos, Retired
Vice 1993 575,185 -0- -0- 44,618 413,957 39,746
Chairman of the Company/6/ 1992 686,000 445,900 -0- 62,990 229,313 39,384
1991 654,342 377,300 -0- 63,186 194,226
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Robert M. Devlin, Vice 1993 300,731 175,000 515,625 32,000 134,378 14,998
Chairman of the Company 1992 280,000 110,000 -0- 20,000 60,203 14,570
1991 274,646 120,000 187,500 20,000 29,538
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Daniel Leitch III, President & 1993 283,231 145,000 305,000 12,000 48,954 18,375
CEO of American General 1992 259,962 125,000 -0- 20,000 29,405 14,502
Finance, Inc. 1991 247,269 110,000 -0- 2,500 37,363
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Stephen D. Bickel, President & 1993 300,000 105,000 -0- 12,000 139,974 15,013
CEO of The Variable Annuity 1992 293,308 135,000 -0- 20,000 74,884 14,842
Life Insurance Company 1991 280,000 125,000 187,500 20,000 52,862
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</TABLE>
/1/PLAN AWARDS. All long-term compensation awards were granted under the 1984
Plan.
/2/RESTRICTED STOCK AWARDS. These amounts represent the value of the re-
stricted stock on the date of grant. At December 31, 1993, Messrs. Tuerff,
Devlin, Leitch, and Bickel held an aggregate of 30,000, 25,000, 10,000, and
10,000 shares, respectively, with a value of $858,750, $715,625, $286,250,
and $286,250, respectively. Neither Mr. Hook nor Mr. Poulos held any re-
stricted stock. Dividends are paid to holders with respect to restricted
stock at the same rate as is paid on all other Common Stock. Upon a Change
of Control, all forfeiture restrictions with respect to all outstanding
shares of restricted stock immediately lapse. See "Change of Control Ar-
rangements" for the definition of "Change of Control."
/3/OPTIONS. These amounts include both incentive stock options and non-quali-
fied stock options. All outstanding stock appreciation rights were cancelled
in 1992.
(Footnotes continued on following page)
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8 AMERICAN GENERAL CORPORATION
<PAGE>
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/4/LONG-TERM INCENTIVE PLAN PAYOUTS. These amounts represent the value of per-
formance awards on the date of vesting, following the three-year performance
period, regardless of whether the vested award was paid in cash, stock, or a
combination thereof.
/5/ALL OTHER COMPENSATION. These amounts include the Company's contributions to
the American General Employees' Thrift and Incentive Plan ("Thrift Plan")
and Supplemental Thrift Plan ("Supplemental Plan") and the taxable value of
Company-provided term life insurance ("Excess Life"), as well as $11,702 re-
ceived by Mr. Poulos in 1993 pursuant to a supplemental retirement agreement
(see "Pension Plans"). The Thrift Plan contributions for 1993 were $6,746
for each of the named executive officers. The Supplemental Plan contribu-
tions and the Excess Life taxable value for 1993 were as follows: Mr. Hook,
$37,354 and $3,822; Mr. Tuerff, $8,312 and $1,512; Mr. Poulos, $19,138 and
$2,160; Mr. Devlin, $6,787 and $1,465; Mr. Leitch, $6,000 and $5,629; and
Mr. Bickel, $6,755 and $1,512.
/6/RETIREMENT. On October 1, 1993, Mr. Poulos retired from the Company.
The following table contains information concerning the grant of stock op-
tions during 1993 to the named executive officers under the 1984 Plan.
STOCK OPTIONS GRANTED IN 1993
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<TABLE>
<CAPTION>
Potential Realizable Value
at Assumed Annual Rates
of Stock Price Appreciation
Individual Stock Option Grants for Option Term/1/
--------------------------------------------------------------
Options % of Total
Granted Options Granted Exercise
(#)/2/, to Employees Price Expiration At 5% At 10%
Name /3/ in 1993 ($/Sh) Date per annum per annum
- -------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
H. S. Hook 79,675 15.4 $30.7500 3-17-03 $1,540,796 $3,904,679
J. R. Tuerff 12,000 2.3 30.7500 3-17-03 232,062 588,091
20,000 3.9 30.6875 8-03-03 385,984 978,159
M. J. Poulos 44,618 8.6 30.7500 2-13-01 862,846 2,186,620
R. M. Devlin 12,000 2.3 30.7500 3-17-03 232,062 588,091
20,000 3.9 34.8750 9-09-03 438,654 1,111,635
D. Leitch 12,000 2.3 30.7500 3-17-03 232,062 588,091
S. D. Bickel 12,000 2.3 30.7500 3-17-03 232,062 588,091
</TABLE>
- -------------------------------------------------------------------------------
/1/POTENTIAL REALIZABLE VALUE. These values are disclosed in response to SEC
rules that require such disclosure for illustration only. The values dis-
closed are not intended to be, and should not be, interpreted as projections
of the future price of the Company's stock. To lend perspective to these il-
lustrative values, if the Company's stock price increased 5 percent per year
for 10 years from January 1, 1992 (disregarding dividends and assuming for
purpose of the calculation a constant number of shares outstanding), the to-
tal increase in value of all shares outstanding would be $3.0 billion; and
if the stock price increased 10 percent per year over such period, the in-
crease in value would be $7.7 billion.
/2/OPTIONS. These consist solely of non-qualified stock options, one-third of
which become exercisable on each of the three successive anniversaries fol-
lowing the grant dates.
/3/CHANGE OF CONTROL. Upon a Change of Control, the stock option agreements
provide for the automatic surrender of options and a cash payment based on
the difference between the exercise price and a price intended to give the
option holder the benefit of the highest price paid for the Common Stock in
the change of control transaction, or the highest fair market value of the
Common Stock during the 60 days preceding the change of control date. See
"Change of Control Arrangements" for the definition of "Change of Control."
- -------------------------------------------------------------------------------
1994 PROXY STATEMENT 9
<PAGE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
The following table shows the exercise of options by named executive officers
during 1993 and unexercised options held by them as of December 31, 1993. All
options were granted under the 1984 Plan.
AGGREGATED OPTION EXERCISES IN 1993 AND
OPTION VALUES AT DECEMBER 31, 1993/1/
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money Options
Shares Acquired on Value Options at 12/31/93 (#) at 12/31/93/3/
Name Exercise (#) Realized/2/ ------------------------- -------------------------
Exercisable Unexercisable Exercisable Unexercisable
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
H. S. Hook 130,000 $1,860,099 318,061 191,832 $3,094,429 $909,438
J. R. Tuerff -0- -0- 67,935 52,001 771,275 162,299
M. J. Poulos 141,960 2,060,862 239,418 -0- 1,643,488 -0-
R. M. Devlin 19,681 321,177 -0- 52,001 -0- 162,299
D. Leitch -0- -0- 22,368 25,334 211,386 94,587
S. D. Bickel -0- -0- 65,755 32,001 734,396 162,299
- ------------------------------------------------------------------------------------------------
</TABLE>
/1/OPTIONS. The options reported in the table include both incentive stock op-
tions and non-qualified stock options. All outstanding stock appreciation
rights were cancelled in 1992; currently, none are outstanding. All out-
standing options are subject to acceleration and cashout upon a Change of
Control of the Company. See footnote 3 to the table captioned "Stock Options
Granted in 1993."
/2/VALUE REALIZED. "Value Realized" is the difference between the fair market
value of the underlying shares of Common Stock on the date of exercise and
the exercise price. It does not reflect taxes payable upon exercise.
/3/VALUE. "Value" is the difference between the fair market value of the under-
lying shares of Common Stock on December 31, 1993 and the exercise price.
The following table describes performance awards granted during the Company's
fiscal year ending December 31, 1993 to the named executive officers under the
1984 Plan. See "Report of the Personnel Committee" on pages 5 through 7 for a
discussion of the administration of the long-term incentive awards.
LONG-TERM INCENTIVE PLAN AWARDS GRANTED IN 1993
--------------------------------------------------------------------------
<TABLE>
<CAPTION>
Range of Future Payouts/1/, /2/
Performance or ---------------------------------
Number of Other Period Minimum Maximum
Units Until Matura- (#) (#)
Name (#) tion or Payout
--------------------------------------------------------------------------
<S> <C> <C> <C> <C>
H. S. Hook 15,934 1993-1995 -0- 5,934
J. R. Tuerff 3,500 1993-1995 -0- 3,500
M. J. Poulos 11,154 1993-1995 -0- 2,788
R. M. Devlin 3,500 1993-1995 -0- 3,500
D. Leitch 3,500 1993-1995 -0- 3,500
S. D. Bickel 3,500 1993-1995 -0- 3,500
</TABLE>
--------------------------------------------------------------------------
/1/FUTURE PAYOUTS. Rather than predetermine automatic vesting levels, the per-
sonnel committee evaluates the Company's long-range performance and other
factors at the end of the performance period and determines vesting levels
based upon the judgment of the members of the personnel committee. There-
fore, a Target column is not applicable.
- -------------------------------------------------------------------------------
10 AMERICAN GENERAL CORPORATION
<PAGE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
/2/CHANGE OF CONTROL. Upon a Change of Control, all outstanding performance
awards will vest 100% and be cashed out. Calculation of such cash payment is
similar to the method of calculating the specified price of the Common Stock
with respect to the cashout of options as described in footnote 3 to the ta-
ble captioned "Stock Options Granted in 1993."
At the end of the three-year performance period, if the performance awards
are vested, they provide the recipient of the award either one share of Common
Stock for each vested award and/or the equivalent fair market value in cash up
to an amount determined by the personnel committee. A performance award termi-
nates if the recipient does not remain employed by the Company continuously
throughout the performance period, except as may be determined by the person-
nel committee. Payments of vested performance awards are reported in the Sum-
mary Compensation Table for the year of vesting and payment.
The following graph shows the Company's total return on Common Stock compared
to the S&P 500 Composite Stock Price Index and the S&P Financial Index over
the five-year period beginning December 31, 1988.
<TABLE>
[GRAPH APPEARS HERE]
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL SHAREHOLDER RETURN
AMONG AMERICAN GENERAL, S&P 500 INDEX AND
S&P FINANCIAL INDEX
<CAPTION>
Measurement Period American S&P
(Fiscal Year Covered) General S&P 500 Financial Index
- --------------------- --------- ------- ---------------
<S> <C> <C> <C>
Measurement Pt-12/31/88 $100 $100 $100
FYE 12/31/89 $110 $132 $133
FYE 12/31/90 $117 $128 $104
FYE 12/31/91 $178 $166 $157
FYE 12/31/92 $238 $179 $194
FYE 12/31/93 $248 $197 $215
</TABLE>
<TABLE>
<CAPTION>
5 YEAR ANNUALIZED
YEAR-END 1988 1989 1990 1991 1992 1993 TOTAL RETURN
- ----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
American General $100 $110 $117 $178 $238 $248 19.9%
- ----------------------------------------------------------------------
S&P 500 100 132 128 166 179 197 14.6%
- ----------------------------------------------------------------------
S&P Financial Index 100 133 104 157 194 215 16.6%
- ----------------------------------------------------------------------
</TABLE>
- -------------------------------------------------------------------------------
1994 PROXY STATEMENT 11
<PAGE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
PENSION PLANS
The table below shows the estimated annual retirement benefits payable to em-
ployees at the normal retirement age of 65 under the Company's qualified non-
contributory defined benefit retirement plan ("Retirement Plan"), as well as
its non-qualified, unfunded benefit plan ("Restoration Plan"). The Restoration
Plan provides benefits that employees would have been entitled to receive un-
der the Retirement Plan were it not for limitations imposed by the Internal
Revenue Code. The Retirement Plan provides that a participant will receive,
upon normal retirement, a lifetime pension based on the participant's compen-
sation and length of credited service. The annual pension benefits are based
on average annual compensation during the highest consecutive five of the last
ten years of service. Full vesting of benefits accrued under the plans occurs
after five years of service.
PENSION PLAN TABLE
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Five-Year Years of Service
Average Annual ----------------------------------------------------------
Compensation
Covered by the Plans 15 Yr. 20 Yr. 25 Yr. 30 Yr. 35 Yr.
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$ 200,000 47,291 $ 63,055 $ 78,818 $ 94,582 $ 99,582
500,000 121,541 162,055 202,568 243,082 255,582
800,000 195,791 261,055 326,318 391,582 411,582
1,100,000 270,041 360,055 450,068 540,082 567,582
1,400,000 344,291 459,055 573,818 688,582 723,582
1,700,000 418,541 558,055 697,568 837,082 879,582
1,900,000 468,041 624,055 780,068 936,082 983,582
</TABLE>
- --------------------------------------------------------------------------------
The table illustrates estimated retirement benefits payable on a straight-
life annuity basis to persons in specified annual compensation and years of
service classifications. The amounts in the table are not subject to offset
for amounts payable under Social Security. The amounts shown, however, are
subject to reduction in the event of early retirement.
The credited years of service under the Retirement Plan for Messrs. Hook,
Tuerff, Poulos, Devlin, Leitch, and Bickel are 23, 16, 23, 16, 13, and 28, re-
spectively.
The compensation covered by the Retirement Plan and the Restoration Plan in-
cludes all amounts shown in the Summary Compensation Table under the columns
comprising "Annual Compensation."
In 1989, the board of directors approved a supplemental retirement agreement
for Mr. Hook. The combined effect of this agreement together with the
Retirement Plan and the Restoration Plan is to provide a benefit upon
retirement at or after age 62 of 55% of average monthly compensation as
defined in the Retirement Plan, with a surviving spousal benefit. In 1990, a
lump sum payment of the present value of the supplemental benefit payable at
age 60 was made to Mr. Hook. Upon his retirement Mr. Hook may be entitled to
receive an additional benefit under the supplemental agreement, which is cur-
rently estimated to be less than $4,000 per month.
In 1990, a similar supplemental retirement agreement was approved for Mr.
Poulos, and a comparable lump sum payment was made. Upon his retirement in
1993, it was determined that Mr. Poulos would be entitled to receive an addi-
tional benefit in the amount of approximately $4,000 per month under the sup-
plemental agreement.
CHANGE OF CONTROL ARRANGEMENTS
CHANGE OF CONTROL. All of the awards outstanding or to be granted under the
Plans are subject to the automatic acceleration of vesting and cashout of the
award upon a Change of Control. See the applicable footnotes to the preceding
executive compensation tables for a description of how a Change of Control
would affect each type of award under the plans. The phrase "Change of Con-
trol" for all purposes used in this proxy statement is generally defined as
(i) the acquisition of 30% or more of the Common Stock by a non-affiliate of
the Company; (ii) the merger, consolidation, or sale of substantially all of
the assets of the Company, unless such transaction is with an affiliate of the
Company; (iii) the adoption of a plan of liquidation of the Company by its
shareholders; or (iv) a change in the constituency of the board of directors
of the Company, where the current directors (including future directors who
are nominated or
- -------------------------------------------------------------------------------
12 AMERICAN GENERAL CORPORATION
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
elected by 75% of the then current directors) cease to constitute a majority of
the board of directors of the Company.
SEVERANCE AGREEMENTS. The Company has agreements providing for the payment of
severance benefits to certain executive officers of the Company and its subsid-
iaries in the event of voluntary or involuntary termination of employment
within a maximum period of three years following the occurrence of a Change of
Control. Involuntary termination includes any termination that results from
resignation following any change in certain duties, responsibilities, salary,
or benefits. Voluntary termination includes any termination that is not invol-
untary. No payments are due for termination by reason of death, disability,
normal retirement, or termination for cause.
These agreements generally provide for severance payments equal to slightly
less than three times the executive's base annual salary, excluding bonuses and
special incentive payments, in the event of involuntary termination, and two
times salary in the event of voluntary termination. Any payment thereunder will
be increased by an additional amount to cover payment of any applicable penalty
tax and any federal or state income tax on all benefits received from the Com-
pany as the result of a Change of Control in order to equal the amount the ex-
ecutive would have received absent any such penalty tax. The agreements also
provide for the continuation of certain medical and dental benefits for a maxi-
mum period of 30 months following termination.
The Company has such agreements with 15 officers of the Company or its subsid-
iaries, including the currently employed named executive officers identified in
the Summary Compensation Table. All current agreements expire on March 31,
1996. If a Change of Control occurs prior to expiration of an agreement, the
agreement will remain in effect for a maximum period of three years following
the Change of Control.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The Company does not know of any person or concern that owns more than five
percent of the Common Stock, except for those listed below.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Shares
Name & Address of Beneficially Percent of
Beneficial Owner Owned Class
- --------------------------------------------------------------------------------
<S> <C> <C>
INVESCO PLC
11 Devonshire Square
London EC2M 4YR
England 14,070,651/1/ 6.6%
- -------------------------------------------------------------------------------
FAYEZ SAROFIM & CO. ("SAROFIM CO.") and
FAYEZ S. SAROFIM, its Chairman, President and
principal shareholder
Two Houston Center
Suite 2907
Houston, Texas 12,382,504/2/ 5.8%
- -------------------------------------------------------------------------------
THE CAPITAL GROUP, INC.
and CAPITAL RESEARCH AND MANAGEMENT COMPANY
333 South Hope Street
Los Angeles, California 11,262,000/3/ 5.3%
</TABLE>
- --------------------------------------------------------------------------------
/1/INVESCO PLC has reported shared voting and investment power with respect to
all of the shares reported in the table with certain of its subsidiaries.
/2/Mr. Sarofim has reported that through Sarofim Co., Sarofim Trust Co. (each of
which is a registered investment adviser) and certain trusts of which Mr.
Sarofim is trustee, he may be deemed to share investment power with respect
to all of the shares reported in the table. He shares voting power with
Sarofim Co. and Sarofim Trust Co. with respect to not more than 10,437,020 of
such shares. Such investment power, voting power, or both, also may be deemed
to be shared with clients of Sarofim Co. or Sarofim Trust Co., or with trust-
ees, fiduciaries, or others. The shares reported in the table exclude 5,800
shares owned by family members of Mr. Sarofim, but as to which Mr. Sarofim
and Sarofim Co. disclaim beneficial ownership.
/3/Capital Research and Management Company (a registered investment adviser) is
an operating subsidiary of The Capital Group, Inc. Capital Research and Man-
agement Company and The Capital Group, Inc. reported sole investment power
and no voting power with respect to all of the shares reported in the table,
all of which are owned by various institutional investors.
- --------------------------------------------------------------------------------
1994 PROXY STATEMENT 13
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITY OWNERSHIP OF MANAGEMENT
The beneficial ownership as of February 15, 1994 of Common Stock by each di-
rector, by each of the named executive officers identified herein under the
caption "Summary Compensation Table," and by all directors and executive offi-
cers as a group is set forth below.
Beneficial ownership signifies sole voting and investment power, unless other-
wise noted. Those disclaiming beneficial ownership share voting and investment
power with respect to the securities subject to disclaimer, unless otherwise
noted. Securities subject to such disclaimers are included in the total shares
listed in the left column.
NAME AND SHARES ADDITIONAL RIGHTS AND DISCLAIMERS OF BENEFICIAL OWNERSHIP
- --------------------------------------------------------------------------------
J. Evans Disclaims beneficial ownership of 7,200 shares owned by a
Attwell family member.
157,214 shares
- --------------------------------------------------------------------------------
Stephen D. Includes 50,233 shares owned directly; 39,869 shares held
Bickel 107,290 through the Employees' Thrift and Incentive Plan; and 17,188
shares/1/ shares owned by a family member for which he disclaims
beneficial ownership. Does not include 83,089 shares that
may be acquired within 60 days on exercise of stock options.
- --------------------------------------------------------------------------------
Brady F. Disclaims beneficial ownership of 3,207 shares held as
Carruth 25,912 custodian for a family member, as to which he has sole
shares voting and investment power, and 1,265 shares owned by a
family member.
- --------------------------------------------------------------------------------
W. Lipscomb Disclaims beneficial ownership of 13,260 shares owned by
Davis, Jr. family members, by a limited partnership of which he is the
22,102 shares general partner, and by a trust of which he is co-trustee.
- --------------------------------------------------------------------------------
Robert M. All shares are beneficially owned; 40,621 shares are owned
Devlin 63,258 directly, and 22,637 shares are held through the Employees'
shares/1/ Thrift and Incentive Plan. Does not include 17,333 shares
that may be acquired within 60 days on exercise of stock
options.
- --------------------------------------------------------------------------------
Harold S. Hook All shares are beneficially owned; 179,878 shares are owned
306,426 directly; 47,640 shares are owned by Main Event Management
shares/1/ Corporation; and 78,908 shares are held through the
Employees' Thrift and Incentive Plan. Does not include
419,282 shares that may be acquired within 60 days on
exercise of stock options.
- --------------------------------------------------------------------------------
Larry D. Horner All shares are beneficially owned.
1,000 shares
- --------------------------------------------------------------------------------
Richard J.V. All shares are beneficially owned.
Johnson 11,000
shares
- --------------------------------------------------------------------------------
Daniel Leitch All shares are beneficially owned; 24,136 shares are owned
III 36,429 directly, and 12,293 shares are held through the Employees'
shares/1/ Thrift and Incentive Plan. Does not include 33,035 shares
that may be acquired within 60 days on exercise of stock
options.
- --------------------------------------------------------------------------------
Robert E. All shares are beneficially owned.
Smittcamp
64,442 shares
- --------------------------------------------------------------------------------
James R. Tuerff All shares are beneficially owned; 44,671 shares are owned
63,607 directly, and 18,936 shares are held through the Employees'
shares/1/ Thrift and Incentive Plan. Does not include 71,935 shares
that may be acquired within 60 days on exercise of stock
options.
- --------------------------------------------------------------------------------
All Directors
and Executive
Officers as a
Group (21
persons)
/1/,/2/,/3/
1,106,994
shares
Does not include 952,769 shares that may be acquired within
60 days on exercise of stock options. Officers, including a
former officer, disclaim beneficial ownership of 22,300
shares. Includes 112,500 restricted shares granted under the
1984 Plan for which grantees have sole voting power but not
investment power. Shares owned by the group represent less
than 1% of the Company's outstanding shares.
- ------------------------------------------------------------------------------
/1/Each participant in the American General Employees' Thrift and Incentive Plan
has sole voting power with respect to shares held in the participant's Plan
account (subject to being exercised by the Plan's trustee in the event the
participant does not exercise voting power).
/2/On October 1, 1993, Mr. Poulos retired from the Company. As of February 15,
1994, he beneficially owned 113,317 shares, which did not include 239,418
shares that may be acquired within 60 days on exercise of stock options. He
disclaims beneficial ownership of 5,112 shares, as to which he or his spouse
has sole voting and investment power.
/3/Mr. Barrow will retire as a director at the 1994 Annual Meeting of
Shareholders. He owns 11,632 shares beneficially.
- ------------------------------------------------------------------------------
14 AMERICAN GENERAL CORPORATION
<PAGE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
CERTAIN RELATIONSHIPS AND TRANSACTIONS
. J. Evans Attwell, a director, is a partner in the law firm of Vinson &
Elkins L.L.P. that provided legal services to the Company and its subsidiaries
during 1993.
. Harold S. Hook, a director and chairman and CEO of the Company, is the sole
owner of Main Event Management Corporation (MEMC). On March 25, 1976, the Com-
pany executed a contract with MEMC, pursuant to which MEMC makes its proprie-
tary management system, Main Event Management(R), available to the Company and
its subsidiaries without the usual fees. In return, the Company has agreed to
Mr. Hook's continued relationship with MEMC, provided that such relationship
does not interfere materially with his duties at the Company. The Company also
has agreed to sell certain printed materials to MEMC at cost plus 10%; during
1993, total sales under this agreement were $20,084. Mr. Hook spent less than
5% of his working time on the affairs of MEMC during 1993.
. In addition, various executive officers and directors of American General
may from time to time purchase insurance or annuity products marketed by Amer-
ican General companies in the ordinary course of business.
SECURITIES REPORTING
The Securities and Exchange Commission (the "Commission") requires certain
persons, including the Company's directors and executive officers, to file re-
ports with the Commission regarding beneficial ownership of certain equity se-
curities of the Company. During 1993, Henry S. Romaine, a former director and
executive officer of the Company, filed one late report covering a transaction
occurring after his retirement; and Robert E. Smittcamp, a director of the
Company, filed one late report covering a single transaction.
INDEPENDENT AUDITORS
(Item 2 on proxy card)
The board of directors of the Company, adopting the recommendation of the au-
dit committee, has appointed the firm of Ernst & Young as the Company's inde-
pendent auditors to audit the accounts of the Company for the year 1994 and
recommends ratification of the appointment by the shareholders at this meet-
ing. One or more representatives of Ernst & Young are expected to be present
at the meeting where they will be given the opportunity to make a statement
and will be available to respond to appropriate questions. Ernst & Young has
served as the Company's independent auditors for the fiscal year just complet-
ed.
If the appointment of Ernst & Young is not ratified by a majority of the
shares of Common Stock voting at the meeting, or if, prior to the meeting,
Ernst & Young declines to act or otherwise becomes incapable of acting, or its
engagement is otherwise discontinued by the board of directors of the Company
at any time, then, in any such case, the board of directors will appoint other
independent auditors whose employment will then be subject to ratification by
shareholders at the annual meeting following such appointment.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR RATIFICATION OF THE APPOINTMENT
OF ERNST & YOUNG AS INDEPENDENT AUDITORS.
PERFORMANCE-BASED PLAN
(Item 3 on proxy card)
The Performance-Based Plan for Executive Officers (the "Plan") was approved
by the board of directors on March 17, 1994. The Plan will become effective as
of January 1, 1994, subject to shareholder approval.
PURPOSE OF THE PLAN. As a result of the 1993 amendments to the Internal Reve-
nue Code of 1986 (the "Code"), publicly-held companies generally will
- -------------------------------------------------------------------------------
1994 PROXY STATEMENT 15
<PAGE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
not be entitled to a federal income tax deduction for annual compensation in
excess of $1 million paid to any officer named in the Summary Compensation Ta-
ble in the Company's proxy statement. However, a deduction is permitted for
compensation if it is paid on account of attainment of one or more "perfor-
mance-based" goals. One requirement for compensation to be performance-based
is that the compensation is paid or distributed pursuant to a plan that has
been approved by the shareholders.
The Plan is consistent with American General's compensation philosophy, as
more fully described in the "Report of the Personnel Committee" set forth
herein. Moreover, the Plan reflects the Company's belief in the need to en-
hance shareholder value by aligning the compensation of senior officers with
Company performance and, to the extent possible, by preserving the tax-deduct-
ibility of senior officer compensation.
SUMMARY OF THE PLAN. The Plan will be administered by the personnel committee
of the board of directors.
The Plan provides for the creation of a pool of funds (the "pool") each year
in which (i) operating earnings for the Plan year exceed 7% of average share-
holders' equity for a three-year period, including the current and prior two
Plan years, and (ii) a cash dividend was declared on the outstanding Common
Stock during the Plan year.
The pool for each year will be the sum of (i) 3% of that portion of the
Company's operating earnings for the Plan year that exceeds a base percentage
return to shareholders on average shareholders' equity for the three-year pe-
riod ending on the last day of the Plan year, plus (ii) the amount, not to ex-
ceed $2 million, that was available to pay awards under the Plan for prior
years but was not so paid. The base percentage return to shareholders is es-
tablished annually by the committee.
The maximum annual award that will be made to a participant under the Plan
for a Plan year will not exceed .005 times operating earnings for such year.
This maximum amount is a limitation and does not represent a target. The award
for each participant will be established annually by the committee, subject to
reduction, in the committee's discretion. Prior to the payment of awards under
the Plan, the committee will certify (by written minutes) that the performance
goals and any other material terms of the Plan have been satisfied.
A participant for purposes of the Plan will mean an officer of the Company or
its subsidiary who is, during the Plan year, among the 15 highest salaried em-
ployees of the Company and its subsidiaries and who has been designated by the
committee as eligible to receive an award under the Plan for the Plan year.
Only participants who remain employed by the Company or its subsidiaries
through the end of the applicable Plan year will receive payment of an award.
It is anticipated that all awards made under the Plan will be paid out in cash
in one lump sum payment during the first quarter of the calendar year follow-
ing the Plan year to which the award relates.
The Plan may be amended at any time by the board of directors; provided that
no amendment that requires shareholder approval in order for awards paid under
the Plan to continue to be deductible under the Code may be made without such
shareholder approval. The board of directors may terminate the Plan at any
time.
SHAREHOLDER VOTE. Approval of the Plan will require the affirmative vote of
the holders of a majority of the shares present and voting at the 1994 annual
meeting.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE PROPOSAL TO APPROVE THE
PERFORMANCE-BASED PLAN FOR EXECUTIVE OFFICERS.
OTHER BUSINESS
1994 ANNUAL MEETING. At the date of this proxy statement, the management of
the Company knows of no other matter to be presented for action at the meet-
ing. However, if any other matters do properly
- -------------------------------------------------------------------------------
16 AMERICAN GENERAL CORPORATION
<PAGE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
come before the meeting, it is intended that the persons named on the accompa-
nying proxy will vote on such matters pursuant to the proxy in accordance with
their best judgment.
SHAREHOLDER PROPOSALS AND NOMINATIONS. Shareholders may propose matters to be
presented at shareholders' meetings and also may nominate directors. Formal
procedures have been established for those proposals and nominations.
Shareholder proposals must be received at the Company's principal offices on
or before November 22, 1994 in order to be included in the proxy materials for
presentation at the Company's 1995 annual meeting.
The Company bylaws provide generally that nominations of persons for election
to the board of directors may be made by any shareholder entitled to vote for
the election of directors generally. A shareholder who intends to nominate a
director nominee must provide written notification to the corporate secretary
of the Company at its principal office. The notification must be provided not
fewer than 60 nor more than 90 days prior to any shareholders' meeting called
for the election of directors; provided, that in the event the Company gives
fewer than 70 days' notice of the date of the shareholders' meeting, such
written notification must be provided not later than the close of business on
the 10th day following the day on which notice of the shareholders' meeting
was mailed to shareholders. In addition, to be effective, the notification
must comply with certain other procedures and provide certain information, all
as set forth in the Company bylaws. A copy of these requirements will be pro-
vided to any shareholder upon written request to the corporate secretary.
PROXY SOLICITATION
In addition to the solicitation of proxies by mail, proxies may also be so-
licited by telephone, telegram, facsimile, or personal interview by employees
of the Company, who will not receive additional compensation therefor. The
Company has retained Morrow & Company, Inc. to assist in the solicitation of
proxies at a fee of approximately $15,000, plus expenses. The Company will pay
the cost of soliciting proxies. The Company also will reimburse brokerage
houses and other custodians, nominees, and fiduciaries for their expenses in
sending proxy material to the beneficial owners of Common Stock.
VOTING OF THRIFT PLAN HOLDINGS
The terms of the American General Employees' Thrift and Incentive Plan, the
American General Agents' and Managers' Thrift Plan, and The Variable Annuity
Life Insurance Company Agents' and Managers' Thrift Plan and the related trust
agreements with State Street Bank & Trust Company, as Trustee, require that
the Trustee vote the shares held in participants' accounts as directed by the
participants. In the event a participant does not provide specific voting in-
structions, the Trustee must vote the shares in accordance with the instruc-
tions received from a majority of shares for which the Trustee did receive in-
structions and in accordance with its fiduciary duty. A participant in one of
the plans may use the proxy card to direct the Trustee to vote the shares of
Common Stock allocated to that participant's account. The Trustee will vote
the shares of the participant whose name and signature appear thereon in the
manner directed therein.
By order of the board of directors,
Kurt G. Schreiber
Corporate Secretary
March 22, 1994
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1994 PROXY STATEMENT 17
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[LOGO OF AMERICAN GENERAL APPEARS HERE]
1994 PROXY STATEMENT
AMERICAN GENERAL CORPORATION
2929 ALLEN PARKWAY
HOUSTON, TEXAS 77019-2155
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<PAGE>
[LOGO OF AMERICAN GENERAL APPEARS HERE]
P
R
O
X
Y
ANNUAL MEETING OF SHAREHOLDERS APRIL 28, 1994
The undersigned hereby appoints J. EVANS ATTWELL, W. LIPSCOMB DAVIS
JR., and HAROLD S. HOOK, and each of them, as proxies with full power
of substitution, and hereby authorizes each of them to represent and
to vote, as designated on the reverse side, all the shares of
American General Corporation Common Stock that the undersigned is
entitled to vote at the annual meeting of shareholders to be held in
Houston, Texas, on Thursday, April 28, 1994, and at any postponement
or adjournment thereof.
Election of the following Director Nominees is recommended by the
Board of Directors:
J. Evans Attwell, Brady F. Carruth, W. Lipscomb Davis Jr., Robert M.
Devlin, Harold S. Hook, Larry D. Horner, Richard J. V. Johnson,
Robert E. Smittcamp, and James R. Tuerff.
If you are a participant in any of the American General Thrift Plans
referenced in the Proxy Statement, this card also constitutes
instructions to the trustee of such plans to vote the shares
allocated to your accounts in the manner described in the Proxy
Statement.
YOU ARE ENCOURAGED TO SPECIFY YOUR CHOICES BY MARKING THE APPROPRIATE BOXES,
(SEE REVERSE SIDE). YOU NEED NOT MARK ANY BOXES IF YOU WISH TO VOTE IN
ACCORDANCE WITH THE BOARD OF DIRECTORS' RECOMMENDATIONS. THE NAMED PROXIES
CANNOT VOTE YOUR SHARES UNLESS YOU SIGN AND RETURN THIS CARD. THE PROXY IS
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE COMPANY.
SEE REVERSE
SIDE
<PAGE>
/X/
PLEASE MARK YOUR
VOTES AS IN THIS
EXAMPLE.
3147
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR ELECTION OF ALL
DIRECTOR NOMINEES AND FOR ITEMS 2 AND 3.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEM 1.
FOR WITHHELD
/ / / /
1. Election of
Directors.
(see reverse)
For, except vote withheld from the following nominee(s):
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THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEM 2.
FOR AGAINST ABSTAIN
2. Ratification of / / / / / /
Appointment of
Independent Auditors.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEM 3.
FOR AGAINST ABSTAIN
3. Approval of the / / / / / /
Performance-Based Plan
In their discretion, the proxies are authorized to
vote upon such other business as is properly brought
before the meeting.
NOTE: Please sign exactly as name appears hereon. Joint
owners should each sign. When signing as attorney,
executor, administrator, trustee or guardian, give full
title as such.
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SIGNATURES(S) DATE
<PAGE>
AMERICAN GENERAL CORPORATION
PERFORMANCE - BASED PLAN FOR EXECUTIVE OFFICERS
SECTION 1 - PURPOSE
1.1 The AMERICAN GENERAL CORPORATION PERFORMANCE - BASED PLAN FOR EXECUTIVE
OFFICERS (the "PLAN") is designed to attract and retain the services of key
executives who are in a position to make a material contribution to the
successful operation of the business of American General Corporation and its
subsidiaries. The Plan shall become effective as of January 1, 1994, subject to
approval by shareholders in the manner required by Section 162(m) of the
Internal Revenue Code of 1986, as amended (the "CODE").
SECTION 2 - DEFINITIONS
2.1 For purposes of the Plan, the following terms shall have the following
meanings:
(a) "AVERAGE SHAREHOLDERS' EQUITY" means, for any Plan Year, the sum
of the consolidated shareholders' equity of the Corporation at the
beginning of the Plan Year and for each quarter-end (i.e., March 31, June
30, September 30, and December 31) of that Plan Year, as reported in the
Corporation's quarterly financial supplements and/or the annual report to
shareholders for each applicable period, divided by five.
(b) "AVERAGE SHAREHOLDERS' EQUITY FOR THE THREE-YEAR PERIOD" means
the sum of the Average Shareholders' Equity for the current Plan Year and
the prior two Plan Years as reported in the Corporation's annual report to
shareholders for such years, divided by three.
(c) "AWARD" means an amount granted pursuant to Section 4 of the
Plan.
(d) "BOARD OF DIRECTORS" means the Board of Directors of the
Corporation.
(e) "COMMON STOCK" means the common stock ($.50 par value) of the
Corporation.
(f) "CORPORATION" means American General Corporation.
(g) "INCENTIVE POOL" means a pool of funds created pursuant to
Section 3 of the Plan.
(h) "OPERATING EARNINGS" means, for any Plan Year, the consolidated
operating earnings of the Corporation, which exclude net realized
investment gains, non-recurring items, and the cumulative effect of
accounting changes under generally accepted accounting principles.
<PAGE>
(i) "PARTICIPANT" means an officer of the Corporation or one of its
subsidiaries who is, during the Plan Year, among the 15 highest salaried
employees of the Corporation and its subsidiaries and who has been
designated by the Committee as eligible to receive an Award under the Plan
for the Plan Year.
(j) "PERSONNEL COMMITTEE" or "COMMITTEE" means the Personnel
Committee of the Board of Directors.
(k) "PLAN YEAR" means the calendar year.
SECTION 3 - DETERMINATION OF INCENTIVE POOL
3.1 Prior to the beginning of each Plan Year (or prior to April 1 with
respect to the 1994 Plan Year), the Committee shall prescribe an objective
formula pursuant to which a pool of funds (an "INCENTIVE POOL") shall be created
for such Plan Year conditioned upon (1) Operating Earnings for such Plan Year
exceeding 7% of Average Shareholders' Equity for the Three-Year Period ending on
the last day of such Plan Year, and (2) a cash dividend having been declared on
the outstanding Common Stock during such Plan Year.
3.2 The Incentive Pool for a Plan Year shall be equal to the sum of (1) 3%
of that portion of Operating Earnings for such Plan Year that exceeds a base
percentage return to shareholders, established by the Committee, on Average
Shareholders' Equity for the Three-Year Period ending on the last day of such
Plan Year, plus (2) an amount, not to exceed $2,000,000, consisting of the
excess of the cumulative Incentive Pools for all prior Plan Years over the
actual Awards paid under the Plan for such Plan Years.
SECTION 4 - GRANT OF AWARDS
4.1 Coincident with the establishment of the formula under which the
Incentive Pool shall be determined for a Plan Year, the Committee shall award
shares of the Incentive Pool ("AWARDS") for that Plan Year to individuals whom
the Committee designates as Participants for the Plan Year. The maximum Award
which can be made to a Participant under the Plan for a Plan Year shall not
exceed .005 times Operating Earnings for such Plan Year. The Committee shall
grant Awards under the Plan based upon a review of the contribution and
performance of the Participants as well as the Corporation's performance in
relation to its competitors and as influenced by external factors.
4.2 Notwithstanding the provisions of Section 4.1, the Committee may, in
its sole discretion, reduce the amount otherwise payable to a Participant at any
time prior to the payment of the Award to the Participant.
SECTION 5 - ELIGIBILITY FOR PAYMENT OF AWARDS
5.1 Subject to Section 4.2, a Participant who has been awarded a share of
the Incentive Pool shall receive payment of an Award if the Participant remains
employed by the Corporation or its subsidiaries through the end of the
applicable Plan Year; provided, however, that no Participant shall be entitled
to payment of an Award hereunder until the Committee certifies (by written
minutes) that the performance goals and any other material terms of the Plan
have in fact been satisfied. If a Participant terminates employment prior to
2
<PAGE>
the end of a Plan Year, no payments attributable to his Award for such Plan Year
shall be made pursuant to the Plan.
SECTION 6 - FORM AND TIMING OF PAYMENT OF AWARDS
6.1 Awards will be paid out in cash in one lump sum payment during the
first quarter of the calendar year following the Plan Year to which the Award
relates.
SECTION 7 - ADMINISTRATION
7.1 The Plan shall be administered by the Personnel Committee.
7.2 Subject to the provisions of the Plan, the Committee shall have
exclusive power to determine the amounts that shall be available for Awards each
Plan Year and to establish the guidelines under which the Awards payable to each
Participant shall be determined.
7.3 The Committee's interpretation of the Plan, grant of any Award
pursuant to the Plan, and all actions taken within the scope of its authority
under the Plan, shall be final and binding on all Participants (or former
Participants) and their executors.
7.4 The Committee shall have the authority to establish, adopt or revise
such rules or regulations relating to the Plan as it may deem necessary or
advisable for the administration of the Plan.
SECTION 8 - AMENDMENT AND TERMINATION
8.1 The Board of Directors may amend any provision of the Plan at any
time; provided that no amendment which requires shareholder approval in order
for Awards paid under the Plan to be deductible under the Code may be made
without the approval of the shareholders of the Corporation. The Board of
Directors shall also have the right to terminate the Plan at any time.
SECTION 9 - MISCELLANEOUS
9.1 The fact that an employee has been designated a Participant shall not
confer on the Participant any right to be retained in the employ of the
Corporation or its subsidiaries, or to be designated a Participant in any
subsequent Plan Year.
9.2 No award under this Plan shall be taken into account in determining a
Participant's compensation for the purpose of any employee benefit plan of the
Corporation or its subsidiaries unless so provided in such benefit plan.
9.3 This Plan shall not be deemed the exclusive method of providing
incentive compensation for an employee of the Corporation or its subsidiaries,
nor shall it preclude the Committee or the Board of Directors from authorizing
or approving other forms of incentive compensation.
9.4 All expenses and costs in connection with the operation of the Plan
shall be borne by the Corporation and its subsidiaries.
3
<PAGE>
9.5 The Corporation or its subsidiary making a payment under this Plan
shall withhold therefrom such amounts as may be required by federal, state or
local law, and the amount payable under the Plan to the person entitled thereto
shall be reduced by the amount so withheld.
9.6 The Plan and the rights of all persons under the Plan shall be
construed and administered in accordance with the laws of the State of Texas to
the extent not superseded by federal law.
9.7 In the event of the death of a Participant, any payment due under this
Plan shall be made to the Participant's estate.
9.8 No right or interest of any Participant in the Plan shall be assigned
or transferable, or subject to any lien, directly, by operation of law, or
otherwise, including execution, levy, garnishment, attachment, pledge, and
bankruptcy.
4
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GRAPHICS APPENDIX/LIST
EDGAR Version Typeset Version
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Pages 2 and 3 Nine Directors' Photos appear as noted on
pages 2 and 3.
