<PAGE>
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 [_] 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 240.14a-12
American General Corporation
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(Name of Registrant as Specified In Its Charter)
American General Corporation
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(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)(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 transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
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American General Corporation
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Our Shareholders:
You are invited to attend the 71st annual meeting of the shareholders
of American General Corporation on Thursday, April 24, 1997. The meet-
ing will be held at The Westin Oaks Hotel, 5011 Westheimer Road, Hous-
ton, Texas, at 9 a.m. CDT.
The meeting will be held for the following purposes:
. to elect ten directors for one-year terms;
. to consider and vote upon a proposal to approve the American General
Corporation 1997 Stock and Incentive Plan;
. to ratify the appointment of Ernst & Young LLP as independent audi-
tors for calendar year 1997;
. 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,
LOGO
/s/ Harold S. Hook
LOGO Harold S. Hook
/s/ John A. Adkins Chairman
John A. Adkins
Corporate Secretary
March 18, 1997
LOGO
1997 PROXY STATEMENT
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1997 PROXY STATEMENT
________________________________________________________________________________
<TABLE>
<S> <C>
GENERAL INFORMATION........................................................ 1
ELECTION OF DIRECTORS (Item 1)............................................. 1
GOVERNANCE OF THE COMPANY.................................................. 4
PROPOSAL TO APPROVE THE AMERICAN GENERAL CORPORATION 1997 STOCK AND
INCENTIVE PLAN (Item 2)................................................... 5
COMPENSATION OF EXECUTIVE OFFICERS......................................... 8
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL SHAREHOLDER RETURN................ 15
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS............................ 18
SECURITY OWNERSHIP OF MANAGEMENT........................................... 19
CERTAIN RELATIONSHIPS AND TRANSACTIONS..................................... 20
INDEPENDENT AUDITORS (Item 3).............................................. 20
OTHER BUSINESS............................................................. 20
PROXY SOLICITATION......................................................... 21
VOTING OF THRIFT PLAN HOLDINGS............................................. 21
APPENDIX A--AMERICAN GENERAL CORPORATION 1997 STOCK AND INCENTIVE PLAN..... A-1
</TABLE>
Copies of this proxy statement, the Company's Annual Report to Shareholders,
and its Annual Report on Form 10-K are available to shareholders at no charge
upon request directed to:
American General Corporation
Investor Relations
P.O. Box 3247
Houston, TX 77253-3247
Telephone: (800) AGC-1111
Fax:
(713) 523-8531
LOGO
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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 24, 1997. The 1996
Annual Report to Shareholders has been mailed to shareholders. This proxy
statement and the proxy card are being sent to shareholders beginning on March
18, 1997.
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 approval of
the American General Corporation 1997 Stock and Incentive Plan, and for the
ratification of the appointment of the independent auditors for 1997.
A shareholder may revoke a proxy at any time before it is voted by executing
another proxy or voting in person. Shareholders who attend the meeting may
vote by ballot at the meeting, thereby cancelling any proxy previously given.
VOTING INFORMATION. Holders of record of common stock ("Common Stock") and
holders of record of 7% convertible preferred stock ("Preferred Stock") at the
close of business on March 5, 1997 will be entitled to vote at the meeting. On
that date, 201,102,328 shares of Common Stock and 2,317,701 shares of Pre-
ferred Stock were issued and outstanding. Shareholders are entitled to one
vote for each share of Common Stock, and four-fifths of one vote for each
share of Preferred Stock, held by such shareholders. Holders of Common Stock
and Preferred Stock will vote together as a single class upon the matters to
come before the meeting.
Abstentions from voting will be included to determine if the requisite number
of affirmative votes is received on any matters submitted to the shareholders
for vote and, accordingly, will have the same effect as a vote against such
matters. If a broker indicates on the proxy that it does not have discretion-
ary authority as to certain shares to vote on a particular matter, those
shares will not be considered as present and entitled to vote and will have no
effect on the vote with respect to that matter.
QUORUM. The bylaws of the Company and applicable Texas law require, for a
quorum, the presence at the meeting in person or by proxy of the holders of
shares representing a majority of the votes entitled to be cast at the meet-
ing. IN ORDER TO ENSURE THAT A QUORUM WILL BE PRESENT, EACH SHAREHOLDER IS RE-
QUESTED 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 ten as of the date of the meeting. In accordance with
the Company's previously announced plan of succession, long-time Chairman Har-
old S. Hook will be retiring on April 24, 1997 after 27 years of service and
is not standing for reelection as a director.
All ten director nominees are currently directors of the Company. All nomi-
nees have been nominated for one-year terms ending at the next annual meeting
when their successors assume office. The affirmative vote of a majority of the
votes cast by the holders of Common Stock and Preferred Stock present and en-
titled to vote at the meeting is required for the election of each nominee to
serve as a director of the Company for such term.
All directors to be elected at this meeting were elected at the annual meet-
ing in 1996 for a one-year term, with the exception of James S. D'Agostino Jr.
Mr. D'Agostino was elected as a director by the board of directors on October
24, 1996.
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.
In addition to serving on the board of directors of the Company, Robert M.
Devlin and Jon P. Newton serve as directors of American General Finance, Inc.
and as directors of American General Finance Corporation. Each of these sub-
sidiaries of the Company has publicly issued debt securities outstanding.
On succeeding pages, information is presented about each nominee for direc-
tor, 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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1997 PROXY STATEMENT 1
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NOMINEES FOR ELECTION AS DIRECTOR
J. Evans Attwell, 65
. Vinson & Elkins L.L.P. (attorneys), Of Counsel Director
. With that firm since 1956 since
. Director: Seagull Energy Corporation and Interra 1963
Financial Incorporated
Brady F. Carruth, 39
. Gulf Coast Capital Corporation (commercial Director
landscaping), President & CEO since 1986 since
. Director: Consolidated Graphics, Inc. and Carruth- 1990
Doggett Industries, Inc.
James S. D'Agostino Jr., 50
. American General Life and Accident Insurance Director
Company, Chairman & CEO since 1995, President & since
CEO, 1993 to 1995 1996
. American General Corporation, Executive Vice
President, 1993, Senior Vice President, 1991 to
1993
. Joined American General in 1986
W. Lipscomb Davis Jr., 65
. Hillsboro Enterprises (investments), Partner since Director
1985 since
. Director: Genesco, Inc., Thomas Nelson, Inc., and 1977
SunTrust Bank, Nashville, N.A.
Robert M. Devlin, 56
. American General Corporation, CEO since October Director
1996, President since 1995, Vice Chairman, 1993 to since
1995 1993
. American General Life Insurance Company, President
& CEO, 1986 to 1993
. Joined American General in 1977
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2 AMERICAN GENERAL CORPORATION
<PAGE>
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NOMINEES FOR ELECTION AS DIRECTOR (CONTINUED)
Larry D. Horner, 62
. Pacific USA Holdings Corp. (real estate and thrift Director
operations), Chairman since 1994 since
. Arnhold and S. Bleichroeder, Inc., Managing 1991
Director, 1991 to 1994
. KPMG Peat Marwick LLP, 1956 to 1991, Chairman &
CEO, 1984 to 1990
. Director: Atlantis Plastics, Inc., Biological and
Popular Culture, Inc., Laidlaw Holdings, Inc.,
Pacific Southwest Bank, and Phillips Petroleum
Company
Richard J. V. Johnson, 66
. Houston Chronicle (newspaper publishing), Chairman Director
since 1990 and Publisher since 1987 since
. With that organization since 1956 1990
. Advisory Director: Texas Commerce Bank N.A.
Jon P. Newton, 55
. American General Corporation, Vice Chairman & Director
General Counsel since 1995, Senior Vice President & since
General Counsel, 1993 to 1995 1995
. Joined American General in 1993
. Clark, Thomas, Winters & Newton (attorneys), 1979
to 1993
Robert E. Smittcamp, 55
. Lyons-Magnus Co., Inc. (food processing), President Director
& CEO since 1971 since
. Wawona Frozen Foods, Inc., Co-Owner since 1987; 1990
Wawona Orchards, Co-Owner since 1960
. Director: Lyons Transportation Co. and Astec
TechnologyEngineering Co.
Anne M. Tatlock, 57
. Fiduciary Trust Company International (investment Director
management), President since 1994, Executive Vice since
President, 1990 to 1994 1995
. Director: American Brands, Inc., Fiduciary Trust
Company International, and PHH Corporation
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1997 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.
During 1996, the board of directors held 10 meetings, and each director at-
tended at least 92% of the aggregate number of meetings of the board of direc-
tors and of committees on which such director served, during such director's
service on the board.
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 their recommendations.
The audit committee also reviews compliance with the Company's Policy on
Business Conduct; reviews the scope of the audit to be performed for the fol-
lowing year; and reviews with the independent auditors the accounting princi-
ples and policies of the Company.
The audit committee, the members of which are Messrs. Davis (chairman),
Attwell, and Carruth, held three meetings in 1996.
EXECUTIVE COMMITTEE. The executive committee is authorized to exercise the
authority of the board of directors between regular meetings of the board, ex-
cept when action of the full board is required by law.
The executive committee also is authorized by the board of directors to per-
form 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 also recommend board nominees, as described in the
section "Other Business - Shareholder Proposals and Nominations."
The executive committee, presently composed of Messrs. Devlin (chairman),
Hook, Davis, and Horner, met concurrently with the board of directors in Feb-
ruary, 1996.
PERSONNEL COMMITTEE. The personnel committee reviews the contribution that
key officers and employees make to the Company's performance and prospects,
and the salaries and other compensation of these individuals. The committee
determines the Company's matching contribution under the Employees' Thrift and
Incentive Plan, and the members of the committee administer the following
plans: the 1984 Stock and Incentive Plan (the "1984 Plan") and the 1994 Stock
and Incentive Plan (the "1994 Plan") (collectively hereinafter referred to as
the "Plans"), and the Supplemental Thrift Plan.
The personnel committee, composed of Messrs. Horner (chairman), Johnson, and
Smittcamp, and Ms. Tatlock, held two meetings in 1996.
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 American General Corporation Retirement Plan for Directors (the "Direc-
tors' Retirement Plan") was amended effective March 1, 1997 to terminate fu-
ture benefit accruals. Prior to this amendment, under the Directors' Retire-
ment Plan, non-employee directors of the Company who retired at age 65 or
older with at least six years of service were entitled to receive an annual
sum equal to the annual board retainer at the time of retirement, with payment
commencing at age 70 and continuing for a period of years equal to the direc-
tor's years of service, or until death, whichever is earlier. In lieu of this
retirement benefit, current non-employee directors will be entitled to receive
units of Common Stock equivalents with an aggregate value equal to the actuar-
ial equivalent of the benefits due to commence to such directors at age 70,
with vesting requirements waived. Upon termination of board service, such di-
rectors will be entitled to receive cash in an amount equal to the then cur-
rent value of such units. Beginning in 1997, the non-employee directors would
be eligible for certain awards pursuant to the American General Corporation
1997 Stock and Incentive Plan, subject to shareholder approval. See "1997 Plan
Benefits" on page 7.
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4 AMERICAN GENERAL CORPORATION
<PAGE>
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PROPOSAL TO APPROVE THE AMERICAN GENERAL CORPORATION 1997 STOCK AND INCENTIVE
PLAN
(Item 2 on proxy card)
The board of directors has adopted, subject to shareholder approval, the
American General Corporation 1997 Stock and Incentive Plan (the "1997 Plan").
The 1997 Plan provides for the issuance of up to seven million shares of Com-
mon Stock, which represents approximately 3.5% of the Company's outstanding
shares as of December 31, 1996. The 1997 Plan is intended to promote the in-
terests of the Company and its shareholders by providing incentive and reward
to certain officers, key employees, and directors who may be expected to con-
tribute to the welfare and success of American General. The 1997 Plan also
will assist the Company in continuing to attract and retain highly qualified
personnel. The 1997 Plan is designed to permit the Company to take a deduction
under section 162(m) of the Internal Revenue Code, as amended (the "Code"),
with respect to performance-based compensation to any participant who is a
"covered employee" within the meaning of section 162(m).
In 1984, the shareholders of the Company approved the 1984 Plan and autho-
rized the issuance under the 1984 Plan of up to nine million shares (as ad-
justed for the stock split in 1993) of Common Stock. The 1984 Plan was amend-
ed, effective February 7, 1994, to create the 1994 Plan. Approximately two
million shares remain available for grant under the 1994 Plan, and no shares
remain available for grant under the 1984 Plan. Options or other issuances
outstanding or available for issuance under the Plans will not be affected by
the adoption of the 1997 Plan.
SUMMARY OF THE 1997 PLAN. A copy of the complete text of the 1997 Plan is at-
tached as Appendix A, and the following summary is qualified in its entirety
by reference to such text.
Administration. A committee, consisting entirely of two or more outside di-
rectors (the "Committee"), will administer the 1997 Plan. Currently, the same
four outside directors comprise the Committee and the personnel committee of
the Company's board. The board also has authority under the 1997 Plan to grant
awards to non-employee directors. References to the Committee shall include
the board with respect to grants of awards to non-employee directors.
Effective Date. The 1997 Plan became effective on February 6, 1997, subject
to shareholder approval. No awards may be granted under the 1997 Plan after
ten years from that date.
Participants. Key employees of the Company and its subsidiaries and directors
of the Company will be eligible to receive awards under the 1997 Plan. Recipi-
ents will be selected and awards will be granted by the Committee in its sole
discretion. There are approximately 450 key employees of the Company and seven
non-employee directors of the Company who will be eligible to participate.
Shares of Stock Subject to the 1997 Plan. The stock to be offered pursuant to
awards granted under the 1997 Plan will be shares of Common Stock that may be
either authorized but unissued shares or previously issued and outstanding
shares reacquired by the Company. The aggregate number of shares of Common
Stock that may be issued under the 1997 Plan will not exceed seven million
shares. Shares issuable under the 1997 Plan will be adjusted in the event of
future changes in the outstanding Common Stock by reason of stock splits or
other relevant changes in capitalization.
Types of Awards. Under the 1997 Plan, the Committee may grant Stock Options,
Restricted Stock Awards, Performance Awards, and Incentive Awards. The follow-
ing is a brief description of each of the types of awards available under the
1997 Plan:
Stock Options. Stock Options may be Incentive Stock Options within the mean-
ing of section 422(b) of the Code or Non-Qualified Stock Options. Under the
1997 Plan, the maximum number of shares of Common Stock that may be subject to
Stock Options granted to any one individual during any calendar year may not
exceed 500,000 shares. Stock Options granted under the 1997 Plan will give the
holder the right to purchase, at the price and in the manner determined by the
Committee and set forth in an option agreement, a specified number of shares
of Com-
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1997 PROXY STATEMENT 5
<PAGE>
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mon Stock over a period fixed in the option agreement. The period during which
each option may be exercised will be fixed by the Committee at the time the
option is granted, and will not be less than six months nor more than ten
years from the date the option is granted. The option price per share will be
determined by the Committee, but will not be less than the fair market value
of a share of Common Stock on the date the option is granted. On March 12,
1997, the fair market value of a share of Common Stock was $43.69.
Incentive Stock Options may be granted for any number of shares aggregating
any value, provided that the value of shares of Common Stock for which such
options are exercisable for the first time by any one individual in any one
calendar year cannot exceed $100,000 based on the fair market value of the
Common Stock at the date of grant according to section 422(d)(1) of the Code
(or such other individual limit as may be in effect under the Code on the date
of grant).
The Committee may, in its sole discretion, grant Stock Options under the 1997
Plan in conjunction with stock appreciation rights ("SARs"). SARs give the op-
tion holder the right to surrender any exercisable Stock Option or portion
thereof in exchange for cash, whole shares of Common Stock, or a combination
thereof, as determined by the Committee, with a value equal to the excess of
the fair market value at the date of the request over the option price for the
number of options surrendered.
Tax Consequences Relating to Stock Options. The optionee generally does not
recognize income at either the date of grant or exercise of an Incentive Stock
Option. Upon subsequent sale of the Common Stock, the optionee receives long-
term capital gain or loss treatment for the difference between the sales price
and the option price, provided the shares are held for two years after the op-
tion is granted and one year after the date of exercise. The Company will be
entitled to claim a tax deduction for compensation paid equal to the amount
the optionee recognizes as income in a disqualifying disposition. There are no
tax consequences at the date of grant for Non-Qualified Stock Options. Upon
exercise, the optionee will realize ordinary income equal to the excess of the
fair market value of the Common Stock on the date of exercise over the option
price. The Company will be entitled to claim a tax deduction for compensation
paid equal to the amount the optionee recognizes as ordinary income.
Restricted Stock Awards. The 1997 Plan provides for awards of Restricted
Stock, consisting of shares of Common Stock that will be issued, but not de-
livered, to the participant at the time the award is made with-out any cash
payment to the Company (unless otherwise required by law or the Committee).
Under the 1997 Plan, the maximum number of shares of Common Stock that may be
subject to Restricted Stock Awards granted to any one individual during any
calendar year may not exceed 50,000 shares, and the aggregate number of shares
of Common Stock that may be issued under the 1997 Plan with respect to Re-
stricted Stock Awards shall not exceed 700,000 shares. Shares that are the
subject of a Restricted Stock Award shall be subject to restrictions on dispo-
sition and an obligation of the recipient to forfeit and surrender the shares
under certain circumstances, including the failure to meet certain specified
performance measures.
Performance Awards. Performance Awards under the 1997 Plan provide for the
payment to the recipient of the award, either in cash, shares of Common Stock,
or a combination of the two, of an amount, up to a maximum fixed by the Com-
mittee, the payment of which is contingent upon future performance of the Com-
pany or any subsidiary, division, or department thereof by which the recipient
is employed during the applicable performance period. The Committee has dis-
cretion to establish the performance measures applicable to such performance
prior to the beginning of the performance period. The maximum number of shares
of Common Stock that may be subject to Performance Awards granted to any one
individual during any calendar year may not exceed 100,000 shares, subject to
adjustment for changes in capitalization.
Incentive Awards. Incentive Awards under the 1997 Plan are rights to receive
shares of Common Stock, or the fair market value thereof, or rights to
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6 AMERICAN GENERAL CORPORATION
<PAGE>
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receive an amount equal to any appreciation or increase in the fair market
value of Common Stock over a specified period of time, without satisfaction of
any performance criteria or objectives.
Change of Control. Subject to the Committee's discretion, agreements provid-
ing for awards may contain provisions addressing a change of control of the
Company, including the acceleration of, vesting of, or the payment of cash in
lieu of, any award.
Amendment. The board of directors may amend, suspend, or terminate the 1997
Plan (except with respect to awards that are then outstanding) at any time ex-
cept that it may not, without approval of shareholders, increase the maximum
number of shares issuable (except to reflect changes in capitalization as dis-
cussed above), or change the class of individuals eligible to receive awards.
SHAREHOLDER VOTE. Approval of the 1997 Plan will require the affirmative vote
of a majority of the votes cast on this proposal at the 1997 annual meeting of
shareholders.
1997 PLAN BENEFITS. Subject to shareholder approval, Performance Awards were
granted under the 1997 Plan to three of the named executive officers (see page
12 for a description of "named executive officers") and Incentive Awards and
Non-Qualified Stock Options were granted to the non-employee directors of the
Company. Each of the Company's seven non-employee directors received a grant
of 500 Incentive Award units equal to the value of 500 shares of Common Stock
at the date of grant and options to purchase 1,500 shares of Common Stock at
an exercise price of $42.94, which was the fair market value on the date of
grant. These Non-Qualified Stock Options expire on March 13, 2007. If the 1997
Plan is not approved by shareholders, the awards to the officers and directors
will become void.
Future awards are subject to the discretion of the personnel committee or the
board, and the amounts of such awards are not presently determinable.
The following table sets forth the Performance Awards that have been granted
to three of the named executive officers under the 1997 Plan.
NEW PLAN BENEFITS
AMERICAN GENERAL CORPORATION 1997 STOCK AND INCENTIVE PLAN
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<TABLE>
<CAPTION>
Performance
or Other Estimated Future Payouts in
Number Period Until Units/2/,/3/
Name and Position of Maturation ------------------------------------
Units (#)/1/ or Payout Threshold (#) Target (#) Maximum (#)
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<S> <C> <C> <C> <C> <C>
Robert M. Devlin, 13,000 1997-1999 6,500 13,000 26,000
President & CEO of the
Company
Jon P. Newton, Vice 5,000 1997-1999 2,500 5,000 10,000
Chairman & General
Counsel of the Company
James S. D'Agostino Jr., 5,000 1997-1999 2,500 5,000 10,000
Chairman & CEO of
American General Life
and Accident Insurance
Company
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</TABLE>
/1/ PERFORMANCE UNITS. Each unit is the equivalent of one share of Common Stock.
/2/ FUTURE PAYOUTS. The performance criterion for Performance Awards granted
under the 1997 Plan is cumulative operating earnings per share for the
three-year performance period. Subject to downward adjustment at the
discretion of the Committee, Performance Awards will vest from 0% to 200% on
a pro rata basis according to the following levels: If cumulative earnings
for the period are less than $8.45 ("Threshold"), no Units will vest. If
cumulative earnings are at least $10.56 ("Target") during the period, Units
will vest at 100%, and if cumulative earnings for the period are as much as
$12.67 ("Maximum"), Units will vest at 200% of the original grant.
/3/ CHANGE OF CONTROL. In the event of a Change of Control, Performance Awards
would vest at a 200% level 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 table captioned "Stock Options Granted in 1996." See "Change of
Control and Other Arrangements" for the definition of "Change of Control."
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1997 PROXY STATEMENT 7
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SECTION 162(M) DEDUCTION LIMITATION. Section 162(m) of the Code precludes a
public corporation from taking a deduction for compensation in excess of $1
million paid in a taxable year to its chief executive officer or any of its
four other highest paid officers. However, compensation that qualifies under
section 162(m) as "performance-based" is specifically excluded from the deduc-
tion limit. The 1997 Plan is designed to comply with and meet all the require-
ments of section 162(m) of the Code so that Options and Performance Awards
granted thereunder, and, if determined by the Committee, Restricted Stock
Awards granted thereunder shall constitute "performance-based" compensation
within the meaning of such section, and shall be deductible by the Company.
THE BOARD OF DIRECTORS BELIEVES THAT THE APPROVAL OF THE 1997 PLAN IS IN THE
BEST INTERESTS OF THE COMPANY AND ITS SHAREHOLDERS AND RECOMMENDS THAT YOU
VOTE FOR ITS APPROVAL.
COMPENSATION OF EXECUTIVE OFFICERS
REPORT OF THE PERSONNEL COMMITTEE
COMPENSATION POLICY. A central issue in executive compensation is whether to
make judgments of executive performance on a prospective or retrospective ba-
sis. It has been 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.
In this process, the personnel committee exercises its judgment in establish-
ing the executive officers' salaries and their variable compensation, consist-
ing of cash bonuses and three types of long-term incentive awards: Stock Op-
tions, Performance Awards, and Restricted Stock. In light of certain tax
changes regarding the deductibility of compensation in excess of $1 million
paid in a taxable year to the chief executive officer or any of the four other
highest paid officers of a public corporation and to create long-term share-
holder value, the personnel committee is modifying its retrospective approach
and adopting a procedure for setting performance goals upon which compensation
may be based so that the Company can fully maximize the tax benefits under the
provisions of the Code. In 1995, the personnel committee began to utilize a
performance-based measurement for cash bonuses to such officers. Beginning in
1997, if the 1997 Plan discussed herein is approved by the shareholders, the
personnel committee may increase its utilization of a measurement for execu-
tive compensation that is externally determined and that contains maximum lim-
its for awards. The personnel committee may, however, continue to utilize a
full range of incentive compensation, even though some aspects of the compen-
sation program are not fully deductible under the Code.
The personnel committee's policy is and will continue to be based on the
premise 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 responsibilities 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.
Since 1985, the personnel committee has retained KPMG Peat Marwick LLP as in-
dependent executive compensation consultants to assist in evaluating the
Company's compensation policy.
The personnel committee each year reviews the individual contribution and
performance of each of the key executive officers and any prior incentive
awards granted to them. In addition, the personnel committee reviews overall
corporate performance, including the Company's growth in operating earnings
per share, return on shareholders' equity, cumulative total shareholder re-
turn, asset quality, other major accomplishments of the organization in the
prior year, and the performance compared to peer companies and industry norms.
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
- -------------------------------------------------------------------------------
8 AMERICAN GENERAL CORPORATION
<PAGE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
are selected from the non-bank companies in the S&P Financial Index. The com-
pensation peer group is selected annually by the independent executive compen-
sation consultants retained by the Company. Currently, there are 18 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 personnel 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 indexes in the Com-
parison of Five-Year Cumulative Total Shareholder Return graph included on
page 15 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 of 1996, the personnel committee reviewed
the salaries of the 50 highest salaried employees and recommended to the board
of directors for its approval salaries for the 25 most highly salaried employ-
ees. The remaining 25 salaries were approved by the personnel committee. In
determining the salaries of the executive officers, the personnel committee
reviewed the factors described under "Compensation Policy" above, and the
overall growth and long-term progress of the organization. In addition, the
personnel committee compared the CEO's base salary to that paid to chief exec-
utive officers in other companies selected from the compensation peer group
described above.
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 personnel committee reviews recommendations
for bonus awards for eligible employees, based on the prior year's perfor-
mance. After reviewing the factors described under "Compensation Policy"
above, the personnel committee determines the cash bonuses to be paid to the
chairman, president, and vice chairman and acts upon recommendations for bo-
nuses for the other eligible employees.
In March, 1997, the personnel committee awarded bonuses based on 1996 perfor-
mance to 345 employees, including all of the named executive officers, or ap-
proximately 68% of the eligible employees, totalling $8.6 million. Bonuses
payable in March, 1997 to the 15 highest salaried employees of the Company
were subject to limitations contained in the Performance-Based Plan for Execu-
tive Officers (the "Performance-Based Plan").
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 enable the Company to match long-term compensation with long-
term contribution and provide participants the opportunity to acquire stock in
the Company, thereby further aligning their personal interests with the inter-
ests of other long-term share-holders. In determining these awards, the per-
sonnel committee follows the process and reviews factors described under "Com-
pensation Policy" above.
Long-term incentive awards for 1996 have been made under the 1994 Plan. No
further awards may be made under the 1984 Plan, which has been terminated
except with respect to awards that were outstanding under that plan as of
February 8, 1994. Long-term incentive awards are described as follows:
Stock Options. Stock Options are granted with an exercise price equal to 100%
of the fair market value of Common Stock on the date of grant. Options become
exercisable six months after the date of grant, except that those granted to
the highest paid executives generally become exercisable in three equal an-
- -------------------------------------------------------------------------------
1997 PROXY STATEMENT 9
<PAGE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
nual installments 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 1996, options were awarded to 219 employees for 900,735 shares of Common
Stock, of which 194,000 were awarded to the named executive officers other
than Mr. Hook. The awards to the named executive officers represented one-
tenth of one percent (0.1%) of Common Stock outstanding at the end of 1996.
Performance Awards. Performance Awards are contingent awards of shares of
Common Stock that are earned over a three-year performance period. The commit-
tee determines the percentage of the Performance Awards under the Plans that
is actually earned, which may range from zero to 100%, based upon overall cor-
porate performance during the three-year performance period. This decision is
based upon a review of key corporate performance measures, including growth of
operating earnings per share, total return on book value, return on sharehold-
ers' equity, and the overall growth and profitability of the Company, during
the intervening three-year period. In applying these factors, the personnel
committee has relied upon the judgment of its members rather than upon a math-
ematical formula.
In 1996, the personnel committee determined that the Performance Awards
granted in 1993 should vest at 100%. A total of five executive officers re-
ceived vested Performance Awards in 1996, valued at $939,000. This compares to
a value of $819,000 when granted in 1993 and reflects the increase in the Com-
mon Stock price over the three-year performance period.
In 1996, Performance Awards were granted to each of the named executive offi-
cers, except Mr. Hook and Mr. Devlin.
Restricted Stock. The 1994 Plan also authorizes the personnel committee to
make awards of Restricted Stock. No Restricted Stock was awarded in 1996 to
any of the named executive officers. The 1994 Plan limits the aggregate number
of shares of Restricted Stock that may be awarded annually to one-tenth of one
percent (0.1%) of the number of shares of Common Stock outstanding as of the
preceding December 31.
COMPENSATION OF CHIEF EXECUTIVE OFFICER FOR 1996. In accordance with the
Company's previously announced succession plan, Mr. Hook served as CEO of the
Company until October 24, 1996, at which time he was succeeded by Mr. Devlin.
Subject to the 1994 Employment Agreement between the Company and Mr. Hook de-
scribed on page 17, the personnel committee in setting his salary endeavored
to position Mr. Hook's salary in a middle range that reflected peer company
practice. For 1996, Mr. Hook received the same amount in annual salary that he
has received since 1991. In March, 1997, the personnel committee awarded to
Mr. Hook a discretionary cash bonus for 1996 under the Performance-Based Plan.
When Mr. Devlin was designated as Chief Executive Officer of the Company, the
board of directors increased his annual salary by $100,000 to recognize his
increased duties and responsibilities. In addition, at that time he received a
Stock Option award reported in the table "Stock Options Granted in 1996" on
page 13. In March, 1997, the personnel committee awarded Mr. Devlin a discre-
tionary cash bonus for 1996 under the Performance-Based Plan.
STOCK OWNERSHIP GUIDELINES. In March, 1997, the personnel committee recom-
mended and the board of directors adopted stock ownership guidelines for ap-
proximately 120 officers of the Company and its subsidiaries and the non-em-
ployee directors of the Company. The guidelines outline an ownership level
based upon a multiple of such officers' base salaries or such directors' an-
nual retainers. For officers, the multiple ranges from one-half of the annual
base salary to six times the annual base salary, depending on
- -------------------------------------------------------------------------------
10 AMERICAN GENERAL CORPORATION
<PAGE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
position, and the director level is five times the annual retainer.
DEDUCTIBILITY OF COMPENSATION. Section 162(m) of the Code generally disallows
a tax deduction to public companies for annual compensation over $1 million
paid to their chief executive officers and to certain other highly compensated
executive officers. Mr. Hook has deferred a portion of his 1994, 1995, and
1996 compensation until after his retirement. The Code excludes from the $1
million cap such compensation that is based on attainment of pre-established,
objective performance goals, if certain other requirements are met. Where it
is consistent with the interest of the shareholders, it is the policy of the
personnel committee to establish compensation practices that are both prudent
from a tax standpoint and effective as a compensation program. The personnel
committee also considers it important to be able to utilize a full range of
incentive compensation, even though some aspects of the compensation program
are not fully deductible. In order to maximize the tax benefits under the pro-
visions establishing the $1 million cap, the board of directors is requesting
shareholder approval of the 1997 Plan which contains procedures for setting
criteria for additional categories of performance-based compensation and for
establishing certain maximum limits for awards as required by the Code. The
1997 Plan, which has been described on pages 5 to 8, must be approved by the
Company's shareholders at the 1997 annual meeting of shareholders in order to
secure the Company's tax deduction for future performance-based compensation
paid under such plan.
PERSONNEL COMMITTEE OF THE BOARD OF DIRECTORS:
LARRY D. HORNER, CHAIRMAN
RICHARD J.V. JOHNSON
ROBERT E. SMITTCAMP
ANNE M. TATLOCK
- --------------------------------------------------------------------------------
1997 PROXY STATEMENT 11
<PAGE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SUMMARY COMPENSATION. The following Summary Compensation Table sets forth
compensation information for the Company's CEO and each of the four other most
highly compensated executive officers of the Company, including officers of
certain subsidiaries (the five being herein referred to as the "named execu-
tive officers") for services performed in 1996, 1995, and 1994.
SUMMARY COMPENSATION TABLE
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Long-
Term Compensation/1/
----------------------------------------
Annual Compensation Awards Payouts
- ----------------------------------------------------------------------------------------------------------------
Long-Term
Restricted Securities Incentive All Other
Stock Underlying Plan Compen-
Name and Position Year Salary($) Bonus($)/2/ Awards ($)/3/ Options (#) Payouts ($)/4/ sation ($)/5/
- ----------------- ---- --------- ----------- ------------- ----------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Robert M. Devlin, President 1996 $615,385 $ 750,000 -0- 100,000 $123,375 $31,776
& CEO of the Company 1995 461,077 400,000 -0- 35,000 128,000 23,488
1994 373,155 300,000 -0- 15,000 112,000 19,376
---------------------------------------------------------------------------------
Harold S. Hook, Chairman 1996 980,000 1,500,000 -0- -0- 561,674 57,748
of the Company/6/ 1995 980,000 980,000 -0- -0- 719,872 50,795
1994 980,000 980,000 -0- 505,000 624,400 50,444
---------------------------------------------------------------------------------
Jon P. Newton, Vice 1996 416,154 300,000 -0- 25,000 -0- 23,102
Chairman & General 1995 333,077 200,000 -0- 22,600 -0- 17,728
Counsel of the Company 1994 291,539 150,000 170,250 12,000 -0- 15,709
---------------------------------------------------------------------------------
James S. D'Agostino Jr., 1996 369,539 300,000 -0- 25,000 88,125 19,124
Chairman & CEO of American 1995 299,846 200,000 -0- 20,000 64,000 14,752
General Life and Accident 1994 280,000 140,000 -0- 12,000 56,000 13,779
Insurance Company
---------------------------------------------------------------------------------
Stephen D. Bickel, Chairman & 1996 350,000 150,000 -0- 23,000 123,375 19,668
CEO of The Variable Annuity 1995 333,077 150,000 -0- 22,600 128,000 18,906
Life Insurance Company 1994 300,000 150,000 -0- 12,000 112,000 18,341
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
/1/ PLAN AWARDS. All long-term compensation awards were granted under the
Plans.
/2/ BONUS PAYMENT. The bonus amounts for performance for each year are deter-
mined and paid in March of the subsequent year.
/3/ RESTRICTED STOCK AWARDS. These amounts represent the value of the Re-
stricted Stock on the date of grant. At December 31, 1996, Messrs. Devlin,
Newton, and D'Agostino held an aggregate of 15,000, 10,000, and 14,000
shares, respectively, with a value of $613,125, $408,750, and $572,250, re-
spectively. Dividends are paid to holders with respect to Restricted Stock
at the same rate as is paid on all other Common Stock. In the event of a
Change of Control, all forfeiture restrictions with respect to all out-
standing shares of Restricted Stock immediately lapse. See "Change of Con-
trol and Other Arrangements" for the definition of "Change of Control."
/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"). The Thrift Plan con-
tributions for 1996 were $6,750 for each of the named executive officers.
The Supplemental Plan contributions and the Excess Life taxable value for
1996 were as follows: Mr. Devlin, $20,942 and $4,084; Mr. Hook, $37,350 and
$13,648; Mr. Newton, $11,977 and $4,375; Mr. D'Agostino, $9,879 and $2,495;
and Mr. Bickel, $9,000 and $3,918.
/6/ CEO SUCCESSION. Mr. Hook was CEO until October 24, 1996, when the board of
directors designated Mr. Devlin as CEO of the Company in accordance with the
Company's previously announced plan of succession.
- -------------------------------------------------------------------------------
12 AMERICAN GENERAL CORPORATION
<PAGE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
STOCK OPTIONS. The following table contains information concerning the grant
of Stock Options during 1996 to the named executive officers who were granted
Stock Options under the 1994 Plan.
STOCK OPTIONS GRANTED IN 1996
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Potential Realizable Value
at Assumed Annual Rates
of Stock Price Appreciation
Individual Stock Option Grants for Option Term/1/
----------------------------------------------------------------------
Options % of Total
Granted Options Granted Exercise At 5% At 10%
(#)/2/, to Employees Price Expiration per annum per annum
Name /3/ in 1996 ($/Sh) Date ($) ($)
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Robert M. Devlin 50,000 5.6 $35.250 3-13-06 $ 1,108,427 $ 2,808,971
50,000 5.6 37.375 10-24-06 1,175,247 2,978,306
Jon P. Newton 25,000 2.8 35.250 3-13-06 554,213 1,404,486
James S. D'Agostino Jr. 25,000 2.8 35.250 3-13-06 554,213 1,404,486
Stephen D. Bickel 23,000 2.6 35.250 3-13-06 509,876 1,292,127
</TABLE>
- -------------------------------------------------------------------------------
/1/ POTENTIAL REALIZABLE VALUE. These values are disclosed for illustration only
and should not be interpreted as projections of the future price of Common
Stock. To lend perspective to these illustrative values, if the price of
Common Stock increased 5 percent per year for 10 years from March 13, 1996
(disregarding dividends and assuming for purposes of the calculation a con-
stant number of shares outstanding), the total increase in value of all
shares of Common Stock outstanding would be $4.7 billion; and if the price
of Common Stock increased 10 percent per year over such period, the increase
in value would be $11.9 billion.
/2/ OPTIONS. These consist solely of Non-Qualified Options to acquire Common
Stock, which generally become exercisable in three equal annual installments
beginning on the first anniversary of the grant.
/3/ CHANGE OF CONTROL. In the event of a Change of Control, the stock option
agreements provide for the automatic surrender of options and a cash payment
based on the difference between the exercise price and a price intended to
give the option holder the benefit of the highest price paid for Common
Stock in the change of control transaction, or the highest fair market value
of Common Stock during the 60 days preceding the change of control date. See
"Change of Control and Other Arrangements - Change of Control" for the defi-
nition of "Change of Control."
- -------------------------------------------------------------------------------
1997 PROXY STATEMENT 13
<PAGE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
OPTION EXERCISES AND VALUES. The following table shows the exercise of op-
tions by the named executive officers during 1996 and unexercised options held
by them as of December 31, 1996.
AGGREGATED OPTION EXERCISES IN 1996 AND
OPTION VALUES AT DECEMBER 31, 1996/1/
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money Options
Options at 12/31/96 (#) at 12/31/96/2/
------------------------- -------------------------
Shares Acquired on Value
Name Exercise (#) Realized ($) Exercisable Unexercisable Exercisable Unexercisable
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Robert M. Devlin -0- $ -0- 73,667 128,334 $ 876,097 $727,714
Harold S. Hook -0- -0- 839,653 35,000 13,888,344 450,625
Jon P. Newton -0- -0- 21,533 44,067 236,605 325,845
James S. D'Agostino Jr. -0- -0- 43,296 42,334 588,327 310,464
Stephen D. Bickel 2,304 37,295 110,985 42,067 2,170,754 314,595
- ------------------------------------------------------------------------------------------------------------
</TABLE>
/1/ OPTIONS. The options reported in the table include both Incentive Stock Op-
tions and Non-Qualified Options. All outstanding options are subject to ac-
celeration and cashout in the event of a Change of Control of the Company.
See footnote 3 to the table captioned "Stock Options Granted in 1996."
/2/ VALUE. "Value" is the difference between the fair market value of the under-
lying shares of Common Stock on December 31, 1996 and the exercise price.
PERFORMANCE AWARDS. The following table describes Performance Awards granted
during the Company's fiscal year ending December 31, 1996 to the named execu-
tive officers who were granted Performance Awards under the 1994 Plan. See
"Report of the Personnel Committee" on pages 8 through 11 for a discussion of
the administration of the long-term incentive awards.
LONG-TERM INCENTIVE PLAN AWARDS GRANTED IN 1996
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Performance
or Other
Period Range of Future
Until Payouts/1/,/2/
Number of Maturation -----------------------
Name Units (#) or Payout Minimum (#) Maximum (#)
- ----------------------------------------------------------------------
<S> <C> <C> <C> <C>
Jon P. Newton 1,900 1996-1998 -0- 1,900
James S. D'Agostino Jr. 1,700 1996-1998 -0- 1,700
Stephen D. Bickel 1,900 1996-1998 -0- 1,900
- ----------------------------------------------------------------------
</TABLE>
/1/ FUTURE PAYOUTS. Pursuant to the 1994 Plan, rather than predetermining auto-
matic vesting levels, the personnel committee evaluates the Company's long-
range performance and other factors at the end of the three-year performance
period commencing in 1996 and determines vesting levels based upon the judg-
ment of the members of the personnel committee. Therefore, a Target column
is not applicable.
/2/ CHANGE OF CONTROL. In the event of a Change of Control, all outstanding Per-
formance Awards would 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 table captioned "Stock Options Granted in 1996."
- -------------------------------------------------------------------------------
14 AMERICAN GENERAL CORPORATION
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL SHAREHOLDER RETURN
LOGO
[GRAPH APPEARS HERE]
The graph above 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, 1991. In addition, the total return of
the S&P Insurance (Life/Health) Index for such period has been included for
comparison in view of the Company's increased concentration in the life insur-
ance business as a result of its corporate development activity. The following
table sets forth the numbers used in the graph above and provides the
annualized total return to shareholders for the Company and the three compari-
son indexes.
<TABLE>
<CAPTION>
5 YEAR ANNUALIZED
YEAR-END 1991 1992 1993 1994 1995 1996 TOTAL RETURN
-
<S> <C> <C> <C> <C> <C> <C> <C>
American General $100.00 $133.82 $139.35 $143.41 $183.64 $222.84 17.38%
- ---------------------------------------------------------------------------------------
S&P 500 100.00 107.67 118.43 119.97 164.88 202.93 15.20%
- ---------------------------------------------------------------------------------------
S&P Financial Index 100.00 123.30 136.90 132.16 203.36 274.13 22.35%
- ---------------------------------------------------------------------------------------
S&P Insurance
(Life/Health) 100.00 133.93 135.66 112.61 161.43 196.63 14.48%
</TABLE>
- --------------------------------------------------------------------------------
1997 PROXY STATEMENT 15
<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 Retirement
Plan and the Restoration Plan occurs after five years of service.
PENSION PLAN TABLE
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Five-Year
Average
Annual
Compensation Years of Service
Covered by -----------------------------------------------------------------
the Plans 10 Yr. 15 Yr. 20 Yr. 25 Yr. 30 Yr. 35 Yr.
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 200,000 $ 31,207 $ 46,811 $ 62,415 $ 78,018 $ 93,622 $ 98,622
500,000 80,707 121,061 161,415 201,768 242,122 254,622
800,000 130,207 195,311 260,415 325,518 390,622 410,622
1,100,000 179,707 269,561 359,415 449,268 539,122 566,622
1,400,000 229,207 343,811 458,415 573,018 687,622 722,622
1,700,000 278,707 418,061 557,415 696,768 836,122 878,622
2,000,000 328,207 492,311 656,415 820,518 984,622 1,034,622
</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. Devlin,
Hook, Newton, D'Agostino, and Bickel are 19, 26, 4, 11, and 31, respectively.
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."
SUPPLEMENTAL RETIREMENT BENEFITS
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. As a result, no further benefits are expected to
be payable to Mr. Hook under the supplemental retirement agreement.
The Company has agreed to provide an additional retirement benefit to Mr.
Newton, provided he remains with the Company for a minimum of five years. This
supplemental retirement benefit is to be paid in addition to his accrued bene-
fit under the Retirement Plan and the Restoration Plan. This supplemental ben-
efit will vest after five continuous years of employment and is calculated as
an additional year of benefit service for every year of continuous service
with the Company after completion of the third year, up to a maximum of six
additional years.
CHANGE OF CONTROL AND OTHER ARRANGEMENTS
CHANGE OF CONTROL. All of the awards outstanding or to be granted under the
Plans and the 1997 Plan are subject to the automatic acceleration of vesting
and cashout upon a Change of Control. See the applicable footnotes to the pre-
ceding executive compensation tables for a description of how a Change of Con-
trol would affect each type of award under the Plans. The phrase "Change of
Control" for all purposes used in this proxy statement is generally defined as
(i) the acquisition of 30% or more of the voting securities of
- -------------------------------------------------------------------------------
16 AMERICAN GENERAL CORPORATION
<PAGE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
the Company by a non-affiliate of the Company; (ii) the merger, consolidation,
or sale of substantially all of the assets of the Company, unless such trans-
action 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 con-
stituency of the board of directors of the Company, where the current direc-
tors (including future directors who are nominated or elected by 75% of the
then current directors) cease to constitute a majority of the board of direc-
tors of the Company.
SEVERANCE AGREEMENTS. The Company has agreements providing for the payment of
severance benefits to certain officers of the Company and its subsidiaries in
the event of voluntary or involuntary termination of employment within a pe-
riod equal to the lesser of the amount of time such officer was employed by
the Company or its subsidiaries prior to the Change of Control or three years
following the occurrence of a Change of Control. Involuntary termination in-
cludes any termination that results from resignation following any change in
certain duties, responsibilities, salary, or benefits. Voluntary termination
includes any termination that is not involuntary. No payments are due for ter-
mination 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 officer'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 Company as the result of a Change of Control in order to equal the amount
the officer would have received absent any such penalty tax. The agreements
also provide for the continuation of certain medical and dental benefits for a
maximum period of 30 months following termination.
The Company has such agreements with all of the named executive officers. The
current agreements expire on March 31, 1998.
EMPLOYMENT AGREEMENT. In 1994, pursuant to an agreement for Mr. Hook to
serve beyond his previously anticipated retirement date, the Company entered
into an Employment Agreement providing for Mr. Hook's continued employment as
Chairman of the Company for a period that may expire as late as the Company's
annual meeting of shareholders in 1997, at a minimum annual base salary equal
to his 1994 annual base salary. Mr. Hook's minimum base salary for this period
was set at the same level at which it has remained since May, 1991. This ac-
tion was in keeping with the Company's strategy of maintaining stable base
compensation and emphasizing variable reward opportunities.
In connection with the Employment Agreement, Mr. Hook was granted options to
purchase 400,000 shares of Common Stock pursuant to the 1994 Plan at $25.97
per share, representing the fair market value of Common Stock on the date of
the grant. This grant was an inducement to Mr. Hook to extend his employment
beyond his previously anticipated retirement date, and was authorized by the
personnel committee after consultation with KPMG Peat Marwick LLP. It repre-
sented a one-time grant of options that Mr. Hook would otherwise likely have
received over the term of the Employment Agreement.
CONSULTING AGREEMENTS. In 1994, the Company entered into a Consulting Agree-
ment, pursuant to which, subject to certain conditions, Mr. Hook will provide
consulting services to the Company, and the Company will make five annual pay-
ments of $250,000 to Mr. Hook following his retirement.
- -------------------------------------------------------------------------------
1997 PROXY STATEMENT 17
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The Company does not know of any person that owns more than 5 percent of the
outstanding Common Stock or Preferred Stock, except for those listed below.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY PERCENT OF
NAME AND ADDRESS OF BENEFICIAL OWNER TITLE OF CLASS OWNED CLASS
- ------------------------------------------------------------------------------------
<S> <C> <C> <C>
INVESCO PLC
11 Devonshire Square
London EC2M 4YR
England Common Stock 14,961,901/1/ 7.4%
The Capital Group Companies,
Inc.
333 South Hope Street
Los Angeles, CA Common Stock 13,958,210/2/ 6.9%
Putnam Investments, Inc.
One Post Office Square
Boston, MA Common Stock 13,062,886/3/ 6.4%
Fayez Sarofim & Co. ("Sarofim
Co.") and
Fayez S. Sarofim
Two Houston Center
Houston, TX Common Stock 13,010,479/4/ 6.4%
The Lucy B. Gooding
1995 Living Trust
2970 St. Johns Avenue
Jacksonville, FL Preferred Stock 753,422/5/ 32.5%
The Bryan Trust
One Independent Drive
Jacksonville, FL Preferred Stock 479,236/6/ 20.7%
The Olive Julia Gibson
Bryan Testamentary Trust
One Independent Drive
Jacksonville, FL Preferred Stock 186,506/6/ 8.1%
</TABLE>
/1/ Based on a Schedule 13G dated February 10, 1997. INVESCO PLC and certain of
its subsidiaries report shared voting and investment power with respect to
all of the shares reported in the table.
/2/ Based on a Schedule 13G dated February 12, 1997. The Capital Group
Companies, Inc. reports sole voting power with respect to 59,350 of such
shares and sole dispositive power with respect to 13,958,210 of such shares
and disclaims beneficial ownership with respect to 13,958,210 of such
shares.
/3/ Based on a Schedule 13G dated January 27, 1997. Putnam Investments, Inc. re-
ports shared voting power with respect to 113,108 shares.
/4/ Based on a Schedule 13G dated February 13, 1997. Mr. Sarofim 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 11,234,551 of such shares. Such powers also may be
deemed to be shared with clients of Sarofim Co. or Sarofim Trust Co., or
with trustees, other fiduciaries, clients, or others. The shares reported in
the table exclude 13,100 shares owned by family members of Mr. Sarofim, as
to which Mr. Sarofim and Sarofim Co. disclaim beneficial ownership.
/5/ Lucy B. Gooding, Robert A. Mills, and Bonnie H. Smith are trustees of The
Lucy B. Gooding 1995 Living Trust.
/6/ Jacob F. Bryan IV, G. Howard Bryan, and Cynthia Craig Bliss are
beneficiaries and/or trustees of The Bryan Trust and The Olive Julia Gibson
Bryan Testamentary Trust. In addition to the shares reported in the table,
G. Howard Bryan has direct beneficial ownership of 8,033 shares of Preferred
Stock. Such trusts are being managed by a subsidiary of The Capital Group
Companies, Inc., and the shares held by such trusts are included in the
calculation of beneficial ownership of Common Stock by The Capital Group
Companies, Inc.
- --------------------------------------------------------------------------------
18 AMERICAN GENERAL CORPORATION
<PAGE>
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- -------------------------------------------------------------------------------
SECURITY OWNERSHIP OF MANAGEMENT
The beneficial ownership as of February 15, 1997, of Common Stock by each di-
rector nominee, by each of the named executive officers identified herein un-
der the caption "Summary Compensation Table," and by all director nominees and
executive officers as a group is set forth below, except that ownership in the
American General Employees' Thrift and Incentive Plan (the "Thrift Plan") and
the Supplemental Thrift Plan (the "Supplemental Plan") is shown as of December
31, 1996, the latest date for which such information is available. The persons
included in the table below own no shares of Preferred Stock.
NAME AND SHARES ADDITIONAL RIGHTS AND DISCLAIMERS OF BENEFICIAL OWNERSHIP/1/
- -------------------------------------------------------------------------------
J. Evans
Attwell Disclaims beneficial ownership of 7,200 shares owned by a
155,714 shares family member.
- -------------------------------------------------------------------------------
Stephen D. Includes 65,138 shares owned directly; 46,003 shares held
Bickel 130,162 through the Thrift Plan; 1,833 shares held through the
shares Supplemental Plan; and 17,188 shares owned by a family member
for which he disclaims beneficial ownership. Does not include
130,184 shares that may be acquired within 60 days on
exercise of Stock Options.
- -------------------------------------------------------------------------------
Brady F. Disclaims beneficial ownership of 4,783 shares held as
Carruth 29,230 custodian for a family member, as to which he has sole voting
shares and investment power, and 2,607 shares owned by a family
member.
- -------------------------------------------------------------------------------
James S. All shares are beneficially owned; 21,825 shares are owned
D'Agostino Jr. directly, of which 14,000 shares are Restricted Stock; 7,190
29,988 shares shares are held through the Thrift Plan; and 973 shares are
held through the Supplemental Plan. Does not include 62,295
shares that may be acquired within 60 days on exercise of
Stock Options.
- -------------------------------------------------------------------------------
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.
Devlin 79,361 All shares are beneficially owned; 50,285 shares are owned
shares directly, of which 15,000 shares are Restricted Stock; 26,717
shares are held through the Thrift Plan; and 2,359 shares are
held through the Supplemental Plan. Does not include 106,999
shares that may be acquired within 60 days on exercise of
Stock Options.
- -------------------------------------------------------------------------------
Harold S. Hook All shares are beneficially owned; 150,463 shares are owned
309,844 shares directly; 47,640 shares are owned by Main Event Management
Corporation; 88,849 shares are held through the Thrift Plan;
and 22,892 shares are held through the Supplemental Plan.
Does not include 874,653 shares that may be acquired within
60 days on exercise of Stock Options.
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Larry D. Horner All shares are beneficially owned.
2,000 shares
- -------------------------------------------------------------------------------
Richard J.V. All shares are beneficially owned.
Johnson 12,500
shares
- -------------------------------------------------------------------------------
Jon P. Newton All shares are beneficially owned; 11,537 shares are owned
16,345 shares directly, of which 10,000 shares are Restricted Stock; 3,883
shares are held through the Thrift Plan; and 925 shares
through the Supplemental Plan. Does not include 41,399 shares
that may be acquired within 60 days on exercise of Stock
Options.
- -------------------------------------------------------------------------------
Robert E.
Smittcamp All shares are beneficially owned.
69,789 shares
- -------------------------------------------------------------------------------
Anne M. Tatlock All shares are beneficially owned.
500 shares
- -------------------------------------------------------------------------------
All Director
Nominees and
Executive
Officers
as a Group
(25 persons)
1,008,943
shares Does not include 1,445,033 shares that may be acquired within
60 days on exercise of Stock Options. Includes 116,000 shares
of Restricted Stock granted under the Plans. Shares owned by
the group (including shares that may be acquired within 60
days on exercise of Stock Options) represent 1.2% of the
outstanding shares of Common Stock.
- --------------------------------------------------------------------------------
/1/ Beneficial ownership signifies sole voting and investment power, unless oth-
erwise noted. Each participant in the Thrift Plan has sole voting power with
respect to shares held in the participant's plan account (subject to being
exercised by the Thrift Plan's trustee in the event the participant does not
exercise voting power). A holder of Restricted Stock granted under the Plans
has sole voting power but not investment power with respect to such shares.
Those disclaiming beneficial ownership share voting and investment power
with respect to the securities subject to disclaimer, unless otherwise not-
ed. Securities subject to such disclaimers are included in the total number
of 1,008,943 shares listed in the left column.
- -------------------------------------------------------------------------------
1997 PROXY STATEMENT 19
<PAGE>
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CERTAIN RELATIONSHIPS AND TRANSACTIONS
In 1996, Mr. Attwell was Of Counsel to the law firm of Vinson & Elkins L.L.P.
that provided legal services to the Company and its subsidiaries during 1996.
During Mr. Hook's tenure with the Company, Main Event Management(R), the pro-
prietary management system owned by Main Event Management Corporation
("MEMC"), a corporation solely owned by Mr. Hook, has been made available to
the Company without the usual fees. In order to assure the continued avail-
ability of the system following Mr. Hook's retirement, the Company entered
into a License Agreement dated April 27, 1994 with MEMC, which superseded and
supplanted a License Agreement dated March 26, 1976. Pursuant to the 1994
agreement, MEMC granted to the Company and its subsidiaries a worldwide, non-
exclusive, perpetual, non-transferable right and license to its proprietary
management system, Main Event Management.
MEMC has agreed to continue to assist the Company in institutionalizing the
use of Main Event Management at the Company. As was the case under the prior
agreement, intellectual property rights to this proprietary system, including
improvements or additions thereto, will continue to be owned by MEMC.
Upon the earlier of June 1, 1997 or the day after termination of the Employ-
ment Agreement described on page 17, the Company will pay to MEMC a license
fee in the amount of $1,250,000, and an annual payment of $125,000 for ten
consecutive years.
Various executive officers and directors of American General may from time to
time purchase insurance or annuity products marketed by American General com-
panies in the ordinary course of business.
INDEPENDENT AUDITORS
(Item 3 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 LLP as the Company's
independent auditors to audit the accounts of the Company for the year 1997
and recommends ratification of the appointment by the shareholders at the
meeting. One or more representatives of Ernst & Young LLP 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 LLP has served as the Company's independent auditors for the fiscal year
just completed.
If the appointment of Ernst & Young LLP is not ratified by a majority of the
votes cast, or if, prior to the meeting, Ernst & Young LLP declines to act or
otherwise becomes incapable of acting, or its engagement is otherwise discon-
tinued 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 em-
ployment 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 LLP AS INDEPENDENT AUDITORS.
OTHER BUSINESS
1997 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 come before the meeting, it is
intended that the persons named on the accompanying 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 18, 1997 in order to be included in the proxy ma-
- -------------------------------------------------------------------------------
20 AMERICAN GENERAL CORPORATION
<PAGE>
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- -------------------------------------------------------------------------------
terials for presentation at the Company's 1998 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. 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 notifica- tion 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 provided to
any shareholder upon written request to the corporate secretary.
PROXY SOLICITATION
In addition to the solicitation of proxies by mail, proxies also may 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 & Co., Inc. to assist in the solicitation of prox-
ies at a fee of approximately $13,500, 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 voting securities.
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 of Common Stock held in participants' accounts as
directed by the participants. In the event a participant does not provide spe-
cific voting instructions, the Trustee must vote the shares in accordance with
the instructions received from a majority of shares for which the Trustee did
receive instructions 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,
John A. Adkins
Corporate Secretary
March 18, 1997
- -------------------------------------------------------------------------------
1997 PROXY STATEMENT 21
<PAGE>
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- -------------------------------------------------------------------------------
APPENDIX A
AMERICAN GENERAL CORPORATION 1997 STOCK AND INCENTIVE PLAN
1. PURPOSE
The purpose of the American General Corporation 1997 Stock and Incentive
Plan (the "Plan") is to provide a means through which American General Corpo-
ration, a Texas corporation, and its subsidiaries (collectively, the "Compa-
ny") may attract able persons to enter the employ or become directors of the
Company and to provide a means whereby those persons upon whom the responsi-
bilities of the successful administration and management of the Company rest,
and whose present and potential contributions to the welfare of the Company
are of importance, can acquire and maintain stock ownership, thereby strength-
ening their concern for the welfare of the Company and their desire to remain
in its employ or as directors. A further purpose of the Plan is to provide
such persons with additional incentive and reward opportunities designed to
enhance the profitable growth of the Company. So that the maximum incentive
can be provided, the Plan provides for granting Incentive Stock Options, Non-
Qualified Options, Restricted Stock Awards, Performance Awards, and Incentive
Awards, or any combination of the foregoing, as is best suited to the circum-
stances of the particular person.
2. DEFINITIONS
The following definitions shall be applicable throughout the Plan:
(a)"Award" means, individually or collectively, any Option, Restricted
Stock Award, Performance Award, or Incentive Award.
(b)"Board" means the Board of Directors of American General Corporation.
(c)"Code" means the Internal Revenue Code of 1986, as amended. Reference
in the Plan to any section of the Code shall be deemed to include any
amendments or successor provisions to such section and any regulations
under such section.
(d)"Committee" means a committee of the Board that is selected by the
Board as provided in Section 4(a).
(e)"Common Stock" means the common stock of American General Corporation.
(f)"Company" means, collectively, American General Corporation and its
subsidiaries.
(g)"Director" means an individual elected to the Board by the
shareholders of American General Corporation or by the Board under
applicable corporate law.
(h)"Employee" means any person (including a Director) in an employment
relationship with the Company or any parent or subsidiary corporation (as
defined in section 424 of the Code).
- -------------------------------------------------------------------------------
A-1
<PAGE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
(i)"Fair Market Value" means, as of any specified date, the average of
the highest and lowest quoted selling prices of the Common Stock as
reported on the Composite Tape for issues listed on the New York Stock
Exchange on the specified date, or, if no sales were reported on the
Composite Tape on such specified date, the average of the highest and
lowest quoted selling prices of the Common Stock on the nearest dates
before and after such specified date on which sales of the Common Stock
were so reported.
(j) "Holder" means an employee or a non-employee Director who has been
granted an Option, a Restricted Stock Award, a Performance Award, or an
Incentive Award.
(k) "Incentive Award" means an Award granted under Section 10 of the
Plan.
(l) "Incentive Stock Option" means an Option within the meaning of
section 422(b) of the Code.
(m) "Immediate Family" means, with respect to a Holder, the Holder's
spouse, children or grandchildren (including adopted and step children and
grandchildren).
(n) "1934 Act" means the Securities Exchange Act of 1934, as amended.
(o) "Non-Qualified Option" means an Option that is not an Incentive Stock
Option.
(p) "Option" means an Award under Section 7 of the Plan and includes both
Non-Qualified Options and Incentive Stock Options to purchase Common Stock.
(q) "Performance Award" means an Award granted under Section 9 of the
Plan.
(r) "Personal Representative" means the person who upon the death,
disability, or incompetency of a Holder shall have acquired, by will or by
the laws of descent and distribution or by other legal proceedings, the
right to exercise an Option or the right to any Restricted Stock Award,
Performance Award, or Incentive Award theretofore granted or made to such
Holder.
(s) "Plan" means the American General Corporation 1997 Stock and
Incentive Plan, as amended from time to time.
(t) "Restricted Stock Award" means an Award granted under Section 8 of
the Plan.
(u) "Rule 16b-3" means Securities and Exchange Commission Rule 16b-3
promulgated under the 1934 Act, as such may be amended from time to time,
and any successor rule, regulation, or statute fulfilling the same or
similar function.
3. EFFECTIVE DATE AND DURATION OF THE PLAN
The Plan shall become effective on February 6, 1997, following adoption by
the Board, provided the Plan is approved by the shareholders of American Gen-
eral Corporation within twelve months thereafter. Notwithstanding any provi-
sion in the Plan or in any agreement under the Plan, no Option shall be exer-
cisable and no Award shall vest prior to such shareholder approval. No further
Awards may be granted under the Plan after ten years from the date the Plan
becomes effective. The Plan shall remain in effect until all Options granted
under the Plan have been exercised or expired by reason of lapse of time, all
restrictions imposed upon Restricted Stock Awards have been eliminated, and
all Performance Awards and Incentive Awards have been satisfied.
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A-2
<PAGE>
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- -------------------------------------------------------------------------------
4. ADMINISTRATION
(a) Composition of Committee. The Plan shall be administered by a committee
of, and appointed by, the Board, and such Committee shall be comprised solely
of two or more outside Directors of American General Corporation (within the
meaning of section 162(m) of the Code and applicable interpretive authority
thereunder) who are also non-employee Directors (within the meaning of Rule
16b-3). A majority of the Committee shall constitute a quorum. The Committee
shall act by majority action at a meeting, except that action permitted to be
taken at a meeting may be taken without a meeting if written consent thereto
is given by all members of the Committee.
(b) Powers. Subject to the express provisions of the Plan and except as oth-
erwise provided below with respect to non-employee Directors, the Committee
shall have authority, in its discretion, to determine which Employees or Di-
rectors of the Company shall receive an Award, the time or times when such
Award shall be made, whether an Incentive Stock Option or Non-Qualified Option
shall be granted, the number of shares to be subject to each Option and Re-
stricted Stock Award, and the value of each Performance Award and Incentive
Award. In making such determinations, the Committee shall take into account
the nature of the services rendered by the respective Employees or Directors,
their present and potential contribution to the Company's success, and such
other factors as the Committee shall deem relevant. Notwithstanding the fore-
going, the Board shall have authority, in its discretion, to make the determi-
nations set forth above with respect to non-employee Directors.
(c) Additional Powers. The Committee shall have such additional powers as
are delegated to it by the other provisions of the Plan. Subject to the ex-
press provisions of the Plan and except as otherwise provided below with re-
spect to non-employee Directors, this shall include the power to construe the
Plan and the respective agreements executed thereunder, to prescribe rules and
regulations relating to the Plan and to determine the terms, restrictions, and
provisions of the agreement for each Award, including such terms, restric-
tions, and provisions as shall be requisite in the judgment of the Committee
to cause designated Options to qualify as Incentive Stock Options, to ensure
that the grant of Awards are exempt under Rule 16b-3, and to make all other
determinations necessary or advisable for administering the Plan. Without lim-
iting the generality of the foregoing, agreements providing for Awards under
the Plan may contain such provisions covering a change of control of the Com-
pany, as defined by the Committee in its sole discretion, as the Committee may
approve, not inconsistent with the terms of this Plan, including without limi-
tation provisions for the acceleration of, vesting of, or the payment of cash
in lieu of, any Award. The Committee may correct any defect or supply any
omission or reconcile any inconsistency in the Plan or in any agreement relat-
ing to an Award in the manner and to the extent it shall deem expedient to
carry it into effect. The Committee may delegate to other persons the respon-
sibility of performing ministerial acts in furtherance of the Plan's purposes.
The determinations of the Committee on the matters referred to in this Section
4 shall be conclusive. Notwithstanding the foregoing, the Board, in its dis-
cretion, shall have the power to determine the terms, restrictions, and provi-
sions of the agreement for each Award with respect to non-employee Directors.
5. GRANT OF OPTIONS, RESTRICTED STOCK AWARDS, PERFORMANCE AWARDS, AND
INCENTIVE AWARDS; SHARES SUBJECT TO THE PLAN
(a) Stock Grant Limit. The Committee may from time to time grant Awards to
one or more Employees or Directors determined by it to be eligible for partic-
ipation in the Plan in accordance with the provisions of
- -------------------------------------------------------------------------------
A-3
<PAGE>
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- -------------------------------------------------------------------------------
Section 6. Subject to adjustment in the same manner as provided in Section 11
with respect to shares of Common Stock subject to Awards then outstanding, the
aggregate number of shares of Common Stock that may be issued under the Plan
shall not exceed 7,000,000. Shares shall be deemed to have been issued under
the Plan only to the extent actually issued and delivered pursuant to an
Award. To the extent that an Award lapses or the rights of its Holder termi-
nate or the Award is paid in cash, any shares of Common Stock subject to such
Award shall again be available for the grant of an Award. The separate limita-
tions contained in Sections 7, 8, and 9 with respect to specific types of
Awards shall be applied in a manner which will permit compensation generated
under the Plan to constitute "performance-based" compensation for purposes of
section 162(m) of the Code.
(b) Stock Offered. The stock to be offered pursuant to the grant of an Award
may be authorized but unissued Common Stock or Common Stock previously issued
and outstanding and reacquired by the Company.
6. ELIGIBILITY
Awards may be granted only to persons who, at the time of grant, are key Em-
ployees of the Company or Directors. Awards may not be granted to any person
who immediately after such grant is the owner, directly or indirectly, of more
than 10% of the total combined voting power of all classes of stock of the
Company. An Award may be granted on more than one occasion to the same person,
and such Award may include an Incentive Stock Option, Non-Qualified Option,
Restricted Stock Award, Performance Award, Incentive Award, or any combination
thereof.
7. STOCK OPTIONS
(a) Limitations on Awards. The maximum number of shares of Common Stock that
may be subject to Option Awards granted to any one individual during any cal-
endar year may not exceed 500,000 shares of Common Stock (subject to adjust-
ment in the same manner as provided in Section 11 with respect to shares of
Common Stock subject to Options then outstanding).
(b) Option Period. The term of each Option shall be as specified by the Com-
mittee at the date of grant but shall not exceed ten years.
(c) Limitations on Exercise of Option. An Option shall be exercisable in
whole or in such installments and at such times, commencing not earlier than
six months from the date of grant, as determined by the Committee.
(d) Stock Option Agreement. Each Option shall be evidenced by an Option
agreement in such form and containing such provisions not inconsistent with
the provisions of the Plan as the Committee from time to time shall approve,
including, without limitation, provisions to qualify as an Incentive Stock Op-
tion under section 422 of the Code.
(e) Option Price and Payment. The price at which a share of Common Stock may
be purchased upon exercise of an Option shall be determined by the Committee,
but, subject to adjustment in the same manner as provided in Section 11, shall
not be less than the Fair Market Value of a share of Common Stock at the date
such Option is granted. The Option or portion thereof may be exercised by de-
livery of an irrevocable notice of exercise to
- -------------------------------------------------------------------------------
A-4
<PAGE>
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- -------------------------------------------------------------------------------
the Company. The purchase price of the Option or portion thereof shall be paid
in full in the manner prescribed by the Committee.
(f) Shareholder Rights and Privileges. The Holder shall be entitled to all
the privileges and rights of a shareholder only with respect to such shares of
Common Stock as have been purchased under the Option and for which certifi-
cates of stock have been registered in the Holder's name.
(g) Special Limitations on Incentive Stock Options. An Incentive Stock Op-
tion may be granted only to an individual who is an Employee at the time the
Option is granted. In the case of Incentive Stock Options, the value of shares
of stock for which such Options are exercisable for the first time in any one
calendar year cannot exceed $100,000 based on the Fair Market Value of the
stock at the date of grant according to section 422(d)(1) of the Code (or such
other individual limit as may be in effect under the Code on the date of
grant). An Incentive Stock Option shall not be transferable or assignable oth-
erwise than by will or the laws of descent and distribution.
(h) Stock Appreciation Rights. The Committee (concurrently with the grant of
an Option or subsequent to such grant) may, in its sole discretion, grant to
any Holder of an Option stock appreciation rights ("SARs"). SARs may give the
Holder of an Option the right, upon written request, to surrender any exercis-
able Option or portion thereof in exchange for cash, whole shares of Common
Stock, or a combination thereof, as determined by the Committee, with a value
equal to the excess of the Fair Market Value, as of the date of such request,
of one share of Common Stock over the Option price for such share multiplied
by the number of shares covered by the Option or portion thereof to be surren-
dered. In the case of any SAR which is granted in connection with an Incentive
Stock Option, such SAR shall be exercisable only when the Fair Market Value of
the Common Stock exceeds the price specified therefor in the Option or portion
thereof to be surrendered. In the event of the exercise of any SAR granted
hereunder, the number of shares reserved for issuance under the Plan shall be
reduced only to the extent that shares of Common Stock are actually issued in
connection with the exercise of such SAR. Additional terms and conditions gov-
erning any such SARs may from time to time be prescribed by the Committee in
its sole discretion.
8. RESTRICTED STOCK AWARDS
(a) Limitations on Awards. The maximum number of shares of Common Stock that
may be subject to Restricted Stock Awards granted to any one individual during
any calendar year may not exceed 50,000 shares of Common Stock (subject to ad-
justment in the same manner as provided in Section 11 with respect to shares
of Common Stock subject to Restricted Stock Awards then outstanding). Subject
to adjustment in the same manner as provided in Section 11 with respect to
shares of Common Stock subject to Restricted Stock Awards then outstanding,
the aggregate number of shares of Common Stock that may be issued under the
Plan with respect to Restricted Stock Awards shall not exceed 700,000.
(b) Restriction Period to be Established by the Committee. At the time a Re-
stricted Stock Award is made, the Committee shall establish a period of time
(the "Restriction Period") applicable to such Award. Each Restricted Stock
Award may have a different Restriction Period, in the discretion of the Com-
mittee.
(c) Forfeiture Restrictions to be Established by the Committee. Shares of
Common Stock that are the subject of a Restricted Stock Award shall be subject
to restrictions on disposition by the Holder and an obligation of
- -------------------------------------------------------------------------------
A-5
<PAGE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
the Holder to forfeit and surrender the shares to the Company under certain
circumstances (the "Forfeiture Restrictions"). The Forfeiture Restrictions
shall be determined by the Committee in its sole discretion, and the Committee
may provide that the Forfeiture Restrictions shall lapse upon (i) the attain-
ment of one or more performance measures established by the Committee that are
based on (1) the price of a share of Common Stock, (2) net income, (3) market
share, (4) return on shareholders' equity, (5) the payment of cash dividends,
(6) operating income, (7) operating return on shareholders' equity, (8) fi-
nance receivables, (9) premium growth, or (10) total shareholder return, (ii)
the Holder's continued employment with the Company or continued service as a
Director for a specified period of time, (iii) the occurrence of any event or
the satisfaction of any other condition specified by the Committee in its sole
discretion, or (iv) a combination of any of the foregoing. The performance
measures may be subject to adjustment for specified significant extraordinary
items or events, and may be absolute, relative to one or more other companies,
or relative to one or more indexes, and may be contingent upon future perfor-
mance of the Company or any subsidiary, division, or department thereof by or
in which the Holder is employed during the performance period. Each Restricted
Stock Award may have different Forfeiture Restrictions, in the discretion of
the Committee.
(d) Other Terms and Conditions. Common Stock awarded pursuant to a Re-
stricted Stock Award shall be represented by a stock certificate registered in
the name of the Holder of such Restricted Stock Award. The Holder shall have
the right to receive dividends during the Restriction Period, to vote Common
Stock subject thereto, and to enjoy all other shareholder rights, except that
(i) the Holder shall not be entitled to delivery of the stock certificate un-
til the Restriction Period shall have expired, (ii) the Company shall retain
custody of the stock during the Restriction Period, (iii) the Holder may not
sell, transfer, pledge, exchange, hypothecate, or otherwise dispose of the
stock during the Restriction Period, and (iv) a breach of the terms and condi-
tions established by the Committee pursuant to the Restricted Stock Award
shall cause a forfeiture of the Restricted Stock Award.
(e) Payment for Restricted Stock. A Holder shall not be required to make any
payment for Common Stock received pursuant to a Restricted Stock Award, except
to the extent otherwise required by law or the Committee.
9. PERFORMANCE AWARDS
(a) Limitations on Awards. The maximum number of shares of Common Stock that
may be subject to Performance Awards granted to any one individual during any
calendar year may not exceed 100,000 shares of Common Stock, subject to ad-
justment in the same manner as provided in Section 11 with respect to shares
of Common Stock subject to Performance Awards then outstanding.
(b) Performance Period. The Committee shall establish, with respect to and
at the time of each Performance Award, a performance period over which the
performance of the Holder shall be measured.
(c) Performance Measures. A Performance Award shall be awarded to a Holder
contingent upon future performance of the Company or any subsidiary, division,
or department thereof by or in which such Holder is employed during the per-
formance period. The Committee shall establish the performance measures appli-
cable to such performance prior to the beginning of the performance period;
provided such measures may be made subject to adjustment for specified signif-
icant extraordinary items or events. The performance measures may
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A-6
<PAGE>
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be absolute, relative to one or more other companies, or relative to one or
more indexes. The performance measures established by the Committee may be
based upon (i) the price of a share of Common Stock, (ii) net income, (iii)
market share, (iv) return on shareholders' equity, (v) the payment of cash
dividends, (vi) operating income, (vii) operating return on shareholders' eq-
uity, (viii) finance receivables, (ix) premium growth, (x) total shareholder
return, or (xi) a combination of any of the foregoing. The Committee, in its
sole discretion, may provide for an adjustable Performance Award value based
upon the level of achievement of performance measures.
(d) Awards Criteria. In determining the value of Performance Awards, the
Committee shall take into account a Holder's responsibility level, perfor-
mance, potential, other Awards, and such other considerations as it deems ap-
propriate. The Committee, in its sole discretion, may provide for a reduction
in the value of a Holder's Performance Award during the performance period.
(e) Payment. Following the end of the performance period, the Holder of a
Performance Award shall be entitled to receive payment of an amount not ex-
ceeding the maximum value of the Performance Award, based on the achievement
of the performance measures for such performance period, as determined by the
Committee. Payment of a Performance Award may be made in cash, Common Stock,
or a combination thereof, as determined by the Committee. Payment shall be
made in a lump sum or in installments as prescribed by the Committee. Any pay-
ment to be made in cash shall be based on the Fair Market Value of the Common
Stock on the payment date.
(f) Termination of Employment. A Performance Award shall terminate if the
Holder does not remain continuously in the employ (or in service as a Direc-
tor) of the Company at all times during the applicable performance period, ex-
cept as may be determined by the Committee.
10. INCENTIVE AWARDS
(a) Incentive Awards. Incentive Awards are rights to receive shares of Com-
mon Stock (or the Fair Market Value thereof), or rights to receive an amount
equal to any appreciation or increase in the Fair Market Value of Common Stock
over a specified period of time, which vest over a period of time as estab-
lished by the Committee, without satisfaction of any performance criteria or
objectives. The Committee may, in its discretion, require payment or other
conditions of the Holder respecting any Incentive Award.
(b) Award Period. The Committee shall establish, with respect to and at the
time of each Incentive Award, a period over which the Award shall vest with
respect to the Holder.
(c) Awards Criteria. In determining the value of Incentive Awards, the Com-
mittee shall take into account a Holder's responsibility level, performance,
potential, other Awards, and such other considerations as it deems appropri-
ate.
(d) Payment. Following the end of the vesting period for an Incentive Award,
the Holder of an Incentive Award shall be entitled to receive payment of an
amount, not exceeding the maximum value of the Incentive Award, based on the
then vested value of the Award. Payment of an Incentive Award may be made in
cash, Common Stock, or a combination thereof as determined by the Committee.
Payment shall be made in a lump
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A-7
<PAGE>
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sum or in installments as prescribed by the Committee. Any payment to be made
in cash shall be based on the Fair Market Value of the Common Stock on the
payment date. Cash dividend equivalents may be paid during or after the
vesting period with respect to an Incentive Award, as determined by the Com-
mittee.
(e) Termination of Employment. An Incentive Award shall terminate if the
Holder does not remain continuously in the employ (or in service as a Direc-
tor) of the Company at all times during the applicable vesting period, except
as may be otherwise determined by the Committee.
11. CHANGE IN CAPITAL STRUCTURE
Options, Restricted Stock Awards, Performance Awards, Incentive Awards, and
any agreements evidencing such Awards shall be subject to adjustment by the
Committee as to the number and price of shares of Common Stock or other con-
sideration subject to such Awards in the event of changes in the outstanding
Common Stock by reason of stock dividends, stock splits, recapitalizations,
reorganizations, mergers, consolidations, combinations, exchanges, or other
relevant changes in capitalization occurring after the date of the grant of
any such Awards. In the event of any such change in the outstanding Common
Stock, the aggregate number of shares available under the Plan shall be appro-
priately adjusted by the Committee. No adjustment to either (i) the number or
price of shares of Common Stock subject to Incentive Stock Options or (ii) the
aggregate number of shares which may be issued as Incentive Stock Options
shall be permitted hereunder to the extent that such adjustment would cause an
Incentive Stock Option to fail to constitute an Incentive Stock Option within
the meaning of section 422 of the Code.
12. AMENDMENT AND TERMINATION OF THE PLAN
The Board may amend the Plan at any time; provided that no change in any
Award theretofore granted may be made that would impair the rights of the
Holder without the consent of the Holder, and provided, further, that it may
not, without approval of the shareholders, amend the Plan (a) to increase the
maximum aggregate number of shares which may be issued under the Plan or (b)
to change the class of individuals eligible to receive Awards under the Plan.
The Board, in its discretion, may terminate the Plan at any time with respect
to any shares of Common Stock for which Awards have not theretofore been
granted.
13. EFFECT OF THE PLAN
(a) No Right to an Award. Neither the adoption of the Plan nor any action of
the Board or of the Committee shall be deemed to give an Employee or Director
any right to an Award except as may be evidenced by a written instrument from
the Company reflecting a grant by the Company of an Award and setting forth
the terms and conditions thereof. The Plan shall be unfunded. The Company
shall not be required to establish any special or separate fund or to make any
other segregation of funds or assets to assure the payment of any Award.
(b) No Employment/Membership Rights Conferred. Nothing contained in the Plan
shall (i) confer upon any Employee any right with respect to continuation of
employment with the Company or (ii) interfere in any way with the right of the
Company to terminate his or her employment at any time. Nothing contained in
the Plan shall confer upon any Director any right with respect to continuation
of membership on the Board.
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A-8
<PAGE>
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(c) Other Laws; Withholding. The Company shall not be obligated to issue any
shares of Common Stock until there has been compliance with such laws and reg-
ulations as the Company may deem applicable. No fractional shares of Common
Stock shall be delivered. The Company shall have the right to deduct in con-
nection with all Awards any taxes required by law to be withheld and to re-
quire any payments required to enable it to satisfy its withholding obliga-
tions.
(d) No Restriction on Corporate Action. Nothing contained in the Plan shall
be construed to prevent the Company from taking any corporate action which is
deemed by the Company to be appropriate or in its best interests, whether or
not such action would have an adverse effect on the Plan or any Award made un-
der the Plan. No Employee, Director, beneficiary, or other person shall have
any claim against the Company as a result of any such action.
(e) Restrictions on Transfer. An Award (other than an Incentive Stock Op-
tion, which shall be subject to the transfer restrictions set forth in Section
7(g)) shall not be transferable or assignable otherwise than (i) by will or
the laws of descent and distribution, (ii) pursuant to a "qualified domestic
relations order" (as defined by the Code), (iii) with respect to Awards of
Non-Qualified Options, if such transfer is permitted in the sole discretion of
the Committee, by transfer by a Holder to a member of the Holder's Immediate
Family, to a trust solely for the benefit of the Holder and the Holder's Imme-
diate Family, or to a partnership or limited liability company whose only
partners or shareholders are the Holder and members of the Holder's Immediate
Family, or (iv) with the consent of the Committee.
(f) Section 162(m). It is intended that the Plan comply fully with and meet
all the requirements of section 162(m) of the Code so that Options and Perfor-
mance Awards granted hereunder and, if determined by the Committee, Restricted
Stock Awards shall constitute "performance-based" compensation within the
meaning of such section. If any provision of the Plan would disqualify the
Plan or would not otherwise permit the Plan to comply with section 162(m) as
so intended, such provision shall be construed or deemed amended to conform to
the requirements or provisions of section 162(m); provided that no such con-
struction or amendment shall have an adverse effect on the economic value to a
Holder of any Award previously granted hereunder.
(g) Governing Law. This Plan shall be construed in accordance with the laws
of the State of Texas.
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A-9
<PAGE>
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LOGO
1997 PROXY STATEMENT
AMERICAN GENERAL CORPORATION
2929 ALLEN PARKWAY
HOUSTON, TEXAS 77019-2155
- --------------------------------------------------------------------------------
<PAGE>
P R O X Y
LOGO
ANNUAL MEETING OF SHAREHOLDERS APRIL 24, 1997
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 24, 1997, 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, James S. D'Agostino Jr., W. Lipscomb Davis
Jr., Robert M. Devlin, Larry D. Horner, Richard J.V. Johnson, Jon P. Newton,
Robert E. Smittcamp, and Anne M. Tatlock.
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. THIS PROXY IS
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE COMPANY.
SEE REVERSE
SIDE
X Please mark
your votes
as in
this example.
1. Election of Directors (see reverse)
2. Approval
of the
American
General
1997
Stock and
Incentive
Plan.
For, except vote withheld from the following nominee(s):
-------------------------------------------
3. Ratification
of
Appointment
of
Independent
Auditors.
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
DIRECTORS AND FOR ITEMS 2 AND 3. (HOWEVER, IF NO DIRECTION IS MADE AS TO THRIFT
PLAN STOCK, SEE THE PROXY STATEMENT.)
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEM 1.
THE BOARD OF DIRECTORS RECOMMENDS
A VOTE FOR ITEM 2.
- --------------------------------------------------------------------------------
----------------------------------
THE BOARD OF DIRECTORS RECOMMENDS
A VOTE FOR ITEM 3.
----------------------------------
FOR
WITHHELD
FOR
FOR
AGAINST
AGAINST
ABSTAIN
ABSTAIN
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,
please give full title as such.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SIGNATURE(S) DATE
<PAGE>
[AMERICAN GENERAL LOGO APPEARS HERE]
ANNUAL MEETING OF SHAREHOLDERS APRIL 24, 1997
P 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
R substitution, and hereby authorizes each of them to represent and to
vote, as designated on the reverse side, all the shares of American
O General Corporation 7% Convertible Preferred Stock that the undersigned
is entitled to vote at the annual meeting of shareholders to be held in
X Houston, Texas, on Thursday, April 24, 1997, and at any postponement or
adjournment thereof.
Y
Election of the following Director Nominees is recommended by the Board
of Directors:
J. Evans Attwell, Brady F. Carruth, James S. D'Agostino Jr., W. Lipscomb
Davis Jr., Robert M. Devlin, Larry Horner, Richard J.V. Johnson, Jon P.
Newton, Robert E. Smittcamp, and Anne M. Tatlock.
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. THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
OF THE COMPANY. ------------
|SEE REVERSE |
| SIDE |
------------
<PAGE>
<TABLE>
<CAPTION>
| 7566
[X] PLEASE MARK YOUR |____
VOTES AS IN THIS
EXAMPLE.
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 ITEM 2 AND 3.
- ------------------------------------------------------------------------------------------------------------------------------------
The Board of Directors recommends a vote FOR Item 1. | The Board of Directors recommends a vote FOR Item 2.
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
FOR WITHHELD | FOR AGAINST ABSTAIN
1. Election of [ ] [ ] | 2. Approval of the American [ ] [ ] [ ]
Directors. | General 1997 Stock and
(see reverse) | Incentive Plan.
|------------------------------------------------------------
| The Board of Directors recommends a vote FOR Item 3.
|------------------------------------------------------------
| FOR AGAINST ABSTAIN
For, except vote withheld from the following | 3. Ratification of [ ] [ ] [ ]
nominee(s): | Appointment of
________________________________________________________________ | Independent Auditors
- ------------------------------------------------------------------------------------------------------------------------------------
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.
________________________________________________
________________________________________________
SIGNATURE(S) DATE
</TABLE>
