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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): January 26, 1998
AMERICAN GENERAL CORPORATION
(Exact name of registrant as specified in charter)
Texas 1-7981 74-0483432
(State or other jurisdiction (Commission File (IRS Employer Identification
of incorporation) Number) Number)
2929 Allen Parkway, Houston, Texas 77019
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (713) 522-1111
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Item 5. Other Events
In connection with the proposed acquisition by American General
Corporation ("American General") of the remaining common shares of
Western National Corporation, American General has filed a
Registration Statement on Form S-4 (as amended to date, the
"Registration Statement") covering the shares of common stock, par
value $.50 per share, of American General ("American General Common
Stock") to be issued in the proposed merger. Set forth below is the
executive compensation information for the fiscal year ended December
31, 1997, that is available as of the date hereof to American General
for incorporation by reference to the Registration Statement. Until
the amounts of cash bonuses are determined by the personnel committee
of the American General board of directors in March 1998, it is
impossible to determine who are the most highly-compensated executive
officers of American General for 1997. A full presentation of 1997
executive compensation will be set forth in the 1998 proxy statement
of American General.
SUMMARY COMPENSATION. The following Summary Compensation Table sets forth
compensation information for American General's chief executive officer, vice
chairman and president. The personnel committee of the board of directors of
American General, which is comprised solely of outside directors, is scheduled
to meet in early March 1998. At that time, the committee will consider, among
other things, the advice of outside compensation consultants, the 1997
performance of American General as well as the performance of its industry peer
group, and the individual contributions of members of senior management. As a
result of this analysis, the personnel committee will determine the cash bonus
and other incentive compensation for members of senior management for 1997
performance. Until the amounts of cash bonuses are determined by the personnel
committee, it is impossible to determine who are the most highly-compensated
executive officers of American General for 1997.
Two retired officers of American General, each of whom was included in the
Summary Compensation Table for the 1997 proxy statement of American General, are
also listed in the table below. Based on salaries paid to the two retired
officers in 1997, and the fact that such individuals will not receive bonuses
payable in March 1998 for 1997 performance, American General has determined that
neither of the retired officers will be included in the Summary Compensation
Table for the 1998 proxy statement of American General.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
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Long-Term Compensation/1/
-----------------------------------------
Annual Compensation Awards Payouts
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Other Long-Term
Annual Restricted Securities Incentive All Other
Compen- Stock Underlying Plan Compen-
Name and Position Year Salary($) Bonus($)/2/ sation($) Awards ($)/4/ Options (#) Payouts ($)/5/ sation ($)/6/
- ----------------- ---- --------- ----------- --------- ------------- ----------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Robert M. Devlin,
Chairman 1997 $816,154 $ -- 17,602/3/ 2,181,250 150,000 $ -0- $40,645
and CEO of 1996 615,385 750,000 -0- -0- 100,000 123,375 31,776
American General 1995 461,077 400,000 -0- -0- 35,000 128,000 23,488
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Jon P. Newton, Vice 1997 483,077 -- -0- 436,250 60,000 174,750 25,754
Chairman of 1996 416,154 300,000 -0- -0- 25,000 -0- 23,102
American General 1995 333,077 200,000 -0- -0- 22,600 -0- 17,728
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James S. D'Agostino Jr., 1997 466,154 -- -0- -0- 75,000 174,750 112,498
President of 1996 369,539 300,000 -0- -0- 25,000 88,125 19,124
American General 1995 299,846 200,000 -0- -0- 20,000 64,000 14,752
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Harold S. Hook/7/,
Former Chairman of
American General
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Stephen D. Bickel/7/,
Former Chairman and
CEO of The Variable
Annuity Life Insurance
Company
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</TABLE>
1 PLAN AWARDS. All long-term compensation awards were granted under the stock
and incentive plans of American General.
2 BONUS PAYMENT. The bonus amounts for performance for each year are determined
and paid in March of the subsequent year.
3 OTHER ANNUAL COMPENSATION. The amount represents reimbursement for certain
income taxes incurred by Mr. Devlin in 1997.
4 RESTRICTED STOCK AWARDS. These amounts represent the value of the Restricted
Stock on the date of grant. At December 31, 1997, Messrs. Devlin, Newton, and
D'Agostino held an aggregate of 65,000, 20,000, and 14,000 shares,
respectively, with a value of $3,514,063, $1,081,250, and $756,875,
respectively. Dividends are paid to holders with respect to Restricted Stock
at the same rate as is paid on all other shares of American General Common
Stock. In the event of a Change of Control, all forfeiture restrictions with
respect to all outstanding shares of Restricted Stock immediately lapse. See
"Change of Control" below for the definition of "Change of Control."
5 LONG-TERM INCENTIVE PLAN PAYOUTS. These amounts represent the value of
Performance 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.
6 ALL OTHER COMPENSATION. These amounts include American General'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"). In the
case of Mr. D'Agostino, the amount also includes $88,889 in moving expenses
for his relocation to Houston, Texas, that were paid by American General. The
Thrift Plan contributions for 1997 were $7,125 for each of the named
executive officers. The Supplemental Plan contributions and the Excess Life
taxable value for 1997 were as follows: Mr. Devlin, $29,602 and $3,918; Mr.
Newton, $14,711 and $3,918; and Mr. D'Agostino, $13,852 and $2,632.
7 Until the amounts of cash bonuses are determined by the personnel committee,
it is impossible to determine who are the most highly-compensated executive
officers of American General. However, based on salaries paid to Messrs. Hook
and Bickel in 1997, and the fact that such individuals will not receive
bonuses payable in March 1998 for 1997 performance, American General has
determined that Messrs. Hook and Bickel will not be included in the Summary
Compensation Table for the 1998 proxy statement of American General.
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STOCK OPTIONS. The following table contains information concerning the grant
of stock options during 1997 to the named executive officers.
<TABLE>
<CAPTION>
STOCK OPTIONS GRANTED IN 1997
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Potential Realizable
Value at Assumed
Annual Rates of Stock
Price Appreciation
Individual Stock Option Grants for Option Term/1/
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% of Total
Options Options Granted Exercise At 5% per At 10% per
Granted to Employees Price Expiration annum annum
Name (#)/2/,/3/ in 1997 ($/Sh) Date ($) ($)
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<S> <C> <C> <C> <C> <C> <C>
Robert M. Devlin 150,000 10 43.6875 3-12-07 $4,121,225 10,443,994
Jon P. Newton 60,000 4 43.6875 3-12-07 1,648,490 4,177,597
James S. D'Agostino Jr. 75,000 5 43.6875 3-12-07 2,060,613 5,221,997
Harold S. Hook/4/
Stephen D. Bickel/4/
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</TABLE>
1 POTENTIAL REALIZABLE VALUE. These values are disclosed for illustration only
and should not be interpreted as projections of the future price of American
General Common Stock.
2 OPTIONS.These consist solely of Non-Qualified Options to acquire American
General Common Stock, which generally become exercisable in three equal
annual installments beginning on the first anniversary of the grant.
3 CHANGE OF CONTROL. In the event of a Change of Control, the stock option
agreements provide for the automatic surrender of options and a cash payment
based on the difference between the exercise price and a price intended to
give the option holder the benefit of the highest price paid for American
General Common Stock in the change of control transaction, or the highest
fair market value of American General Common Stock during the 60 days
preceding the change of control date. See "Change of Control" below for the
definition of "Change of Control."
4 See footnote 7 to the table captioned "Summary Compensation Table."
OPTION EXERCISES AND VALUES. The following table shows the exercise of options
by the named executive officers during 1997 and unexercised options held by them
as of December 31, 1997. The table shows that no options were exercised by the
named executive officers in 1997.
<TABLE>
<CAPTION>
AGGREGATED OPTION EXERCISES IN 1997 AND
OPTION VALUES AT DECEMBER 31, 1997/1/
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Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money Options
Options at 12/31/97 (#) at 12/31/97/2/
------------------------- -------------------------
Shares Acquired on Value
Name Exercise (#) Realized ($) Exercisable Unexercisable Exercisable Unexercisable
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Robert M. Devlin -0- $ -0- 123,666 228,335 $2,826,939 $2,997,010
Jon P. Newton -0- -0- 41,399 84,201 947,783 1,102,267
James S. D'Agostino Jr. -0- -0- 62,296 98,334 1,567,398 1,238,764
Harold S. Hook/3/
Stephen D. Bickel/3/
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</TABLE>
1 OPTIONS.The options reported in the table include both Incentive Stock Options
and Non-Qualified Options. All outstanding options are subject to acceleration
and cashout in the event of a Change of Control. See footnote 3 to the table
captioned "Stock Options Granted in 1997."
2 VALUE."Value" is the difference between the fair market value of the
underlying shares of American General Common Stock on December 31, 1997 and
the exercise price.
3 See footnote 7 to the table captioned "Summary Compensation Table."
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PERFORMANCE AWARDS. The following table describes Performance Awards granted
during the fiscal year ending December 31, 1997 to the named executive offi-
cers.
<TABLE>
<CAPTION>
LONG-TERM INCENTIVE PLAN AWARDS GRANTED IN 1997
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Performance
or Other
Period Estimated Future Payouts
Until in Units/2/,/3/
Number of Maturation ------------------------------------
Name 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
Jon P. Newton 5,000 1997-1999 2,500 5,000 10,000
James S. D'Agostino Jr. 5,000 1997-1999 2,500 5,000 10,000
Harold S. Hook/4/
Stephen D. Bickel/4/
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</TABLE>
1 PERFORMANCE UNITS. Each unit is the equivalent of one share of American
General Common Stock.
2 FUTURE PAYOUTS. The performance criterion for these Performance Awards is
cumulative operating earnings per share for the three-year performance period.
Subject to downward adjustment at the discretion of the personnel 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 American
General Common Stock with respect to the cashout of options as described in
footnote 3 to the table captioned "Stock Options Granted in 1997."
4 See footnote 7 to the table captioned "Summary Compensation Table."
CHANGE OF CONTROL. All of the awards outstanding or to be granted under
American General's stock and incentive plans are subject to the automatic
acceleration of vesting and cashout upon a Change of Control. See the
applicable footnotes to the preceding executive compensation tables for a
description of how a Change of Control would affect each type of award under the
plans. The phrase "Change of Control" for such purposes is generally defined as
(i) the acquisition of 30% or more of the voting securities of American General
by a nonaffiliate of American General; (ii) the merger, consolidation, or sale
of substantially all of the assets of American General, unless such transaction
is with an affiliate of American General; (iii) the adoption of a plan of
liquidation of American General by its shareholders; or (iv) a change in the
constituency of the board of directors of American General, where the current
directors (including future directors who are nominated or elected by 75% of the
then current directors) cease to constitute a majority of the board of directors
of American General.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this Report to be signed on its behalf by the
undersigned thereunto duly authorized.
AMERICAN GENERAL CORPORATION
Dated: January 26, 1998 By:/s/ Nicholas R. Rasmussen
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Name: Nicholas R. Rasmussen
Title: Senior Vice President-Corporate
Development
