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SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[ ] Preliminary Proxy Statement [_] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
American General Corporation
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(Name of Registrant as Specified In Its Charter)
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 72nd annual meeting of the shareholders
of American General Corporation on Thursday, April 30, 1998. The meet-
ing will be held at Chase Center Auditorium, 601 Travis Street, Hous-
ton, Texas, at 9 a.m. CDT.
The meeting will be held for the following purposes:
. to elect twelve directors for one-year terms;
. to consider and vote upon a proposal to amend the Restated Articles
of Incorporation increasing the number of shares of Common Stock
authorized from 300,000,000 to 800,000,000 shares;
. to consider and vote upon a proposal to approve an Employee Stock
Purchase Plan;
. to ratify the appointment of Ernst & Young LLP as independent audi-
tors for 1998; and
. 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,
/s/ Susan A. Jacobs /s/ Robert M. Devlin
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Susan A. Jacobs Robert M. Devlin
Corporate Secretary Chairman and Chief Executive Officer
March 17, 1998
1998 PROXY STATEMENT
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1998 PROXY STATEMENT
________________________________________________________________________________
<TABLE>
<S> <C>
GENERAL INFORMATION........................................................ 1
ELECTION OF DIRECTORS (Item 1)............................................. 1
GOVERNANCE OF THE COMPANY.................................................. 5
PROPOSAL TO AMEND THE RESTATED ARTICLES OF INCORPORATION (Item 2).......... 6
PROPOSAL TO APPROVE AN EMPLOYEE STOCK PURCHASE PLAN (Item 3)............... 7
COMPENSATION OF EXECUTIVE OFFICERS......................................... 10
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS............................ 20
SECURITY OWNERSHIP OF MANAGEMENT........................................... 21
CERTAIN RELATIONSHIPS AND TRANSACTIONS..................................... 21
INDEPENDENT AUDITORS (Item 4).............................................. 22
OTHER BUSINESS............................................................. 22
PROXY SOLICITATION......................................................... 23
VOTING OF THRIFT PLAN HOLDINGS............................................. 23
APPENDIX A--PROPOSED AMENDMENT TO RESTATED ARTICLES OF INCORPORATION OF
AMERICAN GENERAL CORPORATION.............................................. 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
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AMERICAN GENERAL CORPORATION
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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 30, 1998. The 1997
Annual Report to Shareholders has been mailed to shareholders with this proxy
statement and the proxy card beginning on March 17, 1998.
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 Amendment to the Restated Articles of Incorporation, for approval of the
Employee Stock Purchase Plan, and for the ratification of the appointment of
the independent auditors for 1998.
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 revoking 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 11, 1998, will be entitled to vote at the meeting.
As of March 11, 1998, approximately 253,740,059 shares of Common Stock and
2,317,701 shares of Preferred Stock were issued and outstanding. Each
shareholder is 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
shareholder. Except as otherwise indicated herein, 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 and broker non-votes will be included in determining
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.
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 holders of
shares representing a majority of the votes entitled to be cast at the
meeting. IN ORDER TO ENSURE THAT A QUORUM WILL BE PRESENT, EACH SHAREHOLDER IS
REQUESTED TO SIGN, DATE, AND RETURN THE ENCLOSED PROXY CARD.
ELECTION OF DIRECTORS
(Item 1 on proxy card)
By resolution of the board of directors, the number of directors of the
Company has been fixed at twelve as of the date of the meeting.
All twelve director nominees are currently directors of the Company. All
nominees 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 entitled to be cast by the holders of Common Stock and
Preferred Stock represented 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
meeting in 1997 for a one-year term, with the exceptions of Michael E. Murphy
and Michael J. Poulos. Messrs. Murphy and Poulos were elected as directors by
the board of directors on September 11, 1997 and March 5, 1998, respectively.
Mr. Poulos was elected, and has been nominated, pursuant to the terms of the
agreement and plan of merger under which the Company recently acquired Western
National Corporation.
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, Messrs.
D'Agostino and Newton serve as directors of American General Finance, Inc. and
as directors of American General Finance Corporation. Each of these
subsidiaries of the Company has publicly issued debt securities outstanding.
On succeeding pages, information is presented about each nominee for
director, including name, age, principal occupation during the past five
years, certain other directorships, and the period during which the director
has served on the board.
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1998 PROXY STATEMENT 1
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NOMINEES FOR ELECTION AS DIRECTOR
[PHOTO J. EVANS ATTWELL Vinson & Elkins L.L.P. (attorneys), Of
APPEARS Age 66 Counsel
HERE]
With that firm since 1956
Director
since 1963 Director: Seagull Energy Corporation
and Dain Rauscher Corporation
[PHOTO BRADY F. CARRUTH Gulf Coast Capital Corporation
APPEARS Age 40 commercial landscaping), President &
HERE] CEO since 1986
Director Director: Consolidated Graphics, Inc.
since 1990 and Carruth-Doggett Industries, Inc.
[PHOTO JAMES S. D'AGOSTINO JR. American General Corporation, President
APPEARS Age 51 since 1997, Executive Vice President,
HERE] 1993
Director American General Life and Accident
since 1996 Insurance Company, Chairman & CEO, 1995
to 1997, President & CEO, 1993 to 1995
Joined American General in 1986
[PHOTO W. LIPSCOMB DAVIS JR. Hillsboro Enterprises (investments),
APPEARS Age 66 Partner since 1985
HERE]
Director since 1977 Director: Genesco, Inc., Thomas Nelson,
Inc., and SunTrust Bank, Nashville, N.A
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2 AMERICAN GENERAL CORPORATION
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NOMINEES FOR ELECTION AS DIRECTOR (CONTINUED)
[PHOTO ROBERT M. DEVLIN American General Corporation, Chairman
APPEARS Age 57 since 1997, CEO since 1996, President,
HERE] 1995 to 1997, Vice Chairman, 1993 to 1995
Director
since 1993 American General Life Insurance
Company, President & CEO, 1986 to 1993
Joined American General in 1977
Director: Cooper Industries, Inc.
[PHOTO LARRY D. HORNER Pacific USA Holdings Corp. (real estate
APPEARS Age 63 and thrift operations), Chairman since 1994
HERE]
Arnhold and S. Bleichroeder, Inc., Managing
Director Director, 1991 to 1994
since 1991
KPMG Peat Marwick LLP, 1956 to 1991, Chairman
& CEO, 1984 to 1990
Director: Asia Pacific Electric Wire & Cable
Corp. Limited, Atlantis Plastics, Inc.,
Laidlaw Holdings, Inc., Newmark Homes Corp.,
Pacific Southwest Bank, and Phillips
Petroleum Company
[PHOTO RICHARD J. V. JOHNSON Houston Chronicle (newspaper publishing),
APPEARS Age 67 Chairman since 1990 and Publisher since 1987
HERE]
Director With that organization since 1956
since 1990
Advisory Director: Chase Bank of Texas
N.A.
[PHOTO MICHAEL E. MURPHY Sara Lee Corporation (packaged food and
APPEARS consumer products), Vice Chairman, 1993
HERE] Age 61 to 1997, Chief Administrative Officer,
1979 to 1997, Chief Financial Officer,
1979 to 1994
Director
since 1997 Director: Bassett Furniture Industries,
Incorporated, GATX Corporation, Payless
ShoeSource, Inc., and True North
Communications Inc.; Trustee: Northern Trust
Funds
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1998 PROXY STATEMENT 3
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NOMINEES FOR ELECTION AS DIRECTOR (CONTINUED)
[PHOTO JON P. NEWTON American General Corporation, Vice
APPEARS Age 56 Chairman since 1997, Vice Chairman &
HERE] General Counsel, 1995 to 1997, Senior
Director Vice President & General Counsel, 1993
since 1995 to 1995
Joined American General in 1993
Clark, Thomas, Winters & Newton
(attorneys), 1979 to 1993
Director: Newmark Homes Corp.
[PHOTO MICHAEL J. POULOS Western National Corporation (life
APPEARS Age 67 insurance), Chairman, President & CEO,
HERE] 1993 to February 1998
Director American General Corporation, 1970 to
1980 to 1993 1993, Vice Chairman, 1991 to 1993,
Re-elected March 1998 Director, 1980 to 1993
[PHOTO ROBERT E. SMITTCAMP Lyons-Magnus Co., Inc. (food
APPEARS Age 56 processing), President & CEO since 1971
HERE]
Director Wawona Frozen Foods, Inc., Co-Owner since
since 1990 1987; Wawona Orchards, Co-Owner since 1960
Director: Lyons Transportation Co.
[PHOTO ANNE M. TATLOCK Fiduciary Trust Company International
APPEARS Age 58 (investment management), President
HERE] since 1994, Executive Vice President,
Director 1990 to 1994
since 1995
Director: Fortune Brands, Inc. and
Fiduciary Trust Company International
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4 AMERICAN GENERAL CORPORATION
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GOVERNANCE OF THE COMPANY
In accordance with applicable Texas law, the business and affairs of the
Company are managed under the direction of its board of directors.
During 1997, the board of directors held 13 meetings, and each director
attended at least 94% of the aggregate number of meetings of the board of
directors 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
statements, 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
following year; and reviews with the independent auditors the accounting
principles and policies of the Company.
The audit committee held three meetings in 1997. The current members of the
committee are Messrs. Davis (chair), Attwell, Carruth, and Murphy.
EXECUTIVE COMMITTEE. The executive committee is authorized to exercise the
authority of the board of directors between regular meetings of the board,
except when action of the full board is required by law.
The executive committee also is authorized by the board of directors to
perform the functions of a nominating committee and in this capacity
recommends candidates for election to the board of directors and to the
committees of the board. Shareholders may also recommend board nominees, as
described in the section "Other Business - Shareholder Proposals and
Nominations."
The executive committee met concurrently with the board of directors in
February 1997. The current members of the committee are Messrs. Devlin
(chair), Attwell, Horner, Newton, and Poulos.
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 Supplemental
Thrift Plan and the Company's stock and incentive plans.
The personnel committee held three meetings in 1997. The current members of
the committee are Messrs. Horner (chair), Johnson, Poulos, and Smittcamp, and
Ms. Tatlock. Mr. Poulos was elected to the personnel committee after the
committee met in March 1998.
FINANCE COMMITTEE. The finance committee was established by the board of di-
rectors at its January 29, 1998 meeting.
The finance committee advises and consults with management concerning the
general financial affairs of the Company, including the capital structure of
the Company, financing arrangements, investment strategy, and similar matters
of a financial nature; and makes appropriate recommendations to the board of
directors.
The current members of the finance committee are Ms. Tatlock (chair), Messrs.
Attwell, Horner, Murphy, Newton, and Poulos.
MANAGEMENT DEVELOPMENT COMMITTEE. The management development committee was
established by the board of directors at its January 29, 1998 meeting.
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1998 PROXY STATEMENT 5
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The management development committee reviews and consults with the chief ex-
ecutive officer concerning the management structure of the organization, and
the recruitment and development of executive management. The committee also
assists the chief executive officer in developing recommendations for the
board of directors relating to the foregoing.
The current members of the management development committee are Messrs.
Devlin (chair), Carruth, D'Agostino, Davis, Johnson, and Smittcamp.
COMPENSATION OF DIRECTORS
Each non-employee member of the board of directors receives an annual
retainer 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 was amended
effective March 1, 1997 to terminate future benefit accruals. Each of the non-
employee directors who were serving on March 1, 1997 is entitled to receive
units of Common Stock equivalents with an aggregate value equal to the
actuarial equivalent of the benefits due to commence to such directors at age
70, with vesting requirements waived. Upon termination of board service, such
directors will be entitled to receive cash in an amount equal to the then
current value of such units.
The non-employee directors are eligible for certain awards pursuant to the
American General Corporation 1997 Stock and Incentive Plan. In 1997, each of
the Company's 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. Future awards are subject to
the discretion of the board.
PROPOSAL TO AMEND THE RESTATED ARTICLES OF INCORPORATION
(Item 2 on Proxy Card)
The board of directors has authorized the submission to the shareholders for
their approval of an Amendment to the Restated Articles of Incorporation to
provide for an increase in the number of shares of Common Stock authorized for
issuance from 300,000,000 to 800,000,000. The text of the amendment is at-
tached as Appendix A hereto. The amendment will not affect the number of
shares of Preferred Stock authorized. As of March 11, 1998, approximately
253,740,059 shares of Common Stock were issued and outstanding with approxi-
mately 8,461,701 shares being reserved for issuance upon the conversion of
outstanding Preferred Stock and other convertible securities and approximately
13.5 million shares available for issuance under the Company's stock and in-
centive plans (including approximately 6.8 million shares reserved for out-
standing awards).
The board of directors believes an increase in the maximum number of autho-
rized shares of Common Stock is advisable at this time to provide for the
availability of shares for issuance in the future if the need arises, such as
in connection with stock splits, stock dividends, acquisitions, financings,
stock ownership plans, and other appropriate corporate purposes. Although the
Company considers opportunities that may involve the issuance of shares of
Common Stock, the Company has no present commitments or definitive plans to
issue the additional shares proposed to be authorized by the amendment (other
than for the purposes for which shares are currently reserved as described
above).
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6 AMERICAN GENERAL CORPORATION
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The Company last increased its authorized shares of Common Stock in 1983 with
an increase from 100 million to 300 million authorized shares in connection
with a three-for-one stock split. In the ensuing period the Company's assets
have grown from approximately $15 billion to over $93 billion. This increase
has resulted not only from internal growth but also from selective acquisi-
tions.
In the past twelve months, American General acquired Home Beneficial Corpora-
tion, USLIFE Corporation, and Western National Corporation, and issued 9.5
million, 39.0 million, and 10.2 million shares of Common Stock, respectively,
in connection with such transactions. The board of directors of the Company
believes it is strategically important for the Company to maintain an adequate
level of authorized shares for future corporate transactions.
In 1993, the Company last split its Common Stock by paying a 100% stock divi-
dend, increasing its outstanding shares from approximately 100 million to ap-
proximately 200 million. The proposed increase in the authorized shares would
provide the board of directors with the flexibility to consider in the future
a stock split in the form of a stock dividend.
The amendment, if approved, would not itself affect the relative equities of
present shareholders. However, if the amendment is approved, the board of di-
rectors will not be required to obtain further shareholder approval prior to
the issuance of any such additional shares except as may be required by law,
regulation, or stock exchange rules. The shareholders do not have preemptive
rights to purchase additional shares of Common Stock and any issuance of Com-
mon Stock on other than a pro rata basis may dilute the ownership interest of
present shareholders.
Although an increase in the authorized shares of Common Stock could, under
certain circumstances, be construed as having an anti-takeover effect (for ex-
ample, by diluting the stock ownership of a person seeking to effect a change
in the composition of the board of directors or contemplating a tender offer
or other transaction for the combination of the Company with another company),
the proposed amendment is not in response to any effort by a third party to
accumulate the Company's stock or to obtain control of the Company, nor is it
part of a plan by management to recommend to the board of directors and share-
holders a series of amendments or changes that will have an anti-takeover ef-
fect.
SHAREHOLDER VOTE. Approval of the Amendment to the Restated Articles of
Incorporation will require the affirmative vote of at least two-thirds of the
outstanding shares of Common Stock and Preferred Stock voting together as a
class, and the affirmative vote of at least two-thirds of the outstanding
shares of Common Stock voting separately as a class.
THE BOARD OF DIRECTORS BELIEVES THAT THE APPROVAL OF THE AMENDMENT TO THE
RESTATED ARTICLES OF INCORPORATION IS IN THE BEST INTERESTS OF THE COMPANY AND
ITS SHAREHOLDERS AND RECOMMENDS THAT YOU VOTE FOR ITS APPROVAL.
PROPOSAL TO APPROVE AN EMPLOYEE STOCK PURCHASE PLAN
(Item 3 on Proxy Card)
GENERAL
The board of directors authorized the adoption of the American General
Corporation 1998 Employee Stock Purchase Plan (the "Purchase Plan") on January
29, 1998, subject to approval by the shareholders of the Company within 12
months thereafter. The purpose of the Purchase Plan is to provide an incentive
to employees of the Company and certain of its subsidiaries to acquire or
increase an ownership interest in the Company through the purchase of shares
of Common Stock.
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1998 PROXY STATEMENT 7
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SUMMARY OF PURCHASE PLAN
Shares Available under the Purchase Plan; Adjustments. Subject to adjustment
as provided in the Purchase Plan, the number of shares of Common Stock that
may be purchased by participating employees under the Purchase Plan will not
in the aggregate exceed 5 million shares, which may be originally issued or
reacquired shares, including shares bought on the market or otherwise for
purposes of the Purchase Plan. Such number of shares is subject to adjustment
in the event of a change in the Common Stock by reason of a stock dividend or
by reason of a subdivision, stock split, reverse stock split,
recapitalization, reorganization, combination, reclassification of shares, or
other similar change. Upon any such event, the maximum number of shares that
may be subject to any option, and the number and purchase price of shares
subject to options outstanding under the Purchase Plan, will also be adjusted
accordingly. On March 11, 1998, the closing price of the Common Stock as
reported on the New York Stock Exchange was $61.94 per share.
Eligibility. Options under the Purchase Plan will be granted on July 1, 1998,
and, thereafter through June 30, 2008, on the first day of each successive
October, January, April and July (each such date being referred to herein as a
"Date of Grant"). Each employee of the Company or any present or future parent
or subsidiary corporation of the Company that has been designated as a
"Participating Company" from time to time by the administrative committee as
of a Date of Grant is eligible to participate in the Purchase Plan as of such
Date of Grant if such employee (i) is regularly scheduled to work more than 20
hours per week and more than three calendar months in any calendar year and
(ii) has been continuously employed by the Company or any parent or subsidiary
corporation of the Company for the period beginning on the date that is 60
days prior to such Date of Grant. Approximately 23,500 employees would have
been eligible to participate in the Purchase Plan as of January 1, 1998.
Participation. An eligible employee may elect to participate in the Purchase
Plan for any calendar quarter during the period from July 1, 1998 to June 30,
2008, by designating a percentage or amount of such employee's eligible
compensation to be deducted for each pay period and paid into the Purchase
Plan for such employee's account. An eligible employee may participate in the
Purchase Plan only by means of payroll deduction. No employee will be granted
an option under the Purchase Plan that permits such employee's rights to
purchase Common Stock to accrue at a rate that exceeds $25,000 of fair market
value of such stock for the calendar year in which such option is outstanding.
Unless an employee's payroll deductions are withdrawn (as described below),
the aggregate payroll deductions credited to the employee's account will be
used to purchase shares of Common Stock at the end of the three-month period
beginning on a Date of Grant (the "Option Period"). The per share purchase
price of the Common Stock will be 85% of the lesser of the fair market value
of the Common Stock on the Date of Grant or on the last day of the Option
Period (the "Date of Exercise"). During the option period, payroll deductions
will be included in the general funds of the Company, free of any trust or
other arrangement and may be used for any corporate purpose. No interest will
be paid or credited to any participant.
Changes in and Withdrawal of Payroll Deductions. A participant may not change
the rate of his or her payroll deductions during an Option Period. However, a
participant may withdraw from the Purchase Plan, in whole but not in part, at
any time prior to the Date of Exercise relating to a particular Option Period
by timely delivering to the Company a notice of withdrawal in the manner
specified by the Company. Upon such notice, the Company promptly will refund
to the participant the amount of the participant's payroll deductions under
the Purchase Plan that have not been otherwise returned or used upon exercise
of an option, and thereafter the participant's payroll deduction authorization
and interest in any unexercised option under the Purchase Plan will terminate.
Delivery of Shares; Restrictions on Transfer. As soon as practicable after
each Date of Exercise, the Company will deliver to a custodian one or more
certificates representing (or shall otherwise cause to be credited to the
account of such custodian) the total number of whole shares of Common Stock
respecting
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8 AMERICAN GENERAL CORPORATION
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options exercised on such Date of Exercise in the aggregate (for both whole
and fractional shares) of all of the participating employees under the
Purchase Plan. Any remaining amount representing a fractional share will not
be certificated but will be paid to the custodian. A participant generally may
not transfer or otherwise dispose of the shares for a period of 21 months from
the Date of Exercise (or for such other period as may be specified from time
to time by the administrative committee under the Purchase Plan). During this
period, the custodian will retain custody of the shares. Thereafter, shares
held by the custodian may be certificated at the request of a participant.
Termination of Employment. If the employment of a participant terminates for
any reason, then the participant's participation in the Purchase Plan ceases,
and the Company will refund the amount of such participant's payroll
deductions under the Purchase Plan that have not yet been otherwise returned
or used upon exercise of an option. Shares held under the Plan for the account
of a former employee are subject to the custodial period described in the
foregoing paragraph.
Restriction Upon Assignment of Option. An option granted under the Purchase
Plan may not be transferred other than by will or the laws of descent and
distribution. Subject to certain limited exceptions, each option is
exercisable, during the employee's lifetime, only by the employee to whom it
is granted.
Administration, Amendments, and Termination. The Purchase Plan is to be
administered by a committee appointed from time to time by the board. In
connection with its administration of the Purchase Plan, the committee is
authorized to interpret the Purchase Plan.
The Purchase Plan may be amended from time to time by the board; provided,
however, that no change in any option theretofore granted may be made that
would impair the rights of a participant without the consent of such
participant. The board may in its discretion terminate the Purchase Plan at
any time with respect to any Common Stock for which options have not
theretofore been granted.
The benefits and amounts to be received by any participant under the Purchase
Plan are not currently determinable.
UNITED STATES FEDERAL INCOME TAX CONSEQUENCES
The following is a brief summary of certain of the U.S. federal income tax
consequences of certain transactions under the Purchase Plan based on federal
income tax laws currently in effect. This summary applies to the Purchase Plan
as normally operated and is not intended to provide or supplement tax advice
to eligible employees. The summary contains general statements based on
current U.S. federal income tax statutes, regulations, and currently available
interpretations thereof. This summary is not intended to be exhaustive and
does not describe state, local, or foreign tax consequences or the effect, if
any, of gift, estate, and inheritance taxes. The Purchase Plan is not
qualified under Section 401(a) of the Internal Revenue Code of 1986, as
amended (the "Code").
Tax Consequences Associated with Payroll Deductions. The compensation paid to
a participant from which payroll deductions are taken for purposes of purchas-
ing Common Stock under the Purchase Plan is taxable to the participant as or-
dinary income in the year paid and deductible in such year by the Company or
the Participating Company for which the participant performs services.
Tax Consequences to Participants with respect to the Purchase and Disposition
of Shares. There is no tax liability to the participant when shares of Common
Stock are purchased pursuant to the Purchase Plan, however, tax liability may
be incurred upon disposition of such shares. If a qualifying disposition of
the shares is made (i.e., a disposition more than two years after the first
day of the applicable Option Period), the participant will recognize in the
year of disposition ordinary income equal to the lesser of (i) the fair market
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1998 PROXY STATEMENT 9
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value of the shares at the time of disposition over the amount paid for the
shares or (ii) 15% of the fair market value of the shares at the Date of
Grant. Any amount realized in excess of such ordinary income will be taxed as
a long-term capital gain. If the shares are sold at less than the purchase
price, the participant will have a capital loss equal to the difference
between the sales price and the purchase price. If a disqualifying disposition
of the shares is made (i.e., a disposition within two years after the first
day of the applicable Option Period), the participant generally will recognize
ordinary income in the year of disposition equal to the fair market value of
the shares at the Date of Exercise over the purchase price. Any further gain
(or loss) realized by the participant generally will be taxed as short-term or
long-term capital gain (or loss) depending on the holding period. Special
rules apply in the case of a participant's death.
Tax Consequences to the Company or Participating Company with respect to the
Purchase and Disposition of Shares. Neither the Company nor any Participating
Company will be entitled to a deduction when shares of Common Stock are
purchased pursuant to the Purchase Plan. The Company, or the Participating
Company for which a participant performs services, will be entitled to a
deduction only if the participant makes a disqualifying disposition of any
shares purchased under the Purchase Plan. In such case, the Company or such
Participating Company can deduct as a compensation expense the amount that is
ordinary income to the participant provided that, among other things, (i) the
amount meets the test of reasonableness, is an ordinary and necessary business
expense, and is not an "excess parachute payment" within the meaning of
Section 280G of the Code, (ii) any applicable withholding obligations are
satisfied, and (iii) the $1 million limitation of Section 162(m) of the Code
is not exceeded.
SHAREHOLDER VOTE. Approval of the Purchase Plan will require the affirmative
vote of a majority of the votes entitled to be cast by the holders of Common
Stock and Preferred Stock represented at the meeting.
THE BOARD OF DIRECTORS BELIEVES THAT THE APPROVAL OF THE PURCHASE 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. The guiding principle of the Company's compensation
policy is pay for performance. The personnel committee believes that a strong
link should exist between compensation and the performance of the individual
and the financial results of the Company. The personnel committee exercises
its judgment in establishing the executive officers' salaries and their
variable compensation, consisting of cash bonuses and three types of long-term
incentive awards: Stock Options, Performance Awards, and Restricted Stock.
During 1997, the personnel committee, with the assistance of Ernst & Young
LLP, independent executive compensation consultants, reviewed a number of
practices supportive of and peripheral to arrangements relating to employment
of key executives by the Company. As a result, the Company is implementing a
number of changes, such as the establishment of employment agreements for key
officers, supplemental retirement benefits, and modification of the change in
control definition for compensation arrangements in order to provide
flexibility to the Company for corporate development transactions.
With the assistance of KPMG Peat Marwick LLP, the Company's independent
executive compensation consultants, during 1997 and the first months of 1998
the personnel committee reviewed and revised the base salary and incentive
compensation practices to place greater significance on short and long-term
incentive compensation for measurable performance. The committee's policy is
based on the premise that compensation should be adequate to attract and
retain qualified employees and that compensation paid to such employees should
be based on their individual duties and responsibilities and their relative
contribution to overall results. 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. Currently, there are 21 companies in this comparison group, which
is
- -------------------------------------------------------------------------------
10 AMERICAN GENERAL CORPORATION
<PAGE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
subject to change as the Company or its competitors change their focus or as
new competition emerges within this framework. The personnel committee
reviewed the individual contribution and performance of each of the key
executive officers and any prior incentive awards granted to them, and
additionally reviewed overall corporate performance, including the Company's
growth in operating earnings per share, return on shareholder's equity,
cumulative total shareholder return, asset quality, and other major
accomplishments of the organization.
SALARIES. Base salaries of executive officers are reviewed individually on an
annual basis to determine if they should be increased, decreased, or left
unchanged. The personnel committee reviewed both base salary and variable
compensation of the 50 highest salaried employees and recommended to the board
of directors for its approval salaries for the 25 most highly salaried
employees. The remaining 25 salaries, as well as variable compensation for all
50 of the highest salaried employees, were approved by the personnel
committee. In determining the salaries of the executive officers, the
personnel committee reviewed the factors described above, and the overall
growth and long-term progress of the organization.
BONUSES. Employees deemed to be in a position to make a significant impact on
the growth and profitability of the organization are eligible for
consideration for an annual cash bonus. During the first quarter of each year,
the personnel committee reviews recommendations for bonus awards, based on the
prior year's performance. After reviewing the factors described under
"Compensation Policy" above, the personnel committee determines the cash
bonuses to be paid to the chief executive officer, vice chairman, and
president, and acts upon recommendations for bonuses for the other employees.
In March 1998, the personnel committee awarded bonuses based on 1997
performance to 453 employees, including all of the named executive officers,
totalling $12.6 million. Bonuses payable in March 1998 to the 15 highest
salaried employees of the Company were subject to limitations contained in the
Performance-Based Plan for Executive Officers (the "Performance-Based Bonus
Plan").
LONG-TERM INCENTIVE AWARDS. Incentive compensation at American General is
intended to promote long-term growth and profitability, since the Company's
businesses are long-term in nature. Awards under the Company's stock and
incentive 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
interests of other long-term shareholders. Consistent with this objective, the
Company has implemented a stock ownership program requiring executives to own
Common Stock in amounts relating to various multiples of their base salaries
(up to 6 times base salary for the chief executive officer). In determining
long-term incentive awards, the personnel committee follows the process and
reviews factors described under "Compensation Policy" above.
Long-term incentive awards for 1997 have been made under the Company's stock
and incentive plans. 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 in three equal annual 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 1997, options were awarded to 277 employees for 1,446,833 shares of Common
Stock, of which 326,000 were awarded to the named executive officers. The
awards to the named executive officers represented less than two-tenths of one
percent (.02%) of Common Stock outstanding at the end of 1997.
- -------------------------------------------------------------------------------
1998 PROXY STATEMENT 11
<PAGE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Performance Awards. Performance Awards are contingent awards of units
equivalent to shares of Common Stock that are earned over a three-year
performance period. The committee determines the percentage of the Performance
Awards under the Company's stock and incentive plans that is actually earned,
which may range from zero to 200%, based on pre-established performance goals.
In 1997, Performance Awards were granted to each of the named executive
officers.
Restricted Stock. The Company's stock and incentive plans also authorize the
personnel committee to make awards of Restricted Stock. The plans limit 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. In 1997, each of Messrs. Devlin,
Newton, and Martin received a Restricted Stock award reported in the "Summary
Compensation Table" on page 13.
COMPENSATION OF CHIEF EXECUTIVE OFFICER FOR 1997. In March 1997, Mr. Devlin
received a Stock Option award reported in the table "Stock Options Granted in
1997" on page 14. In addition, when he was designated as chairman of the
Company in 1997, the board of directors increased Mr. Devlin's annual salary
to recognize his increased duties and responsibilities. In March 1998, the
personnel committee awarded Mr. Devlin a discretionary cash bonus for 1997
under the Performance-Based Bonus Plan.
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. The Code excludes from the $1 million cap such
compensation that is based on attainment of pre-established, objective
performance goals, if certain other requirements are met. Where it is
consistent with the interest of the shareholders, it is the policy of the
personnel committee to establish compensation practices that are both prudent
from a tax standpoint and effective as a compensation program. The personnel
committee also considers it important to be able to utilize a full range of
incentive compensation, even though some aspects of the compensation program
are not fully deductible.
PERSONNEL COMMITTEE OF THE BOARD OF DIRECTORS:
LARRY D. HORNER, CHAIR
RICHARD J.V. JOHNSON
ROBERT E. SMITTCAMP
ANNE M. TATLOCK
- -------------------------------------------------------------------------------
12 AMERICAN GENERAL CORPORATION
<PAGE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SUMMARY COMPENSATION. The following Summary Compensation Table sets forth
compensation information for the Company's chief executive officer and each of
the four other most highly compensated executive officers of the Company,
including officers of certain subsidiaries (the five being herein referred to
as the "named executive officers") for services performed in 1997, 1996, and
1995.
SUMMARY COMPENSATION TABLE
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Long-Term Compensation/1/
----------------------------------------
Annual Compensation Awards Payouts
- -----------------------------------------------------------------------------------------------------------------------
Other Long-Term
Annual Restricted Securities Incentive All Other
Compen- Stock Underlying Plan Compen-
Name and Position Year Salary($) 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 $1,750,000 $17,602/3/ $2,181,250 150,000 $ -0- $40,645
& CEO of the 1996 615,385 750,000 -0- -0- 100,000 123,375 31,776
Company 1995 461,077 400,000 -0- -0- 35,000 128,000 23,488
------------------------------------------------------------------------------------------------------
Jon P. Newton, Vice 1997 483,077 650,000 -0- 436,250 60,000 174,750 25,754
Chairman of the 1996 416,154 300,000 -0- -0- 25,000 -0- 23,102
Company 1995 333,077 200,000 -0- -0- 22,600 -0- 17,728
------------------------------------------------------------------------------------------------------
James S. D'Agostino Jr., 1997 466,154 500,000 -0- -0- 75,000 174,750 112,498
President of the 1996 369,539 300,000 -0- -0- 25,000 88,125 19,124
Company 1995 299,846 200,000 -0- -0- 20,000 64,000 14,752
------------------------------------------------------------------------------------------------------
Rodney O. Martin Jr. 1997 308,077 325,000 -0- 218,125 20,000 -0- 168,048
President of Life 1996 250,385 135,000 -0- -0- 15,500 -0- 7,253
Insurance Division 1995 17,308 100,000 -0- 165,000 5,000 -0- -0-
------------------------------------------------------------------------------------------------------
Thomas L. West Jr. 1997 325,000 300,000 -0- -0- 21,000 -0- 21,668
Chairman & CEO of 1996 316,539 135,000 -0- -0- 21,000 -0- 18,344
Retirement Services 1995 291,539 125,000 -0- 80,313 19,400 -0- 17,037
Division
- -----------------------------------------------------------------------------------------------------------------------
</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 deter-
mined 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 Re-
stricted Stock on the date of grant. At December 31, 1997, Messrs. Devlin,
Newton, D'Agostino, Martin, and West held an aggregate of 65,000, 20,000,
14,000, 10,000 and 7,500 shares, respectively, with a value of $3,514,063,
$1,081,250, $756,875, $540,625, and $405,469, respectively. Dividends are
paid to holders with respect to Restricted Stock at the same rate as is
paid on all other shares of Common Stock. In the event of a Change in Con-
trol, all forfeiture restrictions with respect to all outstanding shares of
Restricted Stock immediately lapse. See "Employment Agreements and Change
in Control Arrangements" below for the definition of "Change in Control."
/5/LONG-TERM INCENTIVE PLAN PAYOUTS. These amounts represent the value of Per-
formance Awards on the date of vesting, following the three-year perfor-
mance 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 contribu-
tions 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 and Mr. Martin, the amount also includes $88,889 and
$153,488, respectively, in moving expenses that were paid by American Gen-
eral. The Thrift Plan contributions for 1997 were $7,125 for each of the
named executive officers. The Supplemental Plan contributions and the Ex-
cess Life taxable value for 1997 were as follows: Mr. Devlin, $29,602 and
$3,918; Mr. Newton, $14,711 and $3,918; Mr. D'Agostino, $13,852 and $2,632;
Mr. Martin, $6,738 and $697; and Mr. West, $7,500 and $7,043.
- -------------------------------------------------------------------------------
1998 PROXY STATEMENT 13
<PAGE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
STOCK OPTIONS. The following table contains information concerning the grant
of stock options during 1997 to the named executive officers.
STOCK OPTIONS GRANTED IN 1997
<TABLE>
- ----------------------------------------------------------------------------------
<CAPTION>
Individual Stock Option Grants
----------------------------------------------
% of Total Grant Date
Options Options Granted Exercise Present
Granted to Employees Price Expiration Value
Name (#)/2/,/3/ in 1997 ($/Sh) Date ($)/1/
- ----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Robert M. Devlin 150,000 10 $43.6875 3-12-07 $1,605,000
Jon P. Newton 60,000 4 43.6875 3-12-07 642,000
James S.
D'Agostino Jr. 75,000 5 43.6875 3-12-07 802,500
Rodney O. Martin
Jr. 20,000 1 43.6875 3-12-07 214,000
Thomas L. West Jr. 21,000 1 43.6875 3-12-07 224,700
- ----------------------------------------------------------------------------------
</TABLE>
/1/GRANT DATE PRESENT VALUE. These estimates of value are disclosed for
illustration only and should not be interpreted as projections of the
future price of Common Stock. These estimates were developed using a Black-
Scholes option pricing model incorporating the following assumptions:
expected volatility of 22%, risk free interest rate of 6.48%, expected life
of 6 years, and dividend yield of 3%.
/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 IN CONTROL. In the event of a Change in Control, the stock option
agreements provide for acceleration and/or 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 in
control transaction, or the highest fair market value of Common Stock
during the 60 days preceding the change in control date. See "Employment
Agreements and Change in Control Arrangements" below for the definition of
"Change in Control."
OPTION EXERCISES AND VALUES. No options were exercised by the named executive
officers in 1997. The following table contains information concerning the
unexercised options held by the named executive officers as of December 31,
1997.
AGGREGATED OPTION VALUES AT DECEMBER 31, 1997/1/
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money Options
Options at 12/31/97 (#) at 12/31/97($)/2/
------------------------- -------------------------
Name Exercisable Unexercisable Exercisable Unexercisable
- ------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Robert M. Devlin 123,666 228,335 $2,826,939 $2,997,010
Jon P. Newton 41,399 84,201 947,783 1,102,267
James S. D'Agostino
Jr. 62,296 98,334 1,567,398 1,238,764
Rodney O. Martin Jr. 10,166 30,334 198,748 401,908
Thomas L. West Jr. 29,933 41,467 676,397 623,928
- ------------------------------------------------------------------------------
</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/or cashout in the event of a Change in 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.
- -------------------------------------------------------------------------------
14 AMERICAN GENERAL CORPORATION
<PAGE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
PERFORMANCE AWARDS. The following table describes Performance Awards granted
during the fiscal year ending December 31, 1997 to the named executive
officers.
LONG-TERM INCENTIVE PLAN AWARDS GRANTED IN 1997
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Performance
or Other
Period Estimated Future Payouts
Until in Units/2/,/3/
Number of Maturation ------------------------------------
Name Units (#)/1/ or Payout Threshold (#) Target (#) Maximum (#)
- --------------------------------------------------------------------------------------
<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
Rodney O. Martin Jr. 1,500 1997-1999 750 1,500 3,000
Thomas L. West Jr. 1,600 1997-1999 800 1,600 3,200
- --------------------------------------------------------------------------------------
</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 operating earnings per
share for the period are less than $8.45 ("Threshold"), no units will vest;
if cumulative operating earnings per share are at least $10.56 ("Target")
during the period, units will vest at 100%; and if cumulative operating
earnings per share for the period are as much as $12.67 ("Maximum"), units
will vest at 200% of the original grant.
/3/CHANGE IN CONTROL. In the event of a Change in Control, Performance Awards
would vest at a 200% level and be paid in cash or stock at the discretion
of the personnel committee. 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."
PENSION PLANS
Pension Plan Table "A" shows the estimated annual retirement benefits pay-
able to Messrs. Devlin, Newton, and D'Agostino pursuant to their Supplemental
Executive Retirement Agreements with the Company ("SERAs"), which (together
with the Company's Supplemental Executive Retirement Plan) comprise a non-
qualified, unfunded, defined benefit pension plan.
PENSION PLAN TABLE "A"
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Years of Service
Remuneration 10 Yr. 15 Yr. 20 Yr. 25 Yr. 28 Yr.
- ----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$ 400,000 $ 96,000 $144,000 $192,000 $ 240,000 $ 268,800
450,000 108,000 162,000 216,000 270,000 302,400
500,000 120,000 180,000 240,000 300,000 336,000
750,000 180,000 270,000 360,000 450,000 504,000
1,000,000 240,000 360,000 480,000 600,000 672,000
1,250,000 300,000 450,000 600,000 750,000 840,000
1,500,000 360,000 540,000 720,000 900,000 1,008,000
1,750,000 420,000 630,000 840,000 1,050,000 1,176,000
2,000,000 480,000 720,000 960,000 1,200,000 1,344,000
- ----------------------------------------------------------------------
</TABLE>
The SERA benefits shown in Pension Plan Table "A" are subject to offset (i)
for the respective named executive officer's benefits under the American
General Retirement Plan, a qualified non-contributory defined
- -------------------------------------------------------------------------------
1998 PROXY STATEMENT 15
<PAGE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
benefit pension plan, and the Company's Restoration of Retirement Income Plan,
a non-qualified, unfunded, defined benefit pension plan, and (ii) for one-half
of his annual benefit under the Social Security Act, relating to Old-Age and
Disability benefits. The compensation covered by the SERAs is the same as the
annual compensation reported in the Summary Compensation Table for each of the
three named executive officers who have a SERA. The estimated credited years
of service under the SERAs for Messrs. Devlin, Newton, and D'Agostino are 20,
10 and 12, respectively. The maximum number of years of service which can be
credited under the SERAs is 28. The SERA benefit is computed on the basis of a
straight-life annuity with a 10-year term certain.
Pension Plan Table "B" shows the estimated annual retirement benefits
payable to Messrs. Martin and West pursuant to the Company's Supplemental
Executive Retirement Plan ("SERP"), which (together with the SERAs) comprises
a non-qualified, unfunded, defined benefit pension plan.
PENSION PLAN TABLE "B"
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Years of Service
Remuneration 10 Yr. 15 Yr. 20 Yr. 25 Yr. 30 Yr.
- ----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$ 400,000 $ 80,000 $120,000 $160,000 $ 200,000 $ 240,000
450,000 90,000 135,000 180,000 225,000 270,000
500,000 100,000 150,000 200,000 250,000 300,000
750,000 150,000 225,000 300,000 375,000 450,000
1,000,000 200,000 300,000 400,000 500,000 600,000
1,250,000 250,000 375,000 500,000 625,000 750,000
1,500,000 300,000 450,000 600,000 750,000 900,000
1,750,000 350,000 525,000 700,000 875,000 1,050,000
2,000,000 400,000 600,000 800,000 1,000,000 1,200,000
</TABLE>
The SERP benefits shown in Pension Plan Table "B" are subject to offset (i)
for the respective named executive officer's benefits under the American Gen-
eral Retirement Plan, a qualified non-contributory defined benefit pension
plan, and the Company's Restoration of Retirement Income Plan, a non-quali-
fied, unfunded, defined benefit pension plan and (ii) for one-half of his an-
nual benefit under the Social Security Act, relating to Old-Age and Disability
benefits. The compensation covered by the SERP is the same as the annual com-
pensation reported in the Summary Compensation Table for each named executive
officer covered by the SERP. The estimated credited years of service under the
SERP for Messrs. Martin and West are 2 and 4, respectively. The maximum number
of years of service which can be credited under the SERP is 30. The SERP bene-
fit is computed on the basis of a straight-line annuity with a 10-year term
certain.
- -------------------------------------------------------------------------------
16 AMERICAN GENERAL CORPORATION
<PAGE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL SHAREHOLDER RETURN
[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 Insurance (Life/Health)
over the five-year period beginning December 31, 1992. 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 two comparison indexes.
<TABLE>
<CAPTION>
5-YEAR ANNUALIZED
YEAR-END 1992 1993 1994 1995 1996 1997 TOTAL RETURN
<S> <C> <C> <C> <C> <C> <C> <C>
American General $100.00 $104.13 $107.17 $137.23 $166.52 $226.80 17.80%
- ------------------------------------------------------------------------------------
S&P 500 100.00 109.99 111.43 153.13 188.47 251.35 20.24%
- ------------------------------------------------------------------------------------
S&P Insurance
(Life/Health) 100.00 101.29 84.08 120.53 146.82 183.59 12.92%
</TABLE>
EMPLOYMENT AGREEMENTS AND CHANGE IN CONTROL ARRANGEMENTS
CHANGE IN CONTROL. The phrase "Change in 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 the Company by a non-affiliate of the
Company; (ii) the merger or consolidation of the Company or its direct or
indirect subsidiary unless the voting securities of the Company immediately
prior to the transaction continue to represent at least 51% of the voting
power of the Company, the surviving entity, or any parent thereof immediately
after the transaction; (iii) the sale of substantially all of the assets of
the Company, except to an entity which has 51% of its voting power held by
those who were the shareholders of the Company immediately prior to such sale,
in substantially the same proportions; (iv) the adoption of a plan of
liquidation of the Company by its shareholders; or (v) a change in the
constituency of the board of directors of the Company, where the current
directors (including future directors who are nominated or elected by two-
thirds of the then current directors) cease to constitute a majority of the
board of directors of the Company.
- -------------------------------------------------------------------------------
1998 PROXY STATEMENT 17
<PAGE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
EMPLOYMENT AGREEMENTS. As of February 1, 1998 (the "Effective Date"), the
Company entered into three-year employment agreements (the "Agreements") with
Messrs. Devlin, Newton, and D'Agostino (the "Executives"), the terms of which
are automatically extended for an additional month on the first day of each
month, unless the Company or the Executive has given prior notice. Under each
Agreement, the Executive agrees to devote his full working time, energies, and
attention to his duties, and undertakes certain non-competition obligations to
the Company, which generally require the Executive not to directly or
indirectly compete with the Company in any area of the United States in which
the Company conducts business for the three-year period following his
termination of employment.
Each Agreement provides that the Executive will be entitled to receive an an-
nual base salary not less than that in effect on the Effective Date (or, if
greater, that in effect on May 1, 1998) and will be provided with an opportu-
nity to earn an annual bonus. If, as is anticipated for the 1998 fiscal year,
the Executive participates in a bonus plan pursuant to which performance ob-
jectives, bonus opportunities, and levels of payment are set for the Executive
(a "formula bonus plan"), his minimum bonus opportunity for the 1998 fiscal
year (when measured as a percentage of the Executive's salary) will not be
less than the average bonus he actually received for the three preceding fis-
cal years (when so measured). The Executive's bonus opportunity for future
years under the formula bonus plan cannot be reduced; however, the actual bo-
nus to be paid with respect to each such year will be determined pursuant to
the plan's provisions. The Agreement provides that, when non-qualified options
that are granted to the Executive after the Effective Date become exercisable,
they will remain exercisable for their full term.
If an Executive's employment is terminated (i) by the Company for "Cause" (as
defined in the Agreement), (ii) due to the Executive's death, or (iii) by the
Executive without "Good Reason" (as defined in the Agreement), then, except as
described below, the Executive will generally be entitled only to payment of
his salary through the date of termination of employment and to the other
post-termination compensation and benefits to which he is entitled under the
terms of the Company's compensation and benefit plans.
If an Executive's employment with the Company is terminated by the Company
without Cause, by the Executive for Good Reason, or by the Executive for any
reason during the year immediately following a Change in Control, then, in
addition to being entitled to his salary through the date of termination and
the compensation and benefits to which he is entitled under the terms of the
Company's compensation and benefits plans, the Executive will be entitled to
the payments and benefits described in this paragraph. The Executive will be
generally entitled to a cash payment equal to a pro rata portion of the bonus
that would be payable for the year in which his employment is terminated,
assuming the applicable performance targets were achieved at target level. The
Executive will also be entitled to a cash severance payment equal to three
times the Executive's salary and average bonus as measured immediately prior
to the date of termination and certain other benefits. This cash severance
will be paid to the Executive over a three-year period in installments, except
that, if the termination occurs following a Change in Control, the cash
severance will be paid in a lump sum. In addition, the Company will pay (or
establish a trust to pay) all remaining premiums on any "split-dollar"
insurance policy arrangement in effect between the Executive and the Company
and will transfer the rights and incidents of any such policy to the Executive
at no cost to him. All outstanding stock options, restricted stock, and
similar equity-based awards made by the Company to the Executive will become
fully vested and any applicable performance goals will be deemed met at target
level.
Upon termination of each Executive's employment with the Company, other than
a termination by the Company for Cause or by the Executive without Good Rea-
son, the Executive (and the Executive's spouse) will be entitled to lifetime
medical and dental insurance benefits. In addition, if, following the attain-
ment by the Executive of age 62 (or age 60 in the case of Mr. Devlin), the Ex-
ecutive's employment with the Company terminates for any reason (other than a
termination by the Company for Cause), the Executive will become fully vested
in all outstanding time-vested stock options, restricted stock, and similar
equity-based awards
- -------------------------------------------------------------------------------
18 AMERICAN GENERAL CORPORATION
<PAGE>
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- -------------------------------------------------------------------------------
granted to him by the Company, and will also become vested in at least a pro
rata portion of all equity-based performance awards granted to him by the Com-
pany.
In the event that any payments or benefits received by an Executive in con-
nection with a Change in Control (whether or not pursuant to the Agreement)
become subject to an excise tax imposed pursuant to Section 4999 of the Inter-
nal Revenue Code, the Executive will be entitled under the Agreement to an ad-
ditional payment in an amount such that the net amount of payments retained by
the Executive following the imposition of the excise tax and any additional
taxes imposed on the additional payment shall equal the amount the Executive
would have retained had the excise tax not been initially imposed.
CHANGE IN CONTROL SEVERANCE AGREEMENTS. The Company has authorized agreements
providing for the payment of severance benefits to Messrs. Martin and West and
certain other officers of the Company and its subsidiaries following a Change
in Control in the event of certain qualifying terminations of employment
within a three-year period after the Change in Control. The initial terms of
the agreements will expire on December 31, 2000. The agreements will extend
automatically for an additional year unless the Company or the Executive has
given prior notice. Terminations that will qualify the terminated officer for
severance payments include a termination by the Company without "Cause" (as
defined in the agreement) and a termination by the officer with "Good Reason"
(as defined in the agreement) within three years following a Change in
Control. Good Reason includes certain changes in duties, responsibilities,
salary, or benefits.
In the event of a qualifying termination, these agreements provide for
severance payments equal to approximately three times the sum of the officer's
annual base salary and annual bonus. Each agreement provides an additional
amount to cover payment of any applicable excise tax on all benefits received
as the result of a Change in Control (whether or not pursuant to the severance
agreement) and any income or employment taxes imposed on the excise tax
payment in order that the net amount retained by the officer will equal the
amount the officer would have received absent any such excise tax. The
agreements also provide for certain other benefits.
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN AND AGREEMENTS. Under the Supplemental
Executive Retirement Agreements entered into as of February 1, 1998, with
Messrs. Devlin, Newton, and D'Agostino and the Supplemental Executive
Retirement Plan in which Messrs. Martin and West participate as of February 1,
1998, the retirement benefit of each named executive officer will vest upon a
Change in Control. In the event of certain qualifying terminations of employ-
ment after a Change in Control, each named executive officer will be given 36
additional months of age and service credit in the determination of this sup-
plemental retirement benefit.
COMPANY STOCK-BASED AWARDS. All of the awards outstanding or to be granted
under the Company's stock incentive plans are subject to the automatic accel-
eration of vesting and/or cashout upon a Change in Control. See the applicable
footnotes to the preceding executive compensation tables for a description of
how a Change in Control would affect each type of award under such plans.
DEFERRED COMPENSATION PLAN. The Company has authorized for adoption a de-
ferred compensation plan that allows certain officers, including all of the
named executive officers, to defer a portion of their salary and bonus. The
investment options for the deferred compensation include Common Stock. If the
officer elects to have the deferred compensation invested in Common Stock,
then the officer will be credited with an award equal to 20% of the deferred
salary and bonus, which will generally vest in three years and be deemed to be
invested in Common Stock. Vesting of this award will accelerate upon the nor-
mal retirement, disability, or death of the officer or a Change in Control.
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1998 PROXY STATEMENT 19
<PAGE>
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- -------------------------------------------------------------------------------
PERFORMANCE-BASED PLAN FOR EXECUTIVE OFFICERS. Upon a Change in Control, par-
ticipants in this annual bonus plan (including the named executive officers)
will receive a pro rata payment of their respective annual bonuses for the
year in which the Change in Control occurs, which assumes that target levels
of achievement have been met.
SUPPLEMENTAL THRIFT PLAN. Upon a Change in Control, any benefit which partic-
ipants (including the named executive officers) have under the Supplemental
Thrift Plan will become completely vested.
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,
based on the number of shares outstanding on March 5, 1998.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY PERCENT OF
NAME AND ADDRESS OF BENEFICIAL OWNER TITLE OF CLASS OWNED CLASS
- ------------------------------------------------------------------------------------
<S> <C> <C> <C>
Putnam Investments, Inc. Common Stock 13,693,609/1/ 5.4%
One Post Office Square
Boston, MA
AMVESCAP PLC Common Stock 13,078,876/2/ 5.2%
11 Devonshire Square
London EC2M 4YR
England
The Capital Group Companies, Common Stock 13,066,760/3/ 5.1%
Inc.
333 South Hope Street
Los Angeles, CA
The Lucy B. Gooding Preferred Stock 753,422/4/ 32.5%
1995 Living Trust
2970 St. Johns Avenue
Jacksonville, FL
The Bryan Trust Preferred Stock 479,236/5/ 20.7%
One Independent Drive
Jacksonville, FL
The Olive Julia Gibson Preferred Stock 186,506/5/ 8.1%
Bryan Testamentary Trust
One Independent Drive
Jacksonville, FL
</TABLE>
- -------
/1/Based on a Schedule 13G dated January 16, 1998. Putnam Investments, Inc.
reports shared voting power with respect to 139,040 shares.
/2/Based on a Schedule 13G dated February 12, 1998. AMVESCAP PLC and certain
of its subsidiaries report shared voting and investment power with respect
to all of the shares reported in the table.
/3/Based on a Schedule 13G dated February 11, 1998. The Capital Group
Companies, Inc. reports sole voting power with respect to none of such
shares and sole dispositive power with respect to all of such shares and
disclaims beneficial ownership with respect to all of such shares.
/4/Lucy B. Gooding, Robert A. Mills, and Bonnie H. Smith are trustees of The
Lucy B. Gooding 1995 Living Trust.
/5/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.
- -------------------------------------------------------------------------------
20 AMERICAN GENERAL CORPORATION
<PAGE>
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- -------------------------------------------------------------------------------
SECURITY OWNERSHIP OF MANAGEMENT
The beneficial ownership as of March 5, 1998, of Common Stock by each direc-
tor nominee and by each of the named executive officers identified herein un-
der the caption "Summary Compensation Table," 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, 1997, the latest date for which such information is
available. As of such date, each of the named individuals owned less than 1%
of the Company's outstanding Common Stock and no shares of Preferred Stock.
All director nominees and executive officers as a group beneficially owned
less than 1% of the Company's outstanding Common Stock.
<TABLE>
<CAPTION>
NUMBER OF SHARES
NAME OF BENEFICIAL OWNER BENEFICIALLY OWNED/1/,/2/
------------------------ -------------------------
<S> <C>
J. Evans Attwell............................ 156,514/5/
Brady F. Carruth............................ 31,604/5/
James S. D'Agostino Jr...................... 152,505/3/
W. Lipscomb Davis Jr........................ 23,602/4/,/5/,/6/
Robert M. Devlin............................ 383,140/3/
Larry D. Horner............................. 3,500/5/
Richard J. V. Johnson....................... 14,000
Michael E. Murphy........................... 1,000
Jon P. Newton............................... 133,938/3/
Michael J. Poulos........................... 577,326/3/,/5/
Robert E. Smittcamp......................... 71,289/5/
Anne M. Tatlock............................. 2,500
Rodney O. Martin Jr......................... 55,766/3/
Thomas L. West Jr........................... 75,139/3/
All Director Nominees and Executive Officers
as a Group................................. 2,206,320/3/
</TABLE>
- -------
/1/Beneficial ownership signifies sole voting and investment power, unless
otherwise 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 Company's stock and incentive 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 noted. Securities subject to such
disclaimers are included in the total number of 2,206,320 shares listed in
the right column.
/2/Includes shares of Common Stock issuable upon the exercise of options
exercisable within a period of 60 days from March 5, 1998, as follows:
Messrs. Attwell, Carruth, Davis, Horner, Johnson, and Smittcamp, and Ms.
Tatlock-1,500 shares each; Mr Poulos-400,000 shares; Mr. Devlin-202,001
shares; Mr. Newton-77,267 shares; Mr. D'Agostino-98,033 shares; Mr. Martin-
22,000 shares; and Mr. West-50,400 shares.
/3/Includes shares held in the Thrift Plan and the Supplemental Thrift Plan.
/4/Includes shares held in trusts as follows: Mr. Davis-4,090 shares, as to
which he disclaims beneficial ownership.
/5/Includes shares owned by family members as follows: Mr. Attwell-7,200
shares; Mr. Carruth-8,081 shares; Mr. Davis-5,008 shares; Mr. Horner-1,000
shares; Mr. Poulos-5,848 shares; and Mr. Smittcamp-300 shares. Messrs.
Attwell, Carruth, and Davis disclaim beneficial ownership of such shares;
Mr. Carruth has sole voting and investment power with respect to 5,161 of
the shares held by family members.
/6Includes/4,162 shares held by a limited partnership of which he is the
general partner.
CERTAIN RELATIONSHIPS AND TRANSACTIONS
On February 25, 1998, the Company acquired the remaining shares of common
stock of Western National Corporation ("Western National") pursuant to an
Agreement and Plan of Merger dated as of September 11, 1997 and amended as of
January 15, 1998 ("Merger Agreement"). Mr. Poulos, Western National, and the
Company had entered into a letter agreement regarding the treatment of
benefits payable to Mr. Poulos under the terms of the employment agreement
with Western National and certain incentive awards under the Western National
Corporation 1993 Stock and Incentive Plan upon Mr. Poulos' resignation as
Chairman,
- -------------------------------------------------------------------------------
1998 PROXY STATEMENT 21
<PAGE>
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- -------------------------------------------------------------------------------
President & CEO of Western National. Under the terms of such agreement, Mr.
Poulos has (i) received a severance payment of $4.5 million; (ii) surrendered
to the Company 16,268 shares of Common Stock in exchange for $0.95 million
(based on the NYSE closing sales price on the date of surrender); and (iii)
surrendered to the Company 276,625 options to acquire Common Stock in exchange
for $9.98 million (based on the spread between the NYSE closing sales price on
the date of surrender and the exercise price). The surrendered shares of
Common Stock and options were received by Mr. Poulos in accordance with the
terms of the Merger Agreement in exchange for certain of his shares of Western
National common stock that were purchased by him on February 9, 1994 and
Western National options that were granted to him on February 9, 1994. In
addition, the other Western National options held by Mr. Poulos and converted
in the acquisition will continue to be exercisable for the remainder of the
original ten-year term of such options.
In 1994, Mr. Poulos acquired 100,000 shares of Western National common stock
from Conseco, Inc. at a net price of $11.365 per share. To finance this
purchase, Western National made a five-year non-recourse loan, payable in one
installment at maturity, to Mr. Poulos for the full purchase price, which was
secured by the common stock. At December 31, 1997, the interest rate on the
loan was 8.5% per annum. Interest accrued for 1997 aggregated $97,949. On
March 4, 1998, Mr. Poulos repaid the loan in full (principal and accrued
interest of approximately $1.5 million) and is entitled to receive a payment
from Western National of approximately $727,000 pursuant to a related tax-
sharing agreement that he entered into at the request of Western National.
In 1997, Mr. Attwell was Of Counsel to the law firm of Vinson & Elkins
L.L.P., which provided legal services to the Company and its subsidiaries
during 1997.
Various executive officers and directors of American General may from time to
time purchase insurance or annuity products marketed by American General
companies in the ordinary course of business.
INDEPENDENT AUDITORS
(Item 4 on Proxy Card)
The board of directors of the Company, adopting the recommendation of the
audit committee, has appointed the firm of Ernst & Young LLP as the Company's
independent auditors to audit the accounts of the Company for 1998 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
served as the Company's independent auditors for 1997.
If the appointment of Ernst & Young LLP is not ratified by a majority of the
votes entitled to be cast by the holders of Common Stock and Preferred Stock
represented at the meeting, or if, prior to the meeting, Ernst & Young LLP
declines to act or otherwise becomes incapable of acting, or its engagement is
otherwise discontinued by the board of directors of the Company at any time,
then, in any such case, the board of directors will appoint other independent
auditors whose employment will then be subject to ratification by shareholders
at the annual meeting following such appointment.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR RATIFICATION OF THE APPOINTMENT
OF ERNST & YOUNG LLP AS INDEPENDENT AUDITORS.
OTHER BUSINESS
1998 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
meeting. 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.
- -------------------------------------------------------------------------------
22 AMERICAN GENERAL CORPORATION
<PAGE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Shareholder proposals must be received at the Company's principal offices on
or before November 17, 1998 in order to be included in the proxy materials for
presentation at the Company's 1999 annual meeting.
The Company's bylaws provide generally that nominations of persons for
election to the board of directors and shareholder proposals for an annual
meeting may be made by a shareholder only if the shareholder is a shareholder
of record and such shareholder gives timely written notice of such
shareholder's intent to make such nomination or nominations or shareholder
proposals to the corporate secretary. In the case of an annual meeting, to be
timely, notice of shareholder proposals or director nominations must be given
to the corporate secretary not less than 120 days nor more than 150 days prior
to the anniversary date of the immediately preceding annual meeting of
shareholders; provided, that in the event that such annual meeting is called
for a date that is not within 30 days before or after such anniversary date,
notice by the shareholder in order to be timely must be so given not later
than the close of business on the tenth day following the day on which notice
of the date of such annual meeting is mailed or public disclosure of the date
of such annual meeting is made, whichever first occurs. In the case of a
special meeting of shareholders called for the purpose of electing directors,
to be timely, notice of director nominations must be given to the corporate
secretary not later than the close of business on the tenth day following the
day on which notice of the date of such special meeting is mailed or public
disclosure of the date of such special meeting is made, whichever first
occurs. Each such notice must contain certain specified information with
respect to the shareholder making the proposal, and the nominee or nominees or
the shareholder proposal.
A copy of the requirements described above 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
solicited 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 proxies at a fee of approximately $15,000, plus expenses. The
Company will pay the cost of soliciting proxies. The Company also will
reimburse brokerage houses and other custodians, nominees, and fiduciaries for
their expenses in sending proxy material to the beneficial owners of 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
specific 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,
/s/ SUSAN A. JACOBS
- --------------------------------------
Susan A. Jacobs
Corporate Secretary
March 17, 1998
- -------------------------------------------------------------------------------
1998 PROXY STATEMENT 23
<PAGE>
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- -------------------------------------------------------------------------------
APPENDIX A
PROPOSED AMENDMENT TO RESTATED ARTICLES OF INCORPORATION
OF
AMERICAN GENERAL CORPORATION
The first paragraph of ARTICLE FOUR is amended to read in its entirety as
follows:
The aggregate number of shares of stock which the corporation shall have the
authority to issue is eight hundred sixty million (860,000,000) shares, con-
sisting of sixty million (60,000,000) shares of Preferred Stock of the par
value of One Dollar Fifty Cents ($1.50) per share (hereinafter referred to as
the "Preferred Stock"), and eight hundred million (800,000,000) shares of Com-
mon Stock of the par value of Fifty Cents ($0.50) per share (hereinafter re-
ferred to as the "Common Stock").
- -------------------------------------------------------------------------------
AMERICAN GENERAL CORPORATION
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
1998 PROXY STATEMENT
AMERICAN GENERAL CORPORATION
2929 ALLEN PARKWAY
HOUSTON, TEXAS 77019-2155
- --------------------------------------------------------------------------------
<PAGE>
P R O X Y
AMERICAN GENERAL CORPORATION
ANNUAL MEETING OF SHAREHOLDERS ON APRIL 30, 1998
The undersigned hereby appoints ROBERT M. DEVLIN, J. EVANS ATTWELL, and W.
LIPSCOMB DAVIS JR., 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 30, 1998, 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, Michael E.
Murphy, Jon P. Newton, Michael J. Poulos, 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
................................................................................
* Fold and Detach Here *
Annual Meeting of Shareholders
Thursday, April 30, 1998
9 a.m. CDT
Chase Center Auditorium
601 Travis Street
Houston, Texas
[COMMON FRONT]
<PAGE>
Please mark your 3147
[X] 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 ITEMS 2, 3, AND 4. (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.
1. Election of Directors. (see reverse)
FOR WITHHELD
[_] [_]
For, except vote withheld from the following nominee(s):
--------------------------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEM 2.
2. Approval of Amendment to Restated Articles of Incorporation with Respect to
Increasing Authorized Common Stock.
FOR AGAINST ABSTAIN
[_] [_] [_]
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEM 3.
3. Approval of Employee Stock Purchase Plan.
FOR AGAINST ABSTAIN
[_] [_] [_]
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEM 4.
4. Ratification of Appointment of Independent Auditors.
FOR AGAINST 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,
give full title as such.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SIGNATURE(S) DATE
................................................................................
* Fold and Detach Here *
YOUR VOTE IS IMPORTANT TO US. THANK YOU FOR VOTING.
[COMMON BACK]
<PAGE>
P R O X Y
AMERICAN GENERAL CORPORATION
ANNUAL MEETING OF SHAREHOLDERS ON APRIL 30, 1998
The undersigned hereby appoints ROBERT M. DEVLIN, J. EVANS ATTWELL, and W.
LIPSCOMB DAVIS JR., 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
7% Convertible Preferred Stock that the undersigned is entitled to vote at the
annual meeting of shareholders to be held in Houston, Texas, on Thursday, April
30, 1998, 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, Michael E.
Murphy, Jon P. Newton, Michael J. Poulos, 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
................................................................................
* Fold and Detach Here *
Annual Meeting of Shareholders
Thursday, April 30, 1998
9 a.m. CDT
Chase Center Auditorium
601 Travis Street
Houston, Texas
[PREFERRED FRONT]
<PAGE>
Please mark your 7566
[X] 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 ITEMS 2, 3, AND 4.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEM 1.
1. Election of Directors. (see reverse)
FOR WITHHELD
[_] [_]
For, except vote withheld from the following nominee(s):
---------------------------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEM 2.
2. Approval of Amendment to Restated Articles of Incorporation with Respect to
Increasing Authorized Common Stock.
FOR AGAINST ABSTAIN
[_] [_] [_]
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEM 3.
3. Approval of Employee Stock Purchase Plan.
FOR AGAINST ABSTAIN
[_] [_] [_]
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEM 4.
4. Ratification of Appointment of Independent Auditors.
FOR AGAINST 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,
give full title as such.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SIGNATURE(S) DATE
................................................................................
* Fold and Detach Here *
YOUR VOTE IS IMPORTANT TO US. THANK YOU FOR VOTING.
[PREFERRED BACK]
<PAGE>
AMERICAN GENERAL CORPORATION
1998 EMPLOYEE STOCK PURCHASE PLAN
1. PURPOSE. The AMERICAN GENERAL CORPORATION 1998 EMPLOYEE STOCK
PURCHASE PLAN (the "Plan") is intended to provide an incentive for employees of
AMERICAN GENERAL CORPORATION (the "Company") and certain of its subsidiaries to
acquire or increase a proprietary interest in the Company through the purchase
of shares of the Company's common stock. The Plan is intended to qualify as an
"employee stock purchase plan" under Section 423 of the Internal Revenue Code of
1986, as amended (the "Code"). The provisions of the Plan shall be construed in
a manner consistent with the requirements of that section of the Code.
2. DEFINITIONS. Where the following words and phrases are used in the
Plan, they shall have the respective meanings set forth below, unless the
context clearly indicates to the contrary:
(a) "Board" means the Board of Directors of the Company.
(b) "Code" means the Internal Revenue Code of 1986, as amended.
(c) "Committee" means a committee appointed from time to time by the
Board to administer the Plan as provided in paragraph 3.
(d) "Company" means American General Corporation, a Texas corporation.
(e) "Date of Exercise" means the last day of each Option Period.
(f) "Date of Grant" means July 1, 1998, and, thereafter, the first day
of each successive October, January, April, and July.
(g) "Eligible Compensation" means regular straight-time earnings or
base salary, plus payments for overtime, bonuses and other special
payments, commissions, and other incentive payments.
(h) "Eligible Employee" means, with respect to each Date of Grant,
each employee of the Company or a Participating Company who, as of such
Date of Grant, (i) is regularly scheduled to work more than 20 hours per
week and more than three calendar months in any calendar year and (ii) has
been continuously employed by the Company or any parent or subsidiary
corporation of the Company for the period beginning on the date that is 60
days prior to such Date of Grant and ending on such Date of Grant.
(i) "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
(j) "Option Period" means the three-month period beginning on each
Date of Grant.
<PAGE>
(k) "Option Price" shall have the meaning assigned to such term in
paragraph 8(b).
(l) "Participating Company" means any present or future parent or
subsidiary corporation of the Company that participates in the Plan
pursuant to paragraph 4.
(m) "Plan" means this American General Corporation 1998 Employee Stock
Purchase Plan, as amended from time to time.
(n) "Restriction Period" means the period of time during which shares
of Stock acquired by a participant in the Plan may not be sold, assigned,
pledged, exchanged, hypothecated or otherwise transferred, encumbered or
disposed of by such participant as provided in paragraph 8(d).
(o) "Stock" means the shares of the Company's common stock, par value
$.50 per share.
3. ADMINISTRATION OF THE PLAN. The Plan shall be administered by the
Committee, the members of which shall be appointed from time to time by the
Board. Each member of the Committee shall serve for a term commencing on a date
specified by the Board and continuing until he dies, resigns, or is removed from
office by the Board. Subject to the provisions of the Plan, the Committee shall
interpret the Plan and all options granted under the Plan, make such rules as it
deems necessary for the proper administration of the Plan, and make all other
determinations necessary or advisable for the administration of the Plan. In
addition, the Committee shall correct any defect or supply any omission or
reconcile any inconsistency in the Plan, or in any option granted under the
Plan, in the manner and to the extent that the Committee deems desirable to
carry the Plan or any option into effect. The Committee shall, in its sole
discretion, make such decisions or determinations and take such actions, and all
such decisions, determinations and actions taken or made by the Committee
pursuant to this and the other paragraphs of the Plan shall be conclusive on all
parties. The Committee shall not be liable for any decision, determination or
action taken in good faith in connection with the administration of the Plan.
The Committee shall have the authority to delegate routine day-to-day
administration of the Plan to such officers and employees of the Company as the
Committee deems appropriate.
4. PARTICIPATING COMPANIES. The Committee may designate any present or
future parent or subsidiary corporation of the Company that is eligible by law
to participate in the Plan as a Participating Company by written instrument
delivered to the designated Participating Company. Such written instrument shall
specify the effective date of such designation and shall become, as to such
designated Participating Company and persons in its employment, a part of the
Plan. The terms of the Plan may be modified as applied to the Participating
Company only to the extent permitted under Section 423 of the Code. Transfer of
employment among the Company and Participating Companies (and among any other
parent or subsidiary corporation of the Company) shall not be considered a
termination of employment hereunder. Any Participating Company may, by
appropriate action of its Board of Directors, terminate its participation in the
Plan. Moreover, the Committee may, in its discretion, terminate a Participating
Company's Plan participation at any time.
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5. ELIGIBILITY. Subject to the provisions hereof, all Eligible Employees
as of a Date of Grant shall be eligible to participate in the Plan with respect
to options granted under the Plan as of such date.
6. STOCK SUBJECT TO THE PLAN. Subject to the provisions of paragraph 13,
the aggregate number of shares which may be sold pursuant to options granted
under the Plan shall not exceed five million shares of the authorized Stock,
which shares may be unissued shares or reacquired shares, including shares
bought on the market or otherwise for purposes of the Plan. Should any option
granted under the Plan expire or terminate prior to its exercise in full, the
shares theretofore subject to such option may again be subject to an option
granted under the Plan. Any shares that are not subject to outstanding options
upon the termination of the Plan shall cease to be subject to the Plan.
7. GRANT OF OPTIONS.
(a) IN GENERAL. Commencing on July 1, 1998, and continuing while the
Plan remains in force, the Company shall, on each Date of Grant, grant an option
under the Plan to purchase shares of Stock to each Eligible Employee as of such
Date of Grant who elects to participate in the Plan; provided, however, that no
option shall be granted to an Eligible Employee if such individual, immediately
after the option is granted, owns stock possessing five percent or more of the
total combined voting power or value of all classes of stock of the Company or
of its parent or subsidiary corporations (within the meaning of Sections
423(b)(3) and 424(d) of the Code). Except as provided in paragraph 13, the term
of each option shall be for three months, which shall begin on a Date of Grant
and end on the last day of such three-month period. Subject to subparagraph
7(d), the number of shares of Stock subject to an option for a participant shall
be equal to the quotient of (i) the aggregate payroll deductions withheld on
behalf of such participant during the Option Period in accordance with
subparagraph 7(b), divided by (ii) the Option Price of the Stock applicable to
the Option Period, including fractions; provided, however, that the maximum
number of shares of Stock that may be subject to any option for a participant
may not exceed 800 (subject to adjustment as provided in paragraph 13).
(b) ELECTION TO PARTICIPATE; PAYROLL DEDUCTION AUTHORIZATION. An
Eligible Employee may participate in the Plan only by means of payroll
deduction. Except as provided in subparagraph 7(f), each Eligible Employee who
elects to participate in the Plan shall deliver to the Company, within the time
period prescribed by the Committee, a written payroll deduction authorization in
a form prepared by the Company whereby he gives notice of his election to
participate in the Plan as of the next following Date of Grant, and whereby he
designates an integral percentage or an amount of his Eligible Compensation to
be deducted from his compensation for each pay period and paid into the Plan for
his account.
(c) CHANGES IN PAYROLL AUTHORIZATION. The payroll deduction
authorization referred to in subparagraph 7(b) may not be changed during the
Option Period. However, a participant may withdraw from the Plan as provided in
paragraph 9.
(d) $25,000 LIMITATION. No employee shall be granted an option under
the Plan which permits his rights to purchase Stock under the Plan and under all
other employee stock
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purchase plans of the Company and its parent and subsidiary corporations to
accrue at a rate which exceeds $25,000 of fair market value of Stock (determined
at the time such option is granted) for each calendar year in which such option
is outstanding at any time (within the meaning of Section 423(b)(8) of the
Code). Any payroll deductions in excess of the amount specified in the foregoing
sentence shall be returned to the participant as soon as administratively
feasible after the next following Date of Exercise.
(e) LEAVES OF ABSENCE. During a paid leave of absence approved by the
Company and meeting the requirements of Treasury Regulation (S) 1.421-7(h)(2), a
participant's elected payroll deductions shall continue. A participant may not
contribute to the Plan during an unpaid leave of absence. If a participant
takes an unpaid leave of absence that is approved by the Company and meets the
requirements of Treasury Regulation (S) 1.421-7(h)(2), then such participant's
payroll deductions for such Option Period that were made prior to such leave may
remain in the Plan and be used to purchase Stock under the Plan on the Date of
Exercise relating to such Option Period. If a participant takes a leave of
absence that is not described in the first or third sentence of this
subparagraph 7(e), then he shall be considered to have terminated his employment
and withdrawn from the Plan pursuant to the provisions of paragraph 9 hereof.
Further, notwithstanding the preceding provisions of this subparagraph 7(e), if
a participant takes a leave of absence that is described in the first or third
sentence of this subparagraph 7(e) and such leave of absence exceeds 90 days,
then he shall be considered to have withdrawn from the Plan pursuant to the
provisions of paragraph 9 hereof and terminated his employment on the 91st day
of such leave of absence.
(f) CONTINUING ELECTION. Subject to the limitation set forth in
subparagraph 7(d), a participant (i) who has elected to participate in the Plan
pursuant to subparagraph 7(b) as of a Date of Grant and (ii) who takes no action
to change or revoke such election as of the next following Date of Grant and/or
as of any subsequent Date of Grant prior to any such respective Date of Grant
shall be deemed to have made the same election, including the same attendant
payroll deduction authorization, for such next following and/or subsequent
Date(s) of Grant as was in effect immediately prior to such respective Date of
Grant. Payroll deductions that are limited by subparagraph 7(d) shall
recommence at the rate provided in such participant's payroll deduction
authorization at the beginning of the first Option Period that is scheduled to
end in the following calendar year, unless the participant changes the amount of
his payroll deduction authorization pursuant to paragraph 7, withdraws from the
Plan as provided in paragraph 9, or is terminated from participation in the Plan
as provided in paragraph 10.
8. EXERCISE OF OPTIONS.
(a) GENERAL STATEMENT. Subject to the limitation set forth in
subparagraph 7(d), each participant in the Plan automatically and without any
act on his part shall be deemed to have exercised his option on each Date of
Exercise to the extent of his unused payroll deductions under the Plan and to
the extent the issuance of Stock to such participant upon such exercise is
lawful.
(b) "OPTION PRICE" DEFINED. The term "Option Price" shall mean the
per share price of Stock to be paid by each participant on each exercise of his
option, which price shall be equal to 85% of the fair market value of the Stock
on the Date of Exercise or on the Date of Grant,
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whichever amount is less. For all purposes under the Plan, the fair market value
of a share of Stock on a particular date shall be equal to the closing price of
the Stock on the New York Stock Exchange, Inc. on that date (or, if no shares of
Stock have been traded on that date, on the next regular business date on which
shares of the Stock are so traded).
(c) DELIVERY OF SHARE CERTIFICATES. As soon as practicable after each
Date of Exercise, the Company shall deliver to a custodian selected by the
Committee one or more certificates representing (or shall otherwise cause to be
credited to the account of such custodian) the total number of whole shares of
Stock respecting options exercised on such Date of Exercise in the aggregate
(for both whole and fractional shares) of all of the participating employees
hereunder. Any remaining amount representing a fractional share shall not be
certificated (or otherwise so credited) and such remaining amount shall be paid
in cash to the custodian. Such custodian shall keep accurate records of the
beneficial interests of each participating employee in such shares by means of
participant accounts under the Plan, and shall provide each participating
employee with quarterly or such other periodic statements with respect thereto
as may be directed by the Committee. If the Company is required to obtain from
any U.S. commission or agency authority to issue any such shares, the Company
shall seek to obtain such authority. Inability of the Company to obtain from
any commission or agency (whether U.S. or foreign) authority which counsel for
the Company deems necessary for the lawful issuance of any such shares shall
relieve the Company from liability to any participant in the Plan except to
return to him the amount of his payroll deductions under the Plan which would
have otherwise been used upon exercise of the relevant option.
(d) RESTRICTIONS ON TRANSFER. The Committee may from time to time specify
with respect to a particular grant of options the Restriction Period that shall
apply to the shares of Stock acquired pursuant to such options. Unless
otherwise specified by the Committee, the Restriction Period applicable to
shares of Stock acquired under the Plan shall be a period of 21 months after the
Date of Exercise of the options pursuant to which such shares were acquired.
Except as hereinafter provided, during the Restriction Period applicable to
shares of Stock acquired under the Plan, such shares may not be sold, assigned,
pledged, exchanged, hypothecated or otherwise transferred, encumbered or
disposed of by the participant who has purchased such shares; provided, however,
that such restriction shall not apply to the transfer, exchange or conversion of
such shares of Stock pursuant to a merger, consolidation or other plan of
reorganization of the Company, but the stock, securities or other property
(other than cash) received upon any such transfer, exchange or conversion shall
also become subject to the same transfer restrictions applicable to the original
shares of Stock, and shall be held by the custodian, pursuant to the provisions
hereof. Upon the expiration of such Restriction Period, the transfer
restrictions set forth in this subparagraph 8(d) shall cease to apply and the
optionee may, pursuant to procedures established by the Committee and the
custodian, direct the sale or distribution of some or all of the whole shares of
Stock in his Company stock account that are not then subject to transfer
restrictions and, in the event of a sale, request payment of the net proceeds
from such sale. At the time of distribution of such shares, any fractional
share in such Company stock account shall be converted to cash based on the fair
market value of the Stock on the date of distribution and such cash shall be
paid to the participant. The Committee may cause the Stock issued in connection
with the exercise of options under the Plan to bear such legends or other
appropriate restrictions, and the Committee may take such other actions, as it
deems
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appropriate in order to reflect the transfer restrictions set forth in this
subparagraph 8(d) and to assure compliance with applicable laws.
9. WITHDRAWAL FROM THE PLAN.
(a) GENERAL STATEMENT. Any participant may withdraw in whole from the
Plan at any time prior to the Date of Exercise relating to a particular Option
Period. Partial withdrawals shall not be permitted. A participant who wishes
to withdraw from the Plan must timely deliver to the Company a notice of
withdrawal in a form prepared by the Company. The Company, promptly following
the time when the notice of withdrawal is delivered, shall refund to the
participant the amount of his payroll deductions under the Plan which have not
yet been otherwise returned to him or used upon exercise of options; and
thereupon, automatically and without any further act on his part, his payroll
deduction authorization and his interest in unexercised options under the Plan
shall terminate.
(b) ELIGIBILITY FOLLOWING WITHDRAWAL. A participant who withdraws
from the Plan shall be eligible to participate again in the Plan upon expiration
of the Option Period during which he withdrew (provided that he is otherwise
eligible to participate in the Plan at such time).
10. TERMINATION OF EMPLOYMENT.
If the employment of a participant terminates for any reason
whatsoever, then his participation in the Plan automatically and without any act
on his part shall terminate as of the date of the termination of his employment.
The Company shall promptly refund to him the amount of his payroll deductions
under the Plan which have not yet been otherwise returned to him or used upon
exercise of options, and thereupon his interest in unexercised options under the
Plan shall terminate. Shares held under the Plan for the account of a former
employee are subject to the Restriction Period described in subparagraph 8(d)
above.
11. RESTRICTION UPON ASSIGNMENT OF OPTION. An option granted under the
Plan shall not be transferable otherwise than by will or the laws of descent and
distribution. Each option shall be exercisable, during his lifetime, only by
the employee to whom granted. The Company shall not recognize and shall be
under no duty to recognize any assignment or purported assignment by an employee
of his option or of any rights under his option or under the Plan.
12. NO RIGHTS OF SHAREHOLDER UNTIL EXERCISE OF OPTION. With respect to
shares of Stock subject to an option, an optionee shall not be deemed to be a
shareholder, and he shall not have any of the rights or privileges of a
shareholder, until such option has been exercised. With respect to an
individual's Stock held by the custodian pursuant to subparagraph 8(d), the
custodian shall, as soon as practicable, pay the individual any cash dividends
attributable thereto and shall, in accordance with procedures adopted by the
custodian, facilitate the individual's voting rights attributable thereto.
13. CHANGES IN STOCK; ADJUSTMENTS. Whenever any change is made in the
Stock, by reason of a stock dividend or by reason of subdivision, stock split,
reverse stock split, recapitalization, reorganization, combination,
reclassification of shares or other similar change, appropriate action will
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be taken by the Committee to adjust accordingly the number of shares subject to
the Plan, the maximum number of shares that may be subject to any option, and
the number and Option Price of shares subject to options outstanding under the
Plan.
If the Company shall not be the surviving corporation in any merger or
consolidation (or survives only as a subsidiary of another entity), or if the
Company is to be dissolved or liquidated, then, unless a surviving corporation
assumes or substitutes new options (within the meaning of Section 424(a) of the
Code) for all options then outstanding, (i) the Date of Exercise for all options
then outstanding shall be accelerated to a date fixed by the Committee prior to
the effective date of such merger or consolidation or such dissolution or
liquidation and (ii) upon such effective date any unexercised options shall
expire and the Company promptly shall refund to each participant the amount of
such participant's payroll deductions under the Plan which have not yet been
otherwise returned to him or used upon exercise of options.
14. USE OF FUNDS; NO INTEREST PAID. All funds received or held by the
Company under the Plan shall be included in the general funds of the Company
free of any trust or other restriction, and may be used for any corporate
purpose. No interest shall be paid to any participant.
15. TERM OF THE PLAN. The Plan shall be effective upon the date of its
adoption by the shareholders of the Company. Notwithstanding any provision in
the Plan, no option granted under the Plan shall be exercisable prior to such
shareholder approval, and, if the shareholders of the Company do not approve the
Plan by the Date of Exercise of the first option granted hereunder, then the
Plan shall automatically terminate, no options may be exercised hereunder, and
the Company promptly shall refund to each participant the amount of such
participant's payroll deductions under the Plan; and thereupon, automatically
and without any further act on his part, his payroll deduction authorization and
his interest in unexercised options under the Plan shall terminate. Except with
respect to options then outstanding, if not sooner terminated under the
provisions of paragraph 16, the Plan shall terminate upon and no further payroll
deductions shall be made and no further options shall be granted after June 30,
2008.
16. AMENDMENT OR TERMINATION OF THE PLAN. The Board in its discretion may
terminate the Plan at any time with respect to any Stock for which options have
not theretofore been granted. The Board shall have the right to alter or amend
the Plan or any part thereof from time to time; provided, however, that no
change in any option theretofore granted may be made that would impair the
rights of the optionee without the consent of such optionee.
17. SECURITIES LAWS. The Company shall not be obligated to issue any
Stock pursuant to any option granted under the Plan at any time when the offer,
issuance or sale of shares covered by such option has not been registered under
the Securities Act of 1933, as amended, or does not comply with such other
state, federal or foreign laws, rules or regulations, or the requirements of any
stock exchange upon which the Stock may then be listed, as the Company or the
Committee deems applicable and, in the opinion of legal counsel for the Company,
there is no exemption from the requirements of such laws, rules, regulations or
requirements available for the offer, issuance and sale of such shares.
Further, all Stock acquired pursuant to the Plan shall be subject to the
Company's policies concerning compliance with securities laws and regulations,
as such policies may be amended from time to time. The terms and conditions of
options granted hereunder to, and the purchase of
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shares by, persons subject to Section 16 of the Exchange Act shall comply with
any applicable provisions of Rule 16b-3. As to such persons, the Plan shall be
deemed to contain, and such options shall contain, and the shares issued upon
exercise thereof shall be subject to, such additional conditions and
restrictions as may be required from time to time by Rule 16b-3 to qualify for
the maximum exemption from Section 16 of the Exchange Act with respect to Plan
transactions.
18. NO RESTRICTION ON CORPORATE ACTION. Nothing contained in the Plan
shall be construed to prevent the Company or any subsidiary from taking any
corporate action that is deemed by the Company or such subsidiary to be
appropriate or in its best interest, whether or not such action would have an
adverse effect on the Plan or any option granted under the Plan. No employee,
beneficiary or other person shall have any claim against the Company or any
subsidiary as a result of any such action.
19. MISCELLANEOUS PROVISIONS.
(a) PARENT AND SUBSIDIARY CORPORATIONS. For all purposes of the Plan,
a corporation shall be considered to be a parent or subsidiary corporation of
the Company only if such corporation is a parent or subsidiary corporation of
the Company within the meaning of Sections 424(e) and (f) of the Code.
(b) NUMBER AND GENDER. Wherever appropriate herein, words used in the
singular shall be considered to include the plural and words used in the plural
shall be considered to include the singular. The masculine gender, where
appearing in the Plan, shall be deemed to include the feminine gender.
(c) HEADINGS. The headings and subheadings in the Plan are included
solely for convenience, and if there is any conflict between such headings or
subheadings and the text of the Plan, the text shall control.
(d) NOT A CONTRACT OF EMPLOYMENT. The adoption and maintenance of the
Plan shall not be deemed to be a contract between the Company or any
Participating Company and any person or to be consideration for the employment
of any person. Participation in the Plan at any given time shall not be deemed
to create the right to participate in the Plan, or any other arrangement
permitting an employee of the Company or any Participating Company to purchase
Stock at a discount, in the future. The rights and obligations under any
participant's terms of employment with the Company or any Participating Company
shall not be affected by participation in the Plan. Nothing herein contained
shall be deemed to give any person the right to be retained in the employ of the
Company or any Participating Company or to restrict the right of the Company or
any Participating Company to discharge any person at any time, nor shall the
Plan be deemed to give the Company or any Participating Company the right to
require any person to remain in the employ of the Company or such Participating
Company or to restrict any person's right to terminate his employment at any
time. The Plan shall not afford any participant any additional right to
compensation as a result of the termination of such participant's employment for
any reason whatsoever.
(e) COMPLIANCE WITH APPLICABLE LAWS. The Company's obligation to
offer, issue, sell or deliver Stock under the Plan is at all times subject to
all approvals of and compliance
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with any governmental authorities (whether domestic or foreign) required in
connection with the authorization, offer, issuance, sale or delivery of Stock as
well as all federal, state, local and foreign laws. Without limiting the scope
of the preceding sentence, and notwithstanding any other provision in the Plan,
the Company shall not be obligated to grant options or to offer, issue, sell or
deliver Stock under the Plan to any employee who is a citizen or resident of a
jurisdiction the laws of which, for reasons of its public policy, prohibit the
Company from taking any such action with respect to such employee.
(f) SEVERABILITY. If any provision of the Plan shall be held illegal
or invalid for any reason, said illegality or invalidity shall not affect the
remaining provisions hereof; instead, each provision shall be fully severable
and the Plan shall be construed and enforced as if said illegal or invalid
provision had never been included herein.
(g) GOVERNING LAW. All provisions of the Plan shall be construed in
accordance with the laws of Texas except to the extent preempted by federal law.
Executed this _______ day of ___________________________, 1998, to be effective
on the 30th day of April, 1998.
AMERICAN GENERAL CORPORATION
By:
--------------------------
Name:
Title:
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