<PAGE>
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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 (S) 240.14a-11(c) or (S) 240.14a-12
AMERICAN GENERAL CORPORATION
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(Name of Registrant as Specified in Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
-------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-------------------------------------------------------------------------
(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):
-------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-------------------------------------------------------------------------
(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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Reg. (S) 240.14a-101.
SEC 1913 (3-99)
<PAGE>
[LOGO OF AMERICAN GENERAL APPEARS HERE]
Notice of Annual Meeting of Shareholders
and Proxy Statement
Meeting Date: April 27, 2000
American General Corporation
2929 Allen Parkway
Houston, Texas 77019-2155
<PAGE>
Robert M. Devlin
[LOGO OF AMERICAN GENERAL APPEARS HERE] Chairman and CEO
March 21, 2000
Dear Fellow Shareholder:
You are cordially invited to attend the Annual Meeting of
Shareholders of American General Corporation scheduled for Thursday,
April 27, 2000, at The St. Regis Hotel, 1919 Briar Oaks Lane,
Houston, Texas, at 9:00 a.m. CDT.
Please review the enclosed Notice of Meeting and Proxy Statement,
which describe the matters to be acted upon at the meeting. To ensure
that your shares are represented at the meeting, we strongly
encourage you to sign, date and mail the proxy card in the enclosed
envelope. The proxy card should be completed and mailed even if you
plan to attend the meeting.
On behalf of the Board of Directors, thank you for your continued
support. We look forward to your participation.
Sincerely,
/S/ Robert M. Devlin
Robert M. Devlin
American General Corporation
2929 Allen Parkway . Houston, Texas 77019-2155
<PAGE>
American General Corporation
Notice of Annual Meeting of Shareholders
Date: Thursday, April 27, 2000
Time: 9:00 a.m. CDT
Place: The St. Regis Hotel
1919 Briar Oaks Lane
Houston, Texas
Matters to be voted on:
. Election of eleven directors for one-year terms
. Ratification of the appointment of Ernst & Young LLP as independent
auditors for 2000
. Any other business that may properly come before the meeting
You have the right to receive this notice and vote at the Annual
Meeting if you were a shareholder of record at the close of business on
March 8, 2000. Please remember that your shares cannot be voted unless
you sign and return the enclosed proxy card, vote in person at the
Annual Meeting, or make other arrangements to vote your shares.
For the board of directors,
/s/ Mark S. Berg
Mark S. Berg
Executive Vice President, General Counsel
and Corporate Secretary
March 21, 2000
<PAGE>
2000 Proxy Statement
Table of Contents
<TABLE>
<S> <C>
General Information......................................................... 1
Solicitation of Proxies..................................................... 1
Voting...................................................................... 2
Election of Directors (Item 1).............................................. 2
Information About the Nominees............................................. 3
The Board of Directors..................................................... 6
Security Ownership.......................................................... 8
Executive Compensation ..................................................... 10
Personnel Committee Report................................................. 10
Comparison of Five-Year Cumulative Total Shareholder Return................ 14
Executive Compensation Tables.............................................. 15
Change in Control Arrangements and Employment Agreements................... 19
Certain Relationships and Transactions...................................... 21
Section 16(a) Beneficial Ownership Reporting Compliance..................... 21
Independent Auditors (Item 2)............................................... 21
Other Business.............................................................. 22
Appendix A.................................................................. A-1
</TABLE>
Copies of this proxy statement, American General'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
Corporate Relations
P.O. Box 3247
Houston, TX 77253-3247
Telephone: (800) AGC-1111
Internet: www.americangeneral.com
Facsimile: (713) 523-8531
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AMERICAN GENERAL
<PAGE>
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GENERAL INFORMATION
Proxy Statement
The board of directors of American General is soliciting proxies to obtain
support for the proposals to be voted on at the annual meeting of American
General shareholders scheduled for April 27, 2000. The matters to be voted
upon are the following: election of eleven directors for one-year terms;
ratification of the appointment of Ernst & Young LLP as independent auditors
for 2000; and any other business that may properly come before the meeting.
Whenever we refer in this Proxy Statement to the Annual Meeting, we are also
referring to any meeting that results from an adjournment of the Annual Meet-
ing. We are first mailing this Proxy Statement and related proxy card to our
shareholders on or about March 21, 2000.
We encourage you to vote your shares, either by voting in person at the An-
nual Meeting or by granting a proxy. To assist you in deciding how to vote,
this Proxy Statement includes information about American General, its offi-
cers, nominees for director, and related matters. In addition, a graph showing
American General's performance over a five-year period is included on page 14.
SOLICITATION OF PROXIES
The Proxy Card
If you execute the attached proxy card, the individuals designated on the
card (J. Evans Attwell, W. Lipscomb Davis Jr., and Robert M. Devlin) will vote
your shares according to your instructions. With respect to Item 1 (the elec-
tion of directors), you may vote in favor of the director nominees or, if you
desire, indicate on the proxy card that you are not authorizing the designated
individuals to vote your shares for one or more particular nominees. With re-
spect to Item 2 (the ratification of Ernst & Young LLP as independent auditors
for 2000), you may vote in favor of, against, or abstain from voting on the
proposal.
If a proxy card is signed without choices specified, those shares will be
voted for the election of the director nominees and in favor of Item 2. If you
sign a proxy card and deliver it to us, but then want to change your vote, you
may revoke your proxy at any time prior to the Annual Meeting by sending us a
written revocation or a new proxy, or by attending the Annual Meeting and vot-
ing your shares in person.
Costs of Soliciting Proxies
American General will pay the cost of soliciting proxies. Proxies are being
solicited by mail and may be solicited by telephone, telegram, facsimile, or
in person by employees of the company, who will not receive additional compen-
sation for any such solicitation. Georgeson Shareholder Communications Inc.
has been retained to assist in the solicitation of proxies at a fee of $10,000
plus expenses. The company will reimburse brokerage houses and other custodi-
ans, nominees, and fiduciaries for their reasonable expenses in sending proxy
material to the beneficial owners of voting securities.
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2000 PROXY STATEMENT 1
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VOTING
Shareholders Entitled to Vote
Holders of record of Common Stock at the close of business on March 8, 2000,
will be entitled to vote at the Annual Meeting. As of such date, approximately
249 million shares of Common Stock were issued and outstanding. Each share-
holder is entitled to one vote for each share of Common Stock held by such
shareholder.
American General called all of the outstanding shares of 7% Convertible Pre-
ferred Stock for redemption on March 1, 2000. As a result, the preferred
shares have been retired and cancelled as of that date.
Voting of Thrift Plan Holdings
Common Stock held through the American General Employees' Thrift and Incen-
tive Plan, the American General Agents' and Managers' Thrift Plan, The Vari-
able Annuity Life Insurance Company Agents' and Managers' Thrift Plan, and the
related trust agreements is voted by State Street Bank & Trust Company, as
Trustee, as directed by the participants in those plans. If 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 du-
ty.
Quorum and Votes Necessary to Adopt Proposals
In order to transact business at the Annual Meeting, a quorum consisting of a
majority of all outstanding shares entitled to vote must be present. Absten-
tions and proxies returned by brokerage firms for which no voting instructions
have been received from their principals will be counted for the purpose of
determining whether a quorum is present. Once a share is represented for any
purpose at the Annual Meeting, it will be deemed present for quorum purposes
for the entirety of the meeting. The affirmative vote of a majority of the
shares represented at the Annual Meeting is required for approval of any mat-
ters that are presented at the meeting.
ELECTION OF DIRECTORS
(Item 1 on Proxy Card)
By resolution of the board of directors, the number of directors of American
General has been fixed at eleven as of the date of the Annual Meeting. To be
elected, each director must receive the affirmative vote of a majority of the
shares represented at the meeting.
All directors to be elected at the Annual Meeting were elected at the annual
meeting of shareholders in 1999 for one-year terms. All nominees have been
nominated for one-year terms ending at the annual meeting in 2001.
Although the management of American General 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.
Information regarding each nominee, including principal occupation during the
past five years and other directorships, is provided on the succeeding pages.
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2 AMERICAN GENERAL
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INFORMATION ABOUT THE NOMINEES
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J. EVANS ATTWELL (Age 68)
Mr. Attwell has been a director of American General since
[PHOTO OF J. EVANS 1963 and is currently of counsel to the firm of Vinson &
ATTWELL] Elkins L.L.P. He has been with that firm since 1956. Mr.
Attwell is also a director of Ocean Energy, Inc. and Dain
Rauscher Corporation.
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BRADY F. CARRUTH (Age 42)
Mr. Carruth has been a director of American General since
[PHOTO OF BRADY F. 1990 and has been President and CEO of Gulf Coast Capital
CARRUTH] Corporation (commercial landscaping) since 1986. He is also
a director of Consolidated Graphics, Inc.
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W. LIPSCOMB DAVIS JR. (Age 68)
[PHOTO OF W. LIPS- Mr. Davis has been a director of American General since
COMB DAVIS JR.] 1977 and has been a partner of Hillsboro Enterprises (in-
vestments) since 1985. He is also a director of Genesco,
Inc., Thomas Nelson, Inc., and SunTrust Bank, Nashville,
N.A.
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ROBERT M. DEVLIN (Age 59)
Mr. Devlin joined American General in 1977 and has been a
director since 1993. He currently serves as Chairman, Pres-
[PHOTO OF ROBERT M. ident, and CEO of American General (Chairman since 1997,
DEVLIN] President from 1995 to 1997 and since 1998, and CEO since
1996). Mr. Devlin served as Vice Chairman of American Gen-
eral from 1993 to 1995 and President and CEO of American
General Life Insurance Company from 1986 to 1993. He is
also a director of Cooper Industries, Inc. and Phillips Pe-
troleum Company.
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2000 PROXY STATEMENT 3
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INFORMATION ABOUT THE NOMINEES (Continued)
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J. EDWARD EASLER II (Age 52)
Mr. Easler has been a director of American General since
[PHOTO OF J. EDWARD December 1998 and has been Vice President, Institutional
EASLER II] Advancement, of Morehouse School of Medicine since 1998. He
was Vice President, Institutional Advancement, of Lemoyne
Owen College from 1997 to 1998 and Chief Development
Officer/Director of Development of the Center to Prevent
Handgun Violence/Handgun Control from 1996 to 1997. Mr.
Easler was a consultant at The Easler Group from 1994 to
1996.
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LARRY D. HORNER (Age 65)
[PHOTO OF LARRY D. Mr. Horner has been a director of American General since
HORNER] 1991 and has been Chairman of Pacific USA Holdings Corp.
(real estate and thrift operations) since 1994. He was
Managing Director of Arnhold and S. Bleichroeder, Inc. from
1991 to 1994 and Chairman and CEO of KPMG Peat Marwick LLP
from 1984 to 1990. He is also a director of Asia Pacific
Electric Wire & Cable Corp. Limited, Atlantis Plastics,
Inc., Laidlaw Global Securities Corp., Newmark Homes Corp.,
Phillips Petroleum Company, and UTStarcom, Inc.
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RICHARD J. V. JOHNSON (Age 69)
Mr. Johnson has been a director of American General since
[PHOTO OF RICHARD 1990 and has been with the Houston Chronicle (newspaper
J. V. JOHNSON] publishing) since 1956. He currently serves as Chairman and
Publisher of the Houston Chronicle (Chairman since 1990 and
Publisher since 1987). He is also an advisory director of
Chase Bank of Texas N.A.
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MICHAEL E. MURPHY (Age 63)
[PHOTO OF MICHAEL Mr. Murphy has been a director of American General since
E. MURPHY] 1997. He had been Vice Chairman of Sara Lee Corporation
(packaged food and consumer products) for four years when
he retired in 1997. He also served as Chief Administrative
Officer from 1979 to 1997, and Chief Financial Officer from
1979 to 1994, of Sara Lee Corporation. Mr. Murphy is also a
director of Bassett Furniture Industries, Incorporated,
GATX Corporation, Payless ShoeSource, Inc., and True North
Communications Inc., and a trustee of Northern Funds.
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4 AMERICAN GENERAL
<PAGE>
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INFORMATION ABOUT THE NOMINEES (Continued)
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MICHAEL J. POULOS (Age 69)
Mr. Poulos served as a director of American General from
[PHOTO OF MICHAEL 1980 to 1993 and was re-elected as a director in 1998. He
J. POULOS] had been Chairman, President, and CEO of Western National
Corporation (financial services) for five years, when he
retired in 1998. He was with American General from 1970 to
1993, and served as Vice Chairman from 1991 to 1993. Mr.
Poulos is also an advisory director of Greystone Capital
Partners I, LP and a trustee of Century Shares Trust.
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ROBERT E. SMITTCAMP (Age 58)
Mr. Smittcamp has been a director of American General since
[PHOTO OF ROBERT E. 1990 and has been President and CEO of Lyons-Magnus Co.,
SMITTCAMP] Inc. (food processing) since 1971. He has been co-owner of
Wawona Frozen Foods, Inc. since 1987 and Wawona Orchards
since 1960. He is also a director of Lyons Transportation
Co.
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ANNE M. TATLOCK (Age 60)
Ms. Tatlock has been a director of American General since
[PHOTO OF ANNE M. 1995. She currently serves as CEO (since September 1999)
TATLOCK] and President (since 1994) of Fiduciary Trust Company In-
ternational (investment management). She was Executive Vice
President of Fiduciary Trust Company International from
1990 to 1994. Ms. Tatlock is also a director of Fortune
Brands, Inc., Merck & Co., Inc., and Fiduciary Trust Com-
pany International.
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2000 PROXY STATEMENT 5
<PAGE>
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THE BOARD OF DIRECTORS
Composition of the Board of Directors and its Committees
American General is governed by a board of directors and various committees of
the board that meet throughout the year. The five standing committees of the
board are listed in the following table.
Audit Committee
Functions (See charter attached as Appendix A) Members*
. Recommend to the board the independent W. Lipscomb Davis Jr.
auditors to be engaged by American (chair)
General J. Evans Attwell
. Confer with the independent auditors Brady F. Carruth
regarding their review of audited Michael E. Murphy
financial statements
. Review compliance with American
General's corporate responsibility
program
. Review the scope of the audit to be
performed and the accounting principles
and policies of American General
Executive Committee
Functions Members
. Exercise the authority of the board Robert M. Devlin (chair)
between regular meetings J. Evans Attwell
. Perform the functions of a nominating W. Lipscomb Davis Jr.
committee to recommend candidates for Larry D. Horner
election to the board and committees of Jon P. Newton
the board Michael J. Poulos
Finance Committee
Functions Members
. Advise and consult with management Anne M. Tatlock (chair)
concerning the general financial J. Evans Attwell
affairs of American General, including Larry D. Horner
capital structure, financing Michael E. Murphy
arrangements, investment strategy, and Jon P. Newton
similar matters of a financial nature Michael J. Poulos
Management Development Committee
Functions Members
. Advise and consult with the chief Robert M. Devlin (chair)
executive officer concerning the Brady F. Carruth
management structure of the W. Lipscomb Davis Jr.
organization and the recruitment and J. Edward Easler II
development of executive management Richard J.V. Johnson
Robert E. Smittcamp
Personnel Committee
Functions Members*
. Review the contribution of key officers Larry D. Horner (chair)
and the compensation of these J. Edward Easler II
individuals Richard J.V. Johnson
. Review American General's employee Michael J. Poulos
benefit programs and administer certain Robert E. Smittcamp
of these plans Anne M. Tatlock
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* Each of the members of the Committee is a "non-employee director"
(i.e., not an officer or employee of American General or its sub-
sidiaries)
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6 AMERICAN GENERAL
<PAGE>
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Attendance at Meetings
During 1999, the board of directors held 7 meetings. In addition, the
Executive Committee met one time; the Finance Committee met 4 times; the Audit
Committee met 3 times; the Personnel Committee met 2 times; and the Management
Development Committee met 2 times. The directors (as a group) attended at
least 95% of the meetings of the board and board committees on which they
served and no director attended less than 82% of such meetings.
Compensation of Directors
Each non-employee member of the board of directors receives an annual re-
tainer of $32,000 plus a fee of $1,500 for attendance at each meeting of the
board or a board committee. Committee chairmen receive an additional $5,000
annual retainer. No fees or retainers are paid to any director who is an em-
ployee of American General.
Non-employee directors may elect to defer some or all of their cash compensa-
tion under American General's deferred compensation plan. Deferred accounts
are credited, at the director's election, with either phantom units of Common
Stock or with interest at rates that mirror the Cash Fund under the American
General Employees' Thrift and Incentive Plan. If the director elects to have
the deferred compensation invested in phantom units of Common Stock, then the
director will be credited with an additional award equal to 20% of the de-
ferred compensation, which will generally vest in three years and be deemed to
be invested in Common Stock. Vesting of this award will accelerate upon the
retirement, death or disability of the director, or a change in control.
The American General Retirement Plan for Directors was terminated effective
March 1, 1997. Each of the seven non-employee directors serving on that date
received phantom units of Common Stock with a value equal to the benefits such
director would have received under the Plan through March 1, 1997. Upon termi-
nation of board service, such directors will be entitled to receive cash in an
amount equal to the then current value of such units.
Non-employee directors are eligible for certain awards pursuant to American
General's stock and incentive plans. In 1999, each of American General's non-
employee directors received a grant of phantom units equivalent to 500 shares
of Common Stock at the date of grant. In addition, each such director received
non-qualified options to purchase 2,500 shares of Common Stock at an exercise
price of $66.9375, which was the fair market value of Common Stock on the date
of grant. These stock options expire on January 21, 2009. Future awards are
subject to the discretion of the board.
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2000 PROXY STATEMENT 7
<PAGE>
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SECURITY OWNERSHIP
Security Ownership of Directors and Executive Officers
The following table shows as of March 1, 2000 (with the exception of certain
company plan information, which is provided as of December 31, 1999), the num-
ber of shares of Common Stock and phantom stock units beneficially owned (in-
cluding shares and units held in thrift, retirement or deferred compensation
plans) by each director and Named Executive Officer and by all directors and
executive officers as a group. As of that date, none of the persons listed in
the table owned more than 1% of American General's outstanding Common Stock.
All directors and executive officers as a group beneficially owned
approximately 1.5% of American General's outstanding Common Stock.
The Named Executive Officers refer to those executive officers that are
listed in the Summary Compensation Table on page 15. Those individuals are:
Robert M. Devlin, Frederick W. Geissinger, John A. Graf, Rodney O. Martin Jr.,
Jon P. Newton, and Richard W. Scott.
<TABLE>
<CAPTION>
Number of Shares
Name of Beneficial Owner Beneficially Owned/1/,/2/,/3/
------------------------ -----------------------------
<S> <C>
Robert M. Devlin........................... 1,368,155/4/
Frederick W. Geissinger.................... 143,212
John A. Graf............................... 185,348
Rodney O. Martin Jr. ...................... 182,970/4/
Jon P. Newton.............................. 521,175
Richard W. Scott........................... 196,260/4/
J. Evans Attwell........................... 165,940/4/
Brady F. Carruth........................... 38,915/4/
W. Lipscomb Davis Jr....................... 34,782/4/,/5/
J. Edward Easler II........................ 1,945
Larry D. Horner............................ 11,133/4/
Richard J. V. Johnson...................... 21,711
Michael E. Murphy.......................... 9,864/4/
Michael J. Poulos.......................... 596,098/4/
Robert E. Smittcamp........................ 78,383/4/
Anne M. Tatlock............................ 8,157
All Director Nominees and Executive
Officers as a Group....................... 3,827,371
</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
American General'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 3,827,371 shares listed
above.
/2/Includes shares of Common Stock issuable upon the exercise of options exer-
cisable within a period of 60 days from March 1, 2000.
/3/Includes all phantom stock units held by the directors and executive offi-
cers under company plans.
/4/Includes shares owned by family members as follows: Mr. Attwell--7,200
shares; Mr. Carruth--9,732 shares; Mr. Davis--5,008 shares; Mr. Horner--
1,000 shares; Mr. Martin--1,154 shares; Mr. Murphy--4,000 shares; Mr. Poul-
os--5,817 shares; Mr. Scott--1,362 shares; and Mr. Smittcamp--300 shares.
The shares reported in the table for Mr. Davis also include 4,090 shares
held in trust for family members. Messrs. Attwell, Carruth and Davis dis-
claim beneficial ownership of such shares; Mr. Carruth has sole voting and
investment power with respect to 6,187 of the shares held by family members.
Also includes shares held by a family foundation as follows: Mr. Devlin--
3,778 shares and Mr. Poulos--3,000 shares.
/5/Includes 4,162 shares held by a limited partnership of which he is the gen-
eral partner.
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8 AMERICAN GENERAL
<PAGE>
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Security Ownership of Certain Beneficial Owners
The following table sets forth as of March 1, 2000, the number of shares of
Common Stock owned by each person who is known by American General to own ben-
eficially more than 5% of American General's outstanding Common Stock.
<TABLE>
<CAPTION>
Name and Address Shares Beneficially Percent of
of Beneficial Owner Title of Class Owned Class
------------------------------------------------------------------------
<S> <C> <C> <C>
Putnam Investments, Inc. Common Stock 15,273,947/1/ 6.1%
One Post Office Square
Boston, MA 02109
Capital Research and Common Stock 12,719,700/2/ 5.1%
Management Company
333 South Hope Street
Los Angeles, CA 90071
</TABLE>
-------
/1/Based on a Schedule 13G filed on February 17, 2000, Putnam Investments,
Inc. reports shared voting power with respect to 1,585,069 of such
shares, and shared investment power with respect to all of such shares,
as a result of subsidiaries acting as investment advisors to various
clients.
/2/Based on a Schedule 13G filed on February 11, 2000, Capital Research
and Management Company reports sole dispositive power (without sole or
shared voting power) with respect to all of such shares as a result of
acting as investment advisor to various investment companies.
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2000 PROXY STATEMENT 9
<PAGE>
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EXECUTIVE COMPENSATION
PERSONNEL COMMITTEE REPORT
The Personnel Committee of the Board of Directors (the "Personnel Committee")
of American General has issued the following report for the fiscal year ended
December 31, 1999.
Responsibilities of the Personnel Committee
The Personnel Committee is responsible for developing and administering the
compensation policies and practices for American General and recommending to
the board the compensation for the Chief Executive Officer, the Vice Chairmen
and Group Executives, and the other individuals included in the top 25 most
highly compensated executives. It also approves or ratifies the compensation
for the second 25 most highly compensated executives. The members of the Per-
sonnel Committee are independent, non-employee directors who receive no com-
pensation from American General other than as outlined on page 7.
Compensation Philosophy and Guiding Principles
The company's executive compensation policies and practices, as implemented
by the Personnel Committee, are designed to provide a competitive compensation
program that effectively aligns executive compensation with the company's mis-
sion, business strategy, and values. The Personnel Committee believes that im-
plementing these policies and practices will allow the company to attract, mo-
tivate, retain, and reward key executives who have the skills, experience and
talents required to promote the short- and long-term performance and growth of
the company.
The executive compensation program is based on the following pay-for-perfor-
mance guiding principles established by the Personnel Committee:
. attract, retain, reward, and motivate highly talented employees;
. provide incentives for achieving specific corporate earnings and return
goals, as well as market-related goals necessary to build shareholder
value over time; and
. align the interests of executives with the interests of the company's
shareholders by basing a significant portion of compensation upon the
company's performance.
To achieve these objectives, American General's compensation philosophy and
programs:
. reward executives based on the achievement of financial and other
performance measures;
. place a significant portion of total compensation "at-risk" through
incentive awards that are directly linked to company performance and
shareholder returns; and
. encourage significant employee ownership of the company's common stock.
The Personnel Committee considers each of these principles as it administers
and implements the program.
Compensation Methodology
The financial services industry continues to consolidate and converge as in-
surance companies, banks, money managers, and brokers not only compete in the
sale of consumer products and services, but also look to form strategic, val-
ue-enhancing alliances. In this changing and highly competitive marketplace,
American General is committed to attracting and retaining executives with the
strategic vision and tactical abilities to
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10 AMERICAN GENERAL
<PAGE>
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conceive and successfully implement plans that drive American General's cur-
rent and future financial success. To this end, the company strives to provide
competitive compensation that motivates executives to achieve superior perfor-
mance consistent with the company's strategic vision and goals.
Each year the Personnel Committee reviews American General's executive com-
pensation program to ensure that it continues to serve the overall objectives
of the company. This review includes a comprehensive report from an indepen-
dent consulting firm, which assesses the effectiveness of American General's
compensation program. As part of this analysis, the Personnel Committee re-
views American General's performance and compares it to the performance of 21
peer companies. The peer companies selected for the analysis are subject to
change as the company and its competitors change their focus or as new compet-
itors emerge in the industry. The annual compensation review permits an ongo-
ing evaluation of the link between American General's performance and its ex-
ecutive compensation practices within the context of the compensation programs
of peer companies.
To establish a competitive range of base salary, annual and long-term incen-
tive compensation, the Personnel Committee reviewed competitive market data of
peer companies, historical company practices and the recommendations of out-
side compensation specialists. The resulting decisions regarding compensation
levels were based on competitive market practices, the executive's level of
responsibility and strategic decision-making requirements as well as organiza-
tional and individual performance measured against stated objectives. The Per-
sonnel Committee believes that the long-term focus on organizational perfor-
mance brought about by the compensation principles keeps management focused on
strategies that position the company for sustained growth in earnings and re-
turn on equity. The Personnel Committee took particular note of American Gen-
eral's outstanding operating performance measured against its peers in 1999,
including its 13% increase in operating earnings per share and 16% operating
return on equity.
Compensation Components
American General's compensation programs reflect its commitment to fostering
a "pay for performance" culture by aligning the interests of employees with
those of the shareholders. As a result, the company has emphasized long-term,
incentive-based variable compensation. The basic elements of American Gener-
al's executive compensation package are base salary, cash bonuses, and long-
term incentives. The Personnel Committee's policies with respect to each of
these elements are discussed below:
Base Salary
It is the company's compensation policy to set base salaries at
competitive market rates to ensure that the company attracts and retains
the superior executive talent necessary for successful operation of the
company's business. Individual base compensation decisions take into
consideration the factors described above.
Cash Bonuses
The company's executives, as well as certain other employees, are eligible
to receive cash bonuses, awarded consistent with the factors described
above. Bonuses paid in January 2000 to the 15 highest salaried employees
were also subject to certain other performance hurdles relating to
operating earnings and dividends established under the Performance-Based
Plan for Executive Officers approved by the shareholders in 1999.
- -------------------------------------------------------------------------------
2000 PROXY STATEMENT 11
<PAGE>
- -------------------------------------------------------------------------------
Long-Term Incentives
Long-term incentive awards have been designed to increase executive
ownership in the company and thereby more closely align the interests of
executives and shareholders. To achieve this goal, the company is targeting
to increase employee ownership from approximately 3% to 6%. The company
firmly believes that through share ownership, employees will make business
decisions that create greater value for all shareholders.
Stock Options. Stock options are granted with an exercise price equal to
the fair market value of Common Stock on the date of grant. Options granted
in 1999 become exercisable in three, equal annual installments beginning on
the first anniversary of the grant. American General has never cancelled
existing options and repriced them with new options at lower prices.
Reload Options. Reload options are granted in support of American
General's overall objective to increase employee stock ownership. Certain
executives, including the Named Executive Officers, are eligible to receive
reload options. A reload feature enables an executive to exercise an option
with already owned shares of Common Stock prior to the end of the option
term and receive reload options for the shares of Common Stock tendered.
The reload option is exercisable for the remaining term of the original
option, at a price equal to the fair market value of Common Stock on the
date the original option is exercised.
Performance-Based Restricted Stock. Performance-based restricted stock
awards are shares of restricted stock that are earned over a three-year
performance period. These awards are contingent upon the company's
achieving certain performance goals that are established in advance by the
Personnel Committee. The performance goals established by the Personnel
Committee have been based on operating earnings per share growth and could
result in vesting from zero up to 200%. Performance-based restricted stock
awards granted to each of the Named Executive Officers are reported in the
"Long-Term Incentive Plan Awards Granted in 1999" table on page 17.
Restricted Stock. The Personnel Committee is also authorized to make
awards of restricted stock, which vest at the end of a five-year
performance period. Such awards are subject to forfeiture if certain
performance criteria are not met. The restricted stock awards given to the
Named Executive Officers in 1999 are reported in the "Summary Compensation
Table" on page 15.
Stock Ownership Guidelines
In support of the company's desire to increase employee ownership and
foster a "pay for performance" culture, employees eligible for variable
compensation are encouraged to acquire and retain shares of Common Stock
(within five years of becoming eligible for variable compensation) that
equal or exceed a multiple of their base salary as follows:
<TABLE>
<CAPTION>
Stock Ownership
Guidelines
(as a % of Base Salary)
-----------------------
<S> <C>
Chairman............................................. 8x
Vice Chairmen........................................ 7x
Other Members of the Management Committee............ 6x
Salary greater than or equal to $300,000............. 5x
Salary between $250,000 and $299,999................. 4x
Salary between $200,000 and $249,999................. 3x
Salary between $150,000 and $199,999................. 1.50x
Salary between $100,000 and $149,999................. .75x
Salary between $65,000 and $99,999................... .50x
</TABLE>
These guidelines are subject to change from time to time upon review by
the Board of Directors.
- -------------------------------------------------------------------------------
12 AMERICAN GENERAL
<PAGE>
- -------------------------------------------------------------------------------
Chief Executive Officer Compensation
The Chief Executive Officer's compensation for 1999 was determined pursuant
to the same philosophy and objectives described earlier in this report and in-
cludes the same elements and performance measures as the company's other Named
Executive Officers. The Personnel Committee also reviewed Mr. Devlin's benefi-
cial ownership in American General stock in relation to CEO beneficial owner-
ship levels at peer group companies. In awarding Mr. Devlin's compensation,
the Personnel Committee took note of Mr. Devlin's substantial and unique con-
tributions to the company's performance as measured against the company's
goals and its peer group's performance, such as the company's total return to
shareholders, earnings per share, market capitalization, return on equity, and
operating earnings. The Personnel Committee also took into account the impact
of Mr. Devlin's leadership in establishing the "pay for performance" culture
at American General and weaving the core values adopted in 1998 into the fab-
ric of the company.
Compliance with Section 162(m)
Section 162(m) of the Internal Revenue Code generally disallows a tax deduc-
tion to public companies for annual compensation over $1 million paid to their
chief executive officer and certain other highly compensated executive offi-
cers. The code generally excludes from the calculation of the $1 million cap
compensation that is based on the attainment of pre-established, objective
performance goals. Where practicable, it is the policy of the Personnel Com-
mittee to establish compensation practices that are both cost-efficient from a
tax standpoint and effective as a compensation program. The Personnel Commit-
tee also considers it important to be able to utilize the full range of incen-
tive compensation, even though some compensation may not be fully deductible.
By the Personnel Committee:
Larry D. Horner (Chair)
J. Edward Easler II
Richard J.V. Johnson
Michael J. Poulos
Robert E. Smittcamp
Anne M. Tatlock
- -------------------------------------------------------------------------------
2000 PROXY STATEMENT 13
<PAGE>
- -------------------------------------------------------------------------------
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL SHAREHOLDER RETURN
The performance graph below shows American General's total return on Common
Stock compared to the S&P Insurance (Life/Health) Index and the S&P 500 Com-
posite Stock Price Index over the five-year period beginning December 31,
1994. The results are based on an assumed $100 invested on December 31, 1994,
and reinvestment of dividends.
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
5-Year Annualized
Year-End 1994 1995 1996 1997 1998 1999 Total Return
<S> <C> <C> <C> <C> <C> <C> <C>
American General $100.00 $128.05 $155.38 $211.64 $312.49 $310.75 25.45%
- ------------------------------------------------------------------------------------
S&P Insurance
(Life/Health) 100.00 143.35 174.61 218.35 230.51 198.22 14.66
- ------------------------------------------------------------------------------------
S&P 500 100.00 137.43 169.14 225.57 290.04 351.08 28.55
</TABLE>
Source: Ibbotson Associates
There can be no assurance that the company's stock performance will continue
into the future with the same or similar trends depicted in the performance
graph. American General does not make or endorse any predictions as to future
performance of its stock. The performance graph above shall not be deemed in-
corporated by reference into any other public filing, unless the company spe-
cifically incorporates such graph by reference.
- -------------------------------------------------------------------------------
14 AMERICAN GENERAL
<PAGE>
- -------------------------------------------------------------------------------
SUMMARY ANNUAL AND LONG-TERM COMPENSATION
The following table includes information concerning the annual compensation
to the Named Executive Officers for services in all capacities to American
General and its subsidiaries for the fiscal years ended December 31, 1999,
1998, and 1997.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-Term Compensation/1/
------------------------------------
Annual Compensation Awards Payouts
------------------------------------------------------------------------------------------------------
Long-Term
Other Annual Restricted Securities Incentive All Other
Compen- Stock Underlying Plan Compen-
Name and Position Year Salary($) Bonus($)/2/ sation($)/3/ Awards ($)/4/ Options (#) Payouts ($)/5/ sation ($)/6/
----------------- ---- --------- ----------- ------------ ------------- ----------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Robert M. Devlin 1999 935,000 4,000,000 44,789 10,190,626 1,350,000 -0- 380,077
Chairman, 1998 951,346 2,250,000 19,455 3,000,000 225,000 -0- 391,069
President and CEO 1997 816,154 1,750,000 17,602 2,181,250 150,000 -0- 40,645
-------------------------------------------------------------------------------------------
Frederick W.
Geissinger 1999 395,193 600,000 643 169,844 50,000 102,094 64,420
Vice Chairman and 1998 344,712 350,000 599 450,000 25,000 -0- 107,592
Group Executive-- 1997 322,788 250,000 -0- -0- 20,000 -0- 52,397
Consumer Finance
-------------------------------------------------------------------------------------------
John A. Graf/7/ 1999 396,154 700,000 8,770 679,375 50,000 -0- 58,588
Vice Chairman and 1998 356,731 350,000 1,021 900,000 25,000 -0- 43,911
Group Executive-- 1997 -- -- -- -- -- -- --
Retirement Services
-------------------------------------------------------------------------------------------
Rodney O. Martin Jr. 1999 500,000 825,000 18,487 679,375 100,000 88,481 74,389
Vice Chairman and 1998 413,846 500,000 4,314 1,730,000 30,000 -0- 62,008
Group Executive-- 1997 308,077 325,000 -0- 218,125 20,000 -0- 168,048
Life Insurance
-------------------------------------------------------------------------------------------
Jon P. Newton 1999 621,154 600,000 7,425 3,396,876 600,000 129,319 186,382
Vice Chairman and 1998 579,808 1,100,000 5,893 1,500,000 100,000 -0- 187,046
Group Executive-- 1997 483,077 650,000 -0- 436,250 60,000 174,750 25,754
Corporate Operations
-------------------------------------------------------------------------------------------
Richard W. Scott/7/ 1999 398,077 600,000 276 679,375 50,000 -0- 86,974
Vice Chairman and 1998 366,346 350,000 8,563 900,000 25,000 -0- 82,908
Group Executive-- 1997 -- -- -- -- -- -- --
Investment Management
-------------------------------------------------------------------------------------------
</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 de-
termined and paid in the subsequent year.
/3/Other Annual Compensation. Amounts represent reimbursement for certain
income taxes.
/4/Restricted Stock Awards. These amounts represent the value of the re-
stricted stock on the date of grant. The restricted stock awards are
subject to forfeiture restrictions for a five-year period. At December
31, 1999, the aggregate restricted stock holdings for the Named Execu-
tive Officers (excluding the awards reported in the Long-Term Incen-
tive Plan Awards Granted in 1999 table on page 17) were as follows:
Mr. Devlin-250,000 shares valued at $18,968,750; Mr. Geissinger-20,000
shares valued at $1,517,500; Mr. Graf-25,000 shares valued at
$1,896,875; Mr. Martin-47,500 shares valued at $3,604,063; Mr. Newton-
85,000 shares valued at $6,449,375; and Mr. Scott-25,000 shares valued
at $1,896,875. Dividends are paid to holders with respect to re-
stricted stock at the same rate as is paid on all other shares of Com-
mon Stock. In the event of a Change in Control, the forfeiture re-
strictions with respect to all outstanding restricted stock awards im-
mediately lapse. See "Change in Control Arrangements and Employment
Agreements" below for the definition of "Change in Control."
/5/Long-Term Incentive Plan Payouts. These amounts represent the value of
performance awards on the date of vesting, following the three-year
performance period, regardless of whether the vested award was paid in
cash, stock, or a combination thereof.
/6/All Other Compensation. For each Named Executive Officer, the 1999
amount includes American General's contributions to the Thrift Plan
and Supplemental Thrift Plan, premiums paid by the company for a group
carve out individual life insurance policy, and the value of split
dollar life insurance. The Thrift Plan contributions for 1999 were
$7,200 for each of the Named Executive Officers. The Supplemental
Thrift Plan contributions and the premiums paid for group carve out
life insurance for 1999 were as follows: Mr. Devlin-$34,875 and
$14,601; Mr. Geissinger-$11,312 and $2,334; Mr. Graf-$10,626 and $849;
Mr. Martin-$15,300 and $1,891; Mr. Newton-$21,635 and $7,545; and Mr.
Scott-$11,077 and $2,929. The following amounts were included for
split dollar life insurance: Mr. Devlin-$323,401; Mr. Geissinger-
$43,574; Mr. Graf-$39,913; Mr. Martin-$49,998; Mr. Newton-$150,002;
and Mr. Scott-$65,768. Cumulative premiums paid by the company for
split dollar life insurance are recovered by the company from the cash
value of the life insurance policy at the later of retirement or 16
years. The amounts included for split dollar life insurance in the ta-
ble represent the present value of the interest projected to accrue on
the current year's insurance premium.
/7/Not employed by American General in 1997.
- -------------------------------------------------------------------------------
2000 PROXY STATEMENT 15
<PAGE>
- -------------------------------------------------------------------------------
STOCK OPTIONS GRANTED, OPTION EXERCISES AND YEAR END VALUE
The following table includes information on grants of stock options during
fiscal year 1999 to the Named Executive Officers. No stock appreciation rights
were granted during fiscal year 1999.
STOCK OPTIONS GRANTED IN 1999
<TABLE>
<CAPTION>
Individual Stock Option Grants
---------------------------------------------
% of Total Grant Date
Options Options Granted Exercise Present
Granted to Employees Price Expiration Value
Name (#)/1/ in 1999 ($/Sh) Date ($)/2/
- -----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Robert M. Devlin 1,350,000 26% $68.0625 01-20-09 $22,639,500
Frederick W.
Geissinger 50,000 1 68.0625 01-20-09 838,500
John A. Graf 50,000 1 68.0625 01-20-09 838,500
Rodney O. Martin
Jr. 100,000 2 68.0625 01-20-09 1,677,000
Jon P. Newton 600,000 12 68.0625 01-20-09 10,062,000
Richard W. Scott 50,000 1 68.0625 01-20-09 838,500
- -----------------------------------------------------------------------------------
</TABLE>
/1/Options. These consist of non-qualified options and incentive stock
options to acquire Common Stock, which generally become exercisable in
three equal annual installments beginning on the first anniversary of the
grant. The non-qualified options include the right to receive reload
options in the event the optionee exercises an option with already-owned
shares of Common Stock. In the event of a Change in Control, the stock
option agreements provide for acceleration of vesting. See "Change in
Control Arrangements and Employment Agreements" below for the definition
of "Change in Control."
/2/Grant Date Present Value. These estimates of value are disclosed for
illustration only and should not be interpreted as projections of the
future price of Common Stock. These estimates were developed using a
Black-Scholes option pricing model incorporating the following
assumptions: expected volatility of 24.4%, risk free interest rate of
4.82%, expected life of 6 years, and dividend yield of 2.5%.
The following table contains information concerning the options exercised by
the Named Executive Officers during fiscal year 1999 and the unexercised op-
tions held by the Named Executive Officers as of December 31, 1999.
AGGREGATED OPTION EXERCISES IN 1999 AND OPTION VALUES AT DECEMBER 31, 1999/1/
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money Options
Options at 12/31/99 (#) at 12/31/99($)/2/
Shares Acquired in Value ------------------------- -------------------------
Name Exercise (#) Realized ($) Exercisable Unexercisable Exercisable Unexercisable
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Robert M. Devlin -0- $ 0 377,001 1,550,000 $13,125,408 $14,621,875
Frederick W. Geissinger 2,000 74,250 65,166 73,334 2,409,192 879,183
John A. Graf -0- 0 100,350 66,667 4,809,212 664,589
Rodney O. Martin Jr. -0- 0 43,833 126,667 1,433,843 1,324,594
Jon P. Newton -0- 0 138,933 686,667 4,693,861 6,427,089
Richard W. Scott 5,058 219,165 108,825 66,667 5,271,631 664,589
- --------------------------------------------------------------------------------------------------------------
</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 of vesting in the event of a Change in Control.
/2/Value. "Value" is the difference between the fair market value of the
underlying shares of Common Stock and the exercise price.
- -------------------------------------------------------------------------------
16 AMERICAN GENERAL
<PAGE>
- -------------------------------------------------------------------------------
LONG-TERM INCENTIVE PLAN AWARDS GRANTED IN 1999
The following table describes certain performance-based restricted stock
awards granted during the fiscal year ended December 31, 1999, to the Named
Executive Officers.
LONG-TERM INCENTIVE PLAN AWARDS GRANTED IN 1999
<TABLE>
<CAPTION>
Performance
or Other
Period Estimated Future Payouts
Until in Units/2/
Number of Maturation ------------------------------------
Name Shares (#)/1/ or Payout Threshold (#) Target (#) Maximum (#)
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Robert M. Devlin 35,000 1999-2001 17,500 35,000 70,000
Frederick W. Geissinger 5,000 1999-2001 2,500 5,000 10,000
John A. Graf 5,000 1999-2001 2,500 5,000 10,000
Rodney O. Martin Jr. 10,000 1999-2001 5,000 10,000 20,000
Jon P. Newton 17,000 1999-2001 8,500 17,000 34,000
Richard W. Scott 5,000 1999-2001 2,500 5,000 10,000
- -----------------------------------------------------------------------------------------
</TABLE>
/1/Restricted Stock. Dividends are paid to holders with respect to these
shares of restricted stock at the same rate as is paid on all other
shares of Common Stock. The awards are subject to forfeiture if certain
performance criteria are not met for a three-year performance period. In
the event of a Change in Control, the awards would vest at maximum
performance level. See "Change in Control Arrangements and Employment
Agreements" below for the definition of "Change in Control."
/2/Future Payouts. The performance criterion is cumulative operating
earnings per share for the three-year performance period. Operating
earnings means the consolidated operating earnings of American General,
excluding net realized investment gains, non-recurring items, and
cumulative effect of accounting changes under generally accepted
accounting principles. At the discretion of the Personnel Committee, and
subject to the terms and conditions of the award relating to termination
of employment and Change in Control, if cumulative operating earnings per
share are below a threshold performance level of $13.67, the vesting
percentage will be 0% of the original grant; if cumulative operating
earnings per share are between $13.67 and a target performance level of
$14.34, the award will vest pro rata from 50% to 100% of the original
grant; and if cumulative operating earnings per share are between $14.34
and a maximum performance level of $15.45, the award will vest pro rata
from 100% to 200% of the original grant.
- -------------------------------------------------------------------------------
2000 PROXY STATEMENT 17
<PAGE>
- -------------------------------------------------------------------------------
PENSION PLANS
Pension Plan Table "A" shows the estimated annual retirement benefits payable
to Messrs. Devlin and Newton pursuant to their respective Supplemental Execu-
tive Retirement Agreements ("SERAs") with American General, which 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>
$1,000,000 $ 240,000 $ 360,000 $ 480,000 $ 600,000 $ 672,000
1,500,000 360,000 540,000 720,000 900,000 1,008,000
2,000,000 480,000 720,000 960,000 1,200,000 1,344,000
2,500,000 600,000 900,000 1,200,000 1,500,000 1,680,000
3,000,000 720,000 1,080,000 1,440,000 1,800,000 2,016,000
4,000,000 960,000 1,440,000 1,920,000 2,400,000 2,688,000
5,000,000 1,200,000 1,800,000 2,400,000 3,000,000 3,360,000
6,000,000 1,440,000 2,160,000 2,880,000 3,600,000 4,032,000
- ----------------------------------------------------------------------------
</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 benefit
pension plan, and generally under American General'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. Compensation for the
purposes of the SERAs includes annual salary and bonus amounts reported in
the Summary Compensation Table. The estimated credited years of service
under the SERAs for Messrs. Devlin and Newton are 22 and 14, respectively.
The maximum number of years of service that 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. Geissinger, Graf, Martin, and Scott pursuant to American General's
Supplemental Executive Retirement Plan ("SERP"), which comprises a non-quali-
fied, 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>
$ 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
1,500,000 300,000 450,000 600,000 750,000 900,000
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
General Retirement Plan, a qualified non-contributory defined benefit
pension plan, and American General'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. Compensation for the purposes of the SERPs includes
annual salary and bonus amounts reported in the Summary Compensation Table.
The estimated credited years of service under the SERP for Messrs.
Geissinger, Graf, Martin, and Scott are 6, 2, 4, and 2, respectively. The
maximum number of years of service that can be credited under the SERP is
30. The SERP benefit is computed on the basis of a straight-life annuity
with a 10-year term certain.
- -------------------------------------------------------------------------------
18 AMERICAN GENERAL
<PAGE>
- -------------------------------------------------------------------------------
CHANGE IN CONTROL ARRANGEMENTS AND EMPLOYMENT AGREEMENTS
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 American General by a non-affiliate with cer-
tain exceptions; (ii) the merger or consolidation of American General or its
direct or indirect subsidiary with certain exceptions; (iii) the sale of sub-
stantially all of the assets of American General with certain exceptions; (iv)
the adoption of a plan of liquidation of American General by its shareholders;
or (v) a change in the majority composition of American General's board of di-
rectors.
Change in Control Severance Agreements. American General has agreements pro-
viding for the payment of severance benefits to Messrs. Geissinger, Graf, Mar-
tin, and Scott and certain other officers of American General and its subsidi-
aries in the event of certain qualifying terminations of employment related to
a Change in Control. The agreements automatically renew, unless notice of in-
tent to terminate is given. Change-in-Control-related terminations that will
qualify for severance payments include a termination by American General with-
out "Cause" (as defined in the severance agreement) and a termination by the
officer with "Good Reason" (as defined in the severance agreement). Good Rea-
son includes certain changes in duties, responsibilities, salary and bonus
amounts, or benefits.
The severance payments provided in these agreements equal approximately three
times the sum of the respective officer's annual base salary and average an-
nual bonus. The agreements of Messrs. Geissinger, Graf, Martin and Scott and
certain other officers of American General and its subsidiaries provide an ad-
ditional payment to make the officer whole with respect to the imposition of
any excise tax under Section 4999 of the Internal Revenue Code (including in-
come and employment taxes imposed with respect to such additional payment).
The agreements also provide for certain other benefits.
Supplemental Executive Retirement Plan and Agreements. Under the Supplemental
Executive Retirement Agreements with Messrs. Devlin and Newton and the Supple-
mental Executive Retirement Plan in which Messrs. Geissinger, Graf, Martin and
Scott participate, the retirement benefit of each Named Executive Officer will
vest upon a Change in Control. In the event of certain qualifying Change-in-
Control-related terminations of employment, each Named Executive Officer will
be given up to 36 additional months of age and service credit in the determi-
nation of this supplemental retirement benefit.
Company Stock-Based Awards. All of the awards outstanding or to be granted
under American General's stock and incentive plans are subject to the auto-
matic acceleration of vesting 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. All of the Named Executive Officers and certain
other officers are permitted to defer a portion of their compensation in a de-
ferred compensation plan. Its investment options include phantom units of Com-
mon Stock. If this option is chosen by an officer, the officer will be cred-
ited with an additional award equal to 20% of the deferred amount. The award
generally vests in three years. Vesting will accelerate upon the normal re-
tirement, disability, or death of the officer or a Change in Control.
Employment Agreements. Set forth below is a summary of employment agreements
that have been entered into with certain of the Named Executive Officers.
Devlin and Newton. Messrs. Devlin and Newton have three-year Employment
Agreements, which are automatically extended unless notice of intent to termi-
nate is given. Under each Employment Agreement, the executive is entitled to
receive an annual base salary not less than that in effect on
- -------------------------------------------------------------------------------
2000 PROXY STATEMENT 19
<PAGE>
- -------------------------------------------------------------------------------
May 1, 1998, an annual bonus opportunity, and certain other specified bene-
fits. Under each agreement, the executive undertakes certain non-competition
obligations to American General.
If an executive's employment is terminated by the company without Cause (as
defined in his agreement), by the executive for Good Reason (as defined in his
agreement), or by the executive for any reason during the year immediately
following a Change in Control, the executive will be entitled to his salary
through the date of termination, a pro rata portion of the bonus that would be
payable for the year of termination, and cash severance payment or payments
equal to three times the executive's salary and average bonus as well as cer-
tain other benefits. American General will also provide for the payment of all
remaining premiums on the executive's "split-dollar" life insurance policy and
will transfer all rights to the policy to the executive. All the executive's
outstanding equity-based awards will become fully vested and any applicable
performance goals will be deemed met at target level.
Upon termination of each executive's employment, other than a termination by
the company for Cause or by the executive without Good Reason, the executive
(and the executive's spouse) will be entitled to lifetime medical and dental
insurance benefits. In addition, if termination other than for Cause follows
the attainment by the executive of age 62 (or age 60 in the case of Mr.
Devlin), the executive will become fully vested in his outstanding time-
vesting equity-based awards and may also become vested in a pro rata portion
of all equity-based performance awards (depending upon the company's level of
performance to his date of termination).
Graf and Scott. Messrs. Graf and Scott have three-year Employment Agreements,
which expire on February 27, 2001. Under each agreement, the executive is en-
titled to receive an annual base salary of at least $300,000, an annual bonus
opportunity, and certain other specified benefits. Under each agreement, the
executive undertakes certain non-competition obligations to American General.
If an executive's employment is terminated other than for Cause (as defined
in his agreement for termination by the company), or by the executive for
Cause (as defined in his agreement for termination by the executive), the ex-
ecutive will be entitled to receive his then-current base salary as if employ-
ment had continued for the full term of the Employment Agreement. If the exec-
utive complies with certain non-competition obligations after such termina-
tion, if such termination occurs before the bonus for calendar year 2000 has
been awarded, the bonus for calendar year 2000 will be equal to the average of
the bonuses paid to the executive for the calendar years 1997, 1998, and 1999.
In addition, in the event the executive terminates his employment for Cause,
he will be entitled to bonuses or other incentive compensation, if any,
awarded but not yet paid as of the date of such termination.
Upon the occurrence of a Change in Control, the employment relationship under
each of the Employment Agreements will convert to an at-will relationship, the
executive will be released from his post-employment non-competition obliga-
tions, and the provisions of his Change in Control Severance Agreement will be
applicable. The agreements also provide for a payment to be made to the execu-
tive, if necessary, to eliminate the affects of the imposition of the excise
tax under Section 4999 of the Code on any payments made to such executives un-
der the Employment Agreements.
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20 AMERICAN GENERAL
<PAGE>
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CERTAIN RELATIONSHIPS AND TRANSACTIONS
In 1999, Mr. Attwell was Of Counsel to the law firm of Vinson & Elkins
L.L.P., which provided legal services to American General and its subsidiaries
during 1999.
In 1999, Ms. Tatlock served as an executive officer and director of Fiduciary
Trust Company International. In 1999, Fiduciary Trust Company International
served as an investment manager of more than $170 million of securities (val-
ued as of December 31, 1999) held in the American General Retirement Plan.
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.
SECTION 16(a) BENEFICIAL OWNERSHIP
REPORTING COMPLIANCE
Section 16 of the Securities Exchange Act of 1934 requires certain persons to
report their holdings and transactions in American General's equity securities
to the Securities and Exchange Commission on a timely basis. The following
holders of the company's 7% Convertible Preferred Stock, which was redeemed on
March 1, 2000, have filed late reports: Each of The Lucy B. Gooding 1995 Liv-
ing Trust and its trustees (Bonnie H. Smith, Robert A. Mills, and Lucy B.
Gooding) filed one late report on Form 4 covering one transaction by the
trust; and Ms. Smith filed one other late report on Form 4 covering one trans-
action.
INDEPENDENT AUDITORS
(Item 2 on Proxy Card)
The board of directors, adopting the recommendation of the Audit Committee,
has appointed the firm of Ernst & Young LLP as American General's independent
auditors to audit the accounts of the company for 2000 and recommends ratifi-
cation of the appointment by the shareholders at the Annual 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
American General's independent auditors for 1999.
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 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 discon-
tinued by the board of directors 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.
Shareholder Vote. Ratification of the appointment of Ernst & Young LLP as in-
dependent auditors for 2000 will require the affirmative vote of a majority of
the shares represented at the meeting.
The board of directors recommends a vote FOR ratification of the appointment
of Ernst & Young LLP as independent auditors.
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2000 PROXY STATEMENT 21
<PAGE>
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OTHER BUSINESS
2000 Annual Meeting. At the date of this proxy statement, the management of
American General 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 card will vote on
such matters 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.
Shareholder proposals must conform to the standards set out by the Securities
and Exchange Commission and must be received at American General's principal
offices on or before November 21, 2000, in order to be included in the proxy
materials for presentation at American General's annual meeting of
shareholders in 2001.
American General'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 nominations or shareholder proposals to the
corporate secretary. In the case of American General's annual meeting of
shareholders in 2001, to be timely, notice of director nominations or
shareholder proposals must be given to the corporate secretary between
November 28, 2000, and December 28, 2000. In the event that such annual
meeting is called for a date that is not within 30 days before or after April
27, 2001, notice by the shareholder in order to be timely must be given not
later than the close of business on the earlier of the tenth day following (i)
the day on which notice of the date of such annual meeting is mailed or (ii)
public disclosure of the date of such annual meeting is made. The notice must
contain certain specified information with respect to the shareholder making
the proposal, and the director 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.
By order of the board of directors,
/s/ Mark S. Berg
Mark S. Berg
Executive Vice President, General Counsel and
Corporate Secretary
March 21, 2000
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22 AMERICAN GENERAL
<PAGE>
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APPENDIX A
CHARTER OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
OF AMERICAN GENERAL CORPORATION
MEMBERSHIP
The board of directors, acting by resolution adopted by a majority of the
full board of directors, may elect from among its members an audit committee
of not fewer than three (3) nor more than ten (10) members, none of whom shall
be an officer of the company or any of its subsidiaries, or have any relation-
ship to the company or any of its subsidiaries that, in the opinion of the
board of directors, would interfere with the exercise of independent judgment
as a committee member. The chairman of the committee shall be elected by a ma-
jority of the full board of directors at the time the committee is elected or
at such time as it becomes necessary to elect a new chairman because of the
chairman's death, resignation or removal. Each member of the committee shall
be financially literate, or shall undertake to become financially literate
within a reasonable period of time after being elected to the committee, and
at least one member shall have accounting or related financial management ex-
pertise, as these qualifications are determined in the opinion of the board of
directors.
PROCESS
The audit committee shall meet at such times and places as may be fixed by
the committee, or on the call of its chairman, at such times and places as may
be designated in the call of such meetings. The committee shall also meet
promptly upon the request of the company's principal outside auditors. The
committee shall maintain a record of its proceedings and shall report to the
board of directors a summary of its activities not less frequently than twice
each fiscal year, along with such recommendations as the committee deems ap-
propriate.
RESPONSIBILITIES
The audit committee shall have the following powers and duties:
(a) subject to confirmation by the board of directors, to select,
evaluate and, where appropriate, replace the principal outside auditors (or
to nominate the principal outside auditors to be proposed for shareholder
approval in any proxy statement);
(b) to discuss with the principal outside auditors that the outside
auditors are ultimately accountable to the board of directors and the audit
committee;
(c) to review at regular intervals audit arrangements for the company and
its subsidiaries and the reports to be rendered;
(d) to review in advance the plan and scope of the audit of the company
and its subsidiaries to be performed by the principal outside auditors and
the related estimate of fees, and to recommend such audit plan, scope, and
fee estimate for board approval;
(e) to review non-audit services and fees of the company's principal
outside auditors, giving appropriate consideration to the possible effect
on the auditors' independence of each non-audit service provided;
(f) to ensure that the principal outside auditors submit to the committee
at least annually a formal written statement delineating all relationships
between the principal outside auditors and the company, and to review with
the principal outside auditors any disclosed relationships or services that
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2000 PROXY STATEMENT A-1
<PAGE>
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may impact the objectivity and independence of the outside auditors for the
purpose of recommending, as necessary, that the board of directors take
appropriate action to satisfy itself of the outside auditors' independence;
(g) to review periodically with the company's principal outside auditors
the accounting principles and policies of the company, including any
matters required to be discussed by Statement on Auditing Standards No. 61,
as it may be amended or supplemented;
(h) to review periodically with the company's principal outside auditors
such matters relating to the internal auditing systems and procedures and
the internal accounting controls of the company and its subsidiaries as the
committee or the board of directors may determine to be necessary or
desirable;
(i) to review periodically the coordination between the company's
principal outside auditors and the company's internal audit staff, and to
review with the company's principal outside auditors, upon completion of
their audit, their findings and recommendations and the responses of the
company's management to such findings and recommendations;
(j) to review and discuss with management the company's audited financial
statements;
(k) to recommend to the board of directors that the audited financial
statements presented to the audit committee be included in the company's
annual report on Form 10-K;
(l) to periodically review the company's corporate responsibility program
and receive information and assurances from management as to its
effectiveness;
(m) to conduct from time to time, or cause to be conducted, such
investigations or inquiries relating to the committee's responsibilities,
including accounting or audit matters, as the facts presented to the
committee warrant and as the committee may deem necessary or appropriate in
the interest of the company and its shareholders;
(n) to confer with and direct the officers of the company to the extent
necessary to exercise the committee's powers and to carry out its duties;
(o) to meet with representatives of any outside auditors of the company
and/or its internal audit staff in the absence of management, whenever the
committee deems such to be appropriate; and
(p) to perform such additional duties as may be assigned to the committee
by the board of directors.
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A-2 AMERICAN GENERAL
<PAGE>
[American General Logo]
American General Corporation
2929 Allen Parkway
Houston, Texas 77019-2155
www.americangeneral.com
<PAGE>
American General Corporation
P Annual Meeting of Shareholders on April 27, 2000
R 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
O substitution, and hereby authorizes each of them to represent and to vote,
as designated on the reverse side, all the shares of American General
X Corporation common stock that the undersigned is entitled to vote at the
annual meeting of shareholders to be held in Houston, Texas, on Thursday,
Y April 27, 2000, and at any postponement or adjournment thereof.
Election of the following Director Nominees is recommended by the Board of
Directors:
J. Evans Attwell, Brady F. Carruth, W. Lipscomb Davis Jr., Robert M. Devlin,
J. Edward Easler II, Larry D. Horner, Richard J.V. Johnson, Michael E.
Murphy, 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 American General
Corporation.
SEE REVERSE
SIDE
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. FOLD AND DETACH HERE .
Annual Meeting of Shareholders
Thursday, April 27, 2000
9 a.m. CDT
St. Regis Hotel
1919 Briar Oaks Lane
Houston, Texas
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
Please mark your 3147
[X] vote 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 in Item 1 and "FOR" Item 2. (However, if no direction is made to Thrift Plan shares,
see the Proxy Statement.)
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The Board of Directors recommends a vote "FOR" Item 1. The Board of Directors recommends a vote "FOR" Item 2.
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FOR WITHHELD FOR AGAINST ABSTAIN
[_] [_] [_] [_] [_]
1. Election of Directors. 2. Ratification of Appointment of Independent
(see reverse) Auditors.
For, except vote withheld from the following nominee(s):
- --------------------------------------------------------
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In their discretion, the proxies are authorized to vote upon such
other business as is properly brought before the meeting.
NOTE: Please sign exactly as name appears hereon. Joint owners should
each sign. When signing as attorney, executor, administrator, trustee
or guardian, give full title as such.
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SIGNATURE(S) DATE
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. FOLD AND DETACH HERE .
YOUR VOTE IS IMPORTANT TO US. THANK YOU FOR VOTING.
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