<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
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:
/X/ Preliminary proxy statement
/ / Definitive proxy statement
/ / Definitive additional materials
/ / Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
AMERICAN INTERNATIONAL GROUP, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
AMERICAN INTERNATIONAL GROUP, INC.
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
/X/ $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:/1
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(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
/ / 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:
- --------------------------------------------------------------------------------
(2) Form, schedule or registration statement no.:
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(3) Filing party:
- --------------------------------------------------------------------------------
(4) Date filed:
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- ---------------
/1 Set forth the amount on which the filing fee is calculated and state how it
was determined.
<PAGE> 2
AMERICAN INTERNATIONAL GROUP, INC.
70 Pine Street, New York, N.Y. 10270
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 24, 1995
April ,1995
To the Shareholders of
AMERICAN INTERNATIONAL GROUP, INC.:
The Annual Meeting of Shareholders of AMERICAN INTERNATIONAL GROUP, INC.
("AIG") will be held at the offices of AIG at 72 Wall Street, Eighth Floor, New
York, New York, on Wednesday, May 24, 1995, at 11:00 o'clock A.M., for the
following purposes:
1. To elect 16 directors of AIG to hold office until the next annual
election and until their successors are elected and qualified;
2. To act upon a proposal to amend the Restated Certificate of
Incorporation to increase the authorized number of shares of Common
Stock from 500,000,000 shares to 1,000,000,000 shares;
3. To act upon a proposal to select Coopers & Lybrand as independent
accountants for 1995;
4. To act upon a shareholder proposal requesting AIG to change the
composition of the Nominating Committee;
5. To act upon a shareholder proposal requesting AIG to initiate a study
relating to investment in tobacco companies; and
6. To transact any other business that may properly come before the
meeting.
Shareholders of record at the close of business on March 31, 1995 will be
entitled to vote at the meeting. During the ten days prior to the meeting, a
list of the shareholders will be available for inspection at the offices of AIG
at 70 Pine Street, New York, New York.
By Order of the Board of
Directors
KATHLEEN E. SHANNON
Secretary
- --------------------------------------------------------------------------------
If you cannot be present at the meeting, please sign the enclosed Proxy and
return it at once in the accompanying postage
prepaid envelope.
<PAGE> 3
AMERICAN INTERNATIONAL GROUP, INC.
70 Pine Street, New York, N.Y. 10270
PROXY STATEMENT
April , 1995
The enclosed proxy is solicited on behalf of the Board of Directors for use
at the Annual Meeting of Shareholders of American International Group, Inc., a
Delaware corporation ("AIG"), to be held on May 24, 1995, or at any adjournment
thereof. It may be revoked at any time prior to its use. Proxies will be voted
as specified and, unless otherwise specified, will be voted for the election of
directors, for the proposal to amend the Restated Certificate of Incorporation,
for the selection of Coopers & Lybrand as independent accountants for 1995,
against the shareholder proposal requesting AIG to change the composition of the
Nominating Committee, and against the shareholder proposal requesting AIG to
initiate a study related to investment in tobacco companies.
Only shareholders of record at the close of business on March 31, 1995 will
be entitled to vote at the meeting. On that date, shares (exclusive
of shares held by AIG and certain subsidiaries) of common stock, par value $2.50
per share ("AIG Common Stock"), were outstanding, each such share of stock
having one vote.
I. ELECTION OF DIRECTORS
Sixteen directors are to be elected at the meeting to hold office until the
next annual election and until their successors are elected and qualified. It is
the intention of the persons named in the accompanying proxy to vote for the
election of the nominees listed below, all of whom are currently members of your
Board of Directors. It is not expected that any of the nominees will become
unavailable for election as a director, but if any should prior to the meeting,
proxies will be voted for such persons as your Board of Directors shall
recommend. Directors will be elected by a plurality of the votes cast. Any
shares not voted (whether by abstention, broker non-vote, or otherwise) will
have no impact on the vote. The nominees and certain information supplied by
them to AIG are as follows:
M. BERNARD AIDINOFF PARTNER, SULLIVAN & CROMWELL
(Attorneys)
Age 66
Director since 1984
LLOYD M. BENTSEN FORMER UNITED STATES SECRETARY OF THE
TREASURY AND FORMER MEMBER,
Age 74 UNITED STATES SENATE
Director, Affiliated Computer Services, Inc.
Elected February 2, 1995 Panhandle Eastern Corporation
MARSHALL A. COHEN PRESIDENT AND CHIEF EXECUTIVE OFFICER,
THE MOLSON COMPANIES LIMITED
Age 59 (Brewing, Chemical Specialties, Retail
Merchandising and Sports and Entertainment)
Director since 1992 Director, Barrick Gold Corporation
Lafarge Corporation
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2
<PAGE> 4
BARBER B. CONABLE, JR. RETIRED; FORMER PRESIDENT, WORLD BANK, AND
FORMER MEMBER, UNITED STATES HOUSE OF
Age 72 REPRESENTATIVES
Director, Corning, Inc.
Director since 1991 First Empire State Corp.
Manufacturers & Traders Trust Co.
MARTIN FELDSTEIN PROFESSOR OF ECONOMICS, HARVARD UNIVERSITY;
PRESIDENT AND CHIEF EXECUTIVE OFFICER, NATIONAL
Age 55 BUREAU OF ECONOMIC RESEARCH
(Nonprofit Economic Research Center)
Director since 1987 Director, TRW, Inc.
J. P. Morgan & Co. Incorporated
HOUGHTON FREEMAN RETIRED VICE CHAIRMAN--FOREIGN GENERAL
INSURANCE, AIG
Age 73 Also serves as a director of C.V. Starr & Co.,
Inc. ("Starr") and Starr International Company,
Director since 1967 Inc. ("SICO"), private holding companies (see
"Ownership of Certain Securities")
LESLIE L. GONDA CHAIRMAN, INTERNATIONAL LEASE FINANCE
CORPORATION ("ILFC")
Age 75 (a wholly-owned subsidiary of AIG)
Director since 1990
MAURICE R. GREENBERG CHAIRMAN AND CHIEF EXECUTIVE OFFICER, AIG
Director, Transatlantic Holdings, Inc.
Age 69 ("Transatlantic"), which is owned
46 percent by AIG
Director since 1967 Also serves as Chairman of Transatlantic, a
director, President and Chief Executive Officer
of Starr, and a director of SICO and ILFC
- --------------------------------------------------------------------------------
3
<PAGE> 5
CARLA A. HILLS CHAIRMAN AND CHIEF EXECUTIVE OFFICER,
HILLS & COMPANY, INTERNATIONAL CONSULTANTS;
Age 61 FORMER UNITED STATES TRADE REPRESENTATIVE
(Hills & Company provides international
Director since 1993 investment, trade and risk advisory services)
Director, American Telephone and
Telegraph Company
Chevron Corporation
Time Warner Inc.
FRANK J. HOENEMEYER FINANCIAL CONSULTANT;
RETIRED VICE CHAIRMAN,
Age 75 PRUDENTIAL INSURANCE COMPANY OF AMERICA
Director since 1985 Director, Ariad Pharmaceuticals, Inc.
Wellsford Residential Property Trust
Carey Fiduciary Advisors, Inc.
JOHN I. HOWELL RETIRED CHAIRMAN, EXECUTIVE COMMITTEE, J. HENRY
SCHRODER BANK & TRUST COMPANY
Age 78
Director, Schroder Capital Funds, Inc.
Director since 1969 Schroder Asian Growth Fund, Inc.
EDWARD E. MATTHEWS VICE CHAIRMAN--FINANCE, AIG
Age 63 Also serves as a director of Transatlantic,
Starr, SICO and ILFC
Director since 1973
DEAN P. PHYPERS RETIRED SENIOR VICE PRESIDENT,
INTERNATIONAL BUSINESS MACHINES CORPORATION
Age 66
Director, Bethlehem Steel Corporation
Director since 1979 Cambrex
Church & Dwight Co. Inc.
JOHN J. ROBERTS VICE CHAIRMAN--EXTERNAL AFFAIRS, AIG
Age 72 Director, The Adams Express Company
Petroleum & Resources Corporation
Director since 1967 Also serves as a director of Starr and SICO
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4
<PAGE> 6
ERNEST E. STEMPEL VICE CHAIRMAN--LIFE INSURANCE, AIG
Age 78 Also serves as a director of Starr and SICO
Director since 1967
THOMAS R. TIZZIO PRESIDENT, AIG
Age 57 Also serves as a director of Transatlantic,
Starr and SICO
Director since 1986
- --------------------------------------------------------------------------------
The principal occupation or affiliation of the nominees is shown in bold
face type. Each of the directors who is also an executive officer of AIG has,
for more than five years, occupied an executive position with AIG or companies
that are now its subsidiaries, and, except as hereinafter noted, each other
director has occupied an executive position with his company or organization
listed above for at least five years. Mr. Bentsen served as United States
Secretary of the Treasury from January 20, 1993 until December 22, 1994, and as
United States Senator from Texas from 1971 until 1993. Mr. Conable retired on
September 1, 1991 as President of The World Bank. Ambassador Hills served as
United States Trade Representative from 1989 until 1993.
There were four regularly scheduled meetings, comprising all the meetings
of the Board, during 1994. All of the directors attended at least 75% of the
aggregate of all meetings of the directors and of the committees of the Board on
which they served.
Messrs. Aidinoff, Conable, Hoenemeyer, Howell and Phypers and Mrs. Hills
are the current members of the Audit Committee, which held five meetings during
1994. The primary function of the Audit Committee is to give general advice to
the Board and the officers in matters relating to the audits of the records of
account of AIG and its subsidiaries. The Committee reviews the performance and
scope of audit and non-audit services provided by the independent accountants
during the fiscal year and recommends to the Board the nomination of the
independent public accountants as auditors for the ensuing fiscal year. In
addition, the Committee reviews reports issued by the internal auditing
department and the independent accountants.
The Stock Option and Compensation Committee, which held seven meetings
during 1994, administers the various AIG stock option plans, establishes the
compensation of the Chief Executive Officer and sets policy for compensation for
senior management. Current members of the Committee are Messrs. Cohen, Conable,
Hoenemeyer and Howell.
The Executive Committee, which held five meetings in 1994, is comprised of
Messrs. Aidinoff, Greenberg, Howell, Roberts, Stempel and Tizzio. Although the
Executive Committee formally serves as a nominating committee, in practice the
Board serves as a Committee of the whole in determining nominees for membership.
Any member of the Board can present names for consideration, and no action is
taken on any candidate until that candidate is discussed with each non-employee
member of the Board. All proposed nominees for membership on the Board of
Directors submitted in writing by shareholders to the Secretary of AIG will be
brought to the attention of the Executive Committee. Messrs. Bentsen, Conable,
Feldstein, Greenberg, Hoenemeyer, Howell, Matthews and Phypers serve as members
of the Finance Committee, which oversees the financial affairs and investment
activities of AIG and its subsidiaries and which held twelve meetings during
1994.
5
<PAGE> 7
OWNERSHIP OF CERTAIN SECURITIES
The following table summarizes the ownership of equity securities of AIG
and its parents by the directors/nominees and by the directors and executive
officers as a group.
<TABLE>
<CAPTION>
EQUITY SECURITIES OF AIG AND ITS PARENTS
OWNED BENEFICIALLY AS OF JANUARY 31, 1995(1)
----------------------------------------------------------------------------------------------
STARR SICO
AIG COMMON STOCK VOTING STOCK
COMMON STOCK -------------------------- --------------------------
-------------------------------- AMOUNT AND AMOUNT AND
AMOUNT AND NATURE OF PERCENT NATURE OF PERCENT NATURE OF PERCENT
BENEFICIAL OF BENEFICIAL OF BENEFICIAL OF
DIRECTOR OWNERSHIP(2)(3)(4)(5) CLASS OWNERSHIP(6) CLASS OWNERSHIP CLASS
- ---------------------------- --------------------- ------- --------------- ------- --------------- -------
<S> <C> <C> <C> <C> <C> <C>
M. Bernard Aidinoff......... 4,648 (7) 0 -- 0 --
Lloyd M. Bentsen............ 0 -- 0 -- 0 --
Marshall A. Cohen........... 750 (7) 0 -- 0 --
Barber B. Conable, Jr. ..... 2,850 (7) 0 -- 0 --
Martin Feldstein............ 7,629 (7) 0 -- 0 --
Houghton Freeman............ 943,811 .30 250 1.18 10 9.09
Leslie L. Gonda............. 3,490,600 1.10 0 -- 0 --
M. R. Greenberg............. 7,117,131 2.25 5,000 23.67 10 9.09
Carla A. Hills.............. 1,458 (7) 0 -- 0 --
Frank J. Hoenemeyer......... 8,193 (7) 0 -- 0 --
John I. Howell.............. 37,765 .01 0 -- 0 --
Edward E. Matthews.......... 241,438 .08 2,250 10.65 10 9.09
Dean P. Phypers............. 5,646 (7) 0 -- 0 --
John J. Roberts............. 820,487 .26 1,250 4.73 10 9.09
Ernest E. Stempel........... 4,137,624 1.31 1,500 7.10 10 9.09
Thomas R. Tizzio............ 114,998 .04 1,500 7.10 10 9.09
All Directors and Executive
Officers of AIG as a Group
(40 individuals).......... 20,366,777 6.40 18,625 88.17 90 81.82
</TABLE>
- ------------
(1) Amounts of equity securities of Starr and SICO shown represent shares as to
which the individual has sole voting and investment power. With respect to
shares of AIG Common Stock, totals include shares as to which the
individual shares voting and investment power as follows:
Feldstein -- 5,625 shares, Freeman -- 587,845 shares, Howell -- 30,360
shares, Tizzio -- 47,011 shares, all directors and executive officers of
AIG as a group -- 1,022,187 shares.
(2) Amount of equity securities shown includes shares of AIG Common Stock
subject to options which may be exercised within 60 days as follows:
Freeman -- 58,380 shares, Greenberg -- 302,500 shares, Matthews -- 81,325
shares, Roberts -- 3,750 shares, Stempel -- 31,688 shares, Tizzio -- 67,987
shares, all directors and executive officers of AIG as a group -- 787,256
shares.
(3) Amount of shares shown for each of Messrs. Greenberg, Roberts and Stempel
does not include 3,365,540 shares held as trustee for the Starr Trust, as
to which they disclaim beneficial ownership. Inclusion of these shares
would increase the total ownership shown for each of the trustees by 1.07
percent.
(4) Amount of equity securities shown also excludes the following securities
owned by members of the named individual's immediate family or by the
individual as trustee as to which securities such individual has disclaimed
beneficial interest: Matthews -- 32,612 shares, Tizzio -- 8,868 shares, all
directors and executive officers of AIG as a group -- 63,804 shares.
(5) Amount of shares shown for Mr. Greenberg also excludes 977,150 shares owned
directly by Starr (representing 23.67 percent of the shares owned directly
by Starr) as to which Mr. Greenberg disclaims beneficial interest.
(6) As of February 1, 1995, Starr also had outstanding 4,000 shares of Common
Stock Class B, a non-voting stock, and 147 shares of Special Preferred
Stock, Series 3. None of the nominees holds such shares. Shares of Starr's
Series A, Series B, Series C, Series D, Series E, Series F, Series G,
Series H, Series I, Series J, Series K and Series L Preferred Stock and its
5% Subordinated Preferred Stock were held by the nominees as follows on
6
<PAGE> 8
January 31, 1995: Preferred Stock, Series A--Freeman (1,750), Greenberg
(5,000), Matthews (1,500), Roberts (2,500) and Stempel (2,500); Preferred
Stock, Series B--Freeman (1,750), Greenberg (5,000), Matthews (1,750),
Roberts (2,500) and Stempel (2,500); Preferred Stock, Series C--Freeman
(1,750), Greenberg (5,000), Matthews (1,750), Roberts (2,500), Stempel
(2,500) and Tizzio (125); Preferred Stock, Series D--Freeman (1,750),
Greenberg (5,000), Matthews (1,750), Roberts (2,500), Stempel (2,500) and
Tizzio (375); Preferred Stock, Series E--Freeman (2,000), Greenberg
(5,000), Matthews (2,000), Roberts (2,500), Stempel (2,500) and Tizzio
(625); Preferred Stock, Series F--Freeman (2,000), Greenberg (5,000),
Matthews (2,000), Roberts (2,500), Stempel (2,500) and Tizzio (1,000);
Preferred Stock, Series G--Freeman (2,250), Greenberg (5,000), Matthews
(2,250), Roberts (2,250), Stempel (2,250) and Tizzio (1,000); Preferred
Stock, Series H--Freeman (2,250), Greenberg (5,000), Matthews (2,250),
Roberts (1,500), Stempel (2,250) and Tizzio (1,000); Preferred Stock,
Series I--Freeman (2,250), Greenberg (5,000), Matthews (2,250), Roberts
(1,500), Stempel (2,250) and Tizzio (1,000); Preferred Stock, Series
J--Freeman (2,250), Greenberg (5,000), Matthews (2,250), Roberts (1,500),
Stempel (2,250) and Tizzio (1,000); Preferred Stock, Series K--Freeman
(2,250), Greenberg (5,000), Matthews (2,250), Roberts (1,500), Stempel
(2,250) and Tizzio (1,250); Preferred Stock, Series L--Freeman (2,250),
Greenberg (5,000), Matthews (2,250), Roberts (1,500), Stempel (2,250) and
Tizzio (1,250) and 5% Subordinated Preferred Stock--Freeman (50), Greenberg
(100), Roberts (50) and Stempel (70). The total outstanding shares were:
Preferred Stock, Series A (16,240), Preferred Stock, Series B (16,305),
Preferred Stock, Series C (17,055), Preferred Stock, Series D (18,055),
Preferred Stock, Series E (20,055), Preferred Stock, Series F (21,930),
Preferred Stock, Series G (21,875), Preferred Stock, Series H (21,500),
Preferred Stock, Series I (22,000), Preferred Stock Series J (23,500),
Preferred Stock, Series K (24,375), Preferred Stock, Series L (24,375) and
5% Subordinated Preferred Stock (340).
(7) Less than .01%.
The only person who, to the knowledge of AIG, owns in excess of five
percent of the AIG Common Stock is SICO, P.O. Box 152, Hamilton, Bermuda. At
January 31, 1995, SICO held 50,567,162 shares, or 16.01 percent of the
outstanding AIG Common Stock. The Starr Foundation and Starr (both having
executive offices at 70 Pine Street, New York, New York) held 11,382,332 shares
and 7,493,838 shares (including 3,365,540 shares held by the C. V. Starr & Co.
Inc. Trust), or 3.60 percent and 2.37 percent, respectively, of the outstanding
AIG Common Stock on that date.
Section 16(a) of the Securities Exchange Act of 1934 requires directors,
executive officers and 10 percent holders of AIG Common Stock to file reports
concerning their ownership of AIG equity securities. During 1994, each of Mr.
Freeman and Mr. Greenberg filed a late report on Form 4. Mr. Freeman failed to
timely report gifts of 2,619 shares made by his wife in 1992 and the acquisition
of 1,579 shares gifted to him by his wife in 1992, each of which transactions
was required to be previously reported. Mr. Greenberg failed to report timely
one transaction, the disposition of 84 shares made by Starr pursuant to the
Starr Purchase Plan. Each of Messrs. Manton, Mead and E.S.W. Tse, executive
officers of AIG, filed one late report. Mr. Manton failed to timely report the
sale of 50,000 shares held indirectly by the Edwin A.G. Manton and Florence
Manton 6% Annuity Trust. Mr. Mead failed to timely report the establishment of a
trust for which he is trustee, and the acquisition by gift from his direct
holdings in December 1993 of 200 shares by this trust. Mr. Tse failed to report
timely the acquisition of purchase privileges with respect to 51 shares under
the AIG Employee Stock Purchase Plan.
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
Directors who are employees of AIG or its subsidiaries do not receive fees
for service on the Board or the committees. Each other director of AIG receives
director's fees of $15,000 per year, plus $1,500 for each Board meeting
attended. An annual fee of $3,500 is paid to each member of each committee of
the Board. Members of each committee also receive $1,500 for each committee
meeting attended. In addition, directors who are not employees of AIG and its
subsidiaries each purchase 75 shares of AIG Common Stock per quarter, for which
they are reimbursed by AIG. During February 1995, Mr. Bentsen was granted an
option to purchase 10,000 shares of AIG Common Stock at $100 per share, and each
of Mrs. Hills and Messrs. Aidinoff, Cohen, Conable, Feldstein, Hoenemeyer,
Howell and Phypers was granted an option, to purchase 5,000 shares of AIG Common
Stock at $100 per share.
7
<PAGE> 9
Mr. Aidinoff is a partner in the law firm of Sullivan and Cromwell, and
Ambassador Hills is a partner in the law firm of Mudge, Rose, Alexander, Guthrie
& Ferdon, both of which in 1994 provided legal services to AIG and its
subsidiaries, receiving normal fees for services rendered. Ambassador Hills has
also entered into a consulting arrangement with AIG through Hills & Company,
whereby she provides services to AIG.
The following Summary Compensation Table shows the compensation accrued for
services in all capacities to AIG and its subsidiaries by M.R. Greenberg, the
Chairman and Chief Executive Officer of AIG, and the other four most highly
compensated executive officers of AIG at December 31, 1994.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
ANNUAL COMPENSATION ---------------------------------
NAME AND ------------------------ AWARDS PAYOUTS ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS STOCK OPTIONS(#) LTIP PAYOUTS(1) COMPENSATION(2)
- ----------------------------- ---- ---------- ---------- ---------------- ---------------- ------------------
<S> <C> <C> <C> <C> <C> <C>
M.R. Greenberg............... 1994 $1,000,000 $2,750,000(3) 25,000 $8,330,000 $ 3,080
Chairman and Chief 1993 1,231,731 1,100,000 25,000 2,685,750 2,998
Executive Officer 1992 1,147,115 1,100,000(4) 37,500(5) -- 2,909
E.E. Matthews................ 1994 416,924 350,000 10,000 2,940,000 3,080
Vice Chairman -- Finance 1993 316,923 350,000 10,000 789,750 2,998
1992 250,193 300,000(4) 15,000(5) -- 2,909
T.R. Tizzio.................. 1994 416,239 300,000 15,000 2,450,000 3,080
President 1993 329,273 300,000 10,000 631,800 2,998
1992 276,154 235,000(4) 15,000(5) -- 2,909
E.E. Stempel................. 1994 225,000 250,000 10,000 1,960,000
Vice Chairman -- Life
Insurance 1993 200,000 250,000 8,000 631,800 --
1992 175,000 250,000(4) 12,000(5) -- --
E.S.W. Tse................... 1994 275,000 195,834 7,000 1,176,000 34,375(6)
Executive Vice President -- 1993 266,580 199,430 6,000 315,900 33,322(6)
Life Insurance 1992 241,572 175,262(4) 7,500(5) -- 30,196(6)
</TABLE>
- ---------------
(1) Amounts shown in 1993 represent the value, based on the closing sale price
of AIG Common Stock on December 31, 1993 ($87.75), of shares of AIG Common
Stock allocated but not distributed under a Deferred Compensation Profit
Participation Plan (the "SICO Plan") provided to certain senior AIG
employees, including AIG executive officers, by SICO. The SICO Plan came
into being in 1975 when the voting shareholders and Board of Directors of
SICO, a private holding company whose principal asset consists of AIG Common
Stock, decided that a portion of the capital value of SICO should be used to
provide an incentive plan for the current and succeeding managements of all
American International companies, including AIG. Participation in the SICO
Plan by any person, and the amount of such participation, is at the sole
discretion of SICO's Board of Directors, and none of the costs of the
various benefits provided under such plan is charged to or absorbed by AIG.
The SICO Plan provides that shares may be set aside by SICO for the benefit
of the participant and distributed upon retirement. Prior to retirement, the
participant is not entitled to vote, dispose of or receive dividends with
respect to such shares. Shares are subject to forfeiture under certain
conditions, including but not limited to the participant's voluntary
termination of employment with AIG prior to normal retirement age. In
addition, SICO's Board of Directors may elect to pay a participant cash in
lieu of shares of AIG Common Stock. In March, 1993, a determination was made
as to the number of AIG shares allocable to the accounts of the participants
in the SICO Plan with respect to units awarded in December, 1990. The number
of AIG shares allocated to named executive officers is as follows:
Greenberg -- 30,600 shares; Matthews -- 9,000 shares; Tizzio -- 7,200
shares; Stempel -- 7,200 shares; Tse -- 3,600 shares. Amounts shown in 1994
represent the value, based on the closing sale price of AIG Common Stock at
December 31, 1994, of shares of AIG Common Stock allocated in March, 1993
but not distributed under the SICO Plan with respect to units awarded in
December, 1992. The number of shares allocated to named executive officers
is as follows: Greenberg -- 85,000 shares; Matthews -- 30,000 shares;
Tizzio -- 25,000 shares; Stempel -- 20,000 shares; Tse -- 12,000 shares.
(2) Amounts shown for Messrs. Greenberg, Matthews and Tizzio represent matching
contributions under AIG's 401(k) Plan. Amounts representing the accrual
under the Current Retirement Plan and the Supplemental Plan cannot readily
be individually calculated by the actuaries for those plans.
(3) Paid pursuant to the Chief Executive Officer Performance Based Compensation
Plan approved by the shareholders in May, 1994.
(4) Includes cash benefits paid by SICO under the SICO Plan. Commencing January
1, 1993, cash benefits were no longer payable under the SICO Plan.
(5) Adjusted to reflect 50 percent stock split effected as a stock dividend in
1993.
(6) Amounts shown reflect contributions by AIG to the American International
Companies (Hong Kong) Staff Provident Plan.
8
<PAGE> 10
The following table summarizes certain information with respect to grants
of options to purchase AIG Common Stock which were granted during 1994 to the
five individuals named in the Summary Compensation Table, to all executive
officers of AIG as a group, and to all employees.
OPTION GRANTS IN 1994
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE* AT ASSUMED ANNUAL
RATES OF STOCK PRICE
PERCENTAGE OF APPRECIATION FOR OPTION
TOTAL OPTIONS TERM
OPTIONS GRANTED TO EXERCISE --------------------------
DATE GRANTED EMPLOYEES PRICE EXPIRATION 10
NAME OF GRANT (1) DURING 1994 PER SHARE DATE 5 PERCENT(2) PERCENT(3)
- ------------------ --------- ------- ------------- --------- ---------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
M.R. Greenberg.... 12/15/94 25,000 6.33 $96.875 12/15/04 $ 1,523,104 $ 3,859,845
E.E. Matthews..... 12/15/94 10,000 2.53 96.875 12/15/04 609,242 1,543,938
T.R. Tizzio....... 12/15/94 15,000 3.80 96.875 12/15/04 913,862 2,315,907
E.E. Stempel...... 12/15/94 10,000 2.53 96.875 12/15/04 609,242 1,543,938
E.S.W. Tse........ 12/15/94 7,000 1.77 96.875 12/15/04 426,469 1,080,757
All Executive
Officers of AIG
as a Group (30
individuals).... Various 103,800 26.29 96.875(4) 12/15/04 6,323,928 16,026,076
All Employees..... Various 395,700 100.00 96.590(4) Various 23,982,098 60,775,348
All Shareholders
Stock
Appreciation(5).. N/A N/A N/A N/A N/A $19.2 billion $48.8 billion
All Unaffiliated
Shareholders
Stock
Appreciation(5).. N/A N/A N/A N/A N/A $ billion $ billion
</TABLE>
- ---------------
* Options would have no realizable value if there were no appreciation or if
there were depreciation from the price at which the options were granted,
$96.875.
(1) All options were granted pursuant to the 1991 Employee Stock Option Plan at
an exercise price equal to the fair market value of such stock at the date
of grant. The grants provide that 25 percent of the options granted on any
date become exercisable on each anniversary date in each of the successive
four years.
(2) Appreciated price would be $157.80 per share for the individuals named,
$157.80 per share for all executive officers and $157.33 per share for all
employees.
(3) Appreciated price would be $251.27 per share for the individuals named,
$251.27 per share for all executive officers and $250.53 per share for all
employees.
(4) Weighted average exercise price per share.
(5) Calculated using the 315,840,626 shares of AIG Common Stock outstanding at
December 31, 1994.
The following table summarizes certain information with respect to the
exercise of options to purchase AIG Common Stock during 1994 by the five
individuals named in the Summary Compensation Table and the unexercised options
to purchase AIG Common Stock held by such individuals at December 31, 1994.
AGGREGATED OPTION EXERCISES DURING THE YEAR ENDED DECEMBER 31, 1994
AND DECEMBER 31, 1994 OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT IN-THE-MONEY OPTIONS
SHARES DECEMBER 31, 1994 AT DECEMBER 31, 1994(2)
ACQUIRED ON VALUE ------------------------- -------------------------
NAME EXERCISE REALIZED(1) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
- ----------------------- ----------- ----------- ------------------------- -------------------------
<S> <C> <C> <C> <C>
M.R. Greenberg......... -- $ -- 302,500/67,500 $18,221,563/$619,063
E.E. Matthews.......... 9,300 640,473 81,325/28,375 4,465,934/ 361,406
T.R. Tizzio............ 3,700 280,244 67,987/33,375 3,508,713/ 367,031
E.E. Stempel........... 7,812 352,907 31,688/24,625 1,328,180/ 288,219
E.S.W. Tse............. 1,125 84,000 18,562/16,000 830,113/ 150,438
</TABLE>
- ---------------
(1) Aggregate market value on date of exercise (closing sale price as reported
in the New York Stock Exchange Composite Transactions Report) less aggregate
exercise price.
(2) Aggregate market value on December 31, 1994 (closing sale price as reported
in the New York Stock Exchange Composite Transactions Report) less aggregate
exercise price.
9
<PAGE> 11
The following table summarizes certain information with respect to benefits
that the proxy rules classify as granted under Long-Term Incentive Plans which
were granted during 1994 to the five individuals named in the Summary
Compensation Table.
LONG-TERM INCENTIVE PLANS -- AWARDS IN 1994(1)
<TABLE>
<CAPTION>
NAME NUMBER OF UNITS PERFORMANCE PERIOD ESTIMATED FUTURE PAYOUTS
---- --------------- ------------------ ------------------------
<S> <C> <C> <C>
M. R. Greenberg..................... 10,000 Two years 100,000 shares
E. E. Matthews...................... 3,500 Two years 35,000 shares
T. R. Tizzio........................ 3,000 Two years 30,000 shares
E. E. Stempel....................... 2,000 Two years 20,000 shares
E.S.W. Tse.......................... 1,500 Two years 15,000 shares
</TABLE>
- ------------
(1) Awards represent grants of units under the SICO Plan described in Note 1 to
the Summary Compensation Table on page 8 with respect to the two-year
period from January 1, 1995 through December 31, 1996. The SICO Plan
contains neither threshold amounts nor maximum payout limitations. The
number of shares of AIG Common Stock allocated to a unit upon payout is
based on a percentage selected by SICO's Board of Directors of between 20
percent and 100 percent of the increase of SICO's retained earnings
attributable to the AIG Common Stock held by SICO over the two year period.
As a result, the number of shares to be allocated with respect to units
held for the 1995-1996 period and the value of such shares cannot be
determined at this time. The number of shares shown under "Estimated Future
Payouts" represent the number of shares allocable to the named individuals
based upon the units awarded to them for the 1995-1996 period, assuming the
percentage selected by the SICO Board of Directors and the increase in
SICO's retained earnings for the 1995-1996 period were the same as those
used to allocate the shares of AIG Common Stock for the 1993-1994 period.
As noted in the description of the SICO Plan in Note 2 to the Summary
Compensation Table on page 8, prior to retirement, the participant is not
entitled to vote, dispose of or receive dividends with respect to such
shares, and the shares are subject to forfeiture under certain conditions,
including but not limited to the participant's voluntary termination of
employment with AIG prior to normal retirement age.
In order to facilitate the performance of their management
responsibilities, AIG provides to Messrs. Greenberg and Roberts automobiles and
drivers and to these individuals and other officers and employees the use of a
yacht and corporate aircraft, club memberships, recreational opportunities and
clerical and investment management services. These facilities are provided for
use for business purposes and the costs thereof are considered ordinary and
necessary business expenses of AIG. Any personal benefit any of these persons
may have derived from the use of these facilities or from the services provided
is regarded as incidental and the amount thereof has therefore not been included
in the compensation shown in the Summary Compensation Table on page 8.
Messrs. Freeman, Greenberg, Matthews, Roberts, Stempel, Tizzio and Tse or
certain of them, are directors and officers of SICO, directors and members of
the Starr Foundation and directors and officers of Starr. These individuals also
receive compensation as officers of Starr for services rendered to Starr as well
as compensation from SICO for services rendered to SICO. These services are not
considered to detract materially from the business time of these individuals
available for AIG matters and such compensation is not included in the
compensation for services to AIG shown in the Summary Compensation Table on page
8.
AIG maintains a policy of directors and officers liability insurance for
itself, its directors and officers, its subsidiaries, and their directors and
officers. The premium for the year ending May 24, 1995 is approximately
$2,800,000.
PENSION BENEFITS
Through March 31, 1985, when such plan was terminated, employees of AIG and
its subsidiaries who are citizens of the United States or non-citizens working
in the United States were covered under the American International Group, Inc.
Pension Plan, a contributory, qualified, defined benefit plan ("Original Pension
Plan"). The annual pension for a participant was equal to 1.75% of Average Final
Compensation multiplied by years of credited service as a participant (up to 40
years) less 1.4286% of his Social Security Benefit multiplied by years of
credited service (limited to 35 years). Average Final Compensation was defined
as the average annual compensation of a participant during the 3 consecutive
years in the last 10 years of his credited service affording the highest such
average, or during all of the years of his credited service if less than 3
years. Benefits were paid monthly during the life of the participant, or, if
applicable, during the joint lives of the participant and his contingent
annuitant. The annual retirement allowance for participants with at least 10
years of credited service was not less than 50% of 1.75% of Average Final
Compensation, or $1,200, whichever was greater. On April 1, 1985, a new
non-contributory, qualified, defined benefit plan ("Current Retirement Plan")
was established, with provisions substantially the same as the Original Pension
Plan, except for the non-contributory feature and except that in the annual
pension formula described above, 1.25% of Average Final Compensation is
multiplied by years of credited service as a participant
10
<PAGE> 12
(up to 44 years) less 1.25% of his Social Security Benefit multiplied by years
of credited service (limited to 35 years). The 1.25% of Average Final
Compensation is also used in the determination of the minimum retirement
allowance. Effective January 1, 1989, the Current Retirement Plan formula
changed in accordance with government mandated regulations from a Social
Security offset to a Social Security integration method of computation where the
Current Retirement Plan formula is the average of the final three years'
compensation but no greater than 150% of the employee's "covered compensation"
(the average of the Social Security Wage bases during the 35 years preceding the
Social Security retirement age) times credited service up to 35 years,
multiplied by an applicable Social Security retirement age factor. For employees
terminating from active service after January 1, 1993, the benefit formula for
credited service on and after April 1, 1985 changed from 1.25% to 1.35% of
Average Final Compensation.
As a result of the termination of the Original Pension Plan, all benefits
accruing to the termination date became vested regardless of an employee's years
of service and annuities were purchased for benefits payable under that plan.
AIG was entitled to receive the surplus remaining in the Original Pension Plan,
other than the portion of the surplus attributable to employee contributions.
The AIG savings plan ("401(k) Plan") for employees provides for salary
reduction contributions by employees and matching contributions by AIG. The
retirement benefits for most employees who participate in both the Current
Retirement Plan and the 401(k) Plan will be substantially greater than the
benefits which would have been received under the Original Pension Plan.
Annual amounts of normal retirement pension commencing at normal retirement
age of 65 based upon Average Final Compensation and credited service under the
Current Retirement Plan and the Supplemental Plan are illustrated in the
following table:
ESTIMATED ANNUAL PENSION AT AGE 65
<TABLE>
<CAPTION>
TOTAL YEARS OF CREDITED SERVICE AS A PLAN PARTICIPANT
3 YEAR AVERAGE ---------------------------------------------------------------------------------
FINAL COMPENSATION 10 YEARS 15 YEARS 20 YEARS 25 YEARS 30 YEARS 35 YEARS 40 YEARS
- ------------------ --------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 125,000..................... $ 16,236 $ 31,236 $ 46,236 $ 61,236 $ 61,236 $ 61,236 $ 61,236
$ 150,000..................... 22,236 40,236 58,236 76,236 76,236 76,236 76,236
$ 175,000..................... 28,236 49,236 70,236 91,236 91,236 91,236 91,236
$ 200,000..................... 34,236 58,236 82,236 106,236 106,236 106,236 106,236
$ 225,000..................... 40,236 67,236 94,236 121,236 121,236 121,236 121,236
$ 250,000..................... 46,236 76,236 106,236 136,236 136,236 136,236 136,236
$ 300,000..................... 58,236 94,236 130,236 166,236 166,236 166,236 166,236
$ 375,000..................... 76,236 121,236 166,236 211,236 211,236 211,236 211,236
$ 400,000..................... 82,236 130,236 178,236 226,236 226,236 226,236 226,236
$ 500,000..................... 106,236 166,236 226,236 286,236 286,236 286,236 286,236
$ 750,000..................... 166,236 256,236 346,236 436,236 436,236 436,236 436,236
$1,000,000..................... 226,236 346,236 466,236 586,236 586,236 586,236 586,236
$1,375,000..................... 316,236 481,236 646,236 811,236 811,236 811,236 811,236
</TABLE>
- ------------
With respect to the individuals named in the Summary Compensation Table on
page 8 other than Mr. Tse, their respective years of credited service (under
both plans) through December 31, 1994 are as follows: Greenberg--34 years;
Matthews--21.2 years; Stempel--44 years; Tizzio--26.7 years. Pensionable salary
includes only the regular salary paid by AIG and its subsidiaries and does not
include amounts attributable to bonuses or overtime pay. For such named
individuals, pensionable salary during 1994 was as follows:
Greenberg--$1,000,000; Matthews--$416,924; Stempel--$225,000; Tizzio--$416,239.
Amounts representing the accrual under the Current Retirement Plan for 1994
cannot readily be individually calculated by the actuaries for the Plan.
During 1986, AIG adopted the Supplemental Plan to provide additional
retirement benefits to designated executives and key employees. Under the
Supplemental Plan, annual benefits, not to exceed 60% of Average Final
Compensation, accrue at a rate of 2.4% of Average Final Compensation for each
year of service or fraction thereof for each full month of active employment.
The benefit payable under the Supplemental Plan is reduced by payments from the
Original Pension Plan, the Current Retirement Plan, Social Security Benefit and
any payments from a qualified pension plan of a prior employer. Messrs.
Greenberg, Matthews, Roberts, Stempel and Tizzio were participants in the
Supplemental Plan at December 31, 1994. Federal legislation limits the benefits
which may be payable from the Current Retirement Plan. Effective January 1,
1991, the Supplemental Plan was amended to provide a benefit to Current
Retirement Plan participants in an amount equal to the reduction in the benefit
payable as a result of the Federal limitation.
Mr. Tse participates in the American International Companies (Hong Kong)
Staff Provident Plan, a defined contribution plan which requires employee
contributions of five percent of salary. Contributions to this plan by AIG vary
based on employee service. During 1994, AIG contributed 12.5 percent of Mr Tse's
pensionable salary of $275,000 to the plan based on his 33.6 years of service.
11
<PAGE> 13
CERTAIN TRANSACTIONS
Certain transactions in 1994 effected in the ordinary course of business
between AIG and its subsidiaries and SICO and Starr are summarized in the
following table:
<TABLE>
<CAPTION>
SICO STARR
AND AND
SUBSIDIARIES SUBSIDIARIES
------------ ------------
<S> <C> <C>
(in thousands)
AIG and Subsidiaries Paid:
For production of insurance business*................................... $ -- $ 31,200
For services (at cost)**................................................ 1,200 42
Rentals................................................................. 3,000 --
AIG and Subsidiaries Received:
For services (at cost)**................................................ 900 11,500
Rentals................................................................. -- 1,400
</TABLE>
- ------------
*From these payments, which constituted approximately 35% of Starr's gross
revenues for the year, Starr is required to pay its operating expenses and
commissions due originating brokers. The amounts are paid at terms available
to unaffiliated parties, and represent approximately .1% of the gross revenues
of AIG.
**These services are provided and obtained at a cost which, in the opinion of
the management of AIG, does not exceed the cost of obtaining such services
from unaffiliated sources.
REPORT OF THE STOCK OPTION AND COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
The Stock Option and Compensation Committee, currently comprised of Messrs.
Cohen, Conable, Hoenemeyer and Howell, is the committee of the Board responsible
for establishing the compensation of the Chief Executive Officer and setting
policy for compensation at the senior levels of AIG, as well as administering
AIG's various employee stock option plans.
In determining the compensation which is appropriate for both the Chief
Executive Officer and other members of senior management, the Stock Option and
Compensation Committee's starting point is AIG's salary administration
philosophy, which is to pay within a range that helps meet business objectives
while considering external and internal influences and the level of funding
allocated to fixed compensation expenses. At senior positions, one of the
objectives is to pay at a level that allows AIG to attract, retain and motivate
key executives by paying them competitively compared to peers within a selected
group of major companies in the insurance industry while comparing AIG's
performance to the performance of those companies. In so doing, a variety of
factors are considered, including the performance of AIG relative to those
companies as measured by standards such as net income and its growth over prior
periods, return on equity and property and casualty underwriting performance;
the level of compensation paid to senior officers within the selected group of
companies; the level of individual contribution by these senior officers to the
performance of AIG; and, in the case of the Chief Executive Officer, his
compensation as a percentage of net income. In determining 1994 compensation,
the Committee did not use a specific formula in evaluating the various factors,
in determining the specific amount of compensation payable or in determining the
allocation of compensation to salary, bonus and stock option grants but believes
that such compensation is commensurate with the services rendered. The weight
given to each factor with respect to each element of compensation is within the
individual discretion and judgment of each member of the Committee. Each member
also takes the appropriateness of the entire package into account when
evaluating each element of compensation. With respect to the Chief Executive
Officer, the compensation in excess of the salary was determined under the
formula included in the performance-based compensation plan adopted and approved
by the shareholders in 1994, based upon the pre-tax return, with certain
adjustments, on AIG's consolidated common shareholders' equity as of December
31, 1993, with certain adjustments.
AIG's net income per share and after-tax return on equity (excluding
capital gains) for 1993 were $5.82 and 13.7 percent, respectively, and for 1994
were $6.69 and 13.7 percent, respectively. The average net income per share of
AIG's peer group, which is the same as the peer group used for the performance
graph presented below, was $ for 1993 and $3.29 for 1994, respectively,
and the average after-tax return on equity (excluding capital gains) was
reported by Conning & Company, a leading insurance research and asset management
company, to be percent for 1993 and estimated by Conning to be 10.5 percent
for 1994, respectively. AIG evaluates underwriting performance on the basis of
the combined ratio (which is the sum of the statutory loss ratio and the
statutory expense ratio), a measure of underwriting performance commonly used by
property and casualty insurers. AIG's property and casualty underwriting
performance for 1993 and 1994, as measured by its combined ratio, exceeded that
of AIG's peer group. AIG's combined ratios for 1993 and 1994 were 100.07 and
98.75, respectively,
12
<PAGE> 14
while those for its peer group averaged 116.33 and 110.4, respectively. The
total compensation of the Chief Executive Officer for 1994 represented
approximately .17 percent of net income of AIG for that year. The cash
compensation for both the Chief Executive Officer and the executive officers in
general ranked at approximately the 67th percentile when compared to the
compensation of executives of the companies included within the peer group for
1993, the last year for which comparable information is publicly available.
As part of its consideration of the Chief Executive Officer's compensation,
the Committee also reviewed the activities and accomplishments of the Chief
Executive Officer in promoting the long-term interests of AIG through
participation in the debate on the future of the financial services and
insurance industries, in discussions on trade relations and international
affairs and in similar endeavors.
On the basis of the general factors set forth above, the Committee
determined in 1993 the base salaries for 1994 and bonuses for 1993 performance
and in 1994, the base salaries for 1995 and the bonuses for 1994 performance.
The Committee has recognized, in making these compensation determinations,
that AIG has traditionally encouraged long-term strategic management and the
enhancement of shareholder value by providing high performing key executives the
opportunity for superior capital accumulation over the course of their careers
with AIG in the form of stock options. This is a tradition that the Committee
believes to have contributed significantly to AIG's considerable success over
the years.
Section 162(m) of the Internal Revenue Code (the "Code") denies a tax
deduction to any publicly-held corporation such as AIG for compensation paid to
the chief executive officer and four most highly compensated officers of a
corporation in a taxable year to the extent that any such individual's
compensation exceeds $1,000,000 unless certain requirements for
performance-based compensation are satisfied. It is currently the intention of
AIG that all compensation for the Chief Executive Officer and the four other
most highly compensated officers in excess of $1,000,000 will be
performance-based and therefore will be deductible in accordance with Section
162(m). Bonus payments to the Chief Executive Officer for 1994 pursuant to the
Plan will be deductible by AIG for federal income tax purposes.
No member of the Committee is a former or current officer or employee of
AIG or any of its affiliated companies or is receiving compensation from AIG in
any capacity other than as a director.
Stock Option and Compensation Committee
American International Group, Inc.
Marshall A. Cohen
Barber B. Conable
Frank J. Hoenemeyer
John I. Howell
13
<PAGE> 15
PERFORMANCE GRAPH
The following Performance Graph compares the cumulative total shareholder
return on AIG Common Stock for a five year period (December 31, 1989 to December
31, 1994) with the cumulative total return of the Standard & Poor's 500 stock
index (which includes AIG) and a peer group of companies (the "Peer Group")
consisting of eight multi-line or property/casualty insurance companies to which
AIG has traditionally compared its business and operations: Aetna Life &
Casualty Company, Chubb Corporation, CIGNA Corporation, CNA Financial
Corporation, The Continental Corporation, General Re Corporation, The St. Paul
Companies and USF & G Corporation. Although the prior years' Performance Graphs
included The Travelers Corporation, Travelers Inc. has not been included in this
year's Performance Graph because AIG does not believe that the successor company
is comparable to AIG in its overall business and operations. Dividend
reinvestment has been assumed and, with respect to companies in the Peer Group,
the returns of each such company have been weighted to reflect relative stock
market capitalization.
FIVE YEAR CUMULATIVE TOTAL RETURNS
VALUE OF $100 INVESTED ON DECEMBER 31, 1989
[CHART]
<TABLE>
<CAPTION>
MEASUREMENT PERIOD
(FISCAL YEAR COVERED) AIG S&P 500 PEER GROUP
<S> <C> <C> <C>
1989 100.00 100.00 100.00
1990 93.36 96.90 86.26
1991 120.10 126.42 110.92
1992 142.40 136.05 123.49
1993 162.29 149.76 125.64
1994 182.10 151.74 124.26
</TABLE>
II. APPROVAL OF A PROPOSAL TO AMEND THE RESTATED CERTIFICATE OF
INCORPORATION TO INCREASE THE AUTHORIZED NUMBER OF SHARES OF
COMMON STOCK
Your Board of Directors recommends that the shareholders approve a proposal
to amend the Restated Certificate of Incorporation of AIG (the "Certificate") to
increase the authorized shares of AIG Common Stock from 500,000,000 shares to
1,000,000,000 shares.
At January 31, 1995, there were 315,892,792 shares of AIG Common Stock
outstanding, and an additional 21,498,192 shares of AIG Common Stock were held
in AIG's treasury or by AIG subsidiaries. If the amendment is adopted,
approximately 660,000,000 shares of AIG Common Stock would be authorized and
unissued. At December 31, 1994, there were 4,855,696 shares of AIG Common Stock
reserved for issuance pursuant to exercise of stock options under the various
AIG option plans and exercise of purchase privileges under the Purchase Plan.
There are no pre-emptive rights relating to the AIG Common Stock. Except to the
extent that AIG may issue the shares of AIG Common Stock reserved therefor
pursuant to its various stock purchase and stock option plans, AIG has not
entered into any agreements or understandings, and has no present plans, for the
issuance of additional shares of AIG Common Stock, but wishes to have such
shares available for future issuances as the need may arise. No further
shareholder approval would be required prior to the issuance of the additional
shares authorized by this amendment.
The Board's purpose in proposing the increase in the number of authorized
shares of AIG Common Stock is to have shares available for future issuances from
time to time as and when the Board determines that such issuances
14
<PAGE> 16
may be desirable. The Securities and Exchange Commission requires AIG to discuss
how such shares could be used to make it more difficult to effect a change in
control of AIG. For example, the additional shares of AIG Common Stock could be
used to dilute the stock ownership of a person seeking to obtain control of AIG
or could be privately placed with purchasers who would support the Board in
opposing a hostile takeover attempt. This proposal to amend the Certificate is
not in response to any effort of which AIG is aware to accumulate AIG stock or
obtain control of AIG, nor is it part of a plan by management to recommend a
series of similar amendments to the Board of Directors and shareholders. The
Board does not presently contemplate recommending the adoption of any other
amendments to the Certificate which could be construed to affect the ability of
third parties to take over or change control of AIG.
In addition to AIG Common Stock, under the current Certificate AIG is
authorized to issue 6,000,000 shares of Preferred Stock, par value $5.00 per
share, in series, and at January 31, 1995, there were no shares of such
Preferred Stock outstanding.
Approval of this amendment to the Restated Certificate of Incorporation
requires approval by a majority of the shares of AIG Common Stock present and
entitled to vote at the meeting.
Your Board of Directors recommends a vote FOR the proposal to approve this
Amendment.
III. SELECTION OF ACCOUNTANTS
The Audit Committee and the Board of Directors have recommended the
employment of Coopers & Lybrand as independent accountants of AIG for 1995. That
firm has no direct or indirect financial interest in AIG or any of its parents
or subsidiaries. Representatives of that firm are expected to be present at the
Annual Meeting with an opportunity to make a statement if they desire to do so
and to be available to respond to appropriate questions.
Approval of the selection of accountants requires approval by a majority of
the shares of AIG Common Stock present and entitled to vote at the meeting. Any
shares not voted (whether by abstention, broker non-vote or otherwise) will have
no impact on the vote.
Your Board of Directors recommends a vote FOR the proposal to employ
Coopers & Lybrand.
IV. SHAREHOLDER PROPOSAL
The Presbyterian Church (U.S.A.), 100 Witherspoon Street, Louisville,
Kentucky 40202, which states that it owns 84,025 shares of AIG Common Stock, has
notified AIG in writing that it intends to present a resolution for action by
the shareholders at the Annual Meeting. The Adrian Dominican Sisters, 1257 East
Siena Heights Drive, Adrian, Michigan 49221, the Christian Brothers Investment
Services, Inc., 675 Third Avenue, New York, New York 10017-5704, and the Sisters
of Mercy of the Americas, Regional Community of Detroit, 29000 Eleven Mile Road,
Farmington Hills, Michigan 48336, who state that they hold 2,000 shares, 67,050
shares, and 600 shares, respectively, of AIG's Common Stock, have notified AIG
that they are joining as proponents of the resolution to be proposed by the
Presbyterian Church (U.S.A.). The text of the resolution and the supporting
statement submitted by the sponsors are as follows:
"1995 SHAREHOLDER PROPOSAL FOR AMERICAN INTERNATIONAL GROUP
WHEREAS American International Group has, as a practical matter, no Nominating
Committee, the full Board acting on the recommendation of the Executive
Committee, two-thirds of whom are top management officials of AIG;
WHEREAS we believe our company would benefit from the leadership of directors
who have been nominated through a more independent process;
WHEREAS we believe the creation of a nominating committee composed of
independent directors would strengthen the possibility of having directors who
will bring a fresh and independent viewpoint when needed to the deliberations of
our Board;
THEREFORE, resolved that the Board of Directors create a Nominating Committee of
at least four members. All members of the Nominating Committee shall be
independent directors who:
1. have not been an executive of the company or its affiliates during
the last five years.
2. is not, and have not been, a member of a company that is one of the
company's paid advisors or consultants.
3. is not employed by a significant customer or supplier.
4. do not, and did not, have a personal services contract with the
company.
5. are not employed by a tax-exempt organization that receives
significant contributions from the company.
15
<PAGE> 17
6. are not a relative of any management of the company.
7. have not had any business relationship that would be required to be
disclosed under Regulation S-K.
8. are not serving the final year of his/her term on the Board.
9. are not directors or officers of a corporation on which the
chairman, CEO, President or any other officer of AIG serves as a
director.
SUPPORTING STATEMENT
We believe that directors who are free of any relationships which might
influence or preclude their ability to exercise oversight of management and
operations when needed are beneficial to a corporation. Such independence can
serve the shareholders in numerous ways including resolution of conflicting
views within management, or raising financial, public policy or issues of
corporate policy and practice which need addressed.
Corporate leaders and institutional investors recognize the value of
independence. A November 1992 survey of 600 directors of Fortune 1,000
corporations, conducted by Directorship and endorsed by the Business Roundtable,
found that 93 percent believed that a majority of the board should be composed
of outside, independent directors. A majority also believed that the nominating
committee should consist entirely of outside, independent directors. We agree.
A Nominating Committee composed solely of independent directors would
remove any question that candidates for the Board had been selected only by the
current management. The use of the AIG Executive Committee, two-thirds of whose
members are management, to intially screen possible Board members may result in
a Board with independent, impartial directors. This is not guaranteed, however.
The adoption of this proposal would establish an unclouded process, and insure
that candidates are proposed through a thoroughly independent, objective
process. We ask for your support."
MANAGEMENT'S STATEMENT IN OPPOSITION
Your Board of Directors opposes this proposal. Your current Board and its
predecessors have led AIG to prosperity and growth in value for all
shareholders; AIG's long-term performance has consistently outpaced that of its
competitors. Your Board of Directors does not believe that there would be any
demonstrable improvement in the composition of the Board or the performance of
AIG if the proposal were to be adopted. Your Board of Directors stresses the
complete participation of all members in the Board decision-making process,
without distinction based on employee or independent status. Your Board believes
that the views of management are critically important to the nominating process
at AIG, where management directors have substantial personal ownership of AIG
shares and their interests as shareholders are entirely consistent with those of
nonaffiliated shareholders. There is no justification for excluding this
substantial interest from the nominating process. Because in practice your Board
serves as a committee of the whole in determining nominees for membership, the
views of the independent directors, who comprise a majority of the Board, are
well represented. Any member of the Board can present names for consideration,
and no action is taken on any candidate until that candidate is discussed with
each non-employee member of the Board. In sum, your Board of Directors believes
that its existing policies and practices with respect to the nominating process
have resulted in significant benefit to both AIG and its shareholders, and that
the suggested changes are neither necessary nor appropriate. Therefore, your
Board of Directors urges a vote against this proposal.
Approval of this proposal requires approval by a majority of the shares of
AIG Common Stock present and entitled to vote at the meeting. Any shares not
voted (whether by abstention, broker non-vote or otherwise) will have no impact
on the vote.
Your Board of Directors recommends a vote AGAINST this proposal.
V. SHAREHOLDER PROPOSAL
The Sisters of Mercy Consolidated Asset Management Program, 20 Washington
Square North, New York, New York 10011, which states that it owns 2,500 shares
of AIG Common Stock, has notified AIG in writing that it intends to present a
resolution for action by the shareholders at the Annual Meeting. The Sisters of
Charity of the Incarnate Word Retirement Trust, 2600 North Loop West, Houston,
Texas 77092, and the Sisters of Mercy of the Americas, Regional Community of
Chicago, 10024 S. Central Park Avenue, Chicago, Illinois 60642, who state that
they hold 16,250 shares and 1,100 shares, respectively, of AIG's Common Stock,
have notified AIG that they are joining as
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proponents of the resolution to be proposed by the Mercy Consolidated Assets
Management Program. The text of the resolution and the supporting statement
submitted by the sponsors are as follows:
"AMERICAN INTERNATIONAL GROUP
WHEREAS -- We are deeply concerned about the ethical implications of insurance
companies investing in the tobacco industry, especially when they are so
critically aware of the negative health effects of smoking;
-- Cigarette smoking is the leading cause of death and disease in the
United States causing an estimated 430,000 deaths last year, with
53,000 more dying from the effects of passive smoking;
-- In 1994, the Centers for Disease Control and Prevention released an
article "Medical-Care Expenditures Attributable to Cigarette
Smoking, United States -- 1993." The study found that
smoking-related disease in the United States has an enormous
economic impact. In 1993, it is estimated that the direct medical
costs associated with smoking totaled $30 billion;
-- Cigarette companies also have been criticized for their special
promotion campaigns aimed at low-income persons, women and
minorities. The RJR Nabisco "Joe Camel" ads have been severely
criticized by the U.S. Surgeon General who demanded the company
drop the ad campaign because of its manipulative appeal to young
people;
-- "AIG's life operations . . . comprise the largest and most
extensive world-wide life insurance network of any company, and are
a major source of earnings growth and stability for AIG;" (Annual
Report)
-- Our company has no policy to non-invest in tobacco equities, and
yet gives preferential rates to non-smokers. We believe AIG should
seriously review its stand related to these apparently
contradictory positions on tobacco and determine future options.
RESOLVED that shareholders request the Board to initiate a study of the
appropriate ethical responses for the Company to take related to investment in
tobacco companies and report to requesting shareholders the results of this
review.
We believe this review should focus on the following questions:
1. The appropriateness of an insurance company holding stock in
tobacco companies and whether it is socially or financially
responsible to divest of this stock. This should take into account
the depressed price of tobacco stock, and whether this fact can any
longer be used in arguments against divestment in the name of
fiduciary responsibility;
2. Ways in which AIG might keep its shares and creatively express
itself as a major investor to the tobacco companies regarding their
policies and practices;
3. The impact smoking has on AIG insurance payments for
smoking-attributable deaths, diseases, and property loss.
SUPPORTING STATEMENT
Our Company exists to insure health. We reward people for not using cigarettes;
yet we remain open to investing in companies which produce them. Sears-Allstate
has a smoke-free equity portfolio. Other insurance companies have policies
and/or practices that have resulted in prohibitions or limitations on their
various investments in tobacco companies. Meanwhile institutions like Harvard
and Johns Hopkins have sold all tobacco stocks. We believe this study will
enable concerned shareholders and customers to know the mind of our Company on
this crucial issue."
MANAGEMENT'S STATEMENT IN OPPOSITION
Your Board of Directors opposes this proposal. AIG complies with all
Federal, state and other laws and regulations regarding its investment
portfolios. Your Board of Directors believes that AIG shareholders are best
served by not co-mingling investment decisions with what may be considered to be
social issues. Your Board of Directors therefore does not believe it would be
appropriate for AIG to conduct the study or issue the report to shareholders
requested in this proposal. Your Board of Directors urges a vote against this
proposal.
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Approval of this proposal requires approval by a majority of the shares of
AIG Common Stock present and entitled to vote at the meeting. Any shares not
voted (whether by abstention, broker non-vote or otherwise) will have no impact
on the vote.
Your Board of Directors recommends a vote AGAINST this proposal.
VI. SHAREHOLDER PROPOSALS FOR 1996 ANNUAL MEETING
All suggestions from shareholders are given careful attention. Proposals
intended for inclusion in next year's proxy statement should be sent to the AIG
Secretary at 70 Pine Street, New York, New York 10270 and must be received by
December 4, 1995.
VII. OTHER MATTERS
If any other matters properly come before the meeting, it is the intention
of the persons named in the accompanying proxy form to vote the proxy in
accordance with their judgment on such matters.
PROXY SOLICITATION
AIG will bear the cost of this solicitation of proxies. Proxies may be
solicited by mail, personal interview, telephone and telegraph by directors,
their associates, and approximately eight officers and regular employees of AIG
and its subsidiaries. In addition to the foregoing, AIG has retained Georgeson &
Co. to assist in the solicitation of proxies for a fee of approximately $8,000
plus reasonable out-of-pocket expenses and disbursements of that firm. AIG will
also reimburse brokers and others holding stock in their names, or in the names
of nominees, for forwarding proxy materials to their principals.
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AMERICAN INTERNATIONAL GROUP, INC.
------------------------
ANNUAL MEETING OF SHAREHOLDERS
------------------------
MAY 24, 1995
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
The undersigned hereby appoints M.R. Greenberg, John J. Roberts and Ernest
E. Stempel, and each of them, with full power to act without the other and with
full power of substitution, as proxies to represent and to vote, as directed
herein, all shares the undersigned is entitled to vote at the annual meeting of
the shareholders of American International Group, Inc. to be held at Eighth
Floor, 72 Wall Street, New York, New York 10270, on Wednesday, May 24, 1995 at
11:00 a.m., and all adjournments thereof, as follows:
PLEASE MARK, DATE AND SIGN THIS PROXY ON THE REVERSE SIDE AND RETURN IT
PROMPTLY USING THE ENCLOSED POSTAGE PREPAID ENVELOPE.
UNLESS OTHERWISE MARKED, THE PROXIES ARE APPOINTED WITH AUTHORITY TO VOTE "FOR"
ALL NOMINEES FOR ELECTION, "FOR" THE PROPOSAL TO AMEND THE RESTATED
CERTIFICATE OF INCORPORATION, "FOR" THE APPOINTMENT OF
INDEPENDENT ACCOUNTANTS AND "AGAINST" ITEM 4 AND ITEM 5.
(CONTINUED AND TO BE SIGNED ON THE REVERSE SIDE.)
<PAGE> 21
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" ALL NOMINEES IN ITEM 1, "FOR"
ITEMS 2 AND 3, AND "AGAINST" ITEMS 4 AND 5.
1. Election as Directors of the following identified in the Proxy Statement: M.
Aidinoff, L. Bentsen, M. Cohen, B. Conable, M. Feldstein, H. Freeman, L.
Gonda, M. Greenberg, C. Hills, F. Hoenemeyer, J. Howell, E. Matthews, D.
Phypers, J. Roberts, E. Stempel, T. Tizzio
For / / Withhold Authority / /
(INSTRUCTION: To withhold authority to vote for any of the foregoing
individuals, write the name(s) on the following lines.)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
2. Approval of Amendment of Restated Certificate of Incorporation,
For / / Against / / Abstain / /
3. Appointment of Independent Accountants
For / / Against / / Abstain / /
4. Shareholder Proposal Described in the Proxy Statement
For / / Against / / Abstain / /
5. Shareholder Proposal Described in the Proxy Statement
For / / Against / / Abstain / /
If you have noted either an Address Change or made Comments on the reverse side
of the card, mark here.
Address Change and/or Comments Mark Here / /
In their discretion to vote upon other matters that may properly come before the
meeting.
Please sign exactly as your name appears to the left.
DATED , 1995
-------------------------------
- -------------------------------------------
Signature
- -------------------------------------------
Signature
WHEN SIGNING AS ATTORNEY, EXECUTOR, ADMINISTRATOR, TRUSTEE OR GUARDIAN, PLEASE
GIVE YOUR FULL TITLE. IF SHARES ARE HELD JOINTLY, EACH HOLDER SHOULD SIGN.
VOTES MUST BE INDICATED
(X) IN BLACK OR BLUE INK. / /
SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED ENVELOPE.
