<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:
/ / Preliminary proxy statement
/X/ 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.
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(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:
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(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:
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/ / 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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/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 20, 1996
April 2, 1996
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 Monday, May 20, 1996, at 11:00 o'clock A.M., for the
following purposes:
1. To elect 15 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 adopt a 1996 Employee Stock Purchase Plan;
3. To act upon a proposal to select Coopers & Lybrand L.L.P. as independent
accountants for 1996;
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 provide a report on
certain Board matters; and
6. To transact any other business that may properly come before the
meeting.
Shareholders of record at the close of business on March 29, 1996 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
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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 2, 1996
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 20, 1996, 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 adopt a 1996 Employee Stock Purchase Plan, for
the selection of Coopers & Lybrand L.L.P. as independent accountants for 1996,
against the shareholder proposal requesting AIG to change the composition of the
Nominating Committee, and against the shareholder proposal requesting AIG to
provide a report on certain Board matters. These proxy materials are being
mailed to shareholders of AIG commencing on or about April 2, 1996.
Only shareholders of record at the close of business on March 29, 1996 will
be entitled to vote at the meeting. On that date, 473,288,982 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
Fifteen 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 except Messrs. Evan G.
Greenberg and Edmund S.W. Tse are currently members of your Board of Directors.
Messrs. Freeman, Howell and Stempel, who are current members of your Board, will
retire at the Annual Meeting. 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:
<TABLE>
<S> <C> <C>
[PICTURE] M. BERNARD AIDINOFF PARTNER, SULLIVAN & CROMWELL
Age 67 (Attorneys)
Director since 1984
[PICTURE] LLOYD M. BENTSEN PARTNER, VERNER, LIIPFERT, BERNHARD,
MCPHERSON & HAND (Attorneys);
Age 75 FORMER UNITED STATES SECRETARY OF THE
TREASURY AND FORMER MEMBER,
Director since 1995 UNITED STATES SENATE
Director, IVAX Corp.
Panhandle Eastern Corporation
</TABLE>
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1
<PAGE> 4
<TABLE>
<S> <C> <C>
[PICTURE] MARSHALL A. COHEN PRESIDENT AND CHIEF EXECUTIVE OFFICER,
THE MOLSON COMPANIES LIMITED
Age 60 (Brewing, Chemical Specialties, Retail
Director since 1992 Merchandising and Sports and Entertainment)
Director, Barrick Gold Corporation
Lafarge Corporation
[PICTURE] BARBER B. CONABLE, JR. RETIRED; FORMER PRESIDENT, WORLD BANK, AND
FORMER MEMBER, UNITED STATES HOUSE OF
Age 73 REPRESENTATIVES
Director since 1991 Director, First Empire State Corp.
Manufacturers & Traders Trust Co.
[PICTURE] MARTIN S. FELDSTEIN PROFESSOR OF ECONOMICS, HARVARD UNIVERSITY;
PRESIDENT AND CHIEF EXECUTIVE OFFICER, NATIONAL
Age 56 BUREAU OF ECONOMIC RESEARCH
(Nonprofit Economic Research Center)
Director since 1987
Director, TRW, Inc.
J. P. Morgan & Co. Incorporated
[PICTURE] LESLIE L. GONDA CHAIRMAN, INTERNATIONAL LEASE FINANCE
CORPORATION ("ILFC")
Age 76 (a wholly-owned subsidiary of AIG)
Director since 1990
[PICTURE] EVAN G. GREENBERG EXECUTIVE VICE PRESIDENT--FOREIGN GENERAL
INSURANCE, AIG
Age 41
Also serves as a director of C.V. Starr & Co.,
Inc. ("Starr") and Starr International Company,
Inc. ("SICO"), private holding companies (see
"Ownership of Certain Securities")
[PICTURE] MAURICE R. GREENBERG CHAIRMAN AND CHIEF EXECUTIVE OFFICER, AIG
Age 70 Director, Transatlantic Holdings, Inc.
("Transatlantic"), which is owned
Director since 1967 48 percent by AIG
Also serves as Chairman of Transatlantic, a
director, President and Chief Executive Officer
of Starr, and a director of SICO and ILFC
</TABLE>
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2
<PAGE> 5
<TABLE>
<S> <C> <C>
[PICTURE] CARLA A. HILLS CHAIRMAN AND CHIEF EXECUTIVE OFFICER,
HILLS & COMPANY, INTERNATIONAL CONSULTANTS;
Age 62 FORMER UNITED STATES TRADE REPRESENTATIVE
(Hills & Company provides international
Director since 1993 investment, trade and risk advisory services)
Director, AT&T Corp.
Chevron Corporation
Time Warner Inc.
[PICTURE] FRANK J. HOENEMEYER FINANCIAL CONSULTANT;
RETIRED VICE CHAIRMAN,
Age 76 PRUDENTIAL INSURANCE COMPANY OF AMERICA
Director since 1985 Director, Ariad Pharmaceuticals, Inc.
W.P. Carey & Co. Inc.
Mitsui Trust Bank (USA)
Cincinnati, Inc.
Wellsford Residential Property Trust
[PICTURE] EDWARD E. MATTHEWS VICE CHAIRMAN--FINANCE, AIG
Age 64 Also serves as a director of Transatlantic,
Starr, SICO and ILFC
Director since 1973
[PICTURE] DEAN P. PHYPERS RETIRED SENIOR VICE PRESIDENT,
INTERNATIONAL BUSINESS MACHINES CORPORATION
Age 67
Director, Bethlehem Steel Corporation
Director since 1979 Cambrex
Church & Dwight Co. Inc.
[PICTURE] JOHN J. ROBERTS VICE CHAIRMAN--EXTERNAL AFFAIRS, AIG
Age 73 Director, The Adams Express Company
Petroleum & Resources Corporation
Director since 1967 Also serves as a director of Starr and SICO
[PICTURE] THOMAS R. TIZZIO PRESIDENT, AIG
Age 58 Also serves as a director of Transatlantic,
Starr and SICO
Director since 1986
</TABLE>
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3
<PAGE> 6
<TABLE>
<S> <C> <C>
[PICTURE] EDMUND S.W. TSE EXECUTIVE VICE PRESIDENT -- LIFE
INSURANCE, AIG
Age 58
Also serves as a director of Starr and SICO
</TABLE>
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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. Evan G. Greenberg is
the son of M.R. Greenberg.
There were four regularly scheduled meetings, and one special meeting,
comprising all the meetings of the Board, during 1995. All of the directors
except Mr. Bentsen 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 four meetings during
1995. 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 eight meetings
during 1995, 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 nine meetings in 1995, is comprised of
Messrs. Aidinoff, M.R. 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, M.R. 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 1995.
4
<PAGE> 7
OWNERSHIP OF CERTAIN SECURITIES
The following table summarizes the ownership of equity securities of AIG
and its parents by the directors and nominees, by the executive officers named
in the Summary Compensation Table (as set forth under the caption "Compensation
of Directors and Executive Officers") 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, 1996(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 OR EXECUTIVE OFFICER OWNERSHIP(2)(3)(4)(5) CLASS OWNERSHIP(6) CLASS OWNERSHIP CLASS
- ----------------------------- --------------------- ------- --------------- ------- --------------- -------
<S> <C> <C> <C> <C> <C> <C>
M. Bernard Aidinoff.......... 14,922 (7) 0 -- 0 --
Lloyd M. Bentsen............. 5,560 (7) 0 -- 0 --
Marshall A. Cohen............ 9,075 (7) 0 -- 0 --
Barber B. Conable, Jr. ...... 12,225 (7) 0 -- 0 --
Martin S. Feldstein.......... 19,393 (7) 0 -- 0 --
Houghton Freeman............. 1,376,240 .29 250 1.26 10 9.09
Leslie L. Gonda.............. 5,208,450 1.10 0 -- 0 --
E.G. Greenberg............... 50,552 .01 1,000 5.03 0 --
M. R. Greenberg.............. 10,675,162 2.25 5,000 25.16 10 9.09
Carla A. Hills............... 10,136 (7) 0 -- 0 --
Frank J. Hoenemeyer.......... 20,239 (7) 0 -- 0 --
John I. Howell............... 64,597 .01 0 -- 0 --
Edward E. Matthews........... 379,747 .08 2,250 11.32 10 9.09
Dean P. Phypers.............. 16,419 (7) 0 -- 0 --
John J. Roberts.............. 1,221,811 .26 1,000 5.03 10 9.09
Ernest E. Stempel............ 6,162,522 1.30 1,500 7.55 10 9.09
Thomas R. Tizzio............. 191,900 .04 1,500 7.55 10 9.09
Edmund S.W. Tse.............. 101,481 .02 1,125 5.66 10 9.09
All Directors and Executive
Officers of AIG as a Group
(32 individuals)........... 28,384,197 6.20 16,500 83.02 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 with his wife, Freeman -- 847,727 shares with
co-trustees, E.G. Greenberg -- 2,627 shares with co-trustees, M.R.
Greenberg -- 10,066,726 shares with his wife and 25,340 shares with
co-trustees, Howell -- 45,540 shares with his wife, Tizzio -- 73,801 shares
with his wife, all directors and executive officers of AIG as a
group -- 11,131,506 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:
Aidinoff -- 7,500 shares, Bentsen -- 3,750 shares, Cohen -- 7,500 shares,
Conable -- 7,500 shares, Feldstein -- 7,500 shares, Freeman -- 80,634
shares, E.G. Greenberg -- 11,062 shares, M.R. Greenberg -- 385,312 shares,
Hills -- 7,500 shares, Hoenemeyer -- 7,500 shares, Howell -- 7,500 shares,
Matthews -- 126,000 shares, Phypers -- 7,500 shares, Roberts -- 8,625
shares, Stempel -- 54,852 shares, Tizzio -- 118,031 shares, Tse -- 38,855
shares, all directors and executive officers of AIG as a group -- 1,089,251
shares.
(3) Amount of shares shown for each of Messrs. M.R. Greenberg, Roberts and
Stempel does not include 4,974,512 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
1.05 percent.
(4) Amount of equity securities shown also excludes the following securities
owned by members of the named individual's immediate family as to which
securities such individual has disclaimed beneficial ownership:
Matthews -- 4,750 shares, Tizzio -- 13,302 shares, all directors and
executive officers of AIG as a group -- 18,205 shares.
(5) Amount of shares shown for Mr. M.R. Greenberg also excludes 1,575,655 shares
owned directly by Starr (representing 25.16 percent of the shares owned
directly by Starr) as to which Mr. M.R. Greenberg disclaims beneficial
ownership.
5
<PAGE> 8
(Footnotes continued from preceding page)
(6) As of February 1, 1996, Starr also had outstanding 4,500 shares of Common
Stock Class B, a non-voting stock, and 143 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, Series L and Series M Preferred
Stock and its 5% Subordinated Preferred Stock were held by the nominees as
follows on January 31, 1996: Preferred Stock, Series A--M.R. Greenberg
(5,000), Matthews (1,500), and Roberts (2,500); Preferred Stock, Series
B--M.R. Greenberg (5,000), Matthews (1,750) and Roberts (2,500); Preferred
Stock, Series C--M.R. Greenberg (5,000), Matthews (1,750), Roberts (2,500)
and Tizzio (125); Preferred Stock, Series D--M.R. Greenberg (5,000),
Matthews (1,750), Roberts (2,500) and Tizzio (375); Preferred Stock, Series
E--M.R. Greenberg (5,000), Matthews (2,000), Roberts (2,500), Tizzio (625)
and Tse (125); Preferred Stock, Series F--M.R. Greenberg (5,000), Matthews
(2,000), Roberts (2,500), Tizzio (1,000) and Tse (125); Preferred Stock,
Series G--M.R. Greenberg (5,000), Matthews (2,250), Roberts (2,250), Tizzio
(1,000) and Tse (250); Preferred Stock, Series H--E.G. Greenberg (125),
M.R. Greenberg (5,000), Matthews (2,250), Roberts (1,500), Tizzio (1,000)
and Tse (250); Preferred Stock, Series I--E.G. Greenberg (125), M.R.
Greenberg (5,000), Matthews (2,250), Roberts (1,500), Tizzio (1,000) and
Tse (250); Preferred Stock, Series J--E.G. Greenberg (250), M.R. Greenberg
(5,000), Matthews (2,250), Roberts (1,500), Tizzio (1,000) and Tse (500);
Preferred Stock, Series K--E.G. Greenberg (375), M.R. Greenberg (5,000),
Matthews (2,250), Roberts (1,500), Tizzio (1,250) and Tse (750); Preferred
Stock, Series L--E.G. Greenberg (375), M.R. Greenberg (5,000), Matthews
(2,250), Roberts (1,500), Tizzio (1,250) and Tse (750); Preferred Stock,
Series M--E.G. Greenberg (500), M.R. Greenberg (5,000), Matthews (2,250),
Roberts (1,250), Tizzio (1,500) and Tse (1,000); and 5% Subordinated
Preferred Stock--M.R. Greenberg (100) and Roberts (50). The total
outstanding shares were: Preferred Stock, Series A (16,240), Preferred
Stock, Series B (16,055), Preferred Stock, Series C (16,805), Preferred
Stock, Series D (17,680), Preferred Stock, Series E (19,180), Preferred
Stock, Series F (20,805), Preferred Stock, Series G (20,750), Preferred
Stock, Series H (20,125), Preferred Stock, Series I (20,625), Preferred
Stock Series J (21,875), Preferred Stock, Series K (22,750), Preferred
Stock, Series L (22,750), Preferred Stock, Series M (22,750) 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, 1996, SICO held 75,790,001 shares, or 15.98 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 16,593,128 shares
and 11,237,054 shares (including 4,974,512 shares held by the C. V. Starr & Co.
Inc. Trust), or 3.50 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 1995, each of
Messrs. Freeman, E.G. Greenberg and M.R. Greenberg filed a late report on Form
4. Mr. Freeman failed to timely report the sale of 28,000 shares owned by a
trust for the benefit of the estate of Mansfield Freeman, of which he is
trustee. Mr. E.G. Greenberg failed to timely report the sale of 210 shares. Mr.
M.R. Greenberg failed to report timely one transaction, the disposition of 1,044
shares made by Starr pursuant to the Starr Purchase Plan. Each of Messrs. Manton
and Milton, executive officers of AIG, filed one late report. Mr. Manton failed
to timely report the sale of 15,000 shares and Mr. Milton failed to timely
report the sale of 468 shares.
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 or its
subsidiaries each purchase 450 shares of AIG Common Stock per year, for which
they are reimbursed by AIG. During February 1995, Mr. Bentsen was granted an
option to purchase 15,000 shares of AIG Common Stock at $66.67 per share, and
each of Mrs. Hills and Messrs. Aidinoff, Cohen, Conable, Feldstein, Hoenemeyer,
Howell and Phypers was granted an option to purchase 7,500 shares of AIG Common
Stock at $66.67 per share. These options reflect adjustment for the stock split
effected as a 50 percent stock dividend paid in July, 1995.
6
<PAGE> 9
Mr. Aidinoff is a partner in the law firm of Sullivan & Cromwell, and
Ambassador Hills was, during a portion of 1995, a partner in the law firm of
Mudge Rose Guthrie Alexander & Ferdon LLP, each of which in 1995 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 sets forth 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, 1995.
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............... 1995 $1,000,000 $3,150,000(3) 50,000 $ -- $ 6,923
Chairman and Chief 1994 1,000,000 2,750,000(3) 37,500(4) 8,330,000 3,080
Executive Officer 1993 1,231,731 1,100,000 37,500(4) 4,027,725 2,998
E.E. Matthews................ 1995 466,924 470,000 15,000 -- 7,844
Vice Chairman -- Finance 1994 416,924 350,000 15,000(4) 2,940,000 3,080
1993 316,923 350,000 15,000(4) 1,184,625 2,998
T.R. Tizzio.................. 1995 456,624 410,000 15,000 -- 7,835
President 1994 416,239 300,000 22,500(4) 2,450,000 3,080
1993 329,273 300,000 15,000(4) 947,700 2,998
E.S.W. Tse................... 1995 285,000 277,500 10,000 -- 35,625
Executive Vice President -- 1994 275,000 195,834 10,500(4) 1,176,000 34,375
Life Insurance 1993 266,580 199,430 9,000(4) 473,850 33,322
E.E. Stempel................. 1995 250,000 290,000 15,000 -- --
Vice Chairman -- Life
Insurance 1994 225,000 250,000 15,000(4) 1,960,000 --
1993 200,000 250,000 12,000(4) 947,700 --
</TABLE>
- ---------------
(1) Amounts shown in 1993 represent the value, based on the closing sale price
of AIG Common Stock on December 31, 1993 ($58.50), 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 -- 68,850 shares; Matthews -- 20,250 shares; Tizzio -- 16,200
shares; Stempel -- 16,200 shares; Tse -- 8,100 shares. Amounts shown in 1994
represent the value, based on the closing sale price of AIG Common Stock on
the New York Stock Exchange on December 31, 1994 ($65.33), of shares of AIG
Common Stock allocated in March, 1995 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 -- 127,500
shares; Matthews -- 45,000 shares; Tizzio -- 37,500 shares;
Stempel -- 30,000 shares; Tse -- 18,000 shares. All share amounts and sale
prices are adjusted to reflect the stock split effected as a 50 percent
stock dividend in July, 1995.
(2) Amounts shown for Messrs. Greenberg, Matthews and Tizzio represent matching
contributions under AIG's 401(k) Plan. Amounts shown for Mr. Tse reflect
contributions by AIG to the American International Companies (Hong Kong)
Staff Provident Plan.
(3) Paid pursuant to the Chief Executive Officer Performance Based Compensation
Plan approved by the shareholders in May, 1994.
(4) Adjusted to reflect stock split effected as a 50 percent stock dividend in
1995.
7
<PAGE> 10
The following table summarizes certain information with respect to grants
of options to purchase AIG Common Stock which were granted during 1995 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 1995
<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 1995 PER SHARE DATE 5 PERCENT(2) PERCENT(3)
- ------------------ --------- ------- ------------- --------- ---------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
M.R. Greenberg.... 12/14/95 50,000 8.97 $ 93.25 12/14/05 $ 2,932,221 $ 7,430,824
E.E. Matthews..... 12/14/95 15,000 2.69 93.25 12/14/05 879,666 2,229,247
T.R. Tizzio....... 12/14/95 15,000 2.69 93.25 12/14/05 879,666 2,229,247
E.S.W. Tse........ 12/14/95 10,000 1.79 93.25 12/14/05 586,444 1,486,164
E.E. Stempel...... 12/14/95 15,000 2.69 93.25 12/14/05 879,666 2,229,247
All Executive
Officers of AIG
as a Group (21
individuals).... Various 176,900 31.72 89.22(4) Various 9,925,325 25,152,722
All Employees..... Various 557,675 100.00 90.33(4) Various 31,680,430 80,284,430
All Shareholders
Stock
Appreciation(5).. N/A N/A N/A N/A N/A $27.6 billion $69.9 billion
All Unaffiliated
Shareholders
Stock
Appreciation(5).. N/A N/A N/A N/A N/A $19.7 billion $50.0 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,
$93.25.
(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 option 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 $151.89 per share for the individuals named,
$145.32 per share for all executive officers and $147.14 per share for all
employees.
(3) Appreciated price would be $241.87 per share for the individuals named,
$231.40 per share for all executive officers and $234.29 per share for all
employees.
(4) Weighted average exercise price per share.
(5) Calculated using the 474,184,233 shares of AIG Common Stock outstanding at
December 31, 1995.
The following table summarizes certain information with respect to the
exercise of options to purchase AIG Common Stock during 1995 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, 1995.
AGGREGATED OPTION EXERCISES DURING THE YEAR ENDED DECEMBER 31, 1995
AND DECEMBER 31, 1995 OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT IN-THE-MONEY OPTIONS
SHARES DECEMBER 31, 1995 AT DECEMBER 31, 1995(2)
ACQUIRED ON VALUE ------------------------- -------------------------
NAME EXERCISE REALIZED(1) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
- ----------------------- ----------- ----------- ------------------------- -------------------------
<S> <C> <C> <C> <C>
M.R. Greenberg......... 112,500 $6,833,745 385,312/110,938 $23,590,607/$1,965,645
E.E. Matthews.......... 14,175 737,378 126,000/ 39,375 7,414,063/ 786,250
T.R. Tizzio............ 4,012 251,428 118,031/ 45,000 6,752,423/ 943,282
E.S.W. Tse............. -- -- 36,655/ 25,188 1,908,015/ 480,957
E.E. Stempel........... 7,867 329,773 54,852/ 36,750 2,891,535/ 691,813
</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, 1995 (closing sale price as reported
in the New York Stock Exchange Composite Transactions Report) less aggregate
exercise price.
8
<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 (with respect to the 1995-1996 period) to the five
individuals named in the Summary Compensation Table. There were no additional
benefits granted during 1995.
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........................ 3,500 Two years 35,000 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 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 1 to the Summary Compensation Table, 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. M.R. 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.
Messrs. Freeman, E.G. Greenberg, M.R. 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.
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, 1996 is approximately
$2,700,000.
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, multiplied by years of credited service, 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
9
<PAGE> 12
years of credited service as a participant (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 offset 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. Effective January 1, 1996, the Current
Retirement Plan formula now equals 1.25% times Average Final Compensation up to
150% of the employee's "covered compensation" plus 1.75% times Average Final
Compensation in excess of 150% of "covered compensation" times years of credited
service prior to April 1, 1985; plus .925% times Average Final Compensation up
to 150% of the employee's "covered compensation" plus 1.425% times Average Final
Compensation in excess of 150% of "covered compensation" times years of credited
service after April 1, 1985.
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..................... $ 15,024 $ 30,024 $ 45,024 $ 60,024 $ 60,024 $ 60,024 $ 60,024
$ 150,000..................... 21,024 39,024 57,024 75,024 75,024 75,024 75,024
$ 175,000..................... 27,024 48,024 69,024 90,024 90,024 90,024 90,024
$ 200,000..................... 33,024 57,024 81,024 105,024 105,024 105,024 105,024
$ 225,000..................... 39,024 66,024 93,024 120,024 120,024 120,024 120,024
$ 250,000..................... 45,024 75,024 105,024 135,024 135,024 135,024 135,024
$ 300,000..................... 57,024 93,024 129,024 165,024 165,024 165,024 165,024
$ 375,000..................... 75,024 120,024 165,024 210,024 210,024 210,024 210,024
$ 400,000..................... 81,024 129,024 177,024 225,024 225,024 225,024 225,024
$ 500,000..................... 105,024 165,024 225,024 285,024 285,024 285,024 285,024
$ 750,000..................... 165,024 255,024 345,024 435,024 435,024 435,024 435,024
$1,000,000..................... 225,024 345,024 465,024 585,024 585,024 585,024 585,024
$1,375,000..................... 315,024 480,024 645,024 810,024 810,024 810,024 810,024
</TABLE>
- ------------
With respect to the individuals named in the Summary Compensation Table,
other than Mr. Tse, their respective years of credited service (under both
plans) through December 31, 1995 are as follows: Greenberg--35 years;
Matthews--22.2 years; Stempel--44 years; Tizzio--27.7 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 1995 was as follows:
Greenberg--$1,000,000; Matthews--$466,924; Stempel--$250,000; Tizzio--$456,624.
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, Stempel and Tizzio were participants in the Supplemental
Plan at December 31, 1995. 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.
10
<PAGE> 13
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 1995, AIG contributed 12.5 percent of Mr.
Tse's pensionable salary of $285,000 to the plan based on his 34.6 years of
service.
CERTAIN TRANSACTIONS
Certain transactions in 1995 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
------------ ------------
(in thousands)
<S> <C> <C>
AIG and Subsidiaries Paid:
For production of insurance business*................................... $ -- $ 42,600
For services (at cost)**................................................ 1,200 34
Rentals................................................................. 5,000 --
AIG and Subsidiaries Received:
For services (at cost)**................................................ 1,500 10,400
Rentals................................................................. -- 3,700
</TABLE>
- ------------
*From these payments, which constituted approximately 37% 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 .2% 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 employee compensation. 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 1995 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 (the "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, 1994, with certain adjustments.
AIG's after-tax return on equity (excluding capital gains) for 1994 was
13.4 percent and for 1995 was 13.9 percent. The average after-tax return on
equity (excluding capital gains) of AIG's peer group, which is the same as the
peer group used for the performance graph presented below, was reported by
Conning & Company, a leading insurance research and asset management company, to
be 9.5 percent for 1994 and estimated by Conning to be 8.7 percent for 1995,
respectively. AIG evaluates underwriting performance on the basis of the
combined ratio
11
<PAGE> 14
(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 1994 and
1995, as measured by its combined ratio, exceeded that of AIG's peer group.
AIG's combined ratios for 1994 and 1995 were 98.75 and 97.04, respectively,
while those for its peer group averaged 109.9 and 112.3, respectively. The total
compensation of the Chief Executive Officer for 1995 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 73rd percentile when compared to the compensation of
executives of the companies included within the peer group for 1994, 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 other similar endeavors.
On the basis of the general factors set forth above, the Committee
determined in 1994 the base salaries and participation in the supplementary
bonus program for 1995 and bonuses for 1994 performance and in 1995, the base
salaries and participation in the supplementary bonus program for 1996 and the
bonuses for 1995 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 1995 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, Jr.
Frank J. Hoenemeyer
John I. Howell
12
<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, 1990 to December
31, 1995) 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 seven 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, General Re Corporation, The St. Paul Companies and USF& G
Corporation. Although Performance Graphs in 1993 and 1994 included The Travelers
Corporation, Travelers Inc. has not been included in this year's Performance
Graph because AIG does not believe the successor company is comparable to AIG in
its overall business and operations. The prior years' Performance Graphs also
included The Continental Corporation, which has been acquired by CNA Financial
Corporation. 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, 1990
<TABLE>
<CAPTION>
MEASUREMENT PERIOD
(FISCAL YEAR COVERED) AIG S&P 500 PEER GROUP
<S> <C> <C> <C>
1990 100.00 100.00 100.00
1991 128.63 130.47 128.92
1992 152.52 140.41 143.89
1993 173.82 154.58 146.14
1994 195.04 156.60 146.25
1995 277.25 215.45 207.55
</TABLE>
II. APPROVAL OF A PROPOSAL TO ADOPT A 1996
EMPLOYEE STOCK PURCHASE PLAN
The Board of Directors has adopted, subject to approval of the
shareholders, a 1996 Employee Stock Purchase Plan (the "1996 Purchase Plan"), a
copy of which is attached as Appendix A. The 1996 Purchase Plan is intended to
replace AIG's 1984 Employee Stock Purchase Plan which was adopted on March 21,
1984 and approved by the shareholders on May 16, 1984. In the event of approval
of the 1996 Purchase Plan by the shareholders, it is intended that no further
purchase privileges shall be granted under the 1984 Employee Stock Purchase
Plan, although currently outstanding subscriptions may continue in force until
completed or revoked. The purpose of the 1996 Purchase Plan is to advance the
growth and prosperity of AIG and its subsidiaries by providing their employees
with an additional incentive to contribute to the best interests of AIG and to
remain in the employ of AIG or any subsidiary of AIG through affording them an
opportunity to acquire stock of AIG on an attractive basis. The 1996 Purchase
Plan is to be administered by a Committee of at least three employees appointed
by the Chairman of AIG.
Under the 1996 Purchase Plan, all full-time employees as defined in the
1996 Purchase Plan who have at least two years of service with AIG or its
subsidiaries, receive privileges to purchase up to an aggregate of 1,000,000
shares of AIG Common Stock, at a price which is 85% of the fair market value of
such stock on the date of subscription or the date of the grant of the purchase
privilege, whichever is greater. The 1996 Purchase Plan is intended to be an
"employee stock purchase plan", as defined by Section 423 of the Internal
Revenue Code of 1986, as amended ("the Code"). Purchase privileges are granted
annually and are limited to a maximum of the whole number of shares that could
be purchased by the lesser of an amount equal to 5% of an employee's annual
13
<PAGE> 16
compensation, or $5,500 or a pro-rata share of the shares remaining in the
aggregate authorization under the 1996 Purchase Plan, whichever is less. No cash
consideration is received for the granting of purchase privileges. Except in the
case of death, disability or retirement, the amount subscribed is paid by
payroll deduction from 22 bi-weekly paychecks in the second through eleventh
months of the subscription year, and each subscription must be completely paid
for within approximately one year of the subscription date. Provisions are made
for immediate completion of subscriptions and issuance of shares upon death,
disability or normal retirement. Upon termination of employment for any other
reason, the subscription is terminated and contributions to date refunded.
Employees may terminate their subscriptions at any time before their completion
and receive refunds of their money. The shares subscribed for will not be issued
until the subscription is paid for. Subscriptions are not transferable otherwise
than by will or the laws of descent and distribution. The number of shares
available for grant of purchase privileges or issuable under purchase privileges
granted, and purchase prices, are subject to anti-dilution and similar
adjustments. Shares subject to subscriptions which terminate or expire prior to
issuance of the shares will be available for further purchase privileges under
the 1996 Purchase Plan. There is no provision in the 1996 Purchase Plan for its
extension after the exhaustion of the authorized shares. The Board may from time
to time amend, modify, or terminate the 1996 Purchase Plan.
At December 31, 1995, AIG and its subsidiaries had approximately 21,000
employees who would have been eligible to participate in the 1996 Purchase Plan.
If the 1996 Purchase Plan had been in effect during 1995, each of Messrs. M.R.
Greenberg, Matthews, Stempel, Tizzio, Tse and Mr. Gonda (who is a director of
AIG but not an executive officer thereof) would have been eligible to receive
purchase privileges with respect to 69 shares of AIG Common Stock, and all
current executive officers as a group would have been eligible to receive
purchase privileges with respect to 1,311 shares of AIG Common Stock, all based
upon their salaries and the fair market value of the AIG Common Stock on
December 29, 1995. The maximum number of shares with respect to which purchase
privileges could have been granted under the terms of the 1996 Purchase Plan to
all employees, including current officers who are not executive officers, if
such plan had been in effect during 1995 was approximately 1,449,000 shares,
based upon maximum participation by all eligible employees and the fair market
value of the AIG Common Stock on December 29, 1995. The calculation of figures
for all eligible employees based upon an assumption of maximum participation may
be unrealistic; a more realistic estimate might be calculated by adjusting the
participation during 1995 to reflect the increase in the maximum participation
limitation from $3,750 to the new limitation of $5,500 which would be available
under the 1996 Purchase Plan. There were 152,406 shares issued during 1995
pursuant to the 1984 Employee Stock Purchase Plan. Accordingly, assuming all
employees who had subscribed for the previous maximum participation of $3,750
would subscribe for the new maximum participation of $5,500, there would have
been approximately 223,500 shares issued during 1995 had the terms of the 1996
Purchase Plan been in effect.
The market value of the AIG Common Stock on January 31, 1996 was $96.875.
TAXES
For Federal income tax purposes, no income will be realized by employees
participating in the 1996 Purchase Plan upon either the grant of a right to
purchase or the actual purchase of shares under the Plan and neither AIG nor any
of its subsidiaries will be entitled to any deduction at that time. If the
shares acquired upon the exercise of the right to purchase shares are not
disposed of within two years after the date the right to purchase shares was
granted or, if later, within one year after the transfer of such shares to the
participating employee, upon a disposition of the shares the participating
employee will realize ordinary income in the amount of the lesser of (a) the
excess of the fair market value of the shares at the time of their disposition
over the amount paid for the shares by the employee, or (b) 15% of the fair
market value of the shares at the time the right to purchase such shares was
granted. Gains realized upon the disposition of the shares in excess of the
amount treated as ordinary income will be taxable as long-term capital gain.
Neither AIG nor any of its subsidiaries will be entitled to any deduction upon
the disposition of the shares under the foregoing circumstances.
If shares are disposed of before the end of either the two-year or one-year
periods discussed above, a participating employee will realize ordinary income
in the year of disposition on the difference between his purchase price and the
fair market value of such shares at the date of purchase. The employer
corporation will be entitled to a deduction for this amount, provided that such
corporation is AIG, a member of AIG's affiliated group for Federal consolidated
income tax purposes, or a parent or subsidiary corporation which files a
separate Federal income tax return. The participating employee's tax basis in
the shares disposed of will be increased by this amount and the difference
between the sales price of the shares and this basis will be treated as a
capital gain or loss (long-term or short-term depending on the holding period).
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<PAGE> 17
Approval of the 1996 Employee Stock Purchase Plan 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 approve the
1996 Employee Stock Purchase Plan.
III. SELECTION OF ACCOUNTANTS
The Audit Committee and the Board of Directors have recommended the
employment of Coopers & Lybrand L.L.P. as independent accountants of AIG for
1996. 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 L.L.P.
IV. SHAREHOLDER PROPOSAL
The Presbyterian Church (U.S.A.), 100 Witherspoon Street, Louisville,
Kentucky 40202, which states that it owns 50,400 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, 6701
Franklin Road, Bloomfield Hills, Michigan 48301, and Catholic Healthcare West,
1700 Montgomery Street, Suite 300, San Francisco, California 94111, who state
that they hold 150 shares and 7,600 shares, respectively, of AIG 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:
"1996 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 American
International Group;
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 be it 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;
6. are not a relative of any management of the company;
7. are not serving the final year of his/her term on the Board;
8. are not directors or officers of a corporation on which the
chairman, CEO, President or any other officer of American
International Group serves as director.
15
<PAGE> 18
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, such as equal employment opportunity and
workforce diversity, which need addressing.
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 should
remove any question that candidates for the Board have been selected only by the
current management. The use of the American International Group Executive
Committee, two-thirds of whose members are management, to initially 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
Christian Brothers Investment Services, Inc., 675 Third Avenue, 31st Floor,
New York, New York 10017-5704, which states that it owns 63,641 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 Evangelical
Lutheran Church in America, on behalf of the Lutheran Theological Seminary, 7301
Germantown Avenue, Philadelphia, Pennsylvania 19119, and the Sisters of Mercy
Consolidated Asset Management Program, 20 Washington Square North, New York, New
York 10011, who state that they hold 3,000 shares and 150 shares, respectively,
of AIG Common Stock, have notified AIG that they are joining as proponents of
the resolution to be proposed by the Christian Brothers Investment Services,
Inc. The text of the resolution and the supporting statement submitted by the
sponsors are as follows:
16
<PAGE> 19
"AMERICAN INTERNATIONAL GROUP
SHAREHOLDER RESOLUTION
We believe the employee and board composition of major corporations should
reflect the people in the workforce and marketplace of the 21st century if our
company is going to remain competitive. Our employees, customers and
stockholders are now made up of a greater diversity of backgrounds than ever
before. The Department of Labor's 1995 bi-partisan Glass Ceiling Commission
report "Good for Business: Making Full Use of the Nation's Human Capital"
confirms diversity and inclusiveness in the work place has a positive impact on
the bottomline. A Covenant Report of Standard and Poor 500 companies provided by
Covenant Fund revealed ". . . firms that succeed in shattering their own glass
ceiling racked up stockmarket records that were nearly 2 1/2 times better than
otherwise-comparable companies."
In 1994 the Investor Responsibility Research Center reported inclusiveness
at senior management and board levels was only 9% of the Fortune 500 companies
in a comparable workforce of 57% diversity. The Glass Ceiling Commission
reported that companies are selecting from only half of the talent in our
workforce. Therefore we urge our corporation to enlarge its search for the best
qualified board members by casting a wider net. If we are to be prepared for the
21st century we must learn how to compete in a growlingly diverse global market
place by promoting and selecting the best people regardless of race, gender or
their physical challenges. We believe the judgments and perspectives of a
diverse Board would serve to improve the quality of corporate decision-making.
A business roundtable survey of 600 directors of Fortune 1,000 corporations
found 93% believed a Board and the nominating committee should be composed of a
majority of outside independent directors.
Since the Board of Directors is responsible for representing interests in
corporate meetings, a growing proportion of stockholders are now attaching value
to board inclusiveness. A 1994 Investor Responsibility Research Center Survey
revealed 37% of respondents cited board diversity as the influencing factor for
supporting votes.
The Teachers Insurance and Annuity Association and College Retirement
Equities Fund, the largest institutional investor in the United States, recently
issued a set of corporate governance guidelines including a call for "diversity
of directors by experience, sex, age and race."
Therefore be it resolved: the Board of Directors report on the efforts in
behalf of board inclusiveness to shareholders and the company by September 1996.
The report will be at reasonable expense and will include:
1. The nominating committee of the Board in its search for suitable
board candidates, make a greater effort to search for qualified
women and minority candidates for nomination to the Board of
Directors.
2. Report on our Corporation's efforts to encourage diversified
representation on our Board of Directors.
3. Report on our Corporation's effort to use minority and women
executive search firms.
4. Issue a statement publicly committing the company to a policy of
board inclusiveness with the CEO's policy program for steps to take
and the timeline expected to move in that direction."
MANAGEMENT'S STATEMENT IN OPPOSITION
Your Board of Directors opposes this proposal. In the selection of
candidates for Board membership, your Board seeks to select and recommend the
best qualified persons based upon their individual talents, experience and
abilities without regard to race, religion, national origin or gender. In your
Board of Directors' judgment, providing reports or establishing formalistic
procedures and arbitrary deadlines would not enhance the current Board selection
process and would therefore not serve shareholder interests.
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 1997 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, 1996.
17
<PAGE> 20
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.
INCORPORATION BY REFERENCE
To the extent that this Proxy Statement has been or will be specifically
incorporated by reference into any other filing by AIG under the Securities Act
of 1933, as amended, or the Securities Exchange Act of 1934, as amended, the
sections of this Proxy Statement entitled "Report of the Stock Option and
Compensation Committee on Executive Compensation" and "Performance Graph" shall
not be deemed to be so incorporated, unless specifically otherwise provided in
such filing.
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 Morrow &
Co. to assist in the solicitation of proxies for a fee of approximately $10,000
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.
18
<PAGE> 21
APPENDIX A
AMERICAN INTERNATIONAL GROUP, INC.
1996 EMPLOYEE STOCK PURCHASE PLAN (THE "PLAN")
1. Purpose. The purpose of this Plan is to advance the growth and
prosperity of American International Group, Inc. ("AIG") and any subsidiary
corporation of AIG by providing their employees with an additional incentive to
contribute to the best interests of AIG and to remain in the employ of AIG or
any subsidiary corporation of AIG through affording them an opportunity to
acquire stock of AIG on an attractive basis.
2. The Stock. Privileges under the Plan shall be for the purchase of not
more than an aggregate of 1,000,000 shares of Common Stock of AIG, subject to
paragraph 13 below, which may be authorized but unissued shares or issued shares
which have been acquired by AIG and are held in its treasury. Shares subject to
subscriptions which terminate or expire prior to completion shall be available
for further subscription hereunder.
3. Administration of the Plan. The Plan shall be administered by a
Committee of not less than three employees appointed from time to time by the
Chairman of AIG. One member of the Committee shall be designated the trustee.
The Committee shall have power to interpret the Plan and any subscription
agreements entered into hereunder, to make regulations for carrying out its
purpose and to make all other determinations in connection with its
administration, all of which shall, unless otherwise determined by the Board of
Directors of AIG ("Board") be final and conclusive.
4. Eligibility. The eligibility of each employee to participate in the
Plan shall be determined on July 1, 1996 (the "initial determination date") and
on each January 1, April 1, July 1 and October 1 thereafter (the "determination
dates"). Any employee of AIG or its subsidiaries is eligible to participate in
the Plan, except (a) an employee who has not been continually employed by AIG or
its subsidiaries during the two year period ended on the day prior to (1) the
initial determination date, or (2) any determination date thereafter, (b) any
employee whose customary employment does not exceed 20 hours per week, and (c)
an employee whose customary employment does not exceed five months in any
calendar year. An employee's "eligibility date" shall mean that determination
date on which the employee first becomes eligible to participate in the Plan
after his employment, or after his last break in service, if any, or anniversary
thereof.
5. The Purchase Privilege. Annually on his eligibility date, each eligible
employee is entitled to a new purchase privilege. Stock may be subscribed for
pursuant to this purchase privilege only on the eligibility date when such
privilege was first granted or on the first day of the next three succeeding
calendar quarters (his "subscription date"), provided the employee has been
continually employed by AIG or its subsidiaries between such eligibility date
and his subscription date, inclusive. In order to exercise his purchase
privilege, the employee must execute and file with the trustee a subscription
agreement in such form as may be approved by the Board. Notwithstanding any
provision in this Plan contained to the contrary, no employee or other person
shall subscribe for or purchase stock pursuant to a purchase privilege more than
27 months from the date such privilege is granted.
6. Price The purchase price of the shares under each subscription shall be
85% of their fair market value on the employee's subscription day or 85% of the
fair market value on the day the purchase privilege is granted, whichever is
greater, as determined by the Committee in the manner specified by the Board,
and, in any event, shall not be less than the par value of such shares.
7. Limits of Participation. Subject to paragraph 2, the maximum number of
shares for which an employee shall be permitted to subscribe pursuant to any one
annual purchase privilege shall be that number of whole shares which could be
purchased by 5% of his annual rate of compensation on his subscription day, or
by $5,500 or a pro-rata share of the shares remaining in the aggregate
authorization under paragraph 2, whichever is less.
8. Method of Payment. Subject to paragraphs 11 and 12, the employee's cost
shall be paid through payroll deduction in equal amounts over a period of 44
consecutive weeks starting with the second pay day next following the
subscription day.
9. Issue and Delivery of Shares. The shares shall not be issued until the
entire employee's cost is paid. Stock purchased through this Plan will be
delivered to the respective employee as soon as reasonably practicable after the
employee's cost for the entire subscription is paid in full. When the shares
shall have been issued to the employee, he shall have all the rights and
privileges of a shareholder of AIG with respect to shares purchased under the
Plan.
10. Cancellation of Participation. Each participating employee shall have
the right to cancel his subscription at any time by giving the trustee written
notice thereof, whereupon the amount of his deductions will be refunded.
A-1
<PAGE> 22
11. Rights Not Transferable. Except as hereinafter set forth, no
participating employee shall have the right to sell, assign, transfer, pledge,
or otherwise dispose of or encumber his right to participate in the Plan. In the
event of the death of a participating employee during his employment, the person
or persons to whom the employee's rights under any subscription under this Plan
are transferred by will or the laws of descent and distribution shall have the
right for a period of 12 months from the date of his death to pay the entire
balance due from the employee and receive the subscribed-for stock, or in the
alternative, to receive that number of whole shares which have been paid for by
the employee through payroll deduction, together with the balance, if any, of
such deductions.
12. Termination of Employment. Upon termination of employment for any
reason except death, disability or normal retirement, the amount of the
employee's deductions shall be promptly refunded to him. In the event the
termination is by reason of the employee's disability of normal retirement, the
employee may elect, within six weeks, to pay the entire balance due and receive
the subscribed-for stock or to receive that number of whole shares which he has
paid for through payroll deduction, together with the balance, if any, of such
deductions.
13. Dilution or Other Adjustments. In the event of any event affecting
AIG's capitalization, including, without limitation, an extraordinary dividend
or distribution of cash, stock or assets, or in the event the outstanding shares
of the Common Stock of AIG shall be increased or decreased or changed into or
exchanged for a different number or kind of shares of stock or other securities
of AIG or of another corporation, whether through reorganization, merger,
consolidation, recapitalization, stock split-up, combination of shares, stock
dividend or otherwise, the Board shall make appropriate adjustment in the number
or kind of shares or securities available for purchase pursuant to this Plan and
subject to any subscription agreement, and the purchase price therefor. The
determination of the Board as to such adjustments shall be conclusive.
14. Amendment or Discontinuance of the Plan. The Board shall have the
right to amend, modify or terminate the Plan at any time without notice.
15. Stock Ownership. Notwithstanding anything herein to the contrary, no
employee shall be entitled to a purchase privilege for any stock under the Plan
if such employee, immediately after the receipt of such purchase privilege, owns
stock (including all stock which may be purchased under outstanding
subscriptions under the Plan) possessing 5% or more of the total combined voting
power or value of all classes of stock of the Company or of its parent or
subsidiary corporations. In determining whether a company is a subsidiary, the
rules of Section 424(f) of the Internal Revenue Code of 1986, as amended, shall
be followed, and the rules of Section 424(d) shall apply in determining stock
ownership, and stock which the employee may purchase under outstanding options
shall be treated as stock owned by the employee. Nor shall any employee be
allowed to subscribe for any stock under the Plan which permits his rights to
purchase stock under all stock purchase plans of AIG and its subsidiary
corporations to accrue at a rate which exceeds $25,000 of fair market value of
such stock (determined at the time such right to subscribe is granted) for each
calendar year in which such right to subscribe is outstanding at any time.
16. No Right to Continue Employment or as a Stockholder. Nothing contained
in the Plan or in any subscription agreement entered into pursuant to the Plan
shall confer on any employee any right to continue in the employ of AIG or any
subsidiary corporation of AIG. Until the shares of stock subject to any
subscription right are paid in full, the holder of any purchase privilege shall
have no rights as a holder of stock.
17. Listing and Registration of Shares, Other Approvals, etc. Each
purchase privilege under the Plan shall be subject to the requirement that if at
any time the Board shall determine that listing, registration or qualification
of the shares subject thereto upon any securities exchange or under any State or
Federal law, or the consent of approval of any governmental or regulatory body
or any investment representation is necessary or desirable in connection with
the issue or purchase of shares subject thereto, no such privilege may be
exercised in whole or in part unless such listing, registration, qualification,
consent, approval or representation shall have been effected or obtained free of
any conditions not acceptable to the Board.
18. Governing Law. The Plan shall be governed by and interpreted in
accordance with the laws of the State of New York.
A-2
<PAGE> 23
AMERICAN INTERNATIONAL GROUP, INC.
-----------------------------
ANNUAL MEETING OF SHAREHOLDERS
MAY 20, 1996
-----------------------------
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
The undersigned hereby appoints M.R. Greenberg, Edward E. Matthews and
Thomas R. Tizzio, 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 Monday, May 20, 1996
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 ADOPT A 1996 EMPLOYEE
STOCK PURCHASE PLAN, "FOR" THE APPOINTMENT OF INDEPENDENT
ACCOUNTANTS AND "AGAINST" ITEM 4 AND ITEM 5.
(CONTINUED AND TO BE SIGNED ON THE REVERSE SIDE.)
American International Group, Inc.
P.O. Box 11486
New York, NY 10203-0486
<PAGE> 24
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, L. Gonda, E.
Greenberg, M. Greenberg, C. Hills, F. Hoenemeyer, E. Matthews, D. Phypers, J.
Roberts, T. Tizzio, E. Tse
Withhold
For / / Authority / / Exceptions* / /
*INSTRUCTION: To withhold authority to vote for any of the foregoing
individuals, mark the exceptions box. Write the name(s) on the following lines.
...............................................................................
...............................................................................
2. Approval of adoption of a 1996 Employee Stock
Purchase Plan
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 ___________________________________________________________ , 1996
___________________________________________________________________________
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.
