<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:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
[ ] Confidential, for the Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
</TABLE>
AMERICAN INTERNATIONAL GROUP, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
(5) Total fee paid:
------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
(3) Filing Party:
------------------------------------------------------------------------
(4) Date Filed:
<PAGE> 2
AMERICAN INTERNATIONAL GROUP, INC.
70 Pine Street, New York, N.Y. 10270
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 19, 1999
April 7, 1999
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 19, 1999, at 11:00 o'clock A.M., for the
following purposes:
1. To elect 19 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 select PricewaterhouseCoopers LLP as
independent accountants for 1999;
3. To act upon a shareholder proposal requesting AIG to change the
composition of the Nominating Committee;
4. To act upon a shareholder proposal requesting AIG to provide a report on
certain Board matters;
5. To act upon a shareholder proposal requesting AIG to distribute certain
statistical data on employees;
6. To act upon a shareholder proposal requesting AIG to take certain
actions with respect to its business in Switzerland; and
7. To transact any other business that may properly come before the
meeting.
Shareholders of record at the close of business on March 26, 1999 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 7, 1999
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 19, 1999, 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 selection of PricewaterhouseCoopers LLP as independent
accountants for 1999, against the shareholder proposal requesting AIG to change
the composition of the Nominating Committee, against the shareholder proposal
requesting AIG to provide a report on certain Board matters, against the
proposal requesting AIG to distribute certain statistical data on employees and
against the proposal with respect to conducting business in Switzerland. These
proxy materials are being mailed to shareholders of AIG commencing on or about
April 7, 1999.
Only shareholders of record at the close of business on March 26, 1999 will
be entitled to vote at the meeting. On that date, 1,238,828,490 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.
Proxies marked as abstaining, and any proxies returned by brokers as
"non-votes" on behalf of shares held in street name because beneficial owners'
discretion has been withheld as to one or more matters on the agenda for the
Annual Meeting, will be treated as present for purposes of determining a quorum
for the Annual Meeting. With respect to the election of directors, any shares
not voted as a result of an abstention or a broker non-vote will have no impact
on the vote. With respect to the selection of PricewaterhouseCoopers LLP as
independent accountants and the four shareholder proposals, a broker non-vote
will have no impact on the vote and an abstention will be effectively treated as
a vote against the proposal.
I. ELECTION OF DIRECTORS
Nineteen 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. The
nominees and certain information supplied by them to AIG are as follows:
<TABLE>
<S> <C> <C>
[PHOTO] M. BERNARD AIDINOFF SENIOR COUNSEL, SULLIVAN & CROMWELL
(Attorneys)
Director since 1984 Age 70
</TABLE>
- --------------------------------------------------------------------------------
1
<PAGE> 4
<TABLE>
<S> <C> <C>
[PHOTO] ELI BROAD CHAIRMAN AND CHIEF EXECUTIVE OFFICER,
SUNAMERICA INC. ("SUNAMERICA") (a wholly-owned
Elected January 4, 1999 subsidiary of AIG)
Age 65
[PHOTO] PEI-YUAN CHIA RETIRED VICE CHAIRMAN, CITICORP
AND CITIBANK, N.A.
Director since 1996
Age 60
Director, Baxter International, Inc.
Case Corporation
[PHOTO] MARSHALL A. COHEN COUNSEL, CASSELS BROCK & BLACKWELL (Barristers and
Solicitors); FORMER PRESIDENT AND CHIEF EXECUTIVE
Director since 1992 OFFICER, THE MOLSON COMPANIES LIMITED
Age 64
Director, Barrick Gold Corporation
Clark Refining & Marketing, Inc.
Clark USA, Inc.
Haynes International, Inc.
Lafarge Corporation
Repap Enterprises, Inc.
Republic Engineered Steel, Inc.
Toronto Dominion Bank
[PHOTO] BARBER B. CONABLE, JR. RETIRED; FORMER PRESIDENT, WORLD BANK, AND
FORMER MEMBER, UNITED STATES HOUSE OF REPRESENTATIVES
Director since 1991
Age 76
</TABLE>
- --------------------------------------------------------------------------------
2
<PAGE> 5
<TABLE>
<S> <C> <C>
[PHOTO] MARTIN S. FELDSTEIN PROFESSOR OF ECONOMICS, HARVARD UNIVERSITY;
PRESIDENT AND CHIEF EXECUTIVE OFFICER, NATIONAL BUREAU
Director since 1987 OF ECONOMIC RESEARCH
(Nonprofit Economic Research Center)
Age 59
Director, Columbia/HCA Healthcare Corporation,
J. P. Morgan & Co. Incorporated
TRW, Inc.
[PHOTO] ELLEN V. FUTTER PRESIDENT, THE AMERICAN MUSEUM OF NATURAL
HISTORY
Elected March 17, 1999
Age 49
Director, Bristol-Myers Squibb Company
Consolidated Edison, Inc.
J.P. Morgan & Co. Incorporated
[PHOTO] LESLIE L. GONDA CHAIRMAN, INTERNATIONAL LEASE FINANCE
CORPORATION ("ILFC")
Director since 1990 (a wholly-owned subsidiary of AIG)
Age 79
Also serves as a director of ILFC
[PHOTO] EVAN G. GREENBERG PRESIDENT AND CHIEF OPERATING OFFICER, AIG
Director since 1996 Age 44
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")
[PHOTO] MAURICE R. GREENBERG CHAIRMAN AND CHIEF EXECUTIVE OFFICER, AIG
Director since 1967 Age 73
Director, Transatlantic Holdings, Inc.
("Transatlantic") and 20th Century Industries ("20th
Century"), which are owned 55 percent and 59 percent,
respectively, by AIG
Also serves as Chairman of Transatlantic and 20th
Century, a director, President and Chief Executive
Officer of Starr, and a director of SICO and ILFC
</TABLE>
- --------------------------------------------------------------------------------
3
<PAGE> 6
<TABLE>
<S> <C> <C>
[PHOTO] CARLA A. HILLS CHAIRMAN AND CHIEF EXECUTIVE OFFICER,
HILLS & COMPANY; FORMER UNITED STATES
Director since 1993 TRADE REPRESENTATIVE
(Hills & Company provides international
investment, trade and risk advisory services)
Age 65
Director, Chevron Corporation
Lucent Technologies Inc.
Time Warner Inc.
[PHOTO] FRANK J. HOENEMEYER FINANCIAL CONSULTANT;
RETIRED VICE CHAIRMAN,
Director since 1985 PRUDENTIAL INSURANCE COMPANY OF AMERICA
Age 79
Director, Carey Fiduciary Advisors, Inc.
Cincinnati, Inc.
Wellsford Real Properties, Inc.
[PHOTO] EDWARD E. MATTHEWS VICE CHAIRMAN -- INVESTMENTS AND FINANCIAL
SERVICES, AIG
Director since 1973
Age 67
Director, Transatlantic
Also serves as a director of Starr, SICO and ILFC
[PHOTO] DEAN P. PHYPERS RETIRED SENIOR VICE PRESIDENT,
INTERNATIONAL BUSINESS MACHINES CORPORATION
Director since 1979
Age 70
Director, Bethlehem Steel Corporation
Cambrex Corporation
Church & Dwight Co. Inc.
[PHOTO] HOWARD I. SMITH EXECUTIVE VICE PRESIDENT, CHIEF FINANCIAL
OFFICER AND COMPTROLLER, AIG
Director since 1997
Age 54
Director, The Kroll-O'Gara Company
Transatlantic
20th Century
Also serves as a director of Starr, SICO and ILFC
</TABLE>
- --------------------------------------------------------------------------------
4
<PAGE> 7
<TABLE>
<S> <C> <C>
[PHOTO] THOMAS R. TIZZIO SENIOR VICE CHAIRMAN -- GENERAL
INSURANCE, AIG
Director since 1986
Age 61
Director, Transatlantic
Also serves as a director of Starr and SICO
[PHOTO] EDMUND S.W. TSE VICE CHAIRMAN -- LIFE INSURANCE, AIG
Director since 1996 Age 61
Also serves as a director of Starr and SICO
[PHOTO] JAY S. WINTROB VICE CHAIRMAN AND CHIEF OPERATING OFFICER,
SUNAMERICA
Elected January 4, 1999
Age 42
[PHOTO] FRANK G. WISNER VICE CHAIRMAN -- EXTERNAL AFFAIRS, AIG
Director since 1997 Age 60
Director, Enron Oil & Gas Company
</TABLE>
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 except
for Mr. Wisner 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. Wisner served as a
career foreign service officer with the United States Department of State from
1961 through July 1997, with his last position being Ambassador to India. Mr.
Chia retired from Citicorp on September 1, 1996. Mr. Cohen became counsel to
Cassels Brock & Blackwell on September 12, 1996, having previously served as
President and Chief Executive Officer of The Molson Companies Limited. E.G.
Greenberg is the son of M.R. Greenberg.
There were four regularly scheduled meetings and one special meeting of the
Board during 1998. All of the directors other than Mr. Lloyd Bentsen attended at
least 75 percent of the aggregate of all meetings of the directors and of the
committees of the Board on which they served. Mr. Bentsen retired from the Board
in November 1998 for health reasons.
The Audit Committee, which held four meetings during 1998, gives 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. Messrs. Aidinoff, Conable,
Hoenemeyer and Phypers and Mrs. Hills are the current members of the Audit
Committee.
5
<PAGE> 8
The Stock Option and Compensation Committee, which held nine meetings
during 1998, 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
and Hoenemeyer.
The principal function of the Executive Committee, which held eight
meetings in 1998, is to act for the Board between Board meetings. 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. Aidinoff, E.G.
Greenberg, M.R. Greenberg, Hoenemeyer, Matthews, and Tizzio are the current
members of the Executive Committee.
The Finance Committee, which oversees the financial affairs and investment
activities of AIG and its subsidiaries, held twelve meetings during 1998.
Messrs. Aidinoff, Broad, Chia, Conable, Feldstein, M.R. Greenberg, Hoenemeyer,
Matthews, Phypers, Smith and Wintrob currently serve as members of the Finance
Committee.
OWNERSHIP OF CERTAIN SECURITIES
The following table summarizes the ownership of equity securities of AIG
and affiliated companies which may be considered by the Securities and Exchange
Commission to be its parents, by the directors, all of which except Mr. Bentsen
are nominees and which include all of 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, 1999(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........ 47,864 (7) 0 -- 0 --
Lloyd M. Bentsen........... 52,115 (7) 0 -- 0 --
Eli Broad.................. 22,980,879 1.84 0 -- 0 --
Pei-yuan Chia.............. 19,481 (7) 0 -- 0 --
Marshall A. Cohen.......... 34,707 (7) 0 -- 0 --
Barber B. Conable, Jr. .... 41,795 (7) 0 -- 0 --
Martin S. Feldstein........ 57,922 (7) 0 -- 0 --
Ellen V. Futter............ 0 -- 0 -- 0 --
Leslie L. Gonda............ 10,825,000 .87 0 -- 0 --
E.G. Greenberg............. 158,074 .01 2,000 9.76 0 --
M. R. Greenberg............ 27,327,297 2.21 5,000 24.39 10 8.33
Carla A. Hills............. 37,093 (7) 0 -- 0 --
Frank J. Hoenemeyer........ 58,356 (7) 0 -- 0 --
Edward E. Matthews......... 908,317 .07 2,250 10.98 10 8.33
Dean P. Phypers............ 50,343 (7) 0 -- 0 --
Howard I. Smith............ 165,944 .01 1,500 7.32 10 8.33
Thomas R. Tizzio........... 546,054 .04 1,750 8.54 10 8.33
Edmund S.W. Tse............ 299,225 .02 1,625 7.93 10 8.33
Jay S. Wintrob............. 1,446,487 .11 0 -- 0 --
Frank G. Wisner............ 2,250 (7) 0 -- 0 --
All Directors and Executive
Officers of AIG as a Group
(37 individuals)......... 89,430,125 7.15 17,750 86.59 90 75.00
</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 -- 8,437 shares with his wife, E.G. Greenberg -- 34,564 shares
with co-trustees, M.R. Greenberg -- 22,965,085 shares with his wife and
61,632 shares with co-trustees, Tizzio -- 242,445 shares with his wife, and
all directors and executive officers of AIG as a group -- 24,245,724
shares.
6
<PAGE> 9
(Footnotes continued from preceding page)
(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 -- 28,125 shares, Bentsen -- 45,000 shares, Broad -- 8,708,452
shares, Chia -- 11,250 shares, Cohen -- 28,125 shares, Conable -- 28,125
shares, Feldstein -- 28,125 shares, E.G. Greenberg -- 59,368 shares, M.R.
Greenberg -- 793,125 shares, Hills -- 28,125 shares, Hoenemeyer -- 28,125
shares, Matthews -- 298,734 shares, Phypers -- 28,125 shares,
Smith -- 118,266 shares, Tizzio -- 303,609 shares, Tse -- 143,344 shares,
Wintrob -- 826,317 shares, Wisner -- 2,250 shares, and all directors and
executive officers of AIG as a group -- 11,859,920 shares.
(3) Amount of shares shown for Mr. M.R. Greenberg does not include 10,633,774
shares held as trustee for the Starr Trust, as to which he disclaims
beneficial ownership. Inclusion of these shares would increase the total
ownership shown for Mr. M.R. Greenberg by .86 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:
Aidinoff -- 1,219 shares, Matthews -- 11,500 shares, Tizzio -- 29,929
shares, and all directors and executive officers of AIG as a
group -- 56,209 shares.
(5) Amount of shares shown for Mr. M.R. Greenberg also excludes 3,569,087 shares
owned directly by Starr (representing 24.39 percent of the shares owned
directly by Starr) as to which Mr. M.R. Greenberg disclaims beneficial
ownership.
(6) As of January 31, 1999, Starr also had outstanding 5,000 shares of Common
Stock Class B, a non-voting stock, and 3,838 shares of Preferred Stock,
Series X-1. None of the nominees holds such shares. Shares of Starr's
Series A through Series Q Preferred Stock and its 5% Subordinated Preferred
Stock were held by the nominees as follows on January 31, 1999: Preferred
Stock, Series A--M.R. Greenberg (5,000) and Matthews (1,500); Preferred
Stock, Series B--M.R. Greenberg (5,000) and Matthews (1,750); Preferred
Stock, Series C--M.R. Greenberg (5,000), Matthews (1,750) and Tizzio (125);
Preferred Stock, Series D--M.R. Greenberg (5,000), Matthews (1,750) and
Tizzio (375); Preferred Stock, Series E--M.R. Greenberg (5,000), Matthews
(2,000), Smith (125), Tizzio (625) and Tse (125); Preferred Stock, Series
F--M.R. Greenberg (5,000), Matthews (2,000), Smith (250), Tizzio (1,000)
and Tse (125); Preferred Stock, Series G--M.R. Greenberg (5,000), Matthews
(2,250), Smith (375), Tizzio (1,000) and Tse (250); Preferred Stock, Series
H--E.G. Greenberg (125), M.R. Greenberg (5,000), Matthews (2,250), Smith
(500), Tizzio (1,000) and Tse (250); Preferred Stock, Series I--E.G.
Greenberg (125), M.R. Greenberg (5,000), Matthews (2,250), Smith (500),
Tizzio (1,000) and Tse (250); Preferred Stock, Series J--E.G. Greenberg
(250), M.R. Greenberg (5,000), Matthews (2,250), Smith (625), Tizzio
(1,000) and Tse (500); Preferred Stock, Series K--E.G. Greenberg (375),
M.R. Greenberg (5,000), Matthews (2,250), Smith (625), Tizzio (1,250) and
Tse (750); Preferred Stock, Series L--E.G. Greenberg (375), M.R. Greenberg
(5,000), Matthews (2,250), Smith (625), Tizzio (1,250) and Tse (750);
Preferred Stock, Series M--E.G. Greenberg (500), M.R. Greenberg (5,000),
Matthews (2,250), Smith (750), Tizzio (1,500) and Tse (1,000); Preferred
Stock, Series N -- E.G. Greenberg (750), M.R. Greenberg (5,000), Matthews
(2,250), Smith (1,000), Tizzio (1,500) and Tse (1,125); Preferred Stock,
Series O -- E.G. Greenberg (750), M.R. Greenberg (5,000), Matthews (2,250),
Smith (1,000), Tizzio (1,500) and Tse (1,125); Preferred Stock, Series
P--E.G. Greenberg (1,000), M.R. Greenberg (5,000), Matthews (2,250), Smith
(1,000), Tizzio (1,500) and Tse (1,125); Preferred Stock, Series Q -- E.G.
Greenberg (1,250), M.R. Greenberg (5,000), Matthews (2,250), Smith (1,250),
Tizzio (1,750) and Tse (1,125) and 5% Subordinated Preferred Stock--M.R.
Greenberg (100). The total outstanding shares were: Preferred Stock, Series
A (8,490), Preferred Stock, Series B (8,305), Preferred Stock, Series C
(7,750), Preferred Stock, Series D (8,500), Preferred Stock, Series E
(9,750), Preferred Stock, Series F (11,125), Preferred Stock, Series G
(11,875), Preferred Stock, Series H (12,500), Preferred Stock, Series I
(12,875), Preferred Stock, Series J (13,875), Preferred Stock, Series K
(14,625), Preferred Stock, Series L (14,625), Preferred Stock, Series M
(16,125), Preferred Stock, Series N (17,625), Preferred Stock, Series O
(17,625), Preferred Stock, Series P (18,500), Preferred Stock, Series Q
(22,250) and 5% Subordinated Preferred Stock (100).
(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, 1999, SICO held 169,666,944 shares, or 13.67 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 35,821,130 shares
and 25,267,841 shares (including 10,633,774 shares held by the C. V. Starr & Co.
Inc. Trust), or 2.89 percent and 2.04 percent, respectively, of the outstanding
AIG Common Stock on that date.
7
<PAGE> 10
At January 31, 1999, the nominees also held options which may be exercised
within 60 days with respect to shares of Transatlantic and 20th Century as
follows: Transatlantic Common Stock, $1.00 par value: M.R. Greenberg -- 37,500
shares, Matthews -- 18,750 shares, Smith -- 750 shares and Tizzio -- 18,750
shares; 20th Century Common Stock, without par value: Smith -- 12,000 shares.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
directors, executive officers and 10 percent holders of AIG Common Stock to file
reports concerning their ownership of AIG equity securities. Based solely on the
review of the Forms 3, 4 and 5 furnished to AIG and certain representations made
to AIG, AIG believes that the only filing deficiencies under Section 16(a) by
its directors and executive officers during 1998 were one late report filed by
Mr. M.R. Greenberg which reflected the transfer of 2,416 shares held in trust
directly to the beneficiary of the trust; one late report filed by Mr. Roberts,
an honorary director and executive officer of AIG, reflecting a retirement
payout under the SICO Plan (as hereinafter defined) of 357,811 shares; one late
report filed by Ms. Shannon, an executive officer of AIG, which reflected the
exercise of an employee stock option resulting in the acquisition of 2,451
shares; and two late reports filed by Mr. Stempel, an honorary director and
executive officer of AIG, which reflected the indirect acquisition of 2,093
shares owned by his wife upon his marriage and the acquisition of 21,794 shares
pursuant to the SICO 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 or its
subsidiaries each purchase 1,012 shares of AIG Common Stock per year, for which
they are reimbursed by AIG. Certain directors who are not employees of AIG also
serve as directors of various subsidiaries of AIG and receive fees for their
service in that capacity.
Mr. Aidinoff is Senior Counsel to the law firm of Sullivan & Cromwell,
which in 1998 provided legal services to AIG and its subsidiaries, receiving
normal fees for services rendered. Mr. Chia has received $600,000 in payments
from AIG during 1998 for services provided pursuant to a consulting arrangement,
which arrangement was terminated as of December 31, 1998. Mrs. Hills has entered
into a consulting arrangement on trade issues 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, 1998.
8
<PAGE> 11
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
ANNUAL COMPENSATION -------------------------------------
NAME AND ----------------------- AWARDS SICO ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS STOCK OPTIONS(#) LTIP PAYOUTS(1) COMPENSATION(2)
------------------ ---- ------ ----- ---------------- --------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
M.R. Greenberg................... 1998 $1,000,000 $5,000,000(3) 100,000 $15,460,000 $ 10,000
Chairman and Chief 1997 1,000,000 3,650,000(3) 112,500(5) -- 6,923
Executive Officer 1996 1,000,000 3,150,000(4) 112,500(6) 10,825,000 9,500
T.R. Tizzio...................... 1998 606,623 530,000 15,000 6,184,000 10,000
Senior Vice Chairman -- 1997 556,623 530,000 30,000(5) -- 7,680
General Insurance 1996 506,624 470,000 45,000(6) 3,788,750 9,500
E.E. Matthews.................... 1998 617,500 435,000 25,000 4,638,000 10,000
Vice Chairman -- Investments 1997 566,923 410,000 30,000(5) -- 7,957
and Financial Services 1996 516,924 470,000 45,000(6) 3,788,750 9,500
E.S.W. Tse....................... 1998 402,455 367,157 25,000 3,092,000 50,368
Vice Chairman -- 1997 352,942 348,824 30,000(5) -- 44,118
Life Insurance 1996 302,942 292,500 33,750(6) 1,732,000 2,901,648
E.G. Greenberg................... 1998 482,692 340,000 35,000 3,092,000 10,000
President and Chief 1997 328,846 310,000 37,500(5) -- 9,500
Operating Officer 1996 256,731 194,000 33,750(6) 1,299,060 --
</TABLE>
- ---------------
(1) The LTIP payouts will be made by SICO pursuant to its Deferred Compensation
Profit Participation Plan (the "SICO Plan") and will not be paid by or
charged to AIG. Amounts shown do not represent actual payments. Payments do
not begin until the employee retires after reaching age 65. Payments are
subject to forfeiture in the event of a voluntary termination prior to age
65. Amounts shown in 1996 represent the value, based on the closing sale
price of AIG Common Stock on December 31, 1996 ($48.11), of shares of AIG
Common Stock allocated with respect to the January 1, 1995 to December 31,
1996 period but not distributed under the SICO Plan. Amounts shown in 1998
represent the value, based on the closing sale price of AIG Common Stock on
December 31, 1998 ($96.625), of shares of AIG Common Stock allocated with
respect to the January 1, 1997 to December 31, 1998 period but not
distributed under the SICO Plan. 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. The SICO Board of Directors may
permit an early pay-out of units under certain circumstances, but none of
the individuals named in the Summary Compensation Table is eligible for such
early pay-out with respect to units awarded to them. Prior to pay-out, the
participant is not entitled to vote, dispose of or receive dividends with
respect to such shares, and 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, 1997, 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, 1994 with
respect to the January 1, 1995 to December 31, 1996 period. The values shown
for the year 1996 represent the number of AIG shares allocated to named
executive officers as follows: M.R. Greenberg -- 225,000 shares;
Tizzio -- 78,750 shares; Matthews -- 78,750 shares; Tse -- 36,000 shares;
and E.G. Greenberg -- 27,000 shares. In March, 1999, 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,
1996 with respect to the January 1, 1997 to December 31, 1998 period. The
values shown for the year 1998 represent the number of AIG shares allocated
to named executive officers as follows: M.R. Greenberg -- 160,000 shares;
Tizzio -- 64,000 shares; Matthews -- 48,000 shares; Tse -- 32,000 shares;
and E.G. Greenberg -- 32,000 shares. All 1996 share amounts and sale prices
are adjusted to reflect the stock splits effected as 50 percent stock
dividends in July, 1997 and July, 1998.
(2) Amounts shown for Messrs. M.R. Greenberg, Tizzio, Matthews and E.G.
Greenberg 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 and, in 1996, includes
approximately $2.86 million, which represents the difference between the
purchase price and the fair market value of a residential property sold by
American International Assurance Company, Limited, a wholly-owned subsidiary
of AIG ("AIA"), to Mr. Tse in December 1996. AIA is entitled to repurchase
the property at the purchase price plus interest if Mr. Tse leaves AIA's
employment prior to retirement at normal retirement age other than upon
death, disability, or early retirement with the consent of AIA.
(3) Paid pursuant to the Chief Executive Officer Compensation Plan approved by
the Shareholders in May, 1997.
(4) Paid pursuant to the Chief Executive Officer Performance Based Compensation
Plan approved by the shareholders in May, 1994.
(5) Adjusted to reflect stock split effected as a 50 percent stock dividend in
July, 1998.
(6) Adjusted to reflect stock splits effected as 50 percent stock dividends in
July, 1997 and July, 1998.
9
<PAGE> 12
The following table summarizes certain information with respect to grants
of options to purchase AIG Common Stock which were granted during 1998 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 1998
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE* AT
PERCENTAGE OF ASSUMED ANNUAL RATES OF
TOTAL OPTIONS STOCK PRICE APPRECIATION FOR
OPTIONS GRANTED TO EXERCISE OPTION TERM
DATE GRANTED EMPLOYEES PRICE EXPIRATION -------------------------------
NAME OF GRANT (1) DURING 1998 PER SHARE DATE 5 PERCENT(2) 10 PERCENT(3)
---- -------- ------- ------------- --------- ---------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C> <C>
M.R. Greenberg....... 12/14/98 100,000 10.82 $87.25 12/14/08 $ 5,487,106 $ 13,905,403
T.R. Tizzio.......... 12/14/98 15,000 1.62 87.25 12/14/08 823,066 2,085,810
E.E. Matthews........ 12/14/98 25,000 2.70 87.25 12/14/08 1,371,776 3,476,351
E.S.W. Tse........... 12/14/98 25,000 2.70 87.25 12/14/08 1,371,776 3,476,351
E.G. Greenberg....... 12/14/98 35,000 3.79 87.25 12/14/08 1,920,487 4,866,891
All Executive
Officers of AIG as
a Group (25
individuals)....... Various 267,100 28.90 87.29(4) Various 14,662,446 37,157,518
All Employees........ Various 924,219 N/A 87.47(4) Various 50,841,287 128,836,129
All Shareholders
Stock
Appreciation(5).... N/A N/A N/A N/A N/A $63.8 billion $161.7 billion
All Unaffiliated
Shareholders Stock
Appreciation(5).... N/A N/A N/A N/A N/A $45.0 billion $114.2 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.
(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 $142.12 per share for the individuals named,
$142.19 per share for all executive officers and a weighted average of
$142.48 per share for all employees.
(3) Appreciated price would be $226.30 per share for the individuals named,
$226.41 per share for all executive officers and a weighted average of
$226.87 per share for all employees.
(4) Weighted average exercise price per share.
(5) Calculated using the 1,049,729,250 shares of AIG Common Stock outstanding at
December 31, 1998.
The following table summarizes certain information with respect to the
exercise of options to purchase AIG Common Stock during 1998 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, 1998.
AGGREGATED OPTION EXERCISES DURING THE YEAR ENDED DECEMBER 31, 1998
AND DECEMBER 31, 1998 OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT IN-THE-MONEY OPTIONS
SHARES DECEMBER 31, 1998 AT DECEMBER 31, 1998(2)
ACQUIRED ON VALUE ------------------------- -------------------------
NAME EXERCISE REALIZED(1) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
---- ----------- ----------- ------------------------- -------------------------
<S> <C> <C> <C> <C>
M.R. Greenberg......... 126,562 $9,737,807 793,125/268,750 $56,009,462/$7,346,093
T.R. Tizzio............ 43,639 3,467,256 303,609/ 68,437 21,470,144/ 2,260,558
E.E. Matthews.......... 37,968 2,462,505 298,734/ 78,437 21,301,428/ 2,354,308
E.S.W. Tse............. 9,492 731,111 143,344/ 69,999 9,512,701/ 1,929,639
E.G. Greenberg......... 3,163 244,720 59,368/ 82,811 3,358,456/ 2,012,307
</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, 1998 (closing sale price as reported
in the New York Stock Exchange Composite Transactions Report) less aggregate
exercise price.
10
<PAGE> 13
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 1998 (with respect to the 1999-2000 period) to the five
individuals named in the Summary Compensation Table.
SICO LONG-TERM INCENTIVE PLANS -- AWARDS IN 1998(1)
<TABLE>
<CAPTION>
NAME NUMBER OF UNITS PERFORMANCE PERIOD ESTIMATED FUTURE PAYOUTS
---- --------------- ------------------ ------------------------
<S> <C> <C> <C>
M. R. Greenberg.............................. 10,000 Two years 160,000 shares
T. R. Tizzio................................. 4,000 Two years 64,000 shares
E. E. Matthews............................... 3,500 Two years 56,000 shares
E.S.W. Tse................................... 3,500 Two years 56,000 shares
E. G. Greenberg.............................. 4,000 Two years 64,000 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, 1999 through December 31, 2000. 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 1999-2000 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 1999-2000 period, assuming the percentage selected by the SICO
Board of Directors and the increase in SICO's retained earnings for the
1999-2000 period were the same as those used to allocate the shares of AIG
Common Stock for the 1997-1998 period. As noted in the description of the
SICO Plan in Note 1 to the Summary Compensation Table, prior to pay-out,
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 the individuals named in the Summary
Compensation Table 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. See footnote 2 to the Summary Compensation Table for
a discussion of Mr. Tse's purchase of a residential property from AIA. In
connection with his employment and relocation to New York, AIG has paid certain
expenses involved with Mr. Wisner's purchase of a cooperative apartment and
provided credit support for his mortgage. During 1998, Mr. Martin Sullivan, an
executive officer, held a mortgage loan from AIG in connection with his
relocation from London to New York. The maximum amount of such loan outstanding
during 1998 and at January 31, 1999 was $285,375 at an interest rate of 5.73
percent per annum.
Messrs. E.G. Greenberg, M.R. Greenberg, Matthews, Smith, 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, 1999 is approximately
$1,889,000, including coverage for the inclusion of SunAmerica commencing
January 1, 1999.
11
<PAGE> 14
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 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
(up to 35 years) plus 1.75% times Average Final Compensation times years of
credited service in excess of 35 years but limited to 40 years; 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 (up to 35
years), plus 1.425% times Average Final Compensation times years of credited
service in excess of 35 years but limited to 44 years.
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.
12
<PAGE> 15
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 a supplemental retirement plan (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
- ------------------ --------------- --------------- ---------------
<S> <C> <C> <C> <C>
$ 125,000.................... $ 13,740 $ 28,740 $ 43,740
$ 150,000.................... 19,740 37,740 55,740
$ 175,000.................... 25,740 46,740 67,740
$ 200,000.................... 31,740 55,740 79,740
$ 225,000.................... 37,740 64,740 91,740
$ 250,000.................... 43,740 73,740 103,740
$ 300,000.................... 55,740 91,740 127,740
$ 375,000.................... 73,740 118,740 163,740
$ 400,000.................... 79,740 127,740 175,740
$ 500,000.................... 103,740 163,740 223,740
$ 750,000.................... 163,740 253,740 343,740
$1,000,000.................... 223,740 343,740 463,740
$1,375,000.................... 313,740 478,740 643,740
<CAPTION>
TOTAL YEARS OF CREDITED SERVICE AS A PLAN PARTICIPANT
3 YEAR AVERAGE ---------------------------------------------------------------------
FINAL COMPENSATION 25 YEARS 30 YEARS 35 YEARS 40 YEARS
- ------------------ --------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
$ 125,000...... $ 58,740 $ 58,740 $ 58,740 $ 58,740
$ 150,000...... 73,740 73,740 73,740 73,740
$ 175,000...... 88,740 88,740 88,740 88,740
$ 200,000...... 103,740 103,740 103,740 103,740
$ 225,000...... 118,740 118,740 118,740 118,740
$ 250,000...... 133,740 133,740 133,740 133,740
$ 300,000...... 163,740 163,740 163,740 163,740
$ 375,000...... 208,740 208,740 208,740 208,740
$ 400,000...... 223,740 223,740 223,740 223,740
$ 500,000...... 283,740 283,740 283,740 283,740
$ 750,000...... 433,740 433,740 433,740 433,740
$1,000,000...... 583,740 583,740 583,740 583,740
$1,375,000...... 808,740 808,740 808,740 808,740
</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, 1998 are as follows: M.R. Greenberg--38 years;
Tizzio--30.7 years; Matthews--25.2 years; and E.G. Greenberg--16.2 years.
Pensionable salary includes the regular salary paid by AIG and its subsidiaries
and does not include amounts attributable to supplementary bonuses or overtime
pay. For such named individuals, pensionable salary during 1998 was as follows:
M.R. Greenberg--$1,000,000; Tizzio--$609,718; Matthews--$620,866; and E.G.
Greenberg--$486,731.
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. E.G.
Greenberg, M.R. Greenberg, Matthews, Smith and Tizzio were participants in the
Supplemental Plan at December 31, 1998. 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 most 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 1998, AIG contributed 12.5 percent of Mr.
Tse's pensionable salary of $402,942 to the plan based on his 37.7 years of
service.
CERTAIN TRANSACTIONS
Certain transactions in 1998 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*..................... $ -- $ 45,500
For services (at cost)**.................................. 1,200 --
Rentals................................................... 3,800 37
AIG and Subsidiaries Received:
For services (at cost)**.................................. 700 9,400
Rentals................................................... 100 3,600
</TABLE>
- ------------
*From these payments, which constituted approximately 39% 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 0.1% 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.
In addition, from time to time, a subsidiary of SICO may assume insurance
risks from third party reinsurers which may have assumed risks from AIG
subsidiaries.
13
<PAGE> 16
REPORT OF THE STOCK OPTION AND COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
The Stock Option and Compensation Committee, currently comprised of Messrs.
Cohen, Conable and Hoenemeyer, 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 (which includes companies in
addition to those in the peer group used for the performance graph presented
below) 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 1998 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 bonus was
determined based upon 1998 performance goals established by the Committee
pursuant to a performance-based compensation plan (the "1997 Plan") adopted and
approved by the shareholders in 1997. The 1998 performance goals utilized both
return on equity and net income as such terms are defined in the 1997 Plan.
AIG's after-tax return on equity (excluding capital gains) was 14.1 percent
for 1997 and 14.4 percent for 1998. 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 11.9
percent for 1997 and estimated by Conning to be 7.8 percent for 1998,
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
1997 and 1998, as measured by its combined ratio, exceeded that of AIG's peer
group. AIG's combined ratios for 1997 and 1998 were 96.20 and 96.36,
respectively, while those for its peer group averaged 103.7 and 107.9,
respectively. The total compensation of the Chief Executive Officer for 1998
represented approximately 0.16 percent of net income of AIG for that year. The
cash compensation for the executive officers included in the Summary
Compensation Table ranked at approximately the 44th percentile when compared to
the compensation of executives of the companies included within the peer group
for 1997, the last year for which comparable information is publicly available.
As part of its consideration of the Chief Executive Officer's compensation,
the Committee reviewed the successful conclusion of major transactions during
the year, including in particular, the SunAmerica acquisition and the investment
in the Blackstone Group Holdings, L.P. 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 1997 the base salaries and participation in the supplementary
bonus program for 1998 and bonuses for 1997 performance, and in 1998, the base
salaries and participation in the supplementary bonus program for 1999 and the
bonuses for 1998 performance.
14
<PAGE> 17
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 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 1998 pursuant to the 1997 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 of AIG and certain of its subsidiaries or
as a committee member of a committee of directors.
Stock Option and Compensation Committee
American International Group, Inc.
Marshall A. Cohen
Barber B. Conable, Jr.
Frank J. Hoenemeyer
15
<PAGE> 18
PERFORMANCE GRAPH
The following Performance Graph compares the cumulative total shareholder
return on AIG Common Stock for a five year period (December 31, 1993 to December
31, 1998) 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 six multi-line or property/casualty insurance companies to which
AIG has traditionally compared its business and operations: Chubb Corporation,
CIGNA Corporation, CNA Financial Corporation, Hartford Financial Services Group,
Inc. (formerly known as ITT Hartford Group, Inc.) and The St. Paul Companies.
The Performance Graphs for the years prior to 1996 included Aetna Life &
Casualty Company, which was acquired by The Travelers Corporation. The
Performance Graphs for the years prior to 1998 included General Re Corporation,
which was acquired by Berkshire Hathaway, Inc. The Performance Graphs for the
years prior to 1998 included USF&G Corporation, which was acquired by The St.
Paul Companies. Hartford Financial Services Group, Inc. was not included in the
Performance Graphs for years prior to 1996 because prior to becoming a
publicly-traded company in December 1995, it was included in ITT Corporation,
and AIG did not believe that ITT Corporation was comparable to AIG in its
overall business and operations. In light of the lack of any historical trading
information with respect to Hartford Financial Services Group, Inc., the
addition of Hartford Financial Services Group, Inc. to the Peer Group had no
impact on the returns set forth below, other than on the returns for the years
ended December 31, 1996 through 1998. 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, 1993
<TABLE>
<CAPTION>
AIG S&P 500 INDEX PEER GROUP
--- ------------- ----------
<S> <C> <C> <C>
Dec 93 100.00 100.00 100.00
Dec 94 112.21 101.32 98.77
Dec 95 159.50 139.40 145.64
Dec 96 187.35 171.40 173.54
Dec 97 283.16 228.59 229.89
Dec 98 378.29 293.91 225.76
</TABLE>
II. SELECTION OF ACCOUNTANTS
The Audit Committee and the Board of Directors have recommended the
employment of PricewaterhouseCoopers LLP as independent accountants of AIG for
1999. 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.
Your Board of Directors recommends a vote FOR the proposal to employ
PricewaterhouseCoopers LLP.
III. SHAREHOLDER PROPOSAL
The Presbyterian Church (U.S.A.), 100 Witherspoon Street, Louisville,
Kentucky 40202, which states that it owns 146,022 shares of AIG Common Stock,
has notified AIG in writing that it intends to present a resolution for
16
<PAGE> 19
action by the shareholders at the Annual Meeting. The text of the resolution and
the supporting statement submitted by the sponsors are as follows:
"AMERICAN INTERNATIONAL GROUP INDEPENDENT NOMINATING COMMITTEE
WHEREAS, American International Group has, as a practical matter, no Nominating
Committee, the full Board acting on the recommendation of the Executive
Committee, most 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 an independent process;
WHEREAS, two of the three elected to the Board since 1996 have been employees of
the company;
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 executives of the company or its affiliates during
the last five years.
2. are not, and have not been, members of organizations that are among
the company's paid advisors or consultants,
3. are not employed by significant customers or suppliers,
4. do not, and did not, have personal services contracts with the
company,
5. are not employed by tax-exempt organizations that receive
significant contributions from the company,
6. are not relatives of any management of the company,
7. are not officers of corporations on which the Chairman, CEO,
President, or any other officer of American International Group
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 corporate policy
and practice issues, 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 would
remove any question that candidates for the Board had been selected only by the
current management. The use of the AIG Executive Committee, most of whose
members are current 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
17
<PAGE> 20
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.
Your Board of Directors recommends a vote AGAINST this proposal.
IV. SHAREHOLDER PROPOSAL
Christian Brothers Investment Services, Inc., 675 Third Avenue, 31st Floor,
New York, New York 10017-5704, which states that it owns 27,975 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. Foundation for
Deep Ecology, 1555 Pacific Avenue, San Francisco, California 94109; The
Congregation of the Holy Cross, Southern Province, 2111 Brackenridge Street,
Austin, Texas 78704-4322; the Domini Social Equity Fund and the Domini
Institutional Social Equity Fund, 11 West 25th Street, 7th Floor, New York, New
York 10010-2001; the Sisters of Charity of the Incarnate Word Health Care
System, 2600 North Loop West, Houston, Texas 77092; The Mercy Consolidated Asset
Management Program, 20 Washington Square North, New York, New York 10011; the
Women's Equity Mutual Fund, 625 Market Street, 16th floor, San Francisco,
California 94105; Catholic Healthcare West, 1700 Montgomery Street, Suite 300,
San Francisco, California 94111-1024; Immaculate Heart Missions, Inc., 4651
North 25th Street, Arlington, Virginia 22207; the Sisters of St. Ursula,
Linwood, 139 South Mill Road, Rhinebeck, New York 12592; The Corporation of the
Convent of the Sisters of Saint Joseph, Chestnut Hill, 9701 Germantown Avenue,
Philadelphia, Pennsylvania 19118; the Unitarian Universalist Association of
Congregations, 25 Beacon Street, Boston, Massachusetts 02108; the Sisters of St.
Dominic, 496 Western Highway, Blauvelt, New York 10913-2097; the Women's
Division of the General Board of Global Ministries of the United Methodist
Church, 475 Riverside Drive, New York, New York 10115; and United States Trust
Company of Boston, 40 Court Street, Boston, Massachusetts 02108, who state that
they hold 4,500 shares, 1,125 shares, 160,750 shares, 41,662 shares, 225 shares,
900 shares, 105,100 shares, 300 shares, 600 shares, 43,275 shares, 14,100
shares, 3,075 shares, 14,382 shares, and over 75,000 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:
"BOARD INCLUSIVENESS REVIEW
Employees, customers, and stockholders reflect a greater diversity of
backgrounds than ever before. We believe that the board composition of major
corporations should reflect the people in the workforce and marketplace of the
Twenty-first Century if our company is going to remain competitive.
The Department of Labor's 1995 Glass Ceiling Commission reported ("Good for
Business: Making Full Use of the Nation's Human Capital") that diversity and
inclusiveness in the workplace positively impact the bottom line. A Covenant
Fund report of S&P 500 companies revealed that ". . . firms that succeed in
shattering their own glass ceiling racked up stock-market records that were
nearly 2.5 times better than otherwise-comparable companies."
The Investor Responsibility Research Center (IRRC) reports that in 1996,
representation at senior management levels was only at 12 percent for the over
39,000 companies required to submit the EEO-1 Report. The Glass Ceiling
Commission reported that companies select from only half of the available talent
within the U.S. workforce.
If we are to be prepared for the 21st Century, we must learn how to compete
in an increasingly diverse global marketplace, by promoting and selecting the
best qualified people regardless of race, gender or physical challenge. Sun
Oil's CEO Robert Campbell stated (Wall Street Journal, 8/12/96): "Often what a
woman or minority person can bring to the board is some perspective a company
has not had before -- adding some modern-day reality to the deliberation
process. Those perspectives are of great value, and often missing from an
all-white, male gathering. They can also be inspirational to the company's
diverse workforce."
We believe that the judgement and perspectives of a more diverse board will
improve the quality of corporate decision-making. A growing proportion of
stockholders is attaching value to board inclusiveness, since the board is
18
<PAGE> 21
responsible for representing shareholder interests. The Teachers Insurance and
Annuity Association and College Retirement Equities Fund, the largest U.S.
institutional investor, recently issued a set of corporate governance guidelines
which included a call for "diversity of directors by experience, sex, age, and
race."
We, therefore, urge our company to enlarge its search for qualified board
members.
RESOLVED: Shareholders request that
1. The company make available to shareholders, at reasonable expense, a
report four months from the date of the annual meeting, which includes
a description of:
-- Efforts to encourage diversified representation on the board;
-- Criteria for board qualification;
-- The process of selecting board nominees, and board committee members;
-- A public statement committing the company to a policy of board
inclusiveness, with a program of steps to be taken and the time line
expected to move in that direction.
2. The Board Nominating Committee make a greater effort to locate
qualified women and persons of color as candidates for nomination to
the board."
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.
Your Board of Directors recommends a vote AGAINST this proposal.
V. SHAREHOLDER PROPOSAL
The Adrian Dominican Sisters, 1257 East Siena Heights Drive, Adrian,
Michigan 49221-1793, who state that they own 4,499 shares of AIG Common Stock,
has notified AIG in writing that they intend to present a resolution for action
by the shareholders at the Annual Meeting. The text of the resolution and the
supporting statement submitted by the sponsor are as follows:
"EQUAL EMPLOYMENT DIVERSITY REPORT
Equal employment is a key issue for shareholders. The bipartisan Glass
Ceiling Commission Study released in 1995 explains that a positive diversity
record has a positive impact on the bottomline. This study is important for
shareholders because it shows how many corporations in the United States select
for advancement from less than 50 percent of the total talent available in our
work force.
- Women and minorities comprise 57 percent of the work force, yet represent
only 3 percent of executive management positions.
- Women who were awarded more than half of all master degrees represent
less than 5 percent of senior-level management positions.
These statistics show the limits placed on selecting the most talented
people for top management positions.
Workplace discrimination has created a significant burden for shareholders.
Recently, companies including Shoney's Incorporated, Denny's, and Hughes
Aircraft have posted multi-million dollar losses as a result of settling various
discrimination lawsuits. In 1996 Texaco settled the largest racial
discrimination lawsuit in U.S. history, costing a reported $170 million to the
company and stockholders. Texaco's public image was tarnished and the company
faced a consumer boycott. In 1998 Smith Barney agreed to spend $15 million on
diversity programs to settle a case brought by plaintiffs charging sexual
harassment. The high cost of litigation, potential loss of government contracts,
and the financial consequences of a damaged corporate image resulting from
discrimination allegations make this issue a high priority for stakeholders.
19
<PAGE> 22
More than 150 major employers publicly report on work force diversity to
their shareholders. Primary examples are Disney/ABC Commitment Report, USAir
Affirming Workplace Diversity Report, Intel Diversity Report, Monsanto Diversity
Report, and Texaco Diversity Report. These companies and many other regularly
provide reports describing diversity progress and challenges. Often companies
will also include this information in their annual reports.
RESOLVED: Shareholders request our company prepare a report at reasonable
cost, which should exclude confidential information. This report shall be made
available to shareholders and employees four months from the date of the annual
meeting and shall include:
1. A chart identifying employees by sex and race in each of the nine major
EEOC defined job categories for 1996, 1997 and 1998, listing actual
numbers and percentages in each category.
2. A summary description of any Affirmative Action policies and programs
to improve performance, including job categories where women and
persons of color are underutilized. This description should include any
policies and programs specifically oriented toward increasing the
number of managers who are qualified females and/or belonging to ethnic
minority groups, summarizing the current numbers of persons by race and
gender in management.
3. A general description of how our company publicizes its affirmative
actions policies and programs to merchandise suppliers and service
providers.
4. A description of any policies and programs directing the purchase of
goods and services to minority and/or female owned business
enterprises.
5. A report on any material litigation in which the company is involved
concerning race, gender or the physically challenged."
MANAGEMENT'S STATEMENT IN OPPOSITION
Your Board of Directors opposes this proposal. AIG is fully committed to
providing equal employment opportunity and complying with equal employment laws.
It is AIG's policy to recruit, hire, train and promote into all job levels the
most qualified applicants without regard to race, color, religion, sex, national
origin, age, handicap or veteran status. All employees at every level are judged
only on the basis of their contribution to the company with emphasis placed on
qualities such as imagination, initiative and integrity. Your Board of Directors
believes that the key to non-discrimination is a qualitative rather than a
quantitative methodology.
Your Board of Directors urges a vote against this proposal. The goal of
equal employment opportunity is worthy; it is also one to which AIG has always
been committed. In your Board of Directors' judgment, providing reports is not
the appropriate approach and would not enhance AIG's efforts to provide equal
opportunity.
Approval of this proposal 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 AGAINST this proposal.
VI. SHAREHOLDER PROPOSAL
John Jennings Crapo, P.O. Box 400151, Cambridge, Massachusetts 02140-0002,
who states that he owns 105 shares of AIG Common Stock, has notified AIG in
writing that he intends to present a resolution for action by the Shareholders
at the Annual Meeting. The text of the resolution and the supporting statement
submitted by the sponsor are as follows:
"SHAREHOLDER PROPOSAL
IT IS REQUESTED THE AMERICAN INTERNATIONAL GROUP, INC. (the "Corporation")
shall hold no account of any public or private entity of The Confederation of
Suisse ("Switzerland") nor provide any other correspondent banking or insurance
services such as transmission of funds for entities of Switzerland.
SHAREHOLDER REASONS
It has been nearly sixty-five years since the expiration by death of German
Chief of State Field Marshall Paul Von Hindenburg and the Nazi seizure of total
Governmental Power in Germany with Herr Adolph Hitler as CEO of the
20
<PAGE> 23
regime and the abolition of free speech and assembly and the genesis of a very
long series of persecutions climaxed by the homicides of many millions of Jews
and others.
In this nation (the United States of America) in the heart of Dixie when
the State of Alabama attempted to suppress the boycott of segregated busses by
African-Americans and others by intimidation by refusing to permit alternative
transportation by companies licensed to sell insurance in said Alabama, Lloyds
of London provided the insurance to the vehicles which provided the freedom
riders transportation. This statement was a positive enunciation of the positive
values of business.
Switzerland had during the horrors of World War Two had pretended
neutrality between and among the belligerents but clandestinely plundrered
Jewish Assets. Nearly fifty-four years since the suicide of Herr Hitler,
financial institutions of Switzerland have refused to settle claims by Jewish
survivors, other survivors, and the heirs and legatees of the former and the
last. Average age of Holocaust victims is age eighty-three.
The savage cruelty and denial of fundamental human rights, the homocides
and other barbarity of the Governments of the Third Reich and it's client states
which included Austria and much of Nazi occupied Europe and the Kingdom of Italy
and the Empire of Japan are to be renounced and the delays in settling the
legitimate claims are repugnant to all us stockholders. Therefore we make this
request."
MANAGEMENT'S STATEMENT IN OPPOSITION
Your Board of Directors opposes this proposal. Your Board has considered
the proposal and does not believe that it is in the best interests of AIG to
limit its business in the manner requested by the proponent. 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.
Your Board of Directors recommends a vote AGAINST this proposal.
VII. SHAREHOLDER PROPOSALS FOR 2000 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
Secretary of AIG at 70 Pine Street, New York, New York 10270 and must be
received by December 9, 1999. Under the AIG By-Laws, notice of any other
shareholder proposal to be made at the 2000 Annual Meeting of Shareholders must
be received not less than 90 nor more than 120 days prior to May 19, 2000 unless
the 2000 Annual Meeting is not scheduled to be held on a date between April 19,
2000 and June 18, 2000, in which case notice must be received no less than the
later of 90 days prior to the date on which such meeting is scheduled or 10 days
after the date on which such meeting date is first publicly announced. A copy of
the current AIG By-Laws may be obtained from the Secretary of AIG.
VIII. OTHER MATTERS
Your Board of Directors knows of no other matters to be presented at the
meeting. 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 facsimile transmission 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.
21
<PAGE> 24
P R O X Y
AMERICAN INTERNATIONAL GROUP, INC.
ANNUAL MEETING OF SHAREHOLDERS
MAY 19, 1999
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 Wednesday May 19,
1999 at 11:00 a.m., and all adjournments thereof, as follows:
(change of address/comments)
_________________________________
_________________________________
_________________________________
(if you have written in the above
space, please mark the corres-
ponding box on the reverse side
of this card)
_____________
| |
PLEASE MARK, DATE AND SIGN THIS PROXY ON THE | SEE REVERSE |
REVERSE SIDE AND RETURN IT PROMPTLY USING THE ENCLOSED | SIDE |
POSTAGE PREPAID ENVELOPE. |_____________|
<PAGE> 25
____
| | Please mark your |
| X | votes as in this | 2742
|____| example. |______
Unless otherwise marked, the proxies are appointed with authority
to vote "FOR" all nominees for election, "FOR" Item 2, "AGAINST"
Item 3, Item 4, Item 5 and Item 6, and in their discretion to vote
upon matters that may properly come before the meeting.
______________________________________________________________________________
| The Board of Directors recommends a vote "FOR" all nominees in Item 1, and |
| "FOR" Items 2. |
|______________________________________________________________________________|
| |
| WITHHELD EXCEPT- |
| FOR AUTHORITY IONS* |
| |
|1. Election of Directors [ ] [ ] [ ] |
| |
| Election as Directors of the following |
| identified in the Proxy Statement: |
| |
| M. Aidinoff, E. Broad, P. Chia, M. Cohen, |
| B. Conable, M. Feldstein, E. Futter, |
| L. Gonda, E. Greenberg, M. Greenberg, |
| C. Hills, F. Hoenemeyer, E. Matthews, |
| D. Phypers, H. Smith, T. Tizzio, E. Tse, |
| J. Wintrob, F. Wisner |
| |
| |
| *INSTRUCTION: To withhold authority to |
| vote for any of the foregoing individuals, |
| mark the exceptions box. Write the name(s) |
| on the following line. |
| |
| |
| ________________________________________ |
| |
| FOR AGAINST ABSTAIN |
| |
|2. Appointment of Independent Accountants [ ] [ ] [ ] |
|______________________________________________________________________________|
______________________________________________________________________________
| The Board of Directors recommends a vote "AGAINST" Items 3, 4, 5 and 6. |
|______________________________________________________________________________|
| |
|3. Shareholder Proposal Described in the |
| Proxy Statement [ ] [ ] [ ] |
| |
| |
|4. Shareholder Proposal Described in the |
| Proxy Statement [ ] [ ] [ ] |
| |
|5. Shareholder Proposal Described in the |
| Proxy Statement [ ] [ ] [ ] |
| |
|6. Shareholder Proposal Described in the |
| Proxy Statement [ ] [ ] [ ] |
|______________________________________________________________________________|
If you have noted either an Address Change or made [ ]
Comments on the reverse side of the card, mark here.
Please Sign, Date and Return the
Proxy Card Promptly Using the
Enclosed Envelope.
SIGNATURES(S) ________________________________________ DATE __________________
Please sign exactly as name appears hereon. Joint owners should each sign.
When signing as attorney, executor, administrator, trustee or guardian,
please give full title as such.
