AIG Shareholders Approve 15 Board Members, Renew Auditor

By | August 15, 2005

Shareholders in the American International Group Inc. last week approved the insurance company’s slate of 15 board members and renewed the auditing contract of PricewaterhouseCoopers LLP, despite opposition from some major institutional investors.

The voting at AIG’s annual meeting – the first since Maurice “Hank” Greenberg was forced out as chief executive in an accounting scandal – came shortly after the board voted to raise the company’s quarterly dividend to 15 cents from 12.5 cents. The dividend is payable on Sept. 16 to shareholders of record on Sept. 2.

California State Treasurer Phil Angelides said the California State Teachers’ Retirement System, which holds AIG shares, voted against the renewal of PricewaterhouseCoopers as well as against AIG board members on audit and executive compensation committees “who served at the time of the scandal.” Angelides is a trustee in the fund.

Angelides also said he was urging CalSTRS as well as the California Public Employees’ Retirement System, or CalPERS, “to take all possible action to recover losses the funds and taxpayers suffered as a result of AIG’s alleged mismanagement.”

AIG shares rose last Thursday 43 cents to close at $62.67 on the New York Stock Exchange, still well below their 52-week high of $73.46 before the AIG accounting problems began unfolding.

Last week’s meeting was led by AIG’s interim chairman, Frank G. Zarb, who was instrumental in ousting Greenberg in March amid widening regulatory probes into insurance practices and accounting procedures. Zarb, who has said he plans to step down as chairman before the end of the year, formerly was chairman of the Nasdaq Stock Market.

Zarb said the company has “more work to do” to regain its footing from what he called “a very, very challenging and, in many ways, a sad year.”

In May, New York Attorney General Eliot Spitzer filed a civil suit against AIG, Greenberg and AIG’s former chief financial officer, Howard I. Smith, accusing them of orchestrating an accounting scheme that made AIG’s financial picture appear brighter than it was, misleading both investors and state regulators. Soon after, AIG filed its delayed annual report and, working with PricewaterhouseCoopers, restated earnings back to 2000.

Zarb said that because of the pending investigations, “none of us will be able to comment on those regulatory matters” at the annual meeting. He said, however, that the company had adopted a series of reforms that should make AIG “the leader in best practices for corporate governance.”

Martin J. Sullivan, who was named CEO after Greenberg’s resignation, was the only speaker to mention Greenberg, and he praised him for building “one of the largest and best capitalized insurance organizations in the world.”

He added that the company and its workers “thank Mr. Greenberg for his decades of service and wish him well going forward.”

Greenberg, who is 80, was vacationing and did not attend the meeting. Spokesman Howard Opinsky said Greenberg had voted his shares, but would not provide details.

According to the company’s proxy, Greenberg is the company’s largest individual shareholder with nearly 1.8 percent of outstanding stock. He also is involved with several related companies that together control about 16 percent of the company’s stock.

Among a handful of shareholders who spoke at the meeting was Richard Ferlauto, director of pension and benefit policy for the American Federation of State, County and Municipal Employees labor union, which is based in Washington, D.C.

Ferlauto said AIG was good to be rid of its “imperial CEO” and praised its efforts to add independent directors to the board. But he termed it “just the beginning” of reforms and urged the company’s officers to involve shareholders in choosing future nominees for board positions.

Copyright 2005 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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