Aig Employee Stock Options

AMERICAN INTERNATIONAL GROUP INC - DEF 14A - 20000406 - PROPOSTA1 III. APROVAÇÃO DE UMA PROPOSTA DE ADOPTAR UM PLANO DE OPÇÃO DE OPÇÕES DE 1999 Geral. O Conselho de Administração (A Diretoria) da AIG adotou o Plano de Opção de Compra de ações de 1999 (o Plano) que acompanha o Apêndice A, em 15 de setembro de 1999, sujeito à aprovação dos acionistas. O Conselho acredita que os interesses da AIG são avançados ao fornecer certos funcionários-chave da AIG e suas subsidiárias, e membros do Conselho, com um incentivo adicional para continuar seus esforços em nome da AIG e suas subsidiárias, bem como para atrair pessoas de treinamento, Experiência e habilidade para a AIG e suas subsidiárias. Elegibilidade. De acordo com o Plano, a AIG pode conceder opções de compra de ações aos funcionários da AIG e suas subsidiárias e aos membros do Conselho de Administração. As opções de compra de ações que se destinam a ser qualificadas como opções de ações de incentivo na acepção da Seção 422 do Código da Receita Federal de 1986 (o Código) só podem ser concedidas aos empregados. Uma vez que a elegibilidade para prêmios e o valor de qualquer prêmio é determinado pelo Comitê (conforme definido abaixo em Administração), os benefícios futuros ao abrigo do Plano não são atualmente determináveis. No entanto, à luz da natureza similar do Plano ao Plano de Opção de Compra de Ações da Plan para 1991, não parece haver nenhum motivo para acreditar que os prêmios concedidos em 1999 aos diretores executivos, aos diretores da AIG como um grupo ou a todos Outros funcionários da AIG como um grupo teriam sido aumentados se tivessem sido feitos sob o plano proposto. Administração. O Plano será administrado por um comitê (o Comitê), a ser nomeado apenas pelos membros do Conselho que não sejam e não tenham sido funcionários da AIG ou de suas subsidiárias. O Comitê está autorizado a selecionar os funcionários da AIG e suas subsidiárias para receber opções de acordo com o Plano, determinar o tempo em que tais opções serão outorgadas, os termos de tais opções eo número de ações para as quais as opções são concedidas. O Comitê está autorizado a estabelecer as regras e regulamentos que julgar necessários para a boa administração do Plano e para fazer tais determinações e interpretações e tomar tais ações, em conexão com o Plano e quaisquer opções de ações concedidas ao abrigo deste, conforme julgar necessário Ou aconselhável. O Conselho de Administração pode, a seu exclusivo critério, em qualquer momento e, de tempos em tempos, conceder opções de compra de ações (incluindo subsídios aos membros do Conselho de Administração que não sejam funcionários da AIG e suas subsidiárias) ou administrar o Plano, caso em que o Conselho terá Toda a autoridade e responsabilidade conferida ao Comitê. Estoque emissível de acordo com o Plano. O número máximo agregado de ações da AIG Common Stock que podem ser emitidas de acordo com o Plano não pode exceder 10.000.000 ações. Após o vencimento ou encerramento de qualquer opção de compra de ações não exercitada, as ações subjacentes da AIG Common Stock estarão novamente disponíveis para emissão. O número máximo de ações em relação ao qual as opções de compra de ações podem ser concedidas a um indivíduo em qualquer ano não pode exceder 250.000 ações (sujeito a ajuste) e nenhum indivíduo pode receber opções sob o Plano exercíveis por mais de 10 do número total de Ações da AIG Common Stock emissíveis ao abrigo do Plano. Além disso, o valor agregado do mercado justo (determinado a partir do momento em que a opção é concedida) da AIG Common Stock com relação ao qual as opções de compra de ações de incentivo são exercíveis pela primeira vez por um empregado elegível durante qualquer ano civil em todos os planos de opções de ações da AIG E de qualquer subsidiária da AIG não pode exceder 100.000. Em 3 de abril de 2000, o preço de fechamento da AIG Common Stock na Bolsa de Valores de Nova York era 117.625 por ação. Opções de estoque. As opções de compra de ações permitem que o titular compre ações da AIG Common Stock a um preço por ação determinado pelo Comitê ou pelo Conselho, cujo preço não será inferior a 100 do valor justo de mercado da Ação Comum AIG na data em que for concedido . Exceto no caso de rescisão do contrato conforme discutido abaixo, uma opção de compra de ações não pode ser exercida por um ano após a data em que é concedida e, em seguida, pode ser exercida nas parcelas determinadas pelo Comitê ou pelo Conselho de Administração em O tempo que a opção de estoque é concedida. Em nenhum caso, no entanto, as opções podem ser exercidas após 10 anos a partir da data da concessão. Se algum funcionário morrer, é desabilitado ou se aposenta depois da idade normal de aposentadoria, a opção permanecerá exercível para o seu termo original. Se o emprego de um empregado terminar por qualquer outro motivo, a opção pode, com o consentimento do Comitê ou do Conselho, ser exercível após a data de rescisão. O pagamento do preço de exercício de uma opção pode ser feito em dinheiro ou ações da AIG Common Stock, ou uma combinação delas. O Comitê, no entanto, pode, a seu critério e a pedido do outorgante, adiar a entrega de ações da AIG Common Stock entregues no exercício de uma opção. As opções de compra de ações concedidas nos termos do Plano não são transferíveis, exceto pelo testamento ou as leis de descendência e distribuição, e tais opções podem ser exercidas, durante a vida, somente pelo eleitor. Ajustes. O número de ações da AIG Common Stock emissíveis pelo Plano e os termos de qualquer opção pendente podem ser ajustados pelo Comitê ou pelo Conselho de Administração para refletir qualquer recapitalização, estoque, dividendos, combinação, fusão, consolidação, oferta de direitos ou Outras mudanças na estrutura corporativa ou ações da AIG. Conseqüências do imposto de renda federal. Após a outorga ou exercício de uma opção de compra de incentivo, nenhum recebimento será realizado pelo eleitorado para fins de imposto de renda federal e a AIG não terá direito a nenhuma dedução. Se o Aig Common Stock adquirido após o exercício não for alienado no período de um ano que comece na data da transferência da AIG Common Stock para o outorgante, nem dentro do prazo de dois anos que começa na data da concessão do Opção, qualquer ganho ou perda realizada pelo outorgante na alienação de tais ações será tributada como ganho ou perda de capital de longo prazo. Nesse caso, nenhuma dedução será autorizada para a AIG. Se o AIG Common Stock for alienado nos períodos de um ano ou dois anos acima mencionados, o outorgante realizará o lucro ordinário no momento da alienação em um valor igual ao excesso do valor justo de mercado da AIG Common Stock Na data do exercício (ou, se menos, o produto líquido da disposição) sobre o preço de exercício, e a AIG terá direito a uma dedução correspondente. O uso de ações anteriormente adquiridas através do exercício de uma opção de compra de incentivo em satisfação de toda ou parte do exercício por outra opção (seja ou não uma opção de compra de incentivo) é uma alienação das ações anteriormente adquiridas, Períodos de exploração de dois anos e dois anos descritos acima. Todas as ações adquiridas após o exercício de uma opção de compra de ações de incentivo, incluindo as ações anteriormente adquiridas utilizadas na satisfação de toda ou parte do preço de exercício, são consideradas como tendo sido adquiridas na data do exercício para os fins do período de um ano e dois, Períodos de espera do ano. Após a outorga de uma opção não qualificada, nenhuma receita será realizada pelo eleitorado para fins de imposto de renda federal, e a AIG não terá direito a nenhuma dedução. Após o exercício de tal opção, o adjudicatário realizará o lucro ordinário no valor pelo qual o valor justo de mercado das Ações Ordinárias da AIG no momento do exercício excede o preço de exercício, e a AIG terá direito a uma dedução correspondente. O Comitê pode permitir que um optativo satisfaça a obrigação da AIG de reter os impostos exigidos após o exercício de uma opção não qualificada ao ter a AIG reter o número de ações da AIG Common Stock, cujo valor justo de mercado é igual ao valor retido na fonte requerido. Um optativo que faça uma eleição para diferir o recebimento de ações após o exercício da opção, não estará sujeito ao imposto de renda na data do exercício para o ganho de opção - a diferença entre (i) o valor justo de mercado do número total de As ações estão sujeitas ao exercício da opção e (ii) o preço de exercício total da opção. O adjudicatário estará sujeito ao imposto de renda federal (e impostos de renda estaduais e locais aplicáveis) sobre as ações diferidas na data em que ele tem direito às ações, com base no seu valor naquela data. O período de detenção para as ações diferidas não começará até a data em que o opção tenha direito a receber as ações e sua base será igual ao valor justo de mercado das ações nessa data. A aprovação do Plano requer a aprovação de uma maioria das ações da AIG Common Stock presentes e com direito a voto na reunião. Seu Conselho de Administração recomenda uma votação PARA a proposta de adotar o Plano. IV. SELECÇÃO DE CONTADORES O Comitê de Auditoria e o Conselho de Administração recomendaram o emprego da PricewaterhouseCoopers LLP como contadores independentes da AIG para o ano 2000. Os representantes dessa empresa deverão estar presentes na Reunião Anual com a oportunidade de fazer uma declaração se desejarem Faça isso e esteja disponível para responder a perguntas apropriadas. A aprovação da seleção de contadores requer aprovação pela maioria das ações da AIG Common Stock presentes e com direito a voto na reunião. O seu Conselho de Administração recomenda uma votação PARA a proposta de empregar PricewaterhouseCoopers LLP. American International Group (AIG) AIG raquo Tópicos raquo Benefícios de pensão Este trecho retirado da AIG DEF 14A arquivou em 5 de junho de 2009. A AIG mantém benefícios definidos e não qualificados (Planos de pensão) que oferecem benefícios de aposentadoria para funcionários cuja duração do serviço lhes permita adquirir e receber esses benefícios. Os funcionários da AIG e suas subsidiárias que são cidadãos dos Estados Unidos ou não cidadãos que trabalham nos Estados Unidos estão cobertos pelo plano de aposentadoria do American International Group, Inc., um plano de aposentadoria de benefício definido qualificado para impostos dos EUA. Os participantes cujo benefício de fórmula é restrito de ser integralmente pago do plano de aposentadoria qualificado devido aos limites do IRS sobre remuneração e benefícios são elegíveis para participar do Plano de Renda de Aposentadoria Excessiva. Os Srs. Tse, Neuger e Moor também participam, e os Srs. Sullivan e Bensinger participaram, no Plano Complementar de Aposentadoria Executiva (SERP). Além disso, o Sr. Sullivan foi coberto pelo Plano de Previdência AIG no Reino Unido (o Plano de Pensão do Reino Unido) em conexão com seus anos de serviço no Reino Unido e o Sr. Herzog tem um benefício sob a American General Corporation Supplemental Executive Retirement Plano de serviço acumulado até 31 de dezembro de 2002. Esse benefício foi adquirido e congelado após a aquisição da American General Corporation. Os participantes recebem o benefício do plano de aposentadoria qualificado pelo imposto, o benefício do Plano de Renda Excesso de Aposentadoria e qualquer montante do benefício da SERP em excesso do benefício do Plano de Renda de Aposentadoria Excedente. O benefício SERP do Sr. Tse146s será reduzido pelo equivalente de anuidade das contribuições da empresa para o saldo da sua conta no âmbito do Fundo de Prevenção de Pessoal da American International Companies (Hong Kong) (AICSPF), que é descrito em 147 Compensação Diferida Nmalificada148 abaixo e benefício do Sr. Sullivan146s SERP Também será reduzido pelo montante de quaisquer pagamentos recebidos do Plano de Pensões do Reino Unido. O plano de renda de aposentadoria excedente fornece um benefício igual à parcela do benefício que não é permitido ser pago pelo plano de aposentadoria qualificado pelo imposto devido aos limites do IRS sobre remuneração e benefícios. O plano de aposentadoria qualificado para impostos e a fórmula do Plano de renda de aposentadoria excedente variam de 0,925 por cento a 1,425 por cento de salário final médio por cada ano de serviço creditado acumulado desde 1º de abril de 1985 até 44 anos e 1,25% a 1,75% de salário final médio Cada ano de serviço creditado acumulado antes de 1º de abril de 1985 até 40 anos. Para os participantes que se aposentam após a idade normal de aposentadoria de 65 anos, o benefício de aposentadoria é atuarialmente aumentado para refletir a data de início do benefício posterior. O SERP oferece um benefício igual a 2,4 por cento do salário final médio por cada ano do serviço creditado até 25 anos, reduzido pelos benefícios mensais efetivamente pagos pelo Plano de Renda de Aposentadoria Excessiva, o plano de aposentadoria qualificado de imposto, a Segurança Social e qualquer antecessor Plano ou plano de compensação diferido estrangeiro patrocinado pela AIG. Os Srs. Liddy e Herzog não, e o Sr. Willumstad não participaram do SERP. Para fins de todos os planos domésticos de aposentadoria, o salário final médio é o salário médio pensionável de um participante durante esses três anos consecutivos nos últimos 10 anos de serviço creditado que proporcionam a média mais alta, não incluindo os valores atribuíveis ao pagamento de horas extras, trimestralmente Bônus, bônus anuais em dinheiro ou prêmios de incentivo de longo prazo. Benefícios de aposentadoria antecipada. Cada um dos planos domésticos de aposentadoria prevê benefícios de reforma antecipada reduzida. Esses benefícios estão disponíveis para os participantes no plano de aposentadoria qualificado para impostos que tenham atingido os 55 anos e tenham 10 ou mais anos de serviço creditado. O Plano de Renda de Aposentadoria Excedente oferece benefícios reduzidos de aposentadoria antecipada aos participantes que atingiram os 60 anos com cinco ou mais anos de serviço, ou que tenham atingido a idade de 55 com 10 ou mais anos de serviço, a menos que o Comitê determine o contrário. O SERP oferece benefícios reduzidos de aposentadoria antecipada no mesmo horário, com exceção de que o Comitê deve aprovar o pagamento de participantes elegíveis que se aposentam antes dos 60 anos de idade. Em caso de reforma antecipada, os participantes da SERP receberão o benefício de fórmula SERP reduzido em 3% para Cada ano que a aposentadoria antecede 65 anos. Os participantes do plano de aposentadoria qualificado e do Plano de Renda de Aposentadoria Excedente receberão o benefício da fórmula do plano projetado para a aposentadoria normal aos 65 anos (usando salário final médio a partir da data da aposentadoria antecipada), mas Prorrateado com base em anos de serviço real, depois reduzido por um montante adicional da mesma maneira descrita em relação ao SERP. Os participantes no plano de aposentadoria qualificado com pelo menos 10 anos de serviço contínuo à AIG têm um subsídio de aposentadoria reduzido, de acordo com o qual, em caso de cessação de emprego antes de atingir a idade de 55 anos, os participantes podem optar por receber uma redução antecipada Benefício de aposentadoria começando em qualquer data entre 55 e 65 anos. Os participantes nos planos domésticos de aposentadoria não podem optar por receber um pagamento fixo após a aposentadoria normal ou antecipada. O Sr. Tse é elegível para se aposentar e receber benefícios da SERP e anunciou que se aposentará efetivamente em nossa Assembléia Geral de Acionistas de 2009. O Sr. Neuger seria elegível para receber um benefício de aposentadoria reduzida de acordo com o plano qualificado e o Plano de Renda de Aposentadoria Excessiva. Benefícios de morte e invalidez. Cada um dos planos domésticos de aposentadoria também prevê benefícios por morte e invalidez. Em caso de óbito, o SERP oferece a um participante pelo menos cinco anos de serviço creditado à AIG com uma renda de sobrevivência igual a 40% do benefício acumulado do participante146 e potencialmente reduzida com base na idade do cônjuge sobrevivente. O plano qualificado e o Plano de Renda Excesso de Aposentadoria, geralmente, prevêem um benefício de morte para os funcionários ativos que morrem antes dos 65 anos, igual a 50% do benefício que o participante teria recebido se ele tivesse terminado o emprego na data da morte, sobreviveu até o seu Data de aposentadoria mais adiantada e elegeu uma anuidade conjunta e de sobrevivência de 50%. De acordo com o plano de aposentadoria qualificado e o Plano de Renda Excesso de Aposentadoria, os participantes continuam a acumular o serviço creditado enquanto recebem pagamentos ao abrigo do plano de invalidez de longo prazo da AIG146s ou durante períodos de licença médica não paga antes de chegar aos 65 anos. No âmbito do SERP, os participantes não acumulam Serviço creditado durante esse período. Tal como acontece com outros benefícios de aposentadoria, no caso de benefícios por morte e invalidez, o benefício de fórmula de acordo com o Plano de Renda de Aposentadoria Excessiva e o SERP é reduzido por valores a pagar de acordo com o plano de aposentadoria qualificado e os participantes no SERP e na Aposentadoria Excessiva O Plano de Renda pode receber o benefício de fórmula do SERP somente na medida em que exceda o benefício pago no Plano de Renda de Aposentadoria Excesso e no plano qualificado. Benefícios previdenciários de 2008. A tabela a seguir detalha os benefícios acumulados nos planos de pensão em que cada executivo nomeado participa. De acordo com as regras da SEC, esses benefícios acumulados são apresentados como se fossem pagáveis ​​após a aposentadoria normal dos executivos de idade aos 65 anos. No entanto, é importante notar que, com exceção do Sr. Tse, que atingiu 65 anos e é elegível Para se aposentar, os benefícios apresentados para os executivos nomeados que permanecem na AIG são pelo menos parcialmente desviados e podem ser recebidos em níveis mais baixos devido a benefícios reduzidos ou perdidos por completo se o executivo mencionado não continuar a trabalhar na AIG nos próximos anos. Em particular, no final de 2008, nem o Sr. Herzog nem o Sr. Moor eram elegíveis para qualquer forma de reforma antecipada nos planos de pensão não qualificados da AIG146. O Sr. Liddy não acumulou nenhum benefício ao abrigo de qualquer plano de pensão da AIG. AIG não concedeu anos adicionais de serviço creditado nos planos de benefícios definidos descritos acima para qualquer executivo nomeado, exceto o crédito para o serviço anterior do Sr. Herzog146s à American General Corporation (conforme exigido pelos regulamentos do Código aplicáveis ​​aos planos assumidos nas aquisições) e idade potencial E créditos de serviço, conforme contemplado pelo Sr. Sullivan146s e os contratos de trabalho do Sr. Bensinger146s. Para obter mais informações, no que diz respeito aos Srs. Sullivan e Bensinger, veja 147 Pagamentos Pênsicos sobre Rescisão e Arranjos com Ex-Oficiais.148 Este trecho retirado da AIG DEF 14A arquivado em 4 de abril de 2008. A AIG mantém planos de benefícios definidos qualificados e não qualificados que oferecem aposentadoria Benefícios. Os funcionários da AIG e suas subsidiárias que são cidadãos dos Estados Unidos ou não cidadãos que trabalham nos Estados Unidos estão cobertos pelo Plano de aposentadoria American International Group, Inc., um plano de aposentadoria de benefícios definidos e qualificado. Os participantes cujo benefício de fórmula é restrito de ser integralmente pago do plano de aposentadoria qualificado devido aos limites do IRS sobre remuneração e benefícios são elegíveis para participar do Plano de Renda de Aposentadoria Excessiva. Os funcionários chave designados, incluindo os executivos nomeados, além do Sr. Sandler, também participam do Plano de Aposentadoria Executivo Suplementar (SERP). Além disso, o Sr. Sullivan está coberto pelo Plano de Pensões da AIG no Reino Unido (o Plano de Pensões do Reino Unido) em conexão com seus anos de serviço no Reino Unido. Os participantes recebem o benefício do plano de aposentadoria qualificado pelo imposto, o benefício do Plano de Renda Excesso de Aposentadoria e qualquer montante do benefício da SERP em excesso do benefício do Plano de Renda de Aposentadoria Excedente. O benefício SERP do Sr. Sullivan146s também será reduzido pelo montante de quaisquer pagamentos recebidos do Plano de Pensões do Reino Unido e o benefício SERP do Sr. Tse146s será reduzido pelo equivalente de anuidade dos pagamentos recebidos do Fundo de Previdência, descrito em 147 Compensação Diferida Nmalificada148 abaixo. O plano de renda de aposentadoria excedente fornece um benefício igual à parcela do benefício que não é permitido ser pago pelo plano de aposentadoria qualificado pelo imposto devido aos limites do IRS sobre remuneração e benefícios. Portanto, a fórmula do plano é a mesma fórmula usada no plano de aposentadoria qualificado. O plano de aposentadoria qualificado para impostos e a fórmula do Plano de renda de aposentadoria excedente dependem dos anos de serviço creditado e do salário final médio. A fórmula varia de 0,925 por cento a 1,75 por cento vezes o salário final médio para cada ano de serviço creditado até 44 anos. Para os participantes que se aposentam após a idade normal de aposentadoria de 65 anos, o benefício de aposentadoria é igual ao maior do benefício determinado usando a fórmula descrita acima e o benefício que os participantes poderiam ter recebido após a aposentadoria aos 65 anos, atuarialmente aumentado para refletir o posterior Data de início do benefício. O SERP oferece um benefício igual a 2,4 por cento do salário final médio por cada ano de serviço creditado até 25 anos, reduzido pelos benefícios mensais efetivamente pagos pelo Plano de Renda de Aposentadoria Excedente, o plano de aposentadoria qualificado, qualquer plano de pensão qualificado de Um empregador anterior e Segurança Social. Para fins de todos os planos domésticos de aposentadoria, o salário final médio é o salário médio pensionável de um participante durante esses três anos consecutivos nos últimos dez anos de serviço creditado que proporcionam a média mais alta, ou durante todos os anos de serviço creditado Se menos de três anos. O salário final médio inclui o salário regular pago pela AIG e suas subsidiárias e não inclui valores atribuíveis ao pagamento de horas extras, bônus trimestrais, bônus anuais em dinheiro ou prêmios de incentivo de longo prazo. Benefícios de aposentadoria antecipada. Cada um dos planos domésticos de aposentadoria prevê benefícios de reforma antecipada reduzida. Esses benefícios estão disponíveis para os participantes no plano de aposentadoria qualificado para impostos que atingiram os 55 anos, participantes do Plano de Renda de Aposentadoria Excedente que atingiram os 60 anos e participantes do SERP que atingiram os 55 anos, em cada caso com 10 ou mais anos Do serviço creditado. A aposentadoria antecipada no Plano de Renda de Aposentadoria Excessiva ou a SERP requer aprovação do Conselho de Administração. No caso de aposentadoria antecipada aprovada, os participantes da SERP que tenham atingido 60 anos e tenham 30 ou mais anos de serviço creditado receberão o benefício de fórmula SERP reduzido em 3% por cada ano em que a aposentadoria antecede os 65 participantes que atingiram os 60 anos E ter pelo menos 25 mas menos de 30 anos de serviço creditado receberá um benefício reduzido em 4% por ano, que a aposentadoria antecede 65 anos e todos os outros participantes receberão um benefício reduzido em 5% por cada ano em que a aposentadoria antecede 65 anos. Os participantes do plano de aposentadoria qualificado e do Plano de Renda de Aposentadoria Excedente receberão o benefício da fórmula do plano projetado para a aposentadoria normal aos 65 anos (usando salário final médio a partir da data da aposentadoria antecipada), mas prorrateado com base em anos de serviço real, Então reduzido por uma quantidade adicional da mesma maneira descrita em relação ao SERP. Os participantes no plano de aposentadoria qualificado com pelo menos 10 anos de serviço contínuo à AIG têm um subsídio de aposentadoria reduzido de acordo com o qual, em caso de cessação de emprego antes de atingir a idade de 55 anos, os participantes podem optar por receber a redução antecipada Benefício de aposentadoria a partir de qualquer data entre 55 e 65 anos e reduzido em 115 adicionais para cada um dos primeiros cinco anos e 130 para cada um dos próximos cinco anos, pelo qual esse início precede os 65 anos. Participantes nos planos domésticos de aposentadoria Não pode optar por receber um pagamento fixo mediante uma reforma normal ou antecipada. O Sr. Sullivan seria elegível para receber um subsídio de aposentadoria reduzido no âmbito do plano de aposentadoria qualificado. O Sr. Neuger seria elegível para receber um benefício reduzido de reforma antecipada de acordo com o plano qualificado para impostos e no âmbito do SERP, no último caso se o Conselho for eleito. Benefícios de morte e invalidez. Cada um dos planos domésticos de aposentadoria também prevê benefícios por morte e invalidez. No caso de morte, o SERP fornece um participante com pelo menos cinco anos de serviço creditado à AIG com uma anuidade de sobrevivência igual a 40% do benefício acumulado do participante146, reduzido pelos benefícios de morte pagáveis ​​ao abrigo do Plano de Renda Excesso de Aposentadoria e do imposto - plano qualificado e potencialmente mais reduzido com base na idade do cônjuge sobrevivente. No que diz respeito aos executivos nomeados, o plano qualificado de imposto prevê um benefício de morte para os funcionários ativos que morrem antes da idade de 65 anos, igual a 50% do benefício que o participante teria recebido se ele tivesse terminado o emprego na data da morte, sobreviveu até o seu Data de aposentadoria mais adiantada e elegeu uma anuidade conjunta e de sobrevivência de 50%. Se um participante morre enquanto trabalha ativamente em ou após os 65 anos de idade, o plano qualificado de imposto prevê um benefício de morte igual ao montante que teria sido pago se o participante possuísse uma anuidade de 100% em co-sobrevivência e sobrevivência em vigor na data da morte. O Plano de Renda de Aposentadoria Excedente fornece benefícios de morte equivalentes aos benefícios de morte de acordo com o plano qualificado para impostos se esses benefícios fossem calculados sem dar cumprimento às limitações impostas pelo IRS, reduzidas pelos benefícios de morte efectivamente pagáveis ​​ao abrigo do plano qualificado. No caso de incapacidade permanente, um participante geralmente pode receber um benefício com base no salário final médio e nos anos de serviço creditado que é devido depois que o participante deixar de receber pagamentos de acordo com o plano de invalidez de longo prazo da AIG146s aos 65 anos. Plano de aposentadoria e o Plano de Renda de Aposentadoria Excessiva, os participantes continuam acumulando anos de serviço creditado enquanto recebem pagamentos ao abrigo do plano de invalidez de longo prazo da AIG146s antes de chegar aos 65 anos. No âmbito do SERP, os participantes não acumulam anos de serviço creditado durante esse período. Tal como acontece com outros benefícios de aposentadoria, no caso de benefícios por morte e invalidez, o benefício de fórmula de acordo com o Plano de Renda de Aposentadoria Excessiva e o SERP é reduzido por valores a pagar de acordo com o plano de aposentadoria qualificado e os participantes no SERP e na Aposentadoria Excessiva O Plano de Renda pode receber o benefício de fórmula do SERP somente na medida em que exceda o benefício pago no Plano de Renda de Aposentadoria Excesso e no plano qualificado. Plano de pensão do Reino Unido. O Sr. Sullivan participou do Plano de Pensões do Reino Unido de 1978 a 1996. O Plano de Pensões do Reino Unido oferece um benefício igual a 1,67 por cento das vezes os ganhos pensionáveis ​​finais para cada ano de serviço. O lucro final para aposentadoria é definido como salário básico, excluindo bônus, horas extras e outros valores variáveis, recebidos nos 12 meses anteriores à data em que o participante cessa o serviço de reforma. Após essa data e antes que o participante se torne elegível para receber pagamentos, a fórmula benefício é aumentada à taxa de inflação até um máximo de 5% ao ano. De acordo com o Plano de Pensões do Reino Unido, a idade normal de aposentadoria é de 65 anos. Com o consentimento dos curadores do plano146, um participante inativo no Plano de Previdência do Reino Unido pode optar pela aposentadoria antecipada após atingir 50 anos e receber um benefício reduzido. Após a reforma antecipada, um participante do plano de pensão do Reino Unido receberia um benefício reduzido em 13% por mês antes do 60º aniversário do participante, com relação aos benefícios obtidos no âmbito do Plano de Pensões do Reino Unido entre 17 de maio de 1990 e 1 de setembro de 1991 e 13 por cento por mês antes do aniversário de 65 anos do participante em relação aos benefícios obtidos no âmbito do Plano de Pensões do Reino Unido por outros períodos de tempo. Como participante inativo no Plano de Pensões do Reino Unido, o Sr. Sullivan seria elegível para receber este benefício reduzido de aposentadoria antecipada com o consentimento dos curadores do plano146. Um participante que se torna incapacitado pode tomar uma pensão de aposentadoria antecipada em qualquer idade. Se um participante morre antes da aposentadoria, uma pensão igual a metade da pensão do participante será pagável a um cônjuge sobrevivente. A forma normal de pagamento do Plano de Pensões do Reino Unido é um pagamento mensal. Uma vez no pagamento, um benefício de pensão do participante146 pode estar sujeito a aumentos discricionários de tempos em tempos. Os participantes no Plano de Pensões do Reino Unido podem optar por receber uma parte ou a totalidade do seu benefício de pensão em um pagamento fixo na aposentadoria. A AIG não concedeu anos adicionais de serviço creditado nos planos de benefícios definidos descritos acima para qualquer um dos executivos nomeados. A tabela a seguir detalha os benefícios acumulados nos planos de benefício definido em que cada executivo nomeado participa. Este trecho retirado da AIG DEF 14A arquivado em 6 de abril de 2007. A AIG mantém planos de benefícios definidos qualificados e não qualificados que oferecem benefícios de aposentadoria. Os funcionários da AIG e suas subsidiárias que são cidadãos dos Estados Unidos ou não cidadãos que trabalham nos Estados Unidos estão cobertos pelo Plano de aposentadoria do American International Group, Inc., um plano de aposentadoria de benefícios definidos qualificado para impostos. Os participantes cujos benefícios de fórmula são restritos de serem pagos do plano de aposentadoria qualificado devido a limites de IRS sobre remuneração e benefícios são elegíveis para participar do Plano de Renda de Aposentadoria Excessiva. Os funcionários chave designados, incluindo os executivos nomeados, além do Sr. Sandler, também participam do Plano de Aposentadoria Executivo Suplementar (SERP). Além disso, o Sr. Sullivan está coberto pelo Plano de Pensões da AIG no Reino Unido (o Plano de Pensões do Reino Unido) em conexão com seus anos de serviço no Reino Unido. Os participantes recebem o benefício do plano de aposentadoria qualificado pelo imposto, o benefício do Plano de Renda Excesso de Aposentadoria e qualquer montante do benefício da SERP em excesso do benefício do Plano de Renda de Aposentadoria Excedente. O benefício SERP do Sr. Sullivan146s também será reduzido pelo montante de quaisquer pagamentos recebidos do Plano de Pensões do Reino Unido e o benefício SERP do Sr. Tse146s será reduzido pelo equivalente de anuidade dos pagamentos recebidos do Fundo de Previdência, descrito em 147 Compensação Diferida Nmalificada148 abaixo. O Plano de Renda de Aposentadoria Excedente fornece um benefício igual ao benefício que é restrito de ser pago a partir do plano de aposentadoria qualificado pelo imposto devido aos limites do IRS sobre remuneração e benefícios. Portanto, a fórmula do plano é a mesma fórmula usada no plano de aposentadoria qualificado. O plano de aposentadoria qualificado para impostos e a fórmula do Plano de renda de aposentadoria excedente dependem dos anos de serviço creditado e do salário final médio. A fórmula varia de 0,925 por cento a 1,75 por cento vezes o salário final médio para cada ano de serviço creditado até 44 anos. Para os participantes que se aposentam após a idade normal de aposentadoria de 65 anos, o benefício de aposentadoria é igual ao maior do benefício determinado usando a fórmula descrita acima e o benefício que os participantes poderiam ter recebido após a aposentadoria aos 65 anos, atuarialmente aumentado para refletir o posterior Data de início do benefício. O SERP oferece um benefício igual a 2,4 por cento do salário final médio por cada ano de serviço creditado até 25 anos, reduzido pelos benefícios mensais efetivamente pagáveis ​​pelo plano de aposentadoria qualificado, qualquer plano de pensão qualificado de um empregador anterior e Segurança Social . Os participantes tanto no SERP como no Plano de Renda de Aposentadoria Excessiva podem receber o benefício de fórmula do SERP somente na medida em que exceda o benefício pago pelo Plano de Renda de Aposentadoria Excessiva. For purposes of all of the domestic retirement plans, average final salary is the average pensionable salary of a participant during those three consecutive years in the last ten years of credited service that afford the highest such average, or during all of the years of credited service if less than three years. Average final salary includes the regular salary paid by AIG and its subsidiaries and does not include amounts attributable to overtime pay, quarterly bonuses, annual cash bonuses or long-term incentive awards. Early retirement benefits. Each of the domestic retirement plans provides for reduced early retirement benefits. These benefits are available to participants in the tax-qualified retirement plan who have reached age 55, participants in the Excess Retirement Income Plan who have reached age 60 and participants in the SERP who have reached age 55, in each case with 10 or more years of credited service. Early retirement under the Excess Retirement Income Plan or the SERP requires the approval of the Board. In the case of approved early retirement, participants in the SERP who have reached age 60 and have 30 or more years of credited service will receive the SERP formula benefit reduced by 3 percent for each year that retirement precedes age 65 participants who have reached age 60 and have at least 25 but fewer than 30 years of credited service will receive a benefit reduced by 4 percent for each year that retirement precedes age 65 and all other participants will receive a benefit reduced by 5 percent for each year that retirement precedes age 65. Participants in the tax - qualified retirement plan and the Excess Retirement Income Plan will receive the plan formula benefit projected to normal retirement at age 65 (using average final salary as of the date of early retirement), but prorated based on years of actual service, then reduced by a further amount in the same manner described with respect to the SERP. Participants in the tax-qualified retirement plan with at least five years of continuous service to AIG have a reduced vested retirement allowance pursuant to which, in the case of termination of employment prior to reaching age 55, such participants may elect to receive the reduced early retirement benefit commencing at any date between age 55 and age 65 and reduced by an additional 115 for each of the first five years, and 130 for each of the next five years, by which such commencement precedes age 65. Participants in the domestic retirement plans may not choose to receive a lump sum payment upon normal or early retirement. Mr. Sullivan would be eligible to receive a reduced vested retirement allowance under the tax-qualified retirement plan. Mr. Sandler would be eligible to receive a reduced early retirement benefit under the tax-qualified retirement plan and under the Excess Retirement Income Plan, in the latter case if the Board so elected. Mr. Neuger would be eligible to receive a reduced early retirement benefit under the tax-qualified plan and under the SERP, in the latter case if the Board so elected. Death and disability benefits. Each of the domestic retirement plans also provides for death and disability benefits. In the case of death, the surviving spouse of a participant with at least five years of credited service to AIG generally may receive a survivor annuity equal to 40 percent of the participant146s accumulated benefit based on average final salary and years of credited service at death, adjusted downward by 2 percent for each year that the surviving spouse was more than five years younger than the participant. Death benefits may not be paid before the time when the participant would have reached age 55, and participants in the Excess Retirement Income Plan and the SERP are eligible for death benefits under those plans only if they are also eligible for death benefits under the tax-qualified retirement plan. In the case of permanent disability, a participant generally may receive a benefit based on average final salary and years of credited service that is payable after the participant ceases to receive payments under AIG146s long-term disability plan at age 65. Under the tax-qualified retirement plan and the Excess Retirement Income Plan, participants continue to accrue years of credited service while receiving payments under AIG146s long-term disability plan before reaching age 65. Under the SERP, participants do not accrue years of credited service during that time. As with other retirement benefits, in the case of death and disability benefits, the formula benefit under the Excess Retirement Income Plan and the SERP is reduced by amounts payable under the tax-qualified retirement plan, and participants in both the SERP and the Excess Retirement Income Plan may receive the formula benefit from the SERP only to the extent that it exceeds the benefit payable from the Excess Retirement Income Plan. UK Pension Plan. Mr. Sullivan participated in the UK Pension Plan from 1978 until 1996. The UK Pension Plan provides a benefit equal to 1.67 percent times final pensionable earnings for each year of service. Final pensionable earnings is defined as basic pay, excluding bonuses, overtime and other variable amounts, received in the 12 months before the date when the participant ceases pensionable service. After that date and before the participant becomes eligible to receive payments, the formula benefit is increased at the rate of inflation up to a maximum of 5 percent per year. Under the UK Pension Plan, normal retirement age is 65. With the consent of the plan146s trustees, an inactive participant in the UK Pension Plan may elect early retirement after reaching age 50 and receive a reduced benefit. Upon early retirement, a male participant in the UK Pension Plan would receive a benefit reduced by 13 percent per month before the participant146s 60th birthday with respect to benefits earned under the UK Pension Plan between May 17, 1990 and September 1, 1991, and by 13 percent per month before the participant146s 65th birthday with respect to benefits earned under the UK Pension Plan for other periods of time. As an inactive participant in the UK Pension Plan, Mr. Sullivan would be eligible to receive this reduced early retirement benefit with the consent of the plan146s trustees. A participant who becomes disabled may take an early retirement pension at any age. If a participant dies prior to retirement, a pension equal to one-half of the participant146s pension will be payable to a surviving spouse. The normal form of payment from the UK Pension Plan is a monthly payment. Once in payment, a participant146s pension benefit may be subject to discretionary increases from time to time. Participants in the UK Pension Plan may choose to receive part or all of their pension benefit in a lump sum payment upon retirement. AIG has not granted extra years of credited service under the defined benefit plans described above to any of the named executives. The following table details the accumulated benefits under the defined benefit plans in which each named executive participates. EXCERPTS ON THIS PAGE:Section 240.14a-101 Schedule 14A. 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 Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) X Definitive Proxy Statement Definitive Additional Materials Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12 American International Group, Inc. (Name of Registrant as Specified In Its Charter) (Name of Person(s) Filing Proxy Statement, if other than the Registrant) Payment of Filing Fee (Check the appropriate box): X No fee required Fee computed on table below per Exchange Act Rules 14a-6(i)(1) 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: A MERICAN I NTERNATIONAL G ROUP. I NC . 70 Pine Street, New York, N. Y. 10270 NOTICE OF ANNUAL MEETING OF SHAREHOLDERS TO BE HELD MAY 14, 2003 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 14, 2003, at 11:00 oclock A. M. for the following purposes: To transact any other business that may properly come before the meeting. Shareholders of record at the close of business on March 21, 2003 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 plan on attending the meeting, please remember to bring photo identification with you. If you cannot be present at the meeting, please sign the enclosed proxy card and return it at once in the accompanying postage prepaid envelope or vote your shares by telephone or over the Internet. A MERICAN I NTERNATIONAL G ROUP. I NC . 70 Pine Street, New York, N. Y. 10270 PROXY STATEMENT 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 14, 2003, 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 amendment to the 1999 Stock Option Plan, for the amendment to the 1996 Employee Stock Purchase Plan, and for the ratification of the selection of PricewaterhouseCoopers LLP as independent accountants for 2003. These proxy materials are being mailed to shareholders of AIG commencing on or about April 4, 2003. Only shareholders of record at the close of business on March 21, 2003 will be entitled to vote at the meeting. On that date, 2,608,348,927 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 AIG Common 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 approval of the amendments to the 1999 Stock Option Plan and the 1996 Employee Stock Purchase Plan, and ratification of the selection of PricewaterhouseCoopers LLP as independent accountants, a broker non-vote will have no impact on the vote while an abstention will effectively be treated as a vote against the proposal. I. ELECTION OF DIRECTORS Sixteen directors are to be elected at the meeting to hold office until the next annual election and until their successors are duly elected and qualified. It is the intention of the persons named in the accompanying form of proxy to vote for the election of the nominees listed below, all of whom are currently members of your Board of Directors. Robert L. Crandall resigned from the Board as of October 9, 2002 and current directors Eli Broad, Edward E. Matthews and Thomas R. Tizzio are not standing for re-election. Upon his retirement from the Board, Mr. Broad will be able to devote more time to his philanthropic and other endeavors and spend less time in travel to New York, but his relationship with AIG will continue as he remains Chairman of AIG SunAmerica Inc. Mr. Matthews has retired as Senior Vice Chairman151Investments and Financial Services, but continues as a consultant to AIG, and Mr. Tizzio continues as Senior Vice Chairman151Domestic General Insurance. 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 the persons named in the accompanying form of proxy may determine in their discretion. Directors will be elected by a plurality of the votes cast. The nominees and certain information supplied by them to AIG are as follows: M. BERNARD AIDINOFF Director since 1984 FRANK G. ZARB Director since 2001 Former Chairman, National Association of Securities Dealers, Inc. and The Nasdaq Stock Market, Inc. Senior Advisor, Hellman amp Friedman LLC (Private Equity Investment Firm) Age 68 Director, FPL Group, Inc. 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. Holbrooke served as United States Ambassador to the United Nations from 1999 to 2001 prior to that he served as Vice Chairman of Credit Suisse First Boston from 1996 to 1999. Mr. Zarb served as Chairman and Chief Executive Officer of the National Association of Securities Dealers, Inc. from February 1997 until October 2000 and The Nasdaq Stock Market, Inc. from February 1997 until January 2001 and as Chairman of those organizations until September 2001. There were four regularly scheduled meetings of the Board during 2002. All of the directors attended at least 75 percent of the aggregate of all meetings of the Board and of the committees of the Board on which they served. The Audit Committee, which held eight meetings during 2002, assists the Boards oversight of AIGs financial reporting process. As part of its oversight role, the Audit Committee recommends to the Board the nomination of the independent accountants as auditors for the ensuing fiscal year. Mr. Hoenemeyer chaired the Audit Committee, which included Messrs. Aidinoff, Conable and Zarb and Mrs. Hills during 2002. The Stock Option and Compensation Committee, which held six meetings during 2002, administers the various AIG stock option and other compensation plans, establishes the compensation of the Chief Executive Officer and sets policy for compensation for senior management. Messrs. Cohen, Conable, Hoenemeyer and Holbrooke are the current members of the Stock Option and Compensation Committee, with Mr. Conable serving as the Chairman, and Ms. Futter served on the Stock Option and Compensation Committee through September 18, 2002. The principal function of the Executive Committee, which held two meetings in 2002, is to act for the Board between Board meetings. Messrs. Aidinoff, Greenberg, Hoenemeyer, Matthews, Tizzio and Zarb and Mrs. Hills are the current members of the Executive Committee, with Mr. Zarb serving as the Chairman. The Finance Committee, which oversees the financial affairs and investment activities of AIG and its subsidiaries, held 12 meetings during 2002. Messrs. Aidinoff, Broad, Chia, Conable, Feldstein, Greenberg, Hoenemeyer, Holbrooke, Matthews, Smith, Wintrob and Zarb served as members of the Finance Committee during 2002. On September 18, 2002, AIG established a Nominating and Corporate Governance Committee. Mr. Aidinoff chairs the committee, which held two meetings in 2002 and which also included Messrs. Cohen and Zarb and Ms. Futter and Mrs. Hills. The primary purposes of the Nominating and Corporate Governance Committee are to recommend individuals to the Board of Directors for nomination, election or appointment as members of the Board and its committees and to review on an ongoing basis the corporate governance principles and practices that should apply to AIG. The Nominating and Corporate Governance Committee will consider nominees recommended by the shareholders. Shareholders who wish to submit nominees for director for consideration by the Nominating and Corporate Governance Committee for election at the 2004 Annual Meeting of Shareholders may do so by submitting in writing such nominees names, in compliance with the procedures described under V. Shareholder Proposals For 2004 Annual Meeting in this Proxy Statement. Ownership of Certain Securities The only persons who, to the knowledge of AIG, own in excess of five percent of the AIG Common Stock are FMR Corp. 82 Devonshire Street, Boston, Massachusetts 02109, which filed a Schedule 13G on February 13, 2003, with respect to the 135,139,163 Shares of AIG Common Stock held by it, and SICO, P. O. Box 152, Hamilton, Bermuda. According to the Schedule 13G filed by FMR Corp. it is the parent company of various entities (collectively, Fidelity) which provide investment advisory and management services to the Fidelity Group of mutual funds. The Schedule 13G states that Fidelity is the beneficial owner of 132,263,544 shares of AIG Common Stock as a result of providing these services to the funds, and that Fidelity International Limited, which operates as an entity separate from FMR Corp. and Fidelity, is the beneficial owner of 2,875,619 shares of AIG Common Stock. At January 31, 2003, SICO held 313,202,236 shares, or 12.0 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 56,957,340 shares and 47,354,216 shares (including 18,885,999 shares held by the C. V. Starr amp Co. Inc. Trust), or 2.18 percent and 1.81 percent, respectively, of the outstanding AIG Common Stock on that date. The following table summarizes the ownership of equity securities of AIG, Starr and SICO by the directors, all of whom except Messrs. Broad, Matthews and Tizzio are nominees, by Messrs. John A. Graf and Rodney O. Martin, Jr. who together with Messrs. Greenberg, Matthews and Tse are the current 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 current executive officers as a group. 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: Feldstein15123,727 shares with his wife, Greenberg15143,568,635 shares with his wife and 100,009 shares with co-trustees, Tizzio151618,617 shares with his wife, Tse1513,555 shares with his wife, and all directors and executive officers of AIG as a group15144,330,135 shares. Amount of equity securities shown includes shares of AIG Common Stock subject to options which may be exercised within 60 days as follows: Aidinoff15158,233 shares, Broad15115,065,145 shares, Chia15126,593 shares, Cohen15158,233 shares, Conable15158,233 shares, Feldstein15158,233 shares, Futter1515,500 shares, Greenberg1511,499,218 shares, Graf151663,857 shares, Hills15158,233 shares, Hoenemeyer15158,233 shares, Martin151665,434 shares, Matthews151562,343 shares, Smith151231,406 shares, Sullivan15142,934 shares, Tizzio151420,359 shares, Tse151357,109 shares, Wintrob151979,718 shares, Wisner15122,812 shares, and all directors and executive officers of AIG as a group15121,932,734 shares. Amount of shares shown for each of Mr. Greenberg, Mr. Matthews and Mr. Smith does not include 18,885,999 shares held as trustee for the Starr Trust, as to which each of them disclaims beneficial ownership. Inclusion of these shares would increase the percentage ownership of AIG Common Stock shown above for each of them by .72 percent. Amount of equity securities shown also excludes the following securities owned by members of the named individuals immediate family as to which securities such individual has disclaimed beneficial ownership: Aidinoff1512,364 shares, Matthews15122,500 shares, Zarb1514,645 shares, and all directors and executive officers of AIG as a group15156,953 shares. (footnotes continued on next page) Less than .01 percent. At January 31, 2003, the named individuals also held options which may be exercised within 60 days with respect to shares of Transatlantic and 21st Century as follows: Transatlantic common stock, 1.00 par value per share: Greenberg151107,500 shares, Matthews15153,750 shares, Smith15113,500 shares and Tizzio15153,750 shares 21st Century common stock, without par value: Smith15124,000 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 ten 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, executive officers and ten percent holders during 2002 were: one late report filed by Mr. Bensinger, an executive officer, reporting the grant of options upon his employment with AIG one late report filed by Mr. Chia reporting one transaction by his late wife four late reports filed by Mr. Freudmann, an executive officer, each reporting one transaction two late reports filed by Mr. Graf, an executive officer, reporting the acquisition of interests under an American General Corporation (AGC) deferred compensation plan one late report filed by SICO reflecting the disposition of shares to a retiring employee under the SICO Plan (see footnotes 5 and 6 to the Summary Compensation Table below) one late report filed by Mr. Wintrob reporting his acquisition of shares through the AIG 1996 Employee Stock Purchase Plan and one late report filed by Mr. Zarb reporting one transaction by his wife. 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 directors fees of 40,000 per year, plus 1,500 for each Board meeting attended. An annual fee of 5,000 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 receive annually 500 shares of AIG Common Stock and an option which vests after one year and is exercisable for nine years thereafter to purchase 2,500 shares of AIG Common Stock at an option price equal to the fair market value of AIG Common Stock on the date of grant, which is the date of the Annual Meeting of Shareholders. Receipt of shares upon exercise of these options may be deferred at the election of the director. On February 10, 2003, each non-employee director received an additional option grant with respect to 2,500 shares at an option price of 47.00 per share. 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. The following Summary Compensation Table sets forth the compensation accrued for services in all capacities to AIG and its subsidiaries by the named executive officers required to be disclosed pursuant to the proxy rules of the Securities and Exchange Commission. SUMMARY COMPENSATION TABLE Amounts shown for named executive officers other than the Chief Executive Officer represent year-end bonuses and bonuses paid quarterly pursuant to a supplementary bonus program. In December, 2001, in light of the losses suffered by AIG as a result of the September 11th terrorist attacks, Mr. Greenberg waived payment of any bonus. In addition, the Stock Option and Compensation Committee accepted managements recommendation that no year-end bonuses be paid to other members of senior management. Messrs. Graf and Martin became executive officers in May 2002. Salary and Bonuses for Messrs. Graf and Martin were paid pursuant to contractual arrangements negotiated in connection with AIGs acquisition of AGC in August 2001. Terms of these arrangements were largely negotiated prior to AIGs offer to acquire AGC with Prudential plc, and AIG agreed to accept such terms in order to close the transaction on an expedited basis. See page 13 for a description of these arrangements. Mr. Matthews retired as an employee as of December 31, 2002. As of the date of this Proxy Statement, he serves as Senior Advisor and a consultant to AIG providing services on a part-time basis. Calculated using the 2,609,600,831 shares of AIG Common Stock outstanding at December 31, 2002. Messrs. Greenberg, Matthews, Tizzio and Smith were granted options to purchase 10,000 shares, 5,000 shares, 5,000 shares and 5,000 shares, respectively, of common stock of Transatlantic at an exercise price of 69.63 per share (the fair market value of Transatlantic common stock on the date of grant) on December 5, 2002 as compensation for services to Transatlantic. These grants provide that 25 percent of the options granted become exercisable on each anniversary date in each of the successive four years and that the option expires ten years from the date of grant. Mr. Smith and Mr. Sandler, an executive officer, were each granted options to purchase 4,000 shares of common stock of 21st Century at a price of 19.10 per share (the fair market value of 21st Century common stock on the date of grant) on June 26, 2002 as compensation for services to 21st Century. These options become exercisable on June 26, 2003 and expire ten years from the date of grant. The following table summarizes certain information with respect to the exercise of options to purchase AIG Common Stock during 2002 by the individuals named in the Summary Compensation Table and the unexercised options to purchase AIG Common Stock held by such individuals at December 31, 2002. Aggregated Option Exercises during the Year Ended December 31, 2002 and December 31, 2002 Option Values Awards represent grants of units under the SICO Plan described in footnotes 5 and 6 to the Summary Compensation Table with respect to the two-year period from January 1, 2003 through December 31, 2004. The SICO Plan contains neither threshold amounts nor maximum payout limitations. The number of shares of AIG Common Stock, if any, allocated to a unit for the benefit of a participant in the SICO Plan is primarily dependent upon two factors: the growth in future earnings of AIG during the unit award period and the book value of AIG at the end of the award period. As a result, the number of shares to be allocated with respect to units held for the 2003-2004 period and the value of such shares upon future payout cannot be determined at this time. The number of shares shown under Estimated Future Payouts represent the number of shares contingently allocable to the named individuals based upon the units awarded to them for the 2003-2004 period, assuming the same criteria as those used to allocate the shares of AIG Common Stock for the 2001-2002 period. As noted in the description of the SICO Plan in the footnotes to the Summary Compensation Table, prior to earning the right to payout, the participant is not entitled to any equity interest with respect to such shares, and the shares are subject to forfeiture under certain conditions, including but not limited to the participants voluntary termination of employment with AIG prior to normal retirement age other than by death or disability. Any payments ultimately distributed under the SICO Plan will not be paid by AIG and will not be dilutive to AIG shareholders. Equity Compensation Plan Information The following table provides information as of December 31, 2002, regarding securities issued to AIG non-employees and employees under equity compensation plans that were in effect during 2002. Number of Securities Remaining Available for Future Issuance Under Equity Compansation Plans (Excluding Securities Reflected in the Second Column) Equity compensation plans approved by security holders 1991 Employee Stock Option Plan Excludes restricted stock units. In order to facilitate the performance of their management responsibilities, AIG provides to Messrs. Greenberg, Matthews and Tse 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. In connection with AIGs acquisition of AGC, AIG entered into employment agreements with both of Messrs. Graf and Martin. Under these agreements, during the employment period (August 29, 2001 through August 29, 2004), Messrs. Graf and Martin are each entitled to receive a base salary of not less than 650,000, an annual bonus of not less than 1,250,000 and a supplemental bonus of 90,000. If either of Mr. Grafs or Mr. Martins employment is terminated without cause or by him, with good reason, during the employment period, he will receive (i) any accrued salary or benefits, (ii) a severance payment of not less than 1.9 million, (iii) a pro-rata portion of his annual bonus, (iv) certain retirement and other employee benefits as if he had continued to be employed until expiration of the agreement, (v) outplacement services and (vi) immediate vesting of all outstanding equity-based awards. If either of Mr. Graf or Mr. Martin is terminated for cause, or if Mr. Graf or Mr. Martin terminates his employment without good reason, AIG will have no further obligations to him other than the repayment of any accrued salary or benefits. If either of Mr. Grafs or Mr. Martins employment is terminated due to death or disability, the equity-based awards will become fully vested and exercisable, and AIG will have no further obligations to him other than the payment of any accrued salary or benefits and any death or disability benefits comparable to those paid to other AIG executives. Messrs. Graf and Martin may not compete with AIG for the period of one year following the termination of employment or, if earlier, August 29, 2004. Under the employment agreements Messrs. Graf and Martin are eligible to receive employee, medical and other welfare benefits provided by AIG to other AIG executives and through 2002, were entitled to certain perquisites and special benefits including annual club membership fees reimbursements, financial planning services, an annual physical, enhanced and split-dollar life insurance and, in the case of Mr. Martin, an automobile allowance. In connection with his employment and relocation to New York, AIG has paid certain expenses involved with Mr. Wisners purchase of a cooperative apartment and provided credit support for his mortgage. During 2002, Mr. Sullivan was provided a mortgage loan by AIG in connection with his relocation from London to New York. The maximum amount of such loan outstanding during 2002 and at January 31, 2003 was 285,375 at an interest rate of 2.78 percent per annum. During 2002, Mr. Nottingham, an executive officer, was provided a mortgage loan by AIG with an effective annual interest rate of 1.07 percent per annum. The maximum amount of such loan outstanding during 2002 was the yen equivalent of 827,801 and at January 31, 2003 was 2,700,000. Messrs. Greenberg, Matthews, Smith, Sullivan, Tizzio, Tse and Wintrob 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, 2003 is approximately 2,850,000. 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 three consecutive years in the last ten years of his credited service affording the highest such average, or during all of the years of his credited service if less than three 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 ten 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 employees 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 employees 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 employees 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 employees 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 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 a supplemental retirement plan (the Supplemental Plan) are illustrated in the following table: Estimated Annual Pension at Age 65 With respect to Messrs. Greenberg and Matthews, their respective years of credited service (under both plans) through December 31, 2002 are as follows: Greenberg15142 years Matthews15129.2 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 2002 was as follows: Greenberg1511,000,000 Matthews151718,846. 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 and Tse were participants in the Supplemental Plan at December 31, 2002. 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. In September 2002, AIG approved a Supplemental Executive Retirement Plan (as amended and restated effective June 1, 2002) and an Excess Retirement Income Plan (effective as of June 1, 2002) which together provide the same benefits described above and replace the Supplemental Plan. Messrs. Graf and Martin have accrued benefits frozen as of December 31, 2002 under the AGC Retirement Plan, the AGC Supplemental Executive Retirement Plan and the AGC Restoration of Retirement Income Plan. Effective January 1, 2003 both individuals will accrue their future benefits under the terms of the AIG Retirement Plan. The estimated annual benefits payable upon retirement at normal retirement age at 65 from all applicable AIG and AGC plans are 251,508 for Mr. Graf and 201,992 for Mr. Martin. 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 2002, AIG contributed 12.5 percent of Mr. Tses pensionable salary of 611,156 to the plan based on his 41.7 years of service. Certain Transactions Certain transactions in 2002 effected in the ordinary course of business between AIG and its subsidiaries and SICO and Starr are summarized in the following table: 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, comprised of Messrs. Cohen, Conable, Hoenemeyer and Holbrooke for the year ended December 31, 2002, 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 AIGs various employee stock option and other compensation plans. In determining the compensation which is appropriate for both the Chief Executive Officer and other members of senior management, the Committees starting point is AIGs 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 New Peer Group (as defined below)) while comparing AIGs 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 and the level of individual contribution by AIGs senior officers to the performance of AIG. No specific formula is utilized to evaluate 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. 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. In its consideration of the Chief Executive Officers compensation, the Committee reviewed the activities and accomplishments of the Chief Executive Officer in relation to the strategic plans and goals of the AIG organization, both internally and in the national and global arenas. The Committee noted Mr. Greenbergs leadership role in the successful effort to obtain federal terrorism coverage which will strengthen the economy, build confidence and create jobs. The Committee recognized the culmination of the Chief Executive Officers leadership of AIGs efforts over nearly three decades as AIG became the first foreign insurance organization to be licensed in Beijing and three additional provinces in China. The Committee reviewed the successful integration of AGC into AIG, accomplished on schedule and on budget. In determining the amount of the bonus, the Committee considered that but for the reserve charge against AIGs earnings for the fourth quarter of 2002, based upon the historical criteria used by the Committee to determine the eligibility of the Chief Executive Officer for a performance-based bonus under the Chief Executive Officer Compensation Plan approved by Shareholders in 1997, Mr. Greenberg would have been entitled to a bonus of 5,000,000. The Committee concluded that Mr. Greenberg had done a superb job in a difficult year amid a challenging environment and that 5,000,000 was an appropriate measure of the outstanding performance of the Chief Executive Officer. On the basis of the general factors set forth above, the Committee determined the bonuses for 2002 performance, the base salaries for 2003 and approved the levels of participation by the senior executive officers in the supplementary bonus program for 2003-2004. The Committee has recognized 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 AIGs considerable success over the years. The Committee believes that the actions of AIG senior management and the Chief Executive Officer evidence the success of AIGs compensation program in aligning the interests of senior management with AIGs shareholders and demonstrate the value of providing senior management and the Chief Executive Officer with the significant option grants made for 2002 performance. In February 2003, in light of the decline in market price of AIG Common Stock, the Committee determined that additional incentives were needed to retain and motivate employees and, accordingly, made an additional grant of options in the same amounts as those awarded in late 2002. Section 162(m) of the Internal Revenue 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 individuals compensation exceeds 1,000,000 unless certain requirements for performance-based compensation are satisfied. Compensation attributable to the exercise of options granted under the 1991 Employee Stock Option Plan and the 1999 Stock Option Plan will be performance-based and therefore will be deductible in accordance with Section 162(m). Other compensation paid to the named executive officers in excess of 1,000,000 did not qualify as performance based and, therefore, was not deductible under Section 162(m). 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 Richard C. Holbrooke II. APPROVAL OF A PROPOSAL TO AMEND THE 1999 STOCK OPTION PLAN The Board of AIG has adopted, subject to approval of the shareholders, certain amendments (the Amendments) to the 1999 Stock Option Plan (the 1999 Plan), which was previously approved by the shareholders. The Amendments increase the aggregate number of shares available for grant under the 1999 Plan from 15,000,000 shares (as such shares have been adjusted since 1999 pursuant to the stock split effected as a stock dividend in 2000) to 45,000,000 shares to assure that an adequate number of shares is available for grant during the remaining term of the 1999 Plan. In addition, the Amendments limit the maximum number of shares as to which stock options may be granted to any one employee in any one year to 900,000 shares. This amendment is also intended to allow grants under the 1999 Plan to qualify as performance-based compensation for purposes of Section 162(m) of the Internal Revenue Code of 1986. No other substantive amendments are being made to the 1999 Plan. An amended and restated version of the 1999 Plan is attached as Appendix B (the Amended 1999 Plan). The purpose of the Amended 1999 Plan is to advance the interests of AIG by providing key employees and members of the Board with additional incentives to continue their efforts on behalf of AIG. At December 31, 2002, AIG and its subsidiaries had approximately 10,000 employees who were eligible to participate in the 1999 Plan. The Amended 1999 Plan is to be administered by a committee of the Board (the Committee) drawn solely from members of the Board who are not and have not been officers of AIG or its subsidiaries. In certain circumstances the Board as a whole may administer the Amended 1999 Plan. Under the Amended 1999 Plan, options may be granted to such employees and members of the Board as selected by the Committee (or the Board) to purchase shares of AIG Common Stock at exercise prices not less than 100 of the fair market value of AIG Common Stock on the date of grant. Shares issued under the Amended 1999 Plan may consist of newly issued shares or shares acquired by AIG from time to time and held as treasury stock. Options, in general, will not be exercisable within one year of the date of grant, but thereafter may be exercised for up to nine years. Options may be granted upon such other terms and conditions as the Committee or the Board may approve. Options will not be transferable otherwise than by will or the laws of descent and distribution. The Amended 1999 Plan provides that the Committee will determine at the time of grant whether all or any part of a stock option will be an incentive stock option. The number of shares available for options or issuable upon the exercise of options, and option prices, will be subject to antidilution and similar adjustments. Shares subject to options which terminate or expire prior to exercise will be available for further issuance under the Amended 1999 Plan. No options may be granted under the Amended 1999 Plan after September 14, 2009. The Board may from time to time amend the Amended 1999 Plan, but no alteration or amendment may be made without the approval of shareholders if such approval is required by applicable law. No cash consideration will be received upon the grant of any option, but options may be granted in lieu of a portion of an employees bonus. Because the granting of options under the provisions of the Amended 1999 Plan will be entirely within the discretion of the Committee or the Board, it is not possible to designate the employees or members of the Board to whom options will be granted under the Amended 1999 Plan or the number of shares to be covered by such options. Grants of options under the 1999 Plan made during 2002 are shown in the table on page 11 under the caption Option Grants in 2002. The market value of the AIG Common Stock on March 14, 2003 was 48.96 per share. Tax Matters Upon the grant or exercise of an incentive stock option, no income will be realized by the optionee for federal income tax purposes and AIG will not be entitled to any deduction. If the AIG Common Stock acquired upon exercise is not disposed of within the one-year period beginning on the date of the transfer of the AIG Common Stock to the optionee, nor within the two-year period beginning on the date of the grant of the option, any gain or loss realized by the optionee upon the disposition of such shares will be taxed as long-term capital gain or loss. In such event, no deduction will be allowed to AIG. If the AIG Common Stock is disposed of within the one-year or two-year periods referred to above, the optionee will realize ordinary income at the time of disposition in an amount equal to the excess of the fair market value of the AIG Common Stock on the date of exercise (or, if less, the net proceeds of the disposition) over the exercise price, and AIG will be entitled to a corresponding deduction. The use of shares previously acquired through the exercise of an incentive stock option in satisfaction of all or a part of the exercise for another option (whether or not an incentive stock option) is a disposition of the previously acquired shares for purposes of the one-year and two-year holding periods described above. All shares acquired upon the exercise of an incentive stock option, including previously acquired shares used in satisfaction of all or a part of the exercise price, are considered to have been acquired upon the date of exercise for purposes of the one-year and two-year holding periods. Upon the grant of a nonqualified option, no income will be realized by the optionee for federal income tax purposes, and AIG will not be entitled to any deduction. Upon the exercise of such an option, the optionee will realize ordinary income in the amount by which the fair market value of the AIG Common Stock at the time of exercise exceeds the exercise price, and AIG will be entitled to a corresponding deduction. An optionee who makes an election to defer receipt of shares upon exercise of the option, will not be subject to income tax on the date of exercise for the option gain151the difference between (i) the fair market value of the total number of shares subject to the option exercise and (ii) the total option exercise price. The optionee will be subject to federal income tax (and applicable state and local income taxes) on the deferred shares on the date he or she is entitled to the shares, based on their value at that date. The holding period for the deferred shares will not begin until the date the optionee is entitled to receive the shares, and his or her basis will be equal to the fair market value of the shares on that date, and AIGs deduction will also be deferred until that date. Approval of Amendments requires approval by a majority of the shares of AIG Common Stock present and entitled to vote at the meeting. Your Board of Directors recommends a vote FOR the proposal to approve the Amendments. III. APPROVAL OF A PROPOSAL TO AMEND THE 1996 EMPLOYEE STOCK PURCHASE PLAN The Board of AIG has adopted, subject to approval of the shareholders, certain amendments (the Amendments) to the 1996 Employee Stock Purchase Plan (the 1996 Purchase Plan), which was previously approved by shareholders. The Amendments increase the aggregate number of shares available for grant under the 1996 Purchase Plan from 4,218,750 shares (as such shares have been adjusted since 1996 pursuant to the stock splits effected in the form of stock dividends in 1997, 1998, 1999 and 2000) to 10,000,000 shares to assure that an adequate number of shares is available for grant during the remaining term of the 1996 Purchase Plan. No other substantive amendments are being made to the 1996 Purchase Plan. An amended and restated version of the 1996 Purchase Plan is attached as Appendix C (the Amended 1996 Purchase Plan). The purpose of the Amended 1996 Purchase Plan is to advance the growth and prosperity of AIG and its subsidiaries by providing their employees with additional incentives to contribute to the best interests of AIG and to remain employed by AIG. At December 31, 2002, AIG and its subsidiaries had approximately 75,000 employees who were eligible to participate in the 1996 Purchase Plan. The Amended 1996 Purchase Plan is to be administered by a committee consisting of at least three employees appointed by the Chairman of AIG. Under the Amended 1996 Purchase Plan, all full-time employees who have at least one year of service with AIG or its subsidiaries, receive privileges to purchase 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 Amended 1996 Purchase Plan is intended to be an employee stock purchase plan, as defined by Section 423 of the Internal Revenue 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 10 of an employees annual compensation or 10,000. No cash consideration will be received for the granting of purchase privileges. Except in the case of death, disability or retirement, the amount subscribed is paid by payroll deduction. 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, will be 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 issuance under the Amended 1996 Purchase Plan. There is no provision in the Amended 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 Amended 1996 Purchase Plan. The market value of the AIG Common Stock on March 14, 2003 was 48.96 per share. Tax Matters For federal income tax purposes, no income will be realized by employees participating in the Amended 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. AIG will be entitled to a deduction for the amount of any ordinary income realized upon the disposition. If shares are disposed of before the end of either the two-year or one-year periods discussed above, a participating employe 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. AIG will be entitled to a deduction for this amount. The participating employees 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). Approval of the Amendments requires approval by a majority of the shares of AIG Common Stock present and entitled to vote at the meeting. Your Board of Directors recommends a vote FOR the proposal to approve the Amendments. IV. RATIFICATION OF SELECTION OF ACCOUNTANTS The Audit Committee and the Board of Directors have approved the employment of PricewaterhouseCoopers LLP as independent accountants of AIG for 2003. 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. The fees billed by PricewaterhouseCoopers LLP for services rendered for the fiscal year ended December 31, 2002 include the following: Audit Fees. The aggregate fees billed by PricewaterhouseCoopers LLP for professional services rendered for the worldwide audit of AIGs annual financial statements for the fiscal year ended December 31, 2002 and for the reviews of the financial statements included in AIGs Quarterly Reports on Form 10-Q for that fiscal year were 27,831,223. Financial Information Systems Design and Implementation Fees. There were no fees billed by PricewaterhouseCoopers LLP for professional services rendered for information technology services relating to financial information systems design and implementation for the fiscal year ended December 31, 2002. All Other Fees. The aggregate fees billed by PricewaterhouseCoopers LLP for worldwide services rendered to AIG, other than the services described above, for the fiscal year ended December 31, 2002 were 11,678,782, including approximately 4,600,000 related to tax advice, and 7,000,000 for other services, principally accounting assistance and attestation services. Ratification 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. Neither AIGs Restated Certificate of Incorporation, as amended, nor By-Laws require that the shareholders ratify the selection of PricewaterhouseCoopers LLP as its independent accountants. AIGs Board is requesting shareholder ratification as a matter of good corporate practice. If the shareholders do not ratify the selection, the Board and the Audit Committee will reconsider whether or not to retain PricewaterhouseCoopers LLP, but may retain PricewaterhouseCoopers LLP. Even if the selection is ratified, the Board and the Audit Committee in their discretion may change the appointment at any time during the year if they determine that such change would be in the best interests of AIG and its shareholders. Your Board of Directors recommends a vote FOR the proposal to ratify the selection of PricewaterhouseCoopers LLP. V. SHAREHOLDER PROPOSALS FOR 2004 ANNUAL MEETING All suggestions from shareholders are given careful attention. Proposals intended for inclusion in next years 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 5, 2003. Under the AIG By-Laws, notice of any other shareholder proposal to be made at the 2004 Annual Meeting of Shareholders must be received not less than 90 nor more than 120 days prior to May 14, 2004 unless the 2004 Annual Meeting is not scheduled to be held on a date between April 14, 2004 and June 13, 2004, 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. VI. 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, Report of the Audit Committee (to the extent permitted by the rules of the Securities and Exchange Commission), Performance Graph and Appendix A, the Audit Committee Charter, shall not be deemed to be so incorporated, unless specifically otherwise provided in such filing. Important Notice Regarding Delivery of Shareholder Documents In accordance with a notice sent to certain shareholders of AIG Common Stock who hold AIG Common Stock through a broker or otherwise through a nominee and who share a single address, only one copy of this Notice of Annual Meeting of Shareholders and Proxy Statement and AIGs 2002 Annual Report to Shareholders is being sent to that address unless AIG receives contrary instructions from any shareholder at that address. This practice, known as householding, is designed to reduce printing and postage costs. However, if any shareholder residing at such address wishes to receive a separate copy of this Notice of Annual Meeting and Proxy Statement or AIGs Annual Report to Shareholders, he or she may contact the AIG Director of Investor Relations at 70 Pine Street, New York, New York 10270, 212-770-6293, and AIG will deliver those documents to such shareholder promptly upon receiving the request. Any such shareholder may also contact the AIG Director of Investor Relations if he or she would like to receive separate proxy materials and annual reports in the future. If a shareholder receives multiple copies of AIGs proxy materials and annual reports, he or she may request householding in the future by contacting the AIG Director of Investor Relations. 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 Georgeson Shareholder Communications Inc. to assist in the solicitation of proxies for a fee of approximately 12,500 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. APPENDIX A AMERICAN INTERNATIONAL GROUP, INC. AUDIT COMMITTEE CHARTER (Amended March 12, 2003) I. Composition of the Audit Committee The Audit Committee shall be comprised of at least three directors, each of whom shall have no relationship to American International Group, Inc. (AIG) that may interfere with the exercise of their independence from management. AIG shall otherwise satisfy the applicable listing requirements under the rules of the New York Stock Exchange, Inc. as such requirements are interpreted by the Board of Directors in its business judgment. II. Purposes of the Audit Committee The purposes of the Audit Committee are to assist the Board of Directors: in its oversight of AIGs accounting and financial reporting principles and policies and internal audit controls and procedures in its oversight of AIGs financial statements and the independent audit thereof in selecting, evaluating and, where deemed appropriate, replacing the outside auditors (or nominating the outside auditors to be proposed for shareholder approval in any proxy statement) and in evaluating the independence of the outside auditors. The function of the Audit Committee is oversight, recognizing that the management of AIG is responsible for the preparation, presentation and integrity of AIGs financial statements. Management and AIGs internal auditing department are responsible for maintaining appropriate accounting and financial reporting principles and policies and internal controls and procedures that provide for compliance with accounting standards and applicable laws and regulations. The outside auditors are responsible for planning and carrying out a proper audit of AIGs annual financial statements, reviews of AIGs quarterly financial statements prior to the filing of each quarterly report on Form 10-Q, and conducting other procedures and preparing the reports required by this Charter. The outside auditors for AIG are ultimately accountable to the Board of Directors, as assisted by the Audit Committee. The Board of Directors, with the assistance of the Audit Committee, has the ultimate authority and responsibility to select the outside auditors for nomination, to nominate the outside auditors to be proposed for shareholder approval in the proxy statement, evaluate and, where appropriate, replace the outside auditors. The outside auditors shall submit to AIG annually a formal written statement delineating all relationships between the outside auditors and AIG and its subsidiaries (Statement as to Independence), addressing the non-audit services provided to AIG or its subsidiaries and the matters set forth in Independence Standards Board Standard No. 1. The outside auditors shall submit to AIG annually a formal written statement of the fees billed for each of the following categories of services rendered by the outside auditors: (i) the audit of AIGs annual financial statements for the most recent fiscal year and the reviews of the financial statements included in AIGs Quarterly Reports on Form 10-Q for that fiscal year (ii) information technology consulting services for the most recent fiscal year, in the aggregate and by each service (and separately identifying fees for such services relating to financial information systems design and implementation) and (iii) all other services rendered by the ou tside auditors for the most recent fiscal years, in the aggregate and by each service. III. Meetings of the Audit Committee The Audit Committee shall meet four times annually, or more frequently if circumstances dictate, to discuss with management the annual audited financial statements and quarterly financial statements. In addition to such meetings of the Audit Committee as may be required to discuss the matters set forth in Article IV, the Audit Committee should meet separately at least annually with management, the director of the internal auditing department and the outside auditors to discuss any matters that the Audit Committee or any of these persons or firms believe should be discussed privately. The Audit Committee may request any officer or employee of AIG or its subsidiaries or AIGs outside counsel or outside auditors to attend a meeting of the Audit Committee or to meet with any members of, or consultants to, the Audit Committee. Members of the Audit Committee may participate in a meeting of the Audit Committee by means of conference call or similar communications equipment by means of which all persons participating in the meeting can hear each other. IV. Duties and Powers of the Audit Committee To carry out its purposes, the Audit Committee shall have the following duties and powers: 1. With respect to the outside auditors, to report its activities to the full Board of Directors and to make such recommendations with respect to the above and other matters as the Audit Committee may deem necessary or appropriate. V. Delegation to Subcommittee The Audit Committee may, in its discretion, delegate to one or more of its members the authority to pre-approve any audit or non-audit service to be performed by the independent auditors. provided that any such approval is presented to the Audit Committee at its next scheduled meeting. VI. Resources and Authority of the Audit Committee The Audit Committee shall have the resources and authority appropriate to discharge its responsibilities, including the authority to engage outside auditors for special audits, review and other procedures and to retain special counsel and other experts or consultants. APPENDIX B AMERICAN INTERNATIONAL GROUP, INC. AMENDED AND RESTATED 1999 STOCK OPTION PLAN (the 147Plan148) 1. Purpose. The purpose of this Plan is to advance the interests of American International Group, Inc. (AIG) by providing certain key employees of AIG and its subsidiaries, and members of the board of directors of AIG (the Board), upon whose judgment, initiative and efforts the successful conduct of the business of AIG largely depends, with an additional incentive to continue their efforts on behalf of AIG and its subsidiaries, as well as to attract people of training, experience and ability to AIG and its subsidiaries. 2. Administration. Except as otherwise provided herein, the Plan shall be administered by a committee (the Committee) of the Board to be drawn solely from members of the Board who are not and have not been officers of AIG or its subsidiaries. The Committee is authorized, subject to the provisions of the Plan, to establish such rules and regulations as it deems necessary for the proper administration of the Plan and to make such determinations and interpretations and to take such action in connection with the Plan and any stock options granted thereunder as it deems necessary or advisable. All determinations and interpretations made by the Committee shall be binding and conclusive on all optionees and on their legal representatives and beneficiaries. The Committee shall have the authority, in its absolute discretion, to determine which employees of AIG and its subsidiaries shall receive stock options, the time when stock options shall be granted, the terms of such options and the number of shares for which options shall be granted. Notwithstanding anything to the contrary contained herein, the Board may, in its sole discretion, at any time and from time to time, grant stock options (including grants to members of the Board who are not employees of AIG and its subsidiaries) or administer the Plan, in which case the Board shall have all of the authority and responsibility granted to the Committee herein. 3. Stock Subject to the Plan. Subject to adjustment as provided in Section 7 hereof, the maximum number of shares that may be issued under the Plan is 45,000,000 shares of the common stock, par value 2.50 per share (the Common Stock), of AIG as such shares shall exist on March 12, 2003 which shares of Common Stock may, in the discretion of the Committee, be either authorized but unissued shares or shares previously issued and reacquired by AIG. Upon the expiration or termination (in whole or in part) of unexercised options, shares of Common Stock subject thereto shall again be available for issuance under the Plan. 4. Eligibility. Employees of AIG and its subsidiaries, and members of the Board, shall be eligible to receive stock options under the Plan. Only employees shall be eligible to receive stock options that are intended to qualify as incentive stock options within the meaning of Section 422 of the Internal Revenue Code of 1986, as amended (the Code). 5. Grant of Stock Options. (a) Stock options may be granted to eligible recipients in such number and at such times during the term of this Plan as the Committee or the Board shall determine provided, however, that (i) the maximum number of shares of Common Stock as to which stock options may be granted under this Plan to any one individual in any one year may not exceed 900,000 shares (as adjusted pursuant to the provisions of Section 7) and (ii) options to purchase more than 10 of the aggregate shares of Common Stock set forth in Section 3 above (as adjusted pursuant to the provisions of Section 7) shall not be granted under this Plan to any one person. (b) At the time of grant, the Committee shall determine (i) whether all or any part of a stock option granted to an eligible employee shall be an incentive stock option and (ii) the number of shares subject to such incentive stock options. The form of any stock option which is all or in part an incentive stock option shall clearly indicate that such stock option is an incentive stock option or, if applicable, the number of shares subject to the incentive stock option. The aggregate fair market value (determined as of the time the option is granted) of the stock with respect to which incentive stock options are exercisable for the first time by an eligible employee during any calendar year (under all such plans of AIG and of any subsidiary corporation of AIG) shall not exceed 100,000. 6. Terms and Conditions of Stock Options. All stock options granted under the Plan shall be in such form as the Committee or the Board may from time to time determine and shall be subject to the following terms and conditions: (a) Option Price. The option price per share with respect to each option shall be determined by the Committee or the Board but shall not be less than 100 of the fair market value of the Common Stock on the date the option is granted. (b) Term of Option. In no event shall any stock option be exercisable after the expiration of 10 years from the date on which the stock option is granted. (c) Exercise of Stock Option and Payment for Shares. Except as provided in paragraph (e) of this Section below, the shares covered by each stock option may not be purchased for one year after the date on which the stock option is granted, but hereafter may be purchased in such installments as shall be determined by the Committee or the Board at the time the stock option is granted. Any shares not purchased on the applicable installment date may be purchased thereafter at any time prior to the final expiration of the stock option. To exercise a stock option, the optionee shall give written notice to AIG specifying the number of shares to be purchased and accompanied by payment of the full purchase price therefor: (i) in cash or by certified or official bank check, (ii) in shares of Common Stock, valued as of the date of exercise, of the same class as those to be granted by exercise of the option, or (iii) in a combination of (i) and (ii). Notwithstanding the foregoing, at the sole discretion of the Committee or the Board, upon the request of the optionee, the Committee or the Board may permit, on such other terms and conditions as the Committee or the Board may determine, the deferral of delivery to a date or dates specified by the optionee of all or some of the shares otherwise deliverable by AIG to the optionee upon the exercise of the option. The Common Stock will be valued on the date of exercise at the fair market value as determined by the Committee. Any person exercising a stock option shall make such representations and agreements and furnish such information as the Committee may in its discretion deem necessary or desirable to assure compliance by AIG, on terms acceptable to AIG, with the provisions of the Securities Act of 1933, as amended, and any other applicable to AIG, with the provisions of the Securities Act of 1933, as amended, and any other applicable legal requirements. If an optionee so requests, shares purchased may be issued in the name of the optionee and another jointly with the right of survivorship. (d) Non-transferability of Options. No stock option granted under the Plan shall be transferable by the optionee other than by will or the laws of descent and distribution, and such option shall be exercisable, during his or her lifetime, only by the optionee. (e) Termination of Employment. Except as otherwise provided by the Committee or the Board, no part of any option granted to an employee (including an officer) may be exercised after the termination of his or her employment with AIG and its subsidiaries, except that (i) if such termination of employment is at or after normal retirement age or due to disability or death, any portion of an option, whether or not exercisable at the time of such termination, may be exercised by the optionee (or in case of death by the person or persons to whom the optionees rights under such option are transferred by will or the laws of descent and distribution) at any time within the term of the option and (ii) if such termination of employment is not at or after normal retirement age or due to disability or death, with the approval of the Committee or the Board, any portion of an option may be exercised by the optionee within three months after such termination, but only to the extent such option was exercisable at the time of such ter mination. 7. Adjustment in Event of Changes in Capitalization. In the event of a recapitalization, stock split, stock dividend, combination or exchange of shares, merger, consolidation, rights offering, separation, reorganization or liquidation, or any other change in the corporate structure or shares of AIG, subsequent to March 12, 2003, the Committee or the Board shall make such equitable adjustments, designed to protect dilution or enlargement of rights, as it may deem appropriate, in the number and kind of shares authorized by the Plan, in the limitations set forth in Section 5(a) and, with respect to outstanding stock options, in the number and kind of shares covered thereby and in the option price. 8. Rights as a Shareholder. An optionee shall have no rights as a shareholder with respect to any shares covered by a stock option until the date of issuance of a stock certificate for such shares. 9. Withholding Taxes. Whenever shares of Common Stock are to be issued in satisfaction of stock options granted under the Plan, AIG shall have the right to require the recipient to remit to AIG an amount sufficient to satisfy all applicable withholding tax requirements prior to the delivery of any certificate or certificates for shares. 10. Term of Plan. No stock options shall be granted pursuant to the Plan after September 14, 2009 but stock options theretofore granted may extend beyond such date and the terms and conditions of the Plan shall continue to apply thereto. 11. Choice of Law. THIS PLAN SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICT OF LAWS. 12. Termination or Adjustment of Plan. The Board may at any time terminate the Plan with respect to any shares of Common Stock of AIG not at the time subject to option, and may from time to time alter or amend the Plan or any part thereof, provided that no change may be made in any stock option theretofore granted which would impair the rights of an optionee without the consent of such optionee, and further, that no alteration or amendment may be made without the approval of shareholders if such approval is required by applicable law. 13. Approval of Shareholders. The Plan was originally adopted on September 15, 1999 by the Board and approved by the shareholders of AIG at the 2000 Annual Meeting of Shareholders. The Plan was amended and restated on March 12, 2003 by the Board subject to approval by the shareholders of AIG at the 2003 Annual Meeting of Shareholders. The terms or conditions of any stock option granted or awarded under the Plan prior to the effectiveness of this Amended and Restated Plan shall not be effected by this Amended and Restated Plan. APPENDIX C AMERICAN INTERNATIONAL GROUP, INC. AMENDED AND RESTATED 1996 EMPLOYEE STOCK PURCHASE PLAN (the 147Plan148) 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 10,000,000 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 the 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 one-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 employees 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 employees subscription day or 85 of the fair market value on the date 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 10 of his annual rate of compensation on his subscription day, or by 10,000 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 employees cost shall be paid through payroll deduction in equal amounts over a period of 44 consecutive weeks starting with the second payday next following the subscription day. 9. Issue and Delivery of Shares. The shares shall not be issued until the entire employees cost is paid. Stock purchased through this Plan will be delivered to the respective employee as soon as reasonably practicable after the employees 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. 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 employees 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 employees deductions shall be promptly refunded to him. In the event the termination is by reason of the employees disability or 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 AIGs 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 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. American International Group, Inc. American International Group, Inc. encourages you to vote your shares electronically over the Internet or by telephone. By doing this, you will not need to return the proxy card. To vote your shares by telephone or electronically, you must use the control number printed in the box above, just below the perforation. The series of numbers that appear in the box above must be used to access the system. You may vote by telephone or over the Internet 24 hours a day, seven days a week until 11:59 p. m. New York City time on May 13, 2003. To vote by telephone: Using a touch-tone telephone, call 1-877-PRX-VOTE (1-877-779-8683). To vote over the Internet: Go to the web site eproxyvoteaig. Your telephone or Internet vote authorizes the named proxies in the same manner as if you marked, signed, dated and returned the proxy card. If you choose to vote your shares by telephone or over the Internet, there is no need for you to mail back your proxy card. Your vote is important. Thank you for voting.