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Update . . . 5/17/00Resolution Vote Results% voting YES: 2.3%Note: This resolution was one of three AIG shareholder resolutions concerning insiders on the Board of Directors. The Responsible Wealth resolution, which called for real, contested Board elections at AIG, was the most ambitious of the three. At this time, few U.S. corporations hold contested elections for all Board seats. The other two resolutions concerning insiders on the AIG Board received 27 and 26 percent of the vote. This indicates serious shareholder concern with the makeup of the AIG Board. Shareholder resolutions face a variety of obstacles. For this reason, it is considered significant if a resolution garners at least 5% of the vote. Votes over 10% indicate exceptional shareholder support for an issue. Filers of "social-issue" resolutions generally don't expect their resolution to receive a majority vote and be adopted by management. Rather, filers use these resolutions to get management's attention, and to raise the issue with other shareholders. They hope to achieve a vote sufficient to allow them to return the next year. According to SEC rules, a resolution must receive 3% of the vote the first year it is filed, 6% in year two and 10% thereafter in order to be included on the proxy the following year |
American International Group stands out among Fortune 500 companies for having a Board on which a majority of directors are officers of AIG and its subsidiaries.
Responsible Wealth member Anne Ellsworth will present a shareholder resolution at AIG's annual meeting on Wednesday, May 17, in New York City, asking the company to make elections more meaningful by nominating 50 percent more candidates for director than seats available on the Board. The resolution requests that when choosing additional nominees the Board gives special consideration to candidates with connections to diverse stakeholders.
PHOTO OPPORTUNITY: Outside the meeting, members of Responsible Wealth and their supporters dressed in Colonial garb will be distributing "A Declaration of Corporate Board Independence" to educate shareholders and passers-by about the issue.
At present, shareholders have no choices in the election of directors as there are the same number of nominees as seats. The resolution states that "the real election for directors occurs within the boardroom, with shareholders relegated to a rubber-stamp process of affirmation."
The institutional investment community, including the Council of Institutional Investors, views having a majority of independent directors as a basic component of good corporate governance.
Boards dominated by company insiders, fellow executives and people doing business with the company are notorious for excessive executive compensation, an area of special concern to Responsible Wealth. Business Week ranks AIG CEO Maurice Greenberg in the bottom third of CEOs in the financial services industry group for delivering shareholder value and corporate profit relative to pay over the period 1997-1999. In those three years, Greenberg reaped $49.2 million in salary, bonus and other compensation.
What sets Responsible
Wealth's resolution apart from other AIG shareholder resolutions
on corporate governance is its focus on the Board election process
and the principle of choice.
"In a country that values democracy as strongly as we do, it's
incredible that corporations can be run in such an undemocratic
fashion," said shareholder Anne Ellsworth. "We would certainly
have a problem with political elections that were always uncontested.
One seat, one candidate wouldn't fly at the ballot box, so why do
we stand for it in our corporations?"
The AIG shareholder
resolution is one of 14 filed by Responsible Wealth this year. Responsible
Wealth is a growing network of over 450 businesspeople, investors
and affluent Americans in the top 5 percent of income and wealth
who are working to promote widely shared prosperity. It is affiliated
with the national nonprofit organization, United for a Fair Economy.
Click here for a copy of the resolution.
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