WHEREAS, the American Heritage Dictionary of the English Language defines the verb "elect" as follows: "1. To select by vote for an office; 2. To choose, especially after deliberation."

WHEREAS, each year shareholders of American corporations are asked to participate in an exercise called "Election of Directors" which bears little resemblance to the word election as commonly used in any democratic country;

WHEREAS, shareholders have no real choice in the election of directors. Even if an overwhelming majority of shareholders oppose a director nominee, that person will serve as director so long as he or she gets one vote. The real election for directors occurs within the boardroom, with shareholders relegated to a rubber-stamp process of affirmation;

WHEREAS, the board of directors, acting as an agent of shareholders, plays a vital role in the governance of the corporation. The board assures that the company is meeting its responsibility to all of its stakeholders: shareowners, employees, customers, communities and the environment;

WHEREAS, a well-functioning board is made up of independent directors who bring a diverse range of experiences and perspectives to their service of shareholders;

WHEREAS, American International Group's 19-member Board includes 10 members who are employees of the company or its subsidiaries. The last proxy statement reported that two of the three new directors elected in early 1999 were also company employees;

RESOLVED, that the company's Board take the necessary steps to allow shareholders to have more democratic Board elections. This shall be achieved by assuring there are at least 50% more director nominees than there are seats to be filled (e.g. if six Board seats are open, at least nine nominees shall be placed before shareholders). Shareholders request that the Board, when choosing additional nominees, give special consideration to candidates from diverse backgrounds, including directors with key relationships to employees and communities.

SUPPORTING STATEMENT

American International Group is one of only a handful of Fortune 500 companies to have company employees fill a majority of director seats. We believe there are inherent conflicts of interest in having insiders making many Board decisions, especially those concerning executive compensation. In the past, our management has argued that the current Board configuration has served the company and its shareholders well. It is, however, shareholders who retain the right and responsibility to elect Directors. This resolution asks simply that shareholders be given a choice. If shareholders agree with the management and Board position that the company's stakeholders are best served by a Board with a majority of insiders, then current Directors should have nothing to fear. If however, shareholders believe the company's stakeholders could be better served by having Directors with a broader range of perspectives and experiences, then shareholders should have the right to make this change.