ResponsibleWealth.org - 2004 Shareholder Resolution: AIG

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% voting YES: 2.5%

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.

AIG

Predatory Lending

WHEREAS,

American International Group’s American General subsidiary is one of America’s largest sub-prime lenders, making real estate and consumer finance loans to borrowers with less than perfect credit.

Historically, sub-prime lending has been fraught with predatory lending abuses. Predatory lending has stripped billions of dollars from borrowers who are often low-income, elderly or people of color, through inflated fees, loans made at rates higher than warranted by customers’ credit scores, poor disclosure of loan terms, and in some cases, outright fraud. Engaging in these practices can be extremely costly to companies and their shareholders. Within the last two years, Citigroup paid $200 million and Household International paid $484 million to settle predatory lending complaints.

AIG’s American General subsidiary lags other major industry players in developing policies protecting borrowers and shareholders from predatory lending abuses:

American General has not adjusted employee compensation policies to discourage abusive sales practices. Fair housing advocates have expressed concern to regulators about American General’s practice of rewarding employees for the amount of credit insurance they sell. These proponents of fair housing laws argue that credit insurance is often a poor value to customers and a potentially predatory practice. Citigroup and others in the industry have ceased compensating employees on the basis of credit insurance sales.

AIG’s American General unit continues to actively oppose (both directly and through industry trade associations) anti-predatory lending legislation at the state and municipal level.

American General has significant non-US sub-prime lending operations. American General does not appear to apply the same anti-predatory lending policies in the rest of the world as it does in the US. Other lenders have committed to common anti-predatory lending standards wherever they operate.

RESOLVED,

Shareholders request that the Board conduct a special executive compensation review to study ways of linking executive compensation to successfully addressing predatory lending practices. Among the factors to be considered in this review are: Implementation of policies to prevent predatory lending; evaluation of sub-prime loans by outside auditors for compliance with laws and company policies; constructive meetings with concerned community groups; and reductions in predatory lending complaints filed with government bodies. A summary of this review, prepared at reasonable cost and omitting proprietary information, shall be made available to shareholders, upon request, no later than October 1, 2004.

PLEASE VOTE FOR THIS PROPOSAL.

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