NEW YORK, May 16 (Reuters) - American International Group Inc. (AIG.N) shareholders voted down a proposal on Wednesday that would require top management to get three-quarters of its stock options and stock from “performance-based” awards. While the proposal was defeated at AIG’s annual meeting, 20 percent of the shareholders voted for it.
“We’ll see what AIG does next year,” AIG shareholder and proposal supporter Kenneth Steiner said. “I think they are open to suggestions.” AIG, the world’s largest insurer and one of the biggest companies in the world, had opposed the proposal, saying it already included performance measures in evaluating the salaries of senior managers.
“AIG believes the ... proposal is too restrictive and overly prescriptive,” Charlene Hamrah, AIG’s director of investor relations, said in a statement.
Steiner pointed out at the meeting that AIG Chief Executive Martin Sullivan’s $21.2 million compensation in 2006, as well as that of other top managers, was very complex and included restricted stock units, a cash bonus, a senior partner’s plan, early retirement and “golden parachutes.”
A golden parachute is given to an executive who is forced out through a merger or fired by the board, meaning it is compensation “not tied to performance,” Steiner said.
While executives get standard options simply for remaining in their jobs, peer-indexed options would be linked to an industry index, so they would get paid only for outperforming similar companies, Steiner said.
Other performance options would pay only when the stock hit a certain price, substantially above the current market, and remained there for a period of time, Steiner said.
Overall, investors at the meeting appeared pleased with Sullivan’s performance and happy to reward him. In 2006, AIG reported net income of $14.05 billion, up 34 percent from the year earlier.
Sullivan also announced that AIG was raising its dividend by 21.2 percent to 20 cents a share, payable in September.
In midday trading, AIG’s stock fell 11 cents to $71.96 in trading on the New York Stock Exchange.
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