AIG Gets New Directors at Subdued Annual Meeting

American International Group got a new slate of government-backed directors at a subdued annual meeting Tuesday, effectively revamping its board after the insurer's $180 billion taxpayer bailout.

Source: TheTruthAboutMortgage AIG Headquarters

The meeting attracted far fewer investors than in years past and wrapped up in less than an hour, with the outcome of company proposals all but assured by the fact that trustees appointed to oversee the government's nearly 80 percent stake in the company can swing any vote.

Only a handful of investors used the meeting as a forum to air grievances, even though it was the first public opportunity to address AIG management and directors since the company's implosion last September.

Less than 200 investors attended the meeting, held in AIG's soon to be sold 72 Wall Street building, which was circled by security personnel.

This was in sharp contrast to overflow crowds in years past. Shareholders have seen the value of their stock all but wiped out. The shares, which traded as high as $100 at the beginning of the decade, have languished below $2 nearly all year.

In morning trading they were down 15 cents at $1.18.

"I am sorry for what's happened to you," Chief Executive Edward Liddy told a shareholder who said she and her husband had bought AIG shares in their retirement plan and had lost a lot of money. "The story that you recount has happened to so many folks," Liddy said.

AIG delayed its annual meeting, usually held in May, to give it more time to shuffle its board, which has been almost entirely reconstituted over the last year.

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"They were like rats leaving a sinking ship -- goodbye and good riddance," shareholder Kenneth Steiner of Great Neck, New York, said at the meeting, referring to departed directors.

At least seven of the new directors were recommended by either the U.S. Treasury Department or the trustees overseeing the government's stake in AIG.

AIG usually hands out thick, glossy, photo-filled annual reports at the meeting, but not this year.

Instead, it distributed bare-bones copies of its 10-K filing with the U.S. Securities and Exchange Committee, printed on cheap newsprint. A spokesman cited financial constraints.

New Leadership

Liddy, a former chief executive of Allstate Corp who had viewed his leadership of AIG as temporary, said he was confident the board would soon name a new chairman and CEO.

The 11 directors standing for election received majority support, Liddy said. Liddy himself plans to relinquish his spot on the board once candidates for CEO and chairman are lined up to succeed him.

Liddy, responding to investors who asked if they should hold onto their shares, said he could give no assurance that the government would ever relinquish its 79.9 percent stake in the insurer.

AIG lost $99 billion last year, largely because of its exposure to credit default swaps, and has been pilloried for bonuses awarded in its financial products unit, the source of much of its losses. AIG is trying to sell assets to help repay $83 billion of government loans.

Liddy said the company had agreed to sell 25 assets so far and that there was "an excellent chance" the government would be repaid.

Last week, AIG said it planned to give the Federal Reserve Bank of New York stakes in two large life insurance units and eventually spin those units off, reducing its debt to the government by about $25 billion.

On Tuesday, the company said it would sell its credit card business in Taiwan to Far Eastern International Bank.

Liddy said AIG is trying to decide what to do with its aircraft leasing unit, International Lease Finance Corp, citing its heavy debt load as a detraction.

He said the financial products unit that triggered so much of AIG's red ink has nearly halved its derivatives exposure, to $1.4 trillion from $2.7 trillion, and by year-end "our risk will have been reduced substantially from its current status."

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