AIG 2007 Annual Report Download - page 11

AIG 2007 Annual Report 9
We have also begun to address the
environmental impact of our own
operations. We conducted the first
global inventory of AIG’s greenhouse
gas emissions and began to develop a
mitigation plan, including the purchase of
carbon offsets. As a first step, we sponsored
a forum in Beijing for our corporate
clients, where we announced our intent
to fund agricultural projects in
rural China that reduce or sequester
greenhouse gas emissions.
We continue to support and participate
in the Carbon Disclosure Project, the U.S.
Climate Action Partnership and other
climate initiatives. In September, AIG
became an insurance-sector component
of the Dow Jones Sustainability Index
North America (DJSI North America).
Index components are selected according
to a systematic assessment that identifies
the leading sustainability-driven compa-
nies in each industry group.
Following the appointment of our
first Chief Diversity Officer early in 2007,
we took a number of actions to help
AIG realize the benefits of a more diverse
organization. We established diversity
steering committees at the business level
to complement our Corporate Executive
Steering Committee; implemented
training programs for existing employees;
and explored ways to improve how
we attract and mentor diverse job
candidates. We are also developing new
products to address the needs of diverse
clients, while increasing our supplier
diversity. We still have work to do,
but the actions we are taking today
will help AIG build its reputation as a
forward-thinking organization.
Stock Price and Dividends
As I mentioned at the outset, the perform-
ance of AIG’s stock in 2007 and into 2008
was disappointing. The price of an AIG
common share closed the year at $58.30,
18.6 percent below the close of 2006.
By comparison, the S&P 500 Stock Index
rose 3.5 percent in 2007.
The Board of Directors took several
steps during 2007 to demonstrate its
confidence in AIG’s ability to continue
to grow and generate excess capital.
In March, the Board approved a new
dividend policy, which provides that,
under ordinary circumstances, AIG plans
to increase its common stock dividend
by approximately 20 percent annually.
The new policy became effective in
May 2007, when the Board voted to
increase the quarterly cash dividend to
20 cents per share, a 21.2 percent increase
over the previous quarterly dividend
and the 22nd consecutive year
that AIG has increased its dividend.
Also in March, the Board expanded
AIG’s existing share repurchase program
by authorizing the repurchase of up to
$8 billion in common stock. In November,
we announced the Board’s decision to
authorize the repurchase of an additional
$8 billion in common stock. During 2007,
AIG repurchased more than 76 million
common shares. AIG does not expect to
purchase additional shares in the foresee-
able future, other than to meet commit-
ments that existed at December 31, 2007.
We believe this is a prudent decision in
light of the unsettled capital markets and
because it gives AIG maximum flexibility
to pursue growth opportunities that
may arise.
Board and Management Changes
Three directors who have made enormous
contributions to AIG will retire at the
annual meeting in May. It is impossible
to overstate the contribution Frank Zarb
made during his seven years on the
Board, particularly during his tenure as
interim Chairman. Frank’s clear judg-
ment and exceptional organizational and
leadership skills provided the support
management needed to work through
some of the most difficult challenges in
AIG’s 89-year history.
Marshall “Mickey” Cohen has been
a valuable contributor throughout his 16
years on the Board. As AIG has evolved,
the continuity of Mickey’s trusted
counsel has been a steady reference point.
As Chairman of the Board’s Compensation
and Management Resources Committee,
he has been at the forefront of
significant enhancements in AIG’s
compensation policies.
Steve Hammerman’s three years of
Board service coincided with a period of
important transition at AIG. As Chairman
of the Regulatory, Compliance and Legal
Committee, his wisdom and common-
sense approach guided AIG through
difficult regulatory issues. We are truly
grateful to all of these outstanding
individuals for their dedicated service.
The Board of Directors
took several steps during
2007 to demonstrate
its confidence in AIG’s
ability to continue
to grow and generate
excess capital.