AIG 2009 Annual Report Download - page 318

American International Group, Inc., and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
ensure compliance with U.S. federal and state securities laws. The Department of the Treasury has agreed that it will
not exercise any voting rights with respect to the AIG Common Stock issued upon exercise of the AIG Series F
Warrant.
Dividends
The terms of each of the AIG Series E Preferred Stock and the AIG Series F Preferred Stock provide for the
election of the greater of two additional directors or up to 20 percent of the total number of AIG directors (rounded
up after giving effect to the election) upon a failure of AIG to make four quarterly dividend payments, whether or not
consecutive. These preferred directors will be elected by a majority of the votes cast by the holder of the AIG Series E
Preferred Stock and the AIG Series F Preferred Stock voting together as a single class. If elected, such preferred
directors would hold office until the next annual meeting (or special meeting called to elect directors) or until all
dividends payable on all outstanding shares of the AIG Series E Preferred Stock and the AIG Series F Preferred
Stock have been declared and paid in full for four consecutive quarters. As of February 17, 2010, the shareholders of
the AIG Series E Preferred Stock and the AIG Series F Preferred Stock had not elected any directors pursuant to the
provision, although AIG had failed to make four quarterly dividend payments.
Series C Perpetual, Convertible, Participating Preferred Stock
On March 4, 2009, AIG issued 100,000 shares of AIG Series C Preferred Stock to the Trust.
The Trust currently holds the AIG Series C Preferred Stock for the sole benefit of the United States Treasury. The
holders of the AIG Series C Preferred Stock have preferential liquidation rights over the holders of AIG Common
Stock and, to the extent permitted by law, vote with the AIG Common Stock on all matters submitted to AIG’s
shareholders. The AIG Series C Preferred Stock is entitled to (i) a percentage of the voting power of AIG’s
shareholders entitled to vote on any particular matter, except where a vote of the common stock only is required, and
(ii) a percentage of the aggregate dividend rights of the outstanding shares of AIG Common Stock and the AIG
Series C Preferred Stock, in each case, on an as converted basis, which percentage, when aggregated with the
percentage representing the 2,690,088 shares of AIG Common Stock underlying the warrants issued to the
Department of the Treasury, any other securities convertible into or exchangeable for AIG Common Stock
beneficially owned by the Department of the Treasury and any AIG Common Stock directly owned by the Department
of the Treasury, represented, as of December 31, 2009, approximately 79.8 percent of each of such voting power and
total dividends payable. The AIG Series C Preferred Stock will become convertible into common stock upon the
subsequent amendment of AIG’s Amended and Restated Certificate of Incorporation, which amendment will need to
be approved by a separate class vote of the holders of AIG Common Stock. Upon such amendment, the AIG Series C
Preferred Stock will be convertible into a number of shares of AIG Common Stock representing its voting power at
that time.
Common Stock
Reverse Stock Split
On June 30, 2009, AIG’s shareholders approved a one-for-twenty reverse common stock split, which became
effective on that date. All references to common shares and per-share data for all periods presented in this report
have been adjusted to give effect to this reverse split. As no change was made to the par value of the common shares,
a total of $7.0 billion was reclassified from common stock to Additional paid-in capital as a retrospective adjustment
for all periods presented.
Treasury Stock Retirement
On November 30, 2009, AIG retired 6,111,158 common shares included in Treasury stock which had a carrying
value of $7.40 billion. These shares were returned to AIG’s authorized but unissued common stock. AIG accounted
for the retirement by reducing common stock by $15.28 million and Additional paid-in capital by $7.38 billion.
AIG 2009 Form 10-K 310