NU Online News Service, June 30, 3:57 p.m.EDT

NEW YORK--American International Group shareholders atthe firm's annual meeting voted down a proposal to have executiveshold shares in the company until two years after their employmentended.

At the same session AIG Chairman and Chief Executive OfficerEdward Liddy said the company's financial situation is "far morestable" than it was a few months ago, and added the company has an"excellent chance" to repay the federal government loans.

Another proposal that would have reincorporated the company inNorth Dakota and a third measure related to the calling of meetingswas also rejected after opposition by the AIG board ofdirectors.

A proposal put forth by AFSCME Employees Pension Plan would haverequired AIG executives to retain a "significant percentage ofshares acquired through equity compensation programs" until twoyears following the end of their employment.

Arguing for the requirement, an AFSCME member said such anarrangement would ensure that executives focus on long-term, ratherthan short-term results, since they would have a stake in thecompany after leaving.

In a statement of opposition, the board argued that executivecompensation restrictions have already been imposed by theDepartment of Treasury, and the company should keep its remainingflexibility.

The proposal to change AIG's jurisdiction of incorporation fromDelaware to North Dakota, put forth by shareholder Mark Filiberto,would have given shareholders more rights, as North Dakota hasstricter corporate governance standards, according to thesupporting statement.

AIG's board opposed the measure, stating that Delaware is themost favored corporate domicile for corporations in the U.S. Theefforts and expenses of reincorporating, the board argued, would beput to better use on the company's restructuring efforts.

Also defeated was a proposal that would have allowedshareholders to call special meetings that would apply toshareowners but not to management and/or the board.

All but one of eight company proposals passed the shareholdervote, including a 20-to-1 reverse stock split designed to boost thecompany's share price.

Speaking at the meeting, Mr. Liddy expressed optimism that thecompany will be able to repay its billions in loans from thefederal government as some shareholders expressed dismay and calledfor accountability for past decisions.

Outlining the series of problems that has rocked the giantinsurer since its last shareholders meeting, Mr. Liddy said, "AIGstrayed from what it does best: the business of insurance."

Discussing the company's plans to sell assets to repaygovernment loans, Mr. Liddy noted the faltering economy has made itmore difficult to get fair value for properties, and he addedreturns for assets should improve when the economy improves.

He also cited as a significant step forward the company's plansto transfer its two major foreign insurance companies, ALICO andAIA, into special purpose vehicles.

Stock in these units, according to the March filing, will beexchanged for a special reduction in AIG's debt by the FederalReserve Bank of New York.

Mr. Liddy mentioned the transfer of AIU Holdings, AIG's globalproperty and casualty insurance franchise, into a special purposevehicle with a possible stock offering as another step forward.

Some shareholders remained on edge and asked Mr. Liddy foranswers on issues ranging from whether he believes AIG's stock willrecover to PricewaterhouseCooper's effectiveness in performingreviews.

Mr. Liddy defended PwC's job as auditor and declined tospeculate on when AIG's stock may recover. He said he is a "badstock picker," and said the company's stock could recover, butother stocks may recover faster.