NU Online News Service, May 11, 8:10 p.m. EDT–A major employees pension plan whose stake in American International Group has suffered losses in the wake of accounting probes has called on the beleaguered insurer to give shareholders more control in nominating board members.
The call for reform was issued by the American Federation of State, County and Municipal Employees (AFSCME) Pension Plan, which has $700 million in assets and owns 26,965 shares of AIG.
Gerald McEntee, chairman of the AFSCME Plan, said that AIG's case proves "shareholders==the true owners of the company==need the power to nominate directors where boards have failed."
AIG, Mr. McEntee noted, is adjusting its financial records for the past four years and has acknowledged "billions of dollars in errors" in its accounting practices. AIG declined to comment on the AFSCME statement.
Accounting irregularities at AIG have proven to be costly for employees pension plans around the country. Mr. McEntee said AFSCME members and other public employees whose pension funds own 3.8 percent of AIG's common stock lost nearly $1 billion because of the AIG's falling stock price during the past six months.
"The board of directors bears responsibility for oversight at AIG. Shareholders need to be sure that structural reforms are in place to protect against this happening again," Mr. McEntee said.
The AFSCME Plan said it has sent a reform agenda to large shareholders of AIG. The agenda includes:
o End litigation blocking a vote on the proxy-access proposal and support a bylaw change requiring AIG to inform shareholders of all candidates for seats on the board of directors who have substantial shareholder support.
o An agreement that the governance committee and lead director consult with major shareholders to seek consensus on nominations to AIG's board to be elected at the next annual meeting once it is scheduled.
o An amendment to AIG's bylaws to require that the board chairman be an independent director who has not served as an officer at AIG.
o Restructuring of the Audit committee with new members of the board who are unrelated to AIG's past practices.
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