AIG gets new directors at subdued annual meeting

(GOVERNMENT, DIRECTORS, MEETING, BOARD, INVESTORS, LIDDY)

By Lilla Zuill and Paritosh Bansal
NEW YORK (Reuters) - American International Group Inc (AIG.N) got a new slate of government-backed directors at a subdued annual meeting on Tuesday, effectively revamping its board after the insurer`s $180 billion taxpayer bailout.
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 AIG 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 18 cents at $1.15.
"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.
"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.
Steiner also took aim at PricewaterhouseCoopers, AIG`s outside auditor. He called PwC "incompetent at best" for not alerting shareholders sooner to a lack of internal controls. AIG disclosed that it paid the accounting firm $131 million in 2008.
Liddy defended PwC, which was reappointed as auditor for the coming year. He said PwC cited AIG for a material weakness in controls in early 2008, effectively forcing AIG to disclose that large losses could be lurking in a derivatives portfolio.
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 said he was confident the board would soon name a new chairman and CEO. He 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 stake in the insurer.  Continued...
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