Oregon Department of Justice

Attorney General Ellen F. Rosenblum

Oregon Department of Justice - Attorney General Ellen F. Rosenblum
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December 1, 2005

Oregon State Treasurer Randall Edwards and Attorney General Hardy Myers today announced that they are joining a group of financial leaders at other pension funds and state investment officials from across the country in filing a brief in a legal action forcing American International Group, Inc. (AIG), to provide shareholders the right to nominate independent candidates for election to the company's board of directors.

The coalition of leaders filed an amicus brief in support of an American Federation of State, County, & Municipal Employees (AFSCME) lawsuit challenging AIG's refusal to include AFSCME's shareholder voting rights proposal on the company's 2005 proxy ballot. This action was the latest in a series of steps institutional investors have taken to provide investors a voice in the management of companies they own and the power to hold executives accountable for decisions that affect long-term company value.

"When investors, as partial owners of a company, are denied a voice in shareholder meetings, our culture of public ownership is compromised," Oregon Treasurer Randall Edwards said. "We are not willing to cede our rights as equity shareholders to a narrow power structure operating in our largest corporations. Yet that will be the effect if AIG, or any other publicly traded company, is allowed to sweep aside one of the most democratic institutions in public equity ownership."

Investors joining the amicus brief in support of the AFSCME lawsuit included: The New York City Employees' Retirement System, the New York City Teachers' Retirement System, the New York City Board of Education Retirement System, New York City Comptroller William C. Thompson, Jr., California State Treasurer Phil Angelides, Iowa State Treasurer Michael L. Fitzgerald, and Vermont State Treasurer Jeb Spaulding.

In the amicus brief, institutional investors said that providing shareholders the right to nominate directors is a matter of "paramount significance," while citing a litany of "well-publicized governance and performance failures at AIG and other publicly traded companies."

"In the absence of rules or legal requirements guaranteeing shareholder proxy access, the true owners of these companies, the shareholders…are unable to hold incumbent directors and company management accountable for decisions that directly affect company value," the investors noted in the brief.

AFSCME filed a lawsuit in February 2005, after AIG declined to include on its 2005 proxy ballot an AFSCME proposal that would have allowed company shareholders to nominate directors to AIG's board. The federal District Court for the Southern District of New York denied AFSCME's request in March and AFSCME filed an appeal with the U.S. Court of Appeals for the Second Circuit. The Appeals court declined to intervene immediately, and AFSCME's shareholder meeting took place–without AFSCME's proposal on its proxy ballot. AFSCME's suit now asks the Appeals court to declare illegal AIG's refusal to let shareholders vote on that AFSCME's proposal.

AFSCME's shareholder resolution would provide AIG shareholders the ability to directly nominate director candidates for consideration on the proxy ballot, and a mechanism for holding company executives accountable for the company's performance and business practices.

The U.S. Department of Justice and the U.S. Securities and Exchange Commission are currently investigating AIG for matters related to former AIG Chairman and CEO Maurice Greenberg. Additionally, the New York State Attorney General's office and Department of Insurance have filed a civil fraud lawsuit against AIG.


Kevin Neely, Justice, (503) 378-6002
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