DEF 14A of American International Group, Inc.

Filed Mar 27, 2018 · FY20170001571049-18-000196

Open on EDGAR

PROPOSAL 1—ELECTION OF DIRECTORS
PROPOSAL 1—ELECTION OF DIRECTORS The following table provides summary information about each of our eleven director nominees. AIG aims to maintain a balanced and independent board that is committed to representing the long-term interests of AIG’s shareholders, and which has the substantial and diverse expertise necessary to oversee AIG’s strategic and business planning as well as management’s approach to addressing the significant risks and challenges facing AIG. Each nominee is elected annually by a majority of votes cast.
PROPOSAL 1—ELECTION OF DIRECTORS
| Name | Age | Director Since | Occupation/Background | Indepen- dent | Other Public Boards | Current Committee Memberships(1) | | W. Don Cornwell | 70 | 2011 | Former Chairman and CEO of Granite Broadcasting Corporation | ✓ | Avon Products, Inc.; Pfizer Inc. | CMRC (Chair) NCGC | | Brian Duperreault | 70 | 2017 | President and CEO of AIG | | Johnson Controls International plc | | | John H. Fitzpatrick | 61 | 2011 | Former Secretary General of The Geneva Association; Former Chief Financial Officer, Head of the Life and Health Reinsurance Business Group and Head of Financial Services of Swiss Re | ✓ | | RCC (Chair) Audit | | William G. Jurgensen | 66 | 2013 | Former CEO of Nationwide Insurance | ✓ | Lamb Weston Holdings, Inc. | Audit (Chair) RCC | | Christopher S. Lynch | 60 | 2009 | Former National Partner in Charge of Financial Services of KPMG LLP | ✓ | Federal Home Loan Mortgage Corporation | NCGC (Chair) RCC Tech | | Henry S. Miller | 72 | 2010 | Chairman of Marblegate Asset Management, LLC; Former Chairman and Managing Director of Miller Buckfire & Co., LLC | ✓ | The Interpublic Group of Companies, Inc. | RCC Regulatory | | Linda A. Mills | 68 | 2015 | Former Corporate Vice President of Operations of Northrop Grumman Corporation | ✓ | Navient Corporation | Audit CMRC Tech | | Suzanne Nora Johnson | 60 | 2008 | Former Vice Chairman of The Goldman Sachs Group, Inc. | ✓ | Intuit Inc.; Pfizer Inc.; Visa Inc. | CMRC NCGC Tech | | Ronald A. Rittenmeyer | 70 | 2010 | Executive Chairman and CEO of Tenet Healthcare Corporation; Former Chairman and CEO of Millennium Health, LLC; Former Chairman, CEO and President of Electronic Data Systems Corporation | ✓ | Avaya Holdings Corp.; IQVIA Holdings Inc.; Tenet Healthcare Corporation | Tech (Chair) Audit CMRC | | Douglas M. Steenland | 66 | 2009 | Former President and CEO of Northwest Airlines Corporation | ✓ | Hilton Worldwide Holdings Inc.; Performance Food Group Company; Travelport Worldwide Limited | (2) | | Theresa M. Stone | 73 | 2013 | Former Executive Vice President and Treasurer of the Massachusetts Institute of Technology; Former Executive Vice President and Chief Financial Officer of Jefferson-Pilot Corporation; Former President of Chubb Life Insurance Company | ✓ | | Regulatory (Chair) Audit |
PROPOSAL 1—ELECTION OF DIRECTORS
(1) The full Committee names are as follows: Audit—Audit Committee CMRC—Compensation and Management Resources Committee NCGC—Nominating and Corporate Governance Committee Regulatory—Regulatory, Compliance and Public Policy Committee RCC—Risk and Capital Committee Tech—Technology Committee (2) Mr. Steenland, as Independent Chairman of the Board, is an ex-officio, non-voting member of each of the Committees. We believe our nominees’ diverse and complementary set of skills, along with the Board’s balanced tenure mix, creates a well-functioning, highly qualified and independent Board of Directors. The Board has identified the following key qualifications and the range of professional experience as relevant and aligned to our current and future strategy and business needs.
PROPOSAL 1—ELECTION OF DIRECTORS
PROPOSAL 1—ELECTION OF DIRECTORS AIG’s Board of Directors currently consists of thirteen directors. All directors serve a one-year term. We are asking our shareholders to re-elect eleven directors at the Annual Meeting, to hold office until the next annual election and until their successors are duly elected and qualified or their earlier resignation. Each of Messrs. Peter R. Fisher and Samuel J. Merksamer separately informed AIG that he would not be standing for re-election to the Board at the Annual Meeting, and they will no longer serve on the Board once their terms end at the Annual Meeting. The Board would like to thank Messrs. Fisher and Merksamer for their service and valuable contributions as directors. It is the intention of the persons named in the accompanying form of proxy to vote for the election of the nominees listed below. All of the nominees are currently members of AIG’s Board of Directors. It is not expected that any of the nominees will become unavailable for election as a director, but if any should become unavailable prior to the Annual Meeting, proxies will be voted for such persons as the persons named in the accompanying form of proxy may determine in their discretion. Directors will be elected by a majority of the votes cast by the shareholders of AIG’s common stock, par value $2.50 per share (AIG Common Stock), which votes cast are either “for” or “against” election. Pursuant to AIG’s By-laws and Corporate Governance Guidelines, each nominee has submitted to the Board an irrevocable resignation from the Board that would become effective upon (1) the failure of such nominee to receive the required vote at the shareholder meeting and (2) Board acceptance of such resignation. In the event that a nominee fails to receive the required vote, AIG’s Nominating and Corporate Governance Committee will then make a recommendation to the Board on the action to be taken with respect to the resignation. The Board will accept such resignation unless the Nominating and Corporate Governance Committee recommends and the Board determines that the best interests of AIG and its shareholders would not be served by doing so. The Board believes that, if elected, the nominees will continue to provide effective oversight of AIG’s business and continue to advance our shareholders’ interests by drawing upon their collective qualifications, skills and experiences, as summarized on page 3. Below are biographies of each of the nominees for director, including the principal occupation or affiliation and public company directorships held by each nominee during the past five years. All of the nominees have extensive direct experience in the oversight of public companies as a result of their service on AIG’s Board and/or the boards of other public companies and/or as a result of their involvement in the other organizations described below.
PROPOSAL 1—ELECTION OF DIRECTORS
| | W. DON CORNWELL | Former Chairman of the Board and Chief Executive Officer of Granite Broadcasting Corporation | | | CAREER HIGHLIGHTS Mr. Cornwell is the former Chairman of the Board and Chief Executive Officer of Granite Broadcasting Corporation, serving from 1988 until his retirement in August 2009, and Vice Chairman until December 2009. Mr. Cornwell spent 17 years at Goldman, Sachs & Co. where he served as Chief Operating Officer of the Corporate Finance Department from 1980 to 1988 and Vice President of the Investment Banking Division from 1976 to 1988. KEY EXPERIENCE AND QUALIFICATIONS In light of Mr. Cornwell’s experience in finance and strategic business transformations, as well as his professional experience across the financial services industry, AIG’s Board has concluded that Mr. Cornwell should be re-elected to the Board. | | | Director since: 2011 Age: 70 Committees: • Compensation and Management Resources (Chair) • Nominating and Corporate Governance Other Directorships: • Current: Avon Products, Inc.; Pfizer Inc. | | |
PROPOSAL 1—ELECTION OF DIRECTORS
| Director since: 2017 Age: 70 Other Directorships: • Current: Johnson Controls International plc (formerly Tyco International, plc) | BRIAN DUPERREAULT | President and Chief Executive Officer of AIG | | | CAREER HIGHLIGHTS Mr. Duperreault has been AIG’s President and Chief Executive Officer since May 2017, when he also joined the Board of Directors. Previously, Mr. Duperreault was the Chief Executive Officer of Hamilton Insurance Group, Ltd. (Hamilton), a Bermuda-based holding company of property and casualty insurance and reinsurance operations in Bermuda, the U.S. and the UK, from December 2013 to May 2017, and served as Chairman of Hamilton from February 2016 to May 2017. He served as President and Chief Executive Officer of Marsh & McLennan Companies, Inc. from February 2008 until his retirement in December 2012. Before joining Marsh, he served as non-executive Chairman of ACE Limited from 2006 through the end of 2007 and as Chief Executive Officer from October 1994 to May 2004. Prior to joining ACE, Mr. Duperreault served in various senior executive positions with AIG and its affiliates from 1973 to 1994. KEY EXPERIENCE AND QUALIFICATIONS In light of Mr. Duperreault’s deep experience in the insurance industry, his history with AIG and his management of large, complex, international institutions, AIG’s Board has concluded that Mr. Duperreault should be re-elected to the Board. | |
PROPOSAL 1—ELECTION OF DIRECTORS
| Director since: 2011 Age: 61 Committees: • Risk and Capital (Chair) • Audit Other Directorships: • None | JOHN H. FITZPATRICK | Former Secretary General of The Geneva Association; Former Chief Financial Officer, Head of the Life and Health Reinsurance Business Group and Head of Financial Services of Swiss Re | | | CAREER HIGHLIGHTS Mr. Fitzpatrick has been Chairman of Oak Street Management Co., LLC, an insurance/management consulting company, and Oak Family Advisors, LLC, a registered investment advisor, since 2010. He was Chairman of White Oak Global Advisors LLC, an asset management firm lending to small and medium sized companies, from September 2015 to September 2017. In 2014, Mr. Fitzpatrick completed a two-year term as Secretary General of The Geneva Association. From 2006 to 2010, he was a partner at Pension Corporation and a director of Pension Insurance Corporation Ltd. From 1998 to 2006, Mr. Fitzpatrick was a member of Swiss Re’s Executive Board Committee and served at Swiss Re as Chief Financial Officer, Head of the Life and Health Reinsurance Business Group and Head of Financial Services. From 1996 to 1998, Mr. Fitzpatrick was a partner in insurance private equity firms sponsored by Zurich Financial Services, Credit Suisse and Swiss Re. From 1990 to 1996, Mr. Fitzpatrick served as the Chief Financial Officer and a Director of Kemper Corporation, a New York Stock Exchange (NYSE)-listed insurance and financial services organization where he started his career in corporate finance in 1978. Mr. Fitzpatrick is a Certified Public Accountant and a Chartered Financial Analyst. KEY EXPERIENCE AND QUALIFICATIONS In light of Mr. Fitzpatrick’s broad experience in the insurance and reinsurance industry, as well as his professional experience in insurance policy and regulation, AIG’s Board has concluded that Mr. Fitzpatrick should be re-elected to the Board. | |
PROPOSAL 1—ELECTION OF DIRECTORS
| Director since: 2013 Age: 66 Committees: • Audit (Chair) • Risk and Capital Other Directorships: • Current: Lamb Weston Holdings, Inc. • Former (past 5 years): Conagra Foods, Inc.; The Scotts Miracle-Gro Company | WILLIAM G. JURGENSEN | Former Chief Executive Officer of Nationwide Insurance | | | CAREER HIGHLIGHTS Mr. Jurgensen is the former Chief Executive Officer of Nationwide Mutual Insurance Company and Nationwide Financial Services, Inc., serving from May 2000 to February 2009. During this time, he also served as director and Chief Executive Officer of several other companies within the Nationwide enterprise. Prior to his time in the insurance industry, he spent 27 years in the commercial banking industry. Before joining Nationwide, Mr. Jurgensen was an Executive Vice President with BankOne Corporation (now a part of JPMorgan Chase & Co.) where he was responsible for corporate banking products, including capital markets, international banking and cash management. He managed the merger integration between First Chicago Corporation and NBD Bancorp, Inc. and later was Chief Executive Officer for First Card, First Chicago’s credit card subsidiary. At First Chicago, he was responsible for retail banking and began his career there as Chief Financial Officer in 1990. Mr. Jurgensen started his banking career at Norwest Corporation (now a part of Wells Fargo & Company) in 1973. The majority of Mr. Jurgensen’s career has involved capital markets, securities trading and investment activities, with the balance in corporate banking. KEY EXPERIENCE AND QUALIFICATIONS In light of Mr. Jurgensen’s experience in insurance, financial services and risk management, AIG’s Board has concluded that Mr. Jurgensen should be re-elected to the Board. | |
PROPOSAL 1—ELECTION OF DIRECTORS
| Director since: 2009 Age: 60 Committees: • Nominating and Corporate Governance (Chair) • Risk and Capital • Technology Other Directorships: • Current: Federal Home Loan Mortgage Corporation | CHRISTOPHER S. LYNCH | Former National Partner in Charge of Financial Services of KPMG LLP | | | CAREER HIGHLIGHTS Mr. Lynch has been an independent consultant since 2007, providing a variety of services to public and privately held companies, including enterprise strategy, corporate restructuring, risk management, governance, financial accounting and regulatory reporting, and troubled-asset management. Prior to that, Mr. Lynch was the former National Partner in Charge of KPMG LLP’s Financial Services Line of Business. He held a variety of positions with KPMG over his 29 year career, including chairing KPMG’s Americas Financial Services Leadership team and being a member of the Global Financial Services Leadership and the U.S. Industries Leadership teams. Mr. Lynch was an audit signing partner under Sarbanes-Oxley and served as lead or client service partner for some of KPMG’s largest financial services clients. He also served as a Partner in KPMG’s National Department of Professional Practice and as a Practice Fellow at the Financial Accounting Standards Board. Mr. Lynch is a member of the Advisory Board of the Stanford Institute for Economic Policy Research and a member of the Audit Committee Chair Advisory Council of the National Association of Corporate Directors. KEY EXPERIENCE AND QUALIFICATIONS In light of Mr. Lynch’s experience in finance, accounting and risk management and strategic business transformations, as well as his professional experience across the financial services industry, AIG’s Board has concluded that Mr. Lynch should be re-elected to the Board. | |
PROPOSAL 1—ELECTION OF DIRECTORS
| Director since: 2010 Age: 72 Committees: • Regulatory, Compliance and Public Policy • Risk and Capital Other Directorships: • Current: The Interpublic Group of Companies, Inc. • Former (past 5 years): Ally Financial Inc. | HENRY S. MILLER | Chairman of Marblegate Asset Management, LLC; Former Chairman and Managing Director of Miller Buckfire & Co., LLC | | | CAREER HIGHLIGHTS Mr. Miller co-founded and has been Chairman of Marblegate Asset Management, LLC since 2009. Mr. Miller was co-founder, Chairman and a Managing Director of Miller Buckfire & Co., LLC, an investment bank, from 2002 to 2011 and Chief Executive Officer from 2002 to 2009. Prior to founding Miller Buckfire & Co., LLC, Mr. Miller was Vice Chairman and a Managing Director at Dresdner Kleinwort Wasserstein and its predecessor company Wasserstein Perella & Co., where he served as the global head of the firm’s financial restructuring group. Prior to that, Mr. Miller was a Managing Director and Head of both the Restructuring Group and Transportation Industry Group of Salomon Brothers Inc. From 1989 to 1992, Mr. Miller was a managing director and, from 1990 to 1992, co-head of investment banking at Prudential Securities. KEY EXPERIENCE AND QUALIFICATIONS In light of Mr. Miller’s experience in strategic business transformations as well as his professional experience across the financial services industry, AIG’s Board has concluded that Mr. Miller should be re-elected to the Board. | |
PROPOSAL 1—ELECTION OF DIRECTORS
| Director since: 2015 Age: 68 Committees: • Audit • Compensation and Management Resources • Technology Other Directorships: • Current: Navient Corporation | LINDA A. MILLS | Former Corporate Vice President of Operations of Northrop Grumman Corporation | | | CAREER HIGHLIGHTS Ms. Mills is the former Corporate Vice President of Operations for Northrop Grumman Corporation, with responsibility for operations, including risk management, engineering and information technology. During her 12 years with Northrop Grumman, from 2002 to 2014, Ms. Mills held a number of operational positions, including Corporate Vice President and President of Information Systems and Information Technology sectors; President of the Civilian Agencies Group; and Vice President of Operations and Process in the firm’s Information Technology Sector. Prior to joining Northrop Grumman, Ms. Mills was Vice President of Information Systems and Processes at TRW, Inc. She began her career as an engineer at Bell Laboratories, Inc. KEY EXPERIENCE AND QUALIFICATIONS In light of Ms. Mills’ in-depth experience with large and complex, often international, operations, risk management, information technology and cyber security, and her success in managing a significant line of business at Northrop Grumman, AIG’s Board has concluded that Ms. Mills should be re-elected to the Board. | |
PROPOSAL 1—ELECTION OF DIRECTORS
| Director since: 2008 Age: 60 Committees: • Compensation and Management Resources • Nominating and Corporate Governance • Technology Other Directorships: • Current: Intuit Inc.; Pfizer Inc.; Visa Inc. | SUZANNE NORA JOHNSON | Former Vice Chairman of The Goldman Sachs Group, Inc. | | | CAREER HIGHLIGHTS Ms. Nora Johnson is the former Vice Chairman of The Goldman Sachs Group, Inc., serving from 2004 to 2007. During her 21 years at Goldman Sachs, she also served as the Chairman of the Global Markets Institute, Head of the Global Investment Research Division and Head of the Global Investment Banking Healthcare Business. KEY EXPERIENCE AND QUALIFICATIONS In light of Ms. Nora Johnson’s experience in managing large, complex, international institutions, her experience in finance as well as her professional experience across the financial services industry, AIG’s Board has concluded that Ms. Nora Johnson should be re-elected to the Board. | |
PROPOSAL 1—ELECTION OF DIRECTORS
| Director since: 2010 Age: 70 Committees: • Technology (Chair) • Audit • Compensation and Management Resources Other Directorships: • Current: Avaya Holdings Corp.; IQVIA Holdings Inc. (formerly Quintiles IMS Holdings, Inc.); Tenet Healthcare Corporation | RONALD A. RITTENMEYER | Executive Chairman and Chief Executive Officer of Tenet Healthcare Corporation; Former Chairman and Chief Executive Officer of Millennium Health, LLC; Former Chairman, Chief Executive Officer and President of Electronic Data Systems Corporation | | | CAREER HIGHLIGHTS Mr. Rittenmeyer has served as Executive Chairman and Chief Executive Officer of Tenet Healthcare Corporation since August 2017 and October 2017, respectively, and also serves as the Chairman of Tenet’s Executive Committee. Mr. Rittenmeyer is the former Chairman and Chief Executive Officer of Millennium Health, LLC, a health solutions company, serving from 2016 to 2017. Mr. Rittenmeyer is the former Chairman, President and Chief Executive Officer of Expert Global Solutions, Inc. (formerly known as NCO Group, Inc.), a global provider of business process outsourcing services, serving from 2011 to 2014. Mr. Rittenmeyer is also the former Chairman, Chief Executive Officer and President of Electronic Data Systems Corporation, serving from 2005 to 2008. Prior to that, Mr. Rittenmeyer was a Managing Director of the Cypress Group, a private equity firm, serving from 2004 to 2005. Mr. Rittenmeyer also served as Chairman, Chief Executive Officer and President of Safety-Kleen Corp. from 2001 to 2004. Among his other leadership roles, Mr. Rittenmeyer served as President and Chief Executive Officer of AmeriServe Food Distribution Inc. from 2000 to 2001, Chairman, Chief Executive Officer and President of RailTex, Inc. from 1998 to 2000, President and Chief Operating Officer of Ryder TRS, Inc. from 1997 to 1998, President and Chief Operating Officer of Merisel, Inc. from 1995 to 1996 and Chief Operating Officer of Burlington Northern Railroad Co. from 1994 to 1995. KEY EXPERIENCE AND QUALIFICATIONS In light of Mr. Rittenmeyer’s experience in managing large, complex, international institutions, his experience in finance and strategic business transformations as well as his professional experience across the financial services industry and technology industry, AIG’s Board has concluded that Mr. Rittenmeyer should be re-elected to the Board. | |
PROPOSAL 1—ELECTION OF DIRECTORS
| Director since: 2009 Age: 66 Committees: • As Independent Chairman, Mr. Steenland is an ex-officio, non-voting member of all Board committees Other Directorships: • Current: Hilton Worldwide Holdings Inc.; Performance Food Group Company; Travelport Worldwide Limited • Former (past 5 years): Chrysler Group LLC; International Lease Finance Corporation; Digital River, Inc. | DOUGLAS M. STEENLAND | Former President and Chief Executive Officer of Northwest Airlines Corporation | | | CAREER HIGHLIGHTS Mr. Steenland is the former Chief Executive Officer of Northwest Airlines Corporation, serving from 2004 to 2008, and President, serving from 2001 to 2004. Prior to that, he served in a number of Northwest Airlines executive positions after joining Northwest Airlines in 1991, including Executive Vice President, Chief Corporate Officer and Senior Vice President and General Counsel. Mr. Steenland retired from Northwest Airlines upon its merger with Delta Air Lines, Inc. Prior to joining Northwest Airlines, Mr. Steenland was a senior partner at a Washington, D.C. law firm that is now part of DLA Piper. KEY EXPERIENCE AND QUALIFICATIONS In light of Mr. Steenland’s experience in managing large, complex, international institutions and his experience in strategic business transformations, AIG’s Board has concluded that Mr. Steenland should be re-elected to the Board. | |
PROPOSAL 1—ELECTION OF DIRECTORS
| Director since: 2013 Age: 73 Committees: • Regulatory, Compliance and Public Policy (Chair) • Audit Other Directorships: • None | THERESA M. STONE | Former Executive Vice President and Treasurer of the Massachusetts Institute of Technology; Former Executive Vice President and Chief Financial Officer of Jefferson-Pilot Corporation; Former President of Chubb Life Insurance Company | | | CAREER HIGHLIGHTS Ms. Stone is the former Executive Vice President and Treasurer of the Massachusetts Institute of Technology (MIT), serving from February 2007 until October 2011. In her role as Executive Vice President and Treasurer, Ms. Stone served as MIT’s Chief Financial Officer and was also responsible for MIT’s operations, including capital projects, campus planning, facilities operations, information technology, environmental health and safety, human resources, medical services and police. Ms. Stone also served as the Special Assistant to the President of MIT from October 2011 to January 2012. From November 2001 to March 2006, Ms. Stone served as Executive Vice President and Chief Financial Officer of Jefferson-Pilot Corporation (now Lincoln Financial Group) and, from 1997 to 2006, she also served as President of Jefferson-Pilot Communications. Ms. Stone also served as the President of Chubb Life Insurance Company from 1994 to 1997. From 1990 to 1994, Ms. Stone served as Senior Vice President—Acquisitions of The Chubb Corporation, in which role she advised the Chairman and Chief Executive Officer on domestic and international property casualty and life insurance strategy, acquisitions and divestitures. Ms. Stone also served as a director of the Federal Reserve Bank of Richmond from 2003 to 2007 and as Deputy Chairman from 2005 to 2007. Ms. Stone began her career as an investment banker, advising clients primarily in the insurance and financial services industries on financial and strategic matters. KEY EXPERIENCE AND QUALIFICATIONS In light of Ms. Stone’s broad experience in both business and academia and her expertise in insurance, finance and management, AIG’s Board has concluded that Ms. Stone should be re-elected to the Board. | |
COMPENSATION OF DIRECTORS
COMPENSATION OF DIRECTORS The following table describes the compensation structure for AIG’s non-management directors in 2017.
2017 Non-Management Director Compensation
2017 Non-Management Director Compensation
2017 Non-Management Director Compensation
| Non-Management Members of the Board in 2017 | Fees Earned or Paid in Cash(1) | Stock Awards(2) | All Other Compensation(3) | Total | | W. Don Cornwell | $180,000 | $129,978 | $10,000 | $319,978 | | Peter R. Fisher | $150,000 | $129,978 | $0 | $279,978 | | John H. Fitzpatrick | $190,000 | $129,978 | $0 | $319,978 | | William G. Jurgensen | $190,000 | $129,978 | $0 | $319,978 | | Christopher S. Lynch | $160,110 | $129,978 | $0 | $290,088 | | Samuel J. Merksamer | $150,000 | $129,978 | $0 | $279,978 | | George L. Miles, Jr. | $74,175 | $0 | $0 | $74,175 | | Henry S. Miller | $150,000 | $129,978 | $10,000 | $289,978 | | Robert S. Miller | $74,175 | $0 | $0 | $74,175 | | Linda A. Mills | $150,000 | $129,978 | $10,000 | $289,978 | | Suzanne Nora Johnson | $159,890 | $129,978 | $10,000 | $299,868 | | John A. Paulson | $74,175 | $0 | $0 | $74,175 | | Ronald A. Rittenmeyer | $170,000 | $129,978 | $0 | $299,978 | | Douglas M. Steenland | $410,000 | $129,978 | $0 | $539,978 | | Theresa M. Stone | $170,000 | $129,978 | $10,000 | $309,978 |
2017 Non-Management Director Compensation
(1) This column represents annual retainer fees and Committee Chair retainer fees. For Mr. Lynch, the amount includes a prorated Committee Chair retainer fee for his service as Chair of the Nominating and Corporate Governance Committee, effective as of the date of the 2017 Annual Meeting. For Ms. Nora Johnson, the amount includes a prorated annual Committee Chair retainer fee for her service as Chair of the Nominating and Corporate Governance Committee until the date of the 2017 Annual Meeting. For Messrs. Miles, Robert S. Miller and Paulson, the amounts include prorated annual retainer fees for their service as directors until the date of the 2017 Annual Meeting. For Mr. Miles, the amount does not include (i) $856,774, which represents the value of shares of AIG Common Stock delivered when he ceased to be a member of the Board as of the 2017 Annual Meeting in accordance with the terms of DSUs previously granted and reported, (ii) $21,630, which represents a cash payment with respect to the final dividend equivalents on his DSUs payable prior to delivery of the underlying shares and warrant equivalents granted to him related to DSUs issued prior to the dividend of warrants by AIG to its shareholders on January 13, 2011 and (iii) $5,626, which represents the delivery of previously granted and reported deferred AIG Common Stock, the deferral of which ended when he ceased to be a member of the Board. For Mr. Robert S. Miller, the amount does not include (i) $840,206, which represents the value of shares of AIG Common Stock delivered when he ceased to be a member of the Board as of the 2017 Annual Meeting in accordance with the terms of DSUs previously granted and reported and (ii) $18,484, which represents a cash payment with respect to the final dividend equivalents on his DSUs payable prior to delivery of the underlying shares and warrant equivalents granted to him related to DSUs granted prior to the warrant distribution. For Mr. Paulson, the amount does not include (i) $323,299, which represents the value of shares of AIG Common Stock delivered when he ceased to be a member of the Board as of the 2017 Annual Meeting in accordance with the terms of DSUs previously granted and reported and (ii) $1,467, which represents a cash payment with respect to the final dividend equivalents on his DSUs payable prior to delivery of the underlying shares. (2) This column represents the grant date fair value of DSUs granted in 2017 to directors, based on the closing sale price of AIG Common Stock on the date of grant. (3) This column represents charitable contributions by AIG under AIG’s Matching Grants Program. The following table sets forth information with respect to the stock awards outstanding at December 31, 2017 for the non-management directors of AIG. None of the non-management directors hold option awards.
Other Measures to Support Leadership Transition
Other Measures to Support Leadership Transition To promote stability during the search for, and transition to, a new Chief Executive Officer, the Committee determined to make one-time grants of restricted stock units in March 2017 to members of our Executive Leadership Team at that time. The awards cliff-vest on the second anniversary of the grant date subject to continued employment (or the participant’s earlier termination without cause) and are not eligible for qualifying resignation or retirement treatment. The awards were aimed to retain leaders in critical positions to facilitate a successful transition and foster the implementation and execution of any change in strategic vision for AIG following appointment of new leadership. The awards were entirely in the form of stock units to align with AIG performance and have no interim delivery before the two-year term, which the Committee believes is an appropriate timeframe by which any period of transition will have occurred. In the interests of transparency, these awards were publicly announced at the time of grant and described in our 2017 Proxy Statement. These awards are described below under “—Leadership and Strategic Change—Transition RSU Awards.”
2017 Annual Compensation Structure
| • | Emphasis on Long-Term Incentives: At least 75 percent of each Executive Leadership Team member’s annual target total direct compensation is “at risk” and the majority of incentive pay opportunity is provided in equity, in the form of PSUs and RSUs, vesting after a three-year period. |
2017 Annual Compensation Structure
| • | Direct Link to AIG Performance: 70 percent of long-term incentives for our Executive Leadership Team are in the form of PSUs that are earned over a three-year period based on achieving total shareholder return (TSR) measured relative to AIG’s peers, and balanced by using option adjusted spread (OAS) relative to peers. |
Compensation Philosophy
Compensation Philosophy We structure our compensation program and make enterprise-wide compensation decisions consistent with our compensation philosophy. Our compensation philosophy centers around the following objectives: • Attracting and retaining the strongest employees and leaders for AIG’s various business needs by providing market-competitive compensation opportunities. • Creating a culture of pay for performance by providing total direct compensation opportunities that reward employees for individual, business unit and company-wide performance. • Providing a market-competitive, performance-driven compensation structure through a four-part program that takes into account base salary, annual incentives, long-term incentives and benefits and perquisites. • Motivating all AIG employees to deliver sustainable, profitable growth balanced with risk to drive long-term value creation for shareholders. • Aligning the long-term economic interests of key employees with those of shareholders by ensuring that a meaningful component of each key employee’s compensation is provided in equity. • Avoiding incentives that encourage employees to take unnecessary or excessive risks that could threaten the value of AIG by appropriately balancing risk and reward as well as rewarding both annual and long-term performance. • Maintaining strong corporate governance practices by meeting evolving standards of compensation governance and complying with regulations applicable to employee compensation. Consistent with this philosophy, our short-term and long-term incentive programs are designed to provide appropriate upside opportunity and downside risk and reinforce alignment with shareholder interests. The Committee evaluates and adjusts the programs annually based on strategic priorities, stakeholder feedback and market considerations.
Compensation Philosophy
| Compensation Best Practices | | | What we do: | What we don’t do: | | ✓ Pay for performance ✓ Comprehensive clawback policy ✓ Share ownership guidelines and holding requirements ✓ All employees and directors prohibited from hedging AIG securities ✓ Executive officers and directors prohibited from pledging AIG securities ✓ Double-trigger change-in-control benefits ✓ Annual risk assessment of compensation plans ✓ Independent compensation consultant | × No golden parachute tax gross-ups × No excessive pension payments, perquisites or other benefits × No equity grants below 100% of fair market value × No dividends or dividend equivalents paid on unvested long-term incentive awards × No repricing of underwater stock options or stock appreciation rights |
2017 Compensation Structure—Annual Direct Compensation Components
| Named Executive Officer | Annual Base Salary | Target Short-Term Incentive | Target Long-Term Incentive | Total | | Brian Duperreault, President and Chief Executive Officer | $1,600,000 | $3,200,000* | $11,200,000 | $16,000,000 | | Siddhartha Sankaran, Executive Vice President and Chief Financial Officer | $1,000,000 | $1,700,000 | $3,300,000 | $6,000,000 | | Peter Zaffino Executive Vice President—General Insurance and Global Chief Operating Officer | $1,250,000 | $3,000,000 | $4,250,000 | $8,500,000 | | Douglas A. Dachille, Executive Vice President and Chief Investment Officer | $1,000,000 | $2,000,000 | $4,000,000 | $7,000,000 | | Kevin T. Hogan, Executive Vice President—Life & Retirement | $1,000,000 | $1,900,000 | $3,600,000 | $6,500,000 |
2017 Compensation Structure—Annual Direct Compensation Components
* Represents Mr. Duperreault’s full year short-term incentive target. His earned award was prorated for service during 2017. Base Salary. An executive’s base salary is established based on his or her experience, performance and salaries for comparable positions at competitors, but will not exceed 25 percent of the executive’s annual target total direct compensation opportunity. This allocation is intended to fairly compensate the executive for the responsibilities of his or her position, achieve an appropriate balance of fixed and variable pay and provide the executive with sufficient liquidity to discourage excessive risk-taking. Annual base salary is paid in cash. Short-Term Incentive. Our short-term incentive, which represents approximately 20 to 35 percent of an Executive Leadership Team member’s annual target total direct compensation opportunity, is designed to reward annual performance and drive near-term business objectives and strategies. It consists of an annual cash award with individual target amounts that reflect business unit or corporate function responsibilities and experience. For our current named executives, short-term incentive awards are generally earned based on a combination of pre-established goals for Company performance and an assessment of individual performance, with a potential range from 0 to 200 percent of target. The Committee has discretion to determine the final award amount and, as explained below, considers Company achievement of performance metrics, individual achievement of pre-established goals and, for 2017, the changes to our operating structure and strategy. All short-term incentive awards earned by our executives are subject to our clawback policy. Company Performance. In March 2017, the Committee established metrics to provide a basis for evaluating overall Company performance. This “Company score” is based on metrics that apply to all our named executives and ranges from 0 to 125 percent of target. The Committee established these performance metrics before Mr. Duperreault joined AIG, and accordingly they reflect AIG’s pre-existing strategy and goals. Although the metrics do not fully align with the new strategy articulated by Mr. Duperreault, the Committee determined not to replace them for 2017. Instead, the Committee considered the new strategy and other significant Company-wide changes in 2017 as a qualitative factor in determining the individual performance and final earned award for the current named executives. To simplify the program and increase the weighting of return on equity (ROE) and risk-adjusted growth metrics as compared to our 2016 program, the 2017 metrics were reduced from five to three and consist of: Core Normalized ROE, Normalized Production Risk-Adjusted Profitability (Normalized Production RAP) and Normalized Value of New Business (Normalized VoNB). Core Normalized ROE, which makes up 70 percent of the score, measures profitability and is targeted based on an improvement in Core Normalized ROE relative to 2016. Normalized Production RAP and Normalized VoNB each make up 15 percent of the score and measure risk-adjusted growth. We normalize our short-term incentive metrics for both favorable and adverse prior year developments and other factors to tie compensation directly to results that participants achieve during the performance year (which, given the nature of our business, could otherwise be overwhelmed by prior year reserve development and/or catastrophe events, for example). In addition, for 2017, we adjusted the metrics for the impact of certain strategic choices by management that were not contemplated when the metrics were established. For our long-term incentive program, we use other market-based metrics, measured relative to peers, to capture the full range of our financial performance over the medium to long term. In the first quarter of 2018, the Committee reviewed performance compared to the Company performance metrics. The Company score was 66 percent, as follows: * The threshold, target and maximum for Normalized Production RAP and Normalized VoNB were updated to reflect the impact of foreign exchange rates. In addition, the Core Normalized ROE and Normalized Production RAP metrics were adjusted for the impact of certain strategic choices by management that were not contemplated when the metrics were established. These performance metrics are non-GAAP financial measures. See Appendix A for an explanation of how these measures are calculated for AIG from our audited financial statements. Individual Performance. Individual performance is based on an assessment by our Chief Executive Officer and his recommendation to the Committee. Our Chief Executive Officer’s individual performance is based on an assessment by the Committee. In past years, members of our Executive Leadership Team were the only participants in our short-term incentive program whose award was based on the Company score and not also an assessment of individual performance. In March 2017, the Committee determined to include an assessment of individual performance both because it provides for a more complete assessment of our executives’ achievements and would allow the Committee to take into account operational and strategic changes during the year. 2017 Individual Performance Results. In the first quarter of 2018, the Committee assessed each current named executive’s individual performance as summarized below. Chief Executive Officer. In assessing Mr. Duperreault’s individual performance, the Committee considered his contributions to AIG, including the following key achievements: • Established new enterprise-wide organizational structure, including the replacement of our Commercial and Consumer segments with General Insurance and Life and Retirement, to improve AIG’s core operating units and drive growth. • Reshaped AIG’s Executive Leadership Team and recruited diverse, experienced talent into key leadership positions. • Launched a new long-term Company strategy and completed multiple initiatives to accelerate the ability of AIG to grow profitable business, including the launch of Blackboard and formation of DSA Re to act as AIG’s main run-off reinsurer. • Engaged proactively with investors and rating agencies to increase shareholder confidence and initiated efforts to improve employee engagement. • Led efforts to rebalance AIG’s financial portfolio to maximize investment returns while reducing risk from catastrophes and long-tail exposure. Chief Financial Officer. In assessing Mr. Sankaran’s individual performance, the Committee considered Mr. Duperreault’s evaluation of Mr. Sankaran’s contributions to AIG, including the following key achievements: • Maintained strength of AIG’s balance sheet despite reserve additions and record year for natural catastrophes, and helped drive approximately $7.5 billion in capital returns. • Provided leadership in AIG’s efforts with financial regulators regarding its regulatory designation as a nonbank systemically important financial institution, which was rescinded in 2017. • Led strategy related to AIG’s legacy portfolio, including sale of non-insurance assets and formation of DSA Re, allowing AIG to consolidate its legacy books and leverage operational efficiencies. • Improved and reengineered AIG’s general ledger reporting infrastructure through standardizing reporting across businesses, decommissioning disparate reporting tools and accelerating the reporting close process. • Played critical role in maintaining stability within AIG and communicating with outside stakeholders during transition to new Chief Executive Officer. Executive Vice President—General Insurance and Global Chief Operating Officer. In assessing Mr. Zaffino’s individual performance, the Committee considered Mr. Duperreault’s evaluation of Mr. Zaffino’s contributions to AIG, including the following key achievements: •
2017 Compensation Structure—Annual Direct Compensation Components
Led the design of General Insurance’s new organizational structure to improve alignment with clients and distribution partners, emphasize certain key business lines and improve the quality and efficiency of decision making. • Introduced a high level three-year strategic vision for General Insurance focusing on improving core performance and profitable growth. • Recruited and appointed experienced, talented leaders to key roles throughout General Insurance and AIG. • Drove fundamental enhancements to General Insurance’s reinsurance strategy and designed a program to reduce exposure to tail events and financial volatility. • Provided strategic input on AIG’s business position to our Chief Executive Officer and individual business leaders to improve performance and played an active role in identifying merger and acquisition opportunities. The Committee also noted that while the 2017 financial results of General Insurance were below expectations and contributed to the level of the Company score, Mr. Zaffino did not join AIG until July 2017. Executive Vice President and Chief Investment Officer. In assessing Mr. Dachille’s individual performance, the Committee considered Mr. Duperreault’s evaluation of Mr. Dachille’s contributions to AIG, including the following key achievements: • Completed sale of AIG’s life settlements portfolio, resulting in a complete exit from the portfolio. • Successfully identified and sold a portfolio of over $10 billion in assets to fund the adverse development reinsurance agreement with National Indemnity Company. • Reduced significantly AIG’s hedge fund portfolio in 2017, and reallocated remaining hedge fund holdings primarily to equity-oriented funds, increasing return on regulatory capital in 2017. • Established a new securitization platform for AIG’s residential loans, allowing AIG to become a more significant participant in the loan market and be able to more effectively manage risk. • Achieved lower than budgeted general operating expenses for the Investments function in 2017 and successfully managed operational risk of Investments activity. Executive Vice President—Life & Retirement. In assessing Mr. Hogan’s individual performance, the Committee considered Mr. Duperreault’s evaluation of Mr. Hogan’s contributions to AIG, including the following key achievements: • Led Life and Retirement to deliver ROE above AIG’s cost of equity, return approximately $1.5 billion in capital to AIG in the form of dividends and loan repayments, and managed expenses, despite challenging market conditions. • Completed sale and transition of Fuji Life Insurance Company, Ltd. • Recruited and appointed leaders to key management positions, including new leaders of Group Retirement and Individual Retirement, and addressed critical succession planning needs. • Created new operations control functions to effectively identify and manage risk, focusing on key control areas such as customer complaints, vendor governance, regulatory exam responses and business continuity planning. • Strengthened asset liability management strategy across Life and Retirement business units. Determination of Earned Short-Term Incentive Awards. Short-term incentive awards for the Executive Leadership Team are generally based on a combination of Company and individual performance and can range from 0 to 200 percent of target. In determining 2017 short-term incentive awards for our current named executive officers, although the Committee took into account the results of the Company score, the Committee exercised its discretion in determining the final earned award for each current named executive. In exercising this discretion, the Committee considered the significant enterprise-wide changes and accomplishments achieved by AIG in 2017, including, but not limited to, the transition to our new Chief Executive Officer and new composition of our Executive Leadership Team, changes to AIG’s strategy and operating structure, including the replacement of our Commercial and Consumer segments with General Insurance and Life and Retirement, and the execution of key initiatives to position AIG for sustainable, profitable growth. The Committee, after discussions with Mr. Duperreault, determined that these fundamental changes in our leadership, operational structure and strategy should be reflected in our annual awards for 2017. Taking the Company score, individual performance and these factors into account, the Committee determined (and, for Mr. Duperreault, the Board ratified) the following earned 2017 short-term incentive amounts for our named executives:
2017 Compensation Structure—Annual Direct Compensation Components
* Prorated for Mr. Duperreault and former executive officers based on the number of months served during 2017. ** Earned awards for our former executive officers are determined based solely on Company performance, pursuant to our 2012 Executive Severance Plan. The 2017 short-term incentive award was paid in full in cash in the first quarter of 2018 and is subject to our clawback policy. Long-Term Incentive. Our long-term incentive comprises the largest percentage of an executive’s annual target compensation opportunity, representing at least 40 percent of his or her annual target total direct compensation opportunity. We believe that providing a significant portion of executives’ compensation in equity and earned over a three-year period will drive long-term value creation for our shareholders and appropriately account for the time horizon of risks. Our 2017 long-term incentive program consists of grants of PSUs, earned between 0 and 200 percent of target based on achievement of performance criteria during a three-year performance period, and grants of RSUs, earned based on continued employment through the three-year period, each of which vests after the three-year period. For members of our Executive Leadership Team, 2017 long-term incentive awards consist 70 percent of PSUs and 30 percent of RSUs. We believe providing this mix of PSUs and RSUs, which we have introduced into our long-term incentive program for the first time in 2017, each with a three-year time-horizon, will enhance our ability to sustain a high-performance culture and attract and retain key talent through providing competitive compensation opportunities that do not incentivize excessive risk taking. The following table illustrates our outstanding long-term incentive awards. Grant of 2017 Long-Term Incentive Awards To determine long-term incentive grants, the Committee approves (and, for Mr. Duperreault, the Board ratifies) the target dollar amount of an executive’s long-term incentive award, which is then converted to a number of PSUs and RSUs based on the average closing price of AIG Common Stock over the calendar month preceding the reference date rounded down to the nearest whole unit. In general, the reference date refers to the grant date in the case of annual awards, the date of the offer of employment to a new hire or the effective date of a recipient’s promotion. For members of our Executive Leadership Team, grants are 70 percent in the form of PSUs and 30 percent in the form of RSUs, with both types of units vesting and settling in AIG Common Stock after the three-year performance period in January 2020. The award for our former Chief Executive Officer, Mr. Hancock, was 50 percent in the form of PSUs and 50 percent in the form of RSUs. Earned PSUs can range from 0 to 200 percent of the target PSU grant subject to achievement of pre-established Company-wide performance metrics over the three-year period, as described below, and RSUs vest subject to continued employment through the three-year period. Grants are made pursuant to the AIG Long Term Incentive Plan (the LTI Plan). For 2017, as with our 2016 long-term incentive program, PSUs are earned based on achieving relative TSR to align with our business strategy and evaluate long-term performance relative to peers. To protect against excessive risk-taking, the TSR metric is balanced by using relative OAS as a gating metric. OAS is a measurement of the spread of a fixed income security’s return and the risk-free rate of return, which is adjusted to take into account embedded options. Relative OAS acts as a measure of our relative creditworthiness and serves only as a gating metric such that, if our relative OAS percentile is below the 20th percentile of our peer group, the payout level resulting from the relative TSR score is reduced by half. The table below summarizes the performance metrics used for the 2017 to 2019 performance period. Earned awards are based 100 percent on relative TSR, which is targeted at median. Actual performance below threshold will result in a 0 percent payout. Relative OAS acts as a gating metric to protect against excessive risk-taking and will reduce the payout level (if any) resulting from the relative TSR score in half if our relative OAS percentile is below the 20th percentile of the peer group. Results will be certified by the Committee in the first quarter of 2020.
2017 Compensation Structure—Annual Direct Compensation Components
| Metric | Weighting | Threshold | Target | Maximum | | Relative TSR | 100% | 25th percentile | 50th percentile | 75th percentile | | Relative OAS | | Acts as a gating metric: If OAS percentile is less than 20th percentile of peer group, the payout level is reduced by half. | | | | | Payout: | 50% | 100% | 200% |
2017 Compensation Structure—Annual Direct Compensation Components
| Peers | | | | AEGON, N.V. Allianz Group AXA Group Chubb Limited CNA Financial Corporation Hartford Financial Services Group Inc. | Lincoln National Corporation Manulife Financial Corporation MetLife, Inc. Principal Financial Group, Inc. Prudential Financial, Inc. Prudential plc | Swiss Re Group The Travelers Companies, Inc. Tokio Marine Holdings, Inc. Voya Financial, Inc. XL Group Ltd. Zurich Financial Services AG | | The peer group above, which is the same group as for our 2016 long-term incentive awards, includes public companies against which AIG benchmarks financial performance and competes for market share and talent. For each company in the peer group, TSR will be measured by (1) the sum of (a) the company’s adjusted share price at the end of the performance period minus the company’s adjusted share price at the beginning of the performance period (in each case, as reported by Bloomberg, adjusted for stock dividend distributions and stock splits and using a 30-day period prior to quarter close for the beginning and end of the performance period) plus (b) non-stock dividends declared during the performance period and reinvested in the company’s shares on the ex-dividend date, divided by (2) the company’s adjusted share price at the beginning of the performance period (as reported by Bloomberg, adjusted for stock dividend distributions and stock splits and using a 30-day period prior to quarter close for the beginning of the performance period). | | | | For AIG and each company in the peer group that have USD-denominated senior unsecured debt outstanding, OAS will be measured based on the OAS for each company as reported by Bloomberg, and AIG’s relative OAS percentile will be determined by the average monthly AIG OAS percentile, as compared to the peer group, over the three-year performance period. | | |
2017 Compensation Structure—Annual Direct Compensation Components
Any earned PSUs and RSUs will vest in January 2020 and will be settled in AIG Common Stock. Dividend equivalent rights in the form of additional PSUs and RSUs also accrue commencing with the first dividend record date of AIG Common Stock following the grant date, are subject to the same vesting, and in the case of PSUs, performance conditions, as the underlying units, and are paid when such related earned shares (if any) are delivered. The number of additional PSUs and RSUs earned at any such time will be equal to (i) the cash dividend amount per share of AIG Common Stock times (ii) the number of PSUs and RSUs covered by the award (and, unless otherwise determined by AIG, any dividend equivalent units previously credited under the award) that have not been previously settled through the delivery of shares (or cash) prior to such date, divided by the fair market value of a share of AIG Common Stock on the applicable dividend record date. Adjudication of 2015 Long-Term Incentive Awards The three-year performance period for our 2015 long-term incentive awards ended on December 31, 2017, and the Committee assessed performance in the first quarter 2018 and certified the results, which are shown in the following table. The metrics for 2015 long-term incentive awards, which were 100 percent in the form of PSUs, comprised relative TSR (weighted 75 percent) and relative final credit default swap (CDS) spread (weighted 25 percent), in each case measured relative to a peer group. As shown in the table, our TSR relative to the peers was below threshold and 75 percent of awards were not earned:
2017 Compensation Structure—Annual Direct Compensation Components
| Performance Metric | Threshold | Target | Maximum | Actual | % Achieved | Weighting | % Achieved (Weighted) | | Relative TSR | 25th percentile | 55th percentile | 75th percentile | 16th percentile | 0% | 75% | 0% | | Relative Final CDS Spread | 5th percentile | 20th to 80th percentile | 95th percentile | 40th percentile | 100% | 25% | 25% | | Payout: | 50% | 100% | 150% | | | | 25% |
2017 Compensation Structure—Annual Direct Compensation Components
One-third of the earned PSUs settled in shares of AIG Common Stock in the first quarter of 2018. The remaining two-thirds of earned PSUs will vest one-third each in January 2019 and 2020 and be settled in AIG Common Stock.
2017 Compensation Structure—Indirect Compensation Components
2017 Compensation Structure—Indirect Compensation Components Welfare and Other Indirect Benefits. AIG’s senior executives generally participate in the same broad-based health, life and disability benefit programs as AIG’s other employees. Retirement Benefits. AIG provides retirement benefits to eligible employees, including both defined contribution plans (such as 401(k) plans) and traditional pension plans (called defined benefit plans). These plans can be either tax-qualified or non-qualified. AIG’s only active defined contribution plan for the named executives is a 401(k) plan, which is tax-qualified. The plan was amended effective January 1, 2012 to provide all participants with a match of 100 percent of the first 6 percent of their eligible compensation contributed up to the Internal Revenue Service (IRS) compensation limit ($270,000 for 2017). Accordingly, for the named executives in 2017, AIG matched a percentage of their contributions to the 401(k) plan up to $16,200. Effective January 1, 2016, AIG also provides a contribution of 3 percent of eligible compensation to all employees eligible to participate in the 401(k) plan, in addition to the 6 percent matching contribution, subject to IRS limits. Our 401(k) plan is described in greater detail in “—2017 Compensation—Post-Employment Compensation.” AIG does not have any active defined benefit plans. As of January 1, 2016, benefit accruals under the AIG Retirement Plan (the Qualified Retirement Plan) and the AIG Non-Qualified Retirement Income Plan (the Non-Qualified Retirement Plan) were frozen. Each of these plans provides for a benefit based on years of service and average final salary and also based on pay credits and interest credits. As a result of the January 1, 2016 freeze, the Qualified Retirement Plan and the Non-Qualified Retirement Plan were closed to new participants, and current participants no longer earn additional benefits (however, interest credits will continue to be earned by participants under these plans). These plans and their benefits are described in greater detail in “—2017 Compensation—Post-Employment Compensation—Pension Benefits.” Perquisites and Other Compensation. To facilitate the performance of their management responsibilities, AIG provides some employees, including the named executives, with corporate aircraft usage (including by an executive’s spouse when traveling with the executive on business travel), use of company pool cars and drivers or parking, legal services, financial, estate and tax planning and other benefits categorized as “perquisites” or “other” compensation under the SEC rules. The Committee also approved the use of AIG-owned corporate aircraft and corporate aircraft owned by a third-party vendor by our Chief Executive Officer for personal travel and an allowance of such travel of up to $195,000 per year. Our Chief Executive Officer is required to reimburse to AIG the cost of using such corporate aircraft for personal travel beyond the $195,000 per year allowance. The calculation of the cost of the Chief Executive Officer’s personal corporate aircraft usage is based on the aggregate incremental cost to AIG of the personal travel, which may include, for AIG-owned corporate aircraft, direct operating cost of the aircraft, including fuel, additives and lubricants, maintenance, airport fees and assessments, crew expenses and in-flight supplies and catering, as applicable, and for corporate aircraft owned by a third-party vendor, the cost-per-flight-hour charge by the vendor as well as costs of fuel, taxes, crew expenses and airport fees and assessments, as applicable. Termination Benefits and Policies. AIG provides severance benefits to its executives to offer competitive total compensation packages, ensure executives’ ongoing retention when considering potential transactions that may create uncertainty as to their future employment with AIG and enable AIG to obtain a release of employment-related claims. In 2012, the Committee established the 2012 Executive Severance Plan (the 2012 ESP), which replaced AIG’s prior Executive Severance Plan established in March 2008. The 2012 ESP extends to AIG executives in grade level 27 or above, including the named executives, and other executives who participated in the prior plan. For purposes of the 2012 ESP, a participant’s grade level is the highest level at which he or she was employed at any time in the 12 months immediately prior to the qualifying termination. The 2012 ESP provides for severance payments and benefits upon a termination by AIG without “cause” or if a qualifying executive terminates for “good reason,” including, for qualifying executives, after a “change in control.” In the event of a qualifying termination, a participant is generally eligible to receive severance in an amount equal to the product of a multiplier times the sum of salary and three-year-average annual incentives. The multiplier is either 1 or 1.5 depending on the executive’s grade level and increases to 1.5 or 2 for qualifying terminations within two years following a Change in Control. If a qualifying termination occurs within twelve months after a participant experiences a reduction in his or her base salary or annual short-term incentive opportunity, the severance payment will be calculated as if the qualifying termination occurred immediately prior to the reduction. In any event, executives in grade level 27 or above who participated in the prior plan, which includes Messrs. Hancock, Sankaran and Schimek, may not receive less than the severance they would have received under the prior plan.
Leadership and Strategic Change
Leadership and Strategic Change President and Chief Executive Officer. Pursuant to his May 14, 2017 offer letter, Mr. Duperreault was granted a one-time, sign-on award of stock options to purchase 1,500,000 shares of AIG Common Stock with an exercise price equal to $61.82, the closing price per share of AIG Common Stock on the grant date, the day Mr. Duperreault’s appointment was announced. Two-thirds of the stock options will vest only if AIG’s stock price increases significantly over the closing price of our common stock on May 12, 2017, the last trading day before Mr. Duperreault joined AIG, and the remaining one-third will vest subject to Mr. Duperreault’s continued service. All of the options will only have value if AIG’s stock price increases from the date Mr. Duperreault joined AIG and have a seven-year term, which is shorter than the market standard and provides a concentrated window for share price improvement. The Committee believes this award properly motivates Mr. Duperreault to create sustainable, profitable growth for AIG, aligning his interests with those of our shareholders. The stock options vest as follows: • Stock options for 500,000 shares will vest in equal, annual installments on each of the first three anniversaries of the grant date (the Time-Vesting Options); • Stock options for 300,000 shares will vest only if, for twenty consecutive trading days, the closing price per share of AIG Common Stock is at least $10.00 over $60.99, but in no event will these stock options vest faster than in equal, annual installments on each of the first three anniversaries of the grant date (the $10 Performance Options); • Stock options for 300,000 shares will vest only if, for twenty consecutive trading days, the closing price per share of AIG Common Stock is at least $20.00 over $60.99; and • Stock options for 400,000 shares will vest only if, for twenty consecutive trading days, the closing price per share of AIG Common Stock is at least $30.00 over $60.99. Pursuant to a Stock Option Award Agreement, if Mr. Duperreault is terminated for “cause” by AIG, all of his stock options, whether vested or unvested, will immediately terminate and be forfeited. If Mr. Duperreault is terminated by AIG without “cause” or resigns for “good reason,” any vested stock options will remain exercisable for three years after his termination, any unvested Time-Vesting Options will vest and remain exercisable for three years after his termination, and any other unvested stock options will continue to be eligible to vest based on stock performance and remain exercisable for three years after his termination (and the $10 Performance Options will be deemed to have attained their three-year anniversary time-vesting requirement). In no event will any stock options remain exercisable after May 15, 2024, the initial seven-year expiration date. Under his Stock Option Award Agreement, Mr. Duperreault agreed to perpetual non-disparagement and confidentiality covenants and to a non-solicitation covenant that applies during his employment and for a period of one year following his termination. All bonuses and equity-based awards granted to Mr. Duperreault are subject to our clawback policy. Also pursuant to his offer letter, Mr. Duperreault was paid a one-time, make-whole cash award of $12 million as compensation for unvested equity awards from his former employer forfeited by him in connection with his appointment as President and Chief Executive Officer. Other than this one-time make-whole cash payment and the stock option award described above, Mr. Duperreault does not have any special employment arrangements with us. Executive Vice President—General Insurance and Global Chief Operating Officer. Mr. Zaffino joined AIG in July 2017 and leads our recently reorganized General Insurance business in addition to serving as our Global Chief Operating Officer. Pursuant to his July 3, 2017 offer letter and in consideration of compensation foregone from his former employer, Mr. Zaffino was granted a one-time sign-on award of stock options and cash having a combined target value of $15 million. The portion of the sign-on award in the form of stock options was a grant of options to purchase 1,000,000 shares of AIG Common Stock with an exercise price equal to $64.53, the closing price per share of AIG Common Stock on the grant date. As described below, two-thirds of the stock options will vest only if AIG’s stock price increases significantly over the closing price of our common stock on the grant date, and the remaining one-third will vest subject to Mr. Zaffino’s continued service. All of the options will only have value if AIG’s stock price increases from the date of grant and have a seven-year term, which is shorter than the market standard and provides a concentrated window for share price improvement. The Committee believes this award properly motivates Mr. Zaffino to create sustainable, profitable growth for AIG, aligning his interests with those of our shareholders. The stock options will vest as follows: • Stock options for 333,000 shares will vest in equal, annual installments on each of the first three anniversaries of the grant date (the Time-Vesting Options); • Stock options for 200,000 shares will vest only if, for twenty consecutive trading days, the closing price per share of AIG Common Stock is at least $10.00 over $64.53, but in no event will these stock options vest faster than in equal, annual installments on each of the first three anniversaries of the grant date (the $10 Performance Options); • Stock options for 200,000 shares will vest only if, for twenty consecutive trading days, the closing price per share of AIG Common Stock is at least $20.00 over $64.53; and • Stock options for 267,000 shares will vest only if, for twenty consecutive trading days, the closing price per share of AIG Common Stock is at least $30.00 over $64.53. Pursuant to a Stock Option Award Agreement, if Mr. Zaffino is terminated for “cause” by AIG, all of his stock options, whether vested or unvested, will immediately terminate and be forfeited. If Mr. Zaffino is terminated by AIG without “cause” or resigns for “good reason,” any vested stock options will remain exercisable for three years after his termination, any unvested Time-Vesting Options will vest and be exercisable for three years after his termination, and any other unvested stock options will continue to be eligible to vest based on stock performance and become exercisable for three years after his termination (and the $10 Performance Options will be deemed to have attained the three-year anniversary time-vesting requirement). In no event will any stock options remain exercisable after July 24, 2024, the initial seven-year expiration date. The remainder of Mr. Zaffino’s sign-on award in the amount of $4,793,733 (representing $15 million minus the grant date fair value of the stock options described above) was a cash award, fifty percent of which was paid in February 2018. The remaining fifty percent will be paid in January 2019, subject to Mr. Zaffino’s continued employment. Mr. Zaffino also entered into a non-solicitation and non-disclosure agreement, pursuant to which he agreed to perpetual non-disparagement and confidentiality covenants and to a non-solicitation covenant that applies during his employment and for a period of one year following his termination. All bonuses and equity-based awards granted to Mr. Zaffino are subject to our clawback policy.
Leadership and Strategic Change
Transition RSU Awards. In March 2017, in connection with the announcement of Mr. Hancock’s resignation, in order to promote stability during the search for, and transition to, a new Chief Executive Officer, the Committee made one-time grants of RSUs to members of our Executive Leadership Team at that time. The awards were aimed to retain leaders in critical positions in a period of uncertainty to facilitate a successful transition and foster the implementation and execution of any change in strategic vision for AIG following appointment of new leadership. Members of our Executive Leadership Team at that time, including Messrs. Sankaran, Dachille, Hogan, Schimek and Solmssen, each received a grant of RSUs made under the LTI Plan, equal to one times his or her 2017 annual target total direct compensation. The grants were made entirely in the form of stock units to align with AIG performance and have no interim delivery before two years, which the Committee believes is an appropriate timeframe by which any period of transition will have occurred. The awards vest subject to the participant’s continued employment through the two-year period (or the participant’s earlier termination without cause) and are not eligible for qualifying resignation or retirement treatment under the LTI Plan.
Process for Compensation Decisions
Process for Compensation Decisions Role of the Committee. The Committee determines and approves the compensation of AIG’s Chief Executive Officer, and the Board approves or ratifies the amounts to be awarded to him. After considering the recommendation of AIG’s Chief Executive Officer, the Committee also approves the compensation of other key employees under its purview, which includes all of the other named executives. The Committee also makes recommendations to the Board with respect to AIG’s compensation programs for other key employees and oversees AIG’s management development and succession planning programs. Attendance at Committee meetings generally includes members of the executive team as appropriate, including representatives from internal legal and human resources, outside counsel, and the Committee’s independent consultant. Consultants. To provide independent advice, the Committee has used the services of Frederic W. Cook & Co. (FW Cook) since 2005. A senior consultant of FW Cook regularly attends the Committee’s meetings and is instructed to provide independent, analytical and evaluative advice about AIG’s compensation programs for senior executives, including views of how the program and proposals compare to market practices in financial services and general industry and to “best practices.” FW Cook responds on a regular basis to questions from the Committee and the Committee’s other advisors, providing its opinions with respect to the design and implementation of current or proposed compensation programs, including the 2017 executive compensation structure. FW Cook also participated in the Committee meeting in which the compensation risk assessment discussed under “—Report of the Compensation and Management Resources Committee—Risk and Compensation Plans” was conducted and previously advised that the process was thorough and well designed. In compliance with SEC and NYSE rules, in February 2017 and February 2018, the Committee reviewed various items related to FW Cook’s relationship to AIG, the members of the Committee and AIG’s executive officers. The Committee confirmed that neither FW Cook nor any of its affiliates provides any other services to AIG or its management except with respect to director compensation, and that FW Cook had no business or personal relationship with any member of the Committee or executive officer that raised a conflict of interest with respect to FW Cook’s work for the AIG Board. The Committee also received information on the fees paid to FW Cook by AIG as a percentage of FW Cook’s total revenue and FW Cook’s ownership of any AIG Common Stock. Considering this information, the Committee determined that FW Cook is independent and that its work has not raised any conflict of interest. In 2017, the Committee also considered materials prepared by Johnson Associates related to market compensation levels. Johnson Associates was engaged by AIG to assist with this work. In particular, Johnson Associates prepared reports presenting market comparisons of total compensation levels for existing employees, new hires and promotions with respect to positions within the Committee’s purview. The Committee performed a review of Johnson Associates’ services similar to the review of FW Cook described above. The Committee noted that FW Cook reviewed the reports prepared by Johnson Associates prior to consideration by the Committee and determined that this appropriately addressed any conflict of interest raised by Johnson Associates’ work or business relationship with AIG. Consideration of Shareholder Feedback. The Committee values feedback from AIG’s shareholders, including the feedback received through our say-on-pay advisory vote. Since 2010, AIG has held an annual say-on-pay advisory vote. In the most recent advisory vote, approximately 98 percent of the votes cast by shareholders were in favor of the 2016 compensation of our named executives as disclosed in our 2017 Proxy Statement. While the Committee believes this level of approval indicates strong support for our compensation program philosophy, goals and structure, we remain committed to periodic shareholder engagement to gather input on AIG’s executive compensation program and other practices. Feedback from our shareholders is communicated directly to our directors and helps inform Committee and Board discussions. Going forward, shareholders’ views will continue to serve as a valuable resource for the Committee, especially as it continues to focus on aligning our executive compensation program with AIG’s evolving business strategy. Consideration of Competitive Compensation Levels. In 2017, the Committee considered information from data disclosed in surveys, market practices and levels disclosed in proxy statements and employment contracts from a number of peer companies (Broad Data), as well as Johnson Associates’ benchmarks, which reflect proprietary data, third-party references and market impressions and judgment. The companies used in the Broad Data set were: Aetna, Inc., AFLAC, The Allstate Corporation, American Express Company, Ameriprise Financial, Inc., Bank of America Corporation, Bank of New York Mellon, BlackRock, Inc., Capital One Financial Corp., Chubb Group, CIGNA Corporation, Citigroup Inc., Hartford Financial Services, Invesco Ltd., JP Morgan Chase & Co., Lincoln National Corporation, Marsh & McLennan Companies, Inc., MetLife Inc., Principal Financial Group, Inc., Prudential Financial Inc., T. Rowe Price Group, Inc., The Travelers Companies Inc., U.S. Bancorp and Wells Fargo & Company.
Other Considerations
Other Considerations Clawback Policy. In 2013, the Committee adopted and implemented a comprehensive Clawback Policy to encourage sound risk management and individual accountability. The Clawback Policy covers all executive officers and any other employee as determined by the Committee and applies to covered compensation for such executive officers and employees. Covered compensation generally includes any bonus, equity or equity-based award or other incentive compensation granted to an executive officer or employee while he or she is subject to the Policy, which includes our incentive awards since 2013. In the event that the Committee determines that a triggering event under the Clawback Policy has occurred, the Committee may require an executive officer or other covered employee to forfeit and/or repay all or any portion of any unpaid covered compensation or covered compensation paid in the 12 months (or such longer period of time as required by any applicable statute or government regulation) preceding the event. Triggering events generally include a material financial restatement; the award or receipt of covered compensation based on materially inaccurate financial statements or performance metrics that are materially inaccurately determined; a failure of risk management, including in a supervisory role, or material violation of AIG’s risk policies; and an action or omission that results in material financial or reputational harm to AIG. Share Ownership Guidelines and Holding Requirements. AIG’s share ownership guidelines establish levels of ownership of AIG Common Stock at five times salary for the Chief Executive Officer and three times salary for other executive officers, which included the other named executives during 2017. Until the guidelines are met, such employees are required to retain 50 percent of the shares of AIG Common Stock received upon the exercise, vesting or payment of certain equity-based awards granted by AIG. Shares held for purposes of the guidelines may include stock owned outright by the officer or his or her spouse and earned but unvested share-based awards. In general, executive officers are required to comply with the guidelines until six months after they cease to be executive officers. No-Hedging and No-Pledging Policies. AIG’s Code of Conduct and Insider Trading Policy prohibit employees from engaging in hedging transactions with respect to any of AIG’s securities, including by trading in any derivative security relating to AIG’s securities. In addition, beginning in March 2018, AIG’s Insider Trading Policy prohibits all future pledging of AIG’s securities by executive officers and directors. None of AIG’s current executive officers or directors have pledged any of AIG’s securities. Deductibility of Executive Compensation. Section 162(m) of the Code generally limits the tax deductibility of compensation in excess of $1 million per year paid by a public company to its “covered employees.” Prior to federal tax reform enacted in December 2017, Section 162(m) included an exception to this limitation on deductibility for qualifying “performance-based compensation” (as defined under applicable tax regulations). Under the new tax legislation, for taxable years beginning after December 31, 2017, there is no longer an exception to the deductibility limit for qualifying “performance-based compensation” (unless the compensation qualifies for certain transition relief under the rules, the scope of which is currently uncertain). Also under the new legislation, the definition of “covered employees” has been expanded to include a company’s chief financial officer, in addition to the chief executive officer and three other most highly paid executive officers, plus any individual who has been a “covered employee” in any taxable year beginning after December 31, 2016. At AIG’s 2013 Annual Meeting, our shareholders approved the AIG 2013 Omnibus Incentive Plan, which is designed to allow for the issuance of awards that satisfy the “performance-based compensation” exception under Section 162(m), and our short- and long-term incentives awarded to covered employees in 2017, as in prior years, were intended to qualify for this exception. Accordingly, separate from determining 2017 short- and long-term incentive opportunities, in the first quarter of 2017, the Committee established performance criteria and set two percent of Normalized Adjusted After-Tax Income, as defined in Appendix A, as the Section 162(m) compliant maximum for 2017 short- and long-term incentives awarded to each individual covered employee, including the named executives. This limit does not serve as a basis for the Committee’s compensation decisions for our named executives, but rather provides for the maximum amount of tax deductible 2017 short- and long-term incentive compensation that the Committee can award to the covered employee, with the Committee retaining the discretion to pay less than the maximum. Once the maximum amount is established, the qualifying performance-based compensation for each covered employee is delivered through the 2017 short-term incentive and long-term incentive programs. If the total amount earned under these programs is less than the maximum deductible amount, the Committee will pay only the amount earned. The Committee retains the ability to pay compensation that exceeds $1 million and does not constitute qualifying performance-based compensation when it determines that such payments are in the best interests of AIG and our shareholders. The Committee believes that retaining the flexibility to attract, retain and motivate our employees with a compensation program that supports long-term value creation, even though some compensation awards may not be tax-deductible, is in the best interests of our shareholders.
Summary Compensation Table
Summary Compensation Table The following tables contain information with respect to AIG’s named executives. As required by SEC rules, AIG’s named executives include the Chief Executive Officer, Chief Financial Officer and the three other most highly paid executive officers, who each served through the end of 2017, as well as a former Chief Executive Officer who served during part of 2017 and two additional individuals who served as executive officers during part of 2017.
2017 Summary Compensation Table
2017 Summary Compensation Table
2017 Summary Compensation Table
| Name and Principal Position | Year | Salary(1) | Bonus | Stock Awards(2) | Option Awards(2) | Non-Equity Incentive Plan Compensation(3) | Change in Pension Value(4) | All Other Compensation(5) | Total | | Brian Duperreault Chief Executive Officer | 2017 | $1,015,385 | $12,000,000(6) | $11,156,834 | $16,153,000 | $2,133,333 | $331,849 | $296,460 | $43,086,861 | | Siddhartha Sankaran Executive Vice President and Chief Financial Officer | 2017 | $1,000,000 | $— | $9,327,757 | — | $1,564,000 | $43,432 | $32,199 | $11,967,388 | | | 2016 | $1,000,000 | $— | $3,159,665 | — | $680,000 | $705 | $39,598 | $4,879,968 | | Douglas A. Dachille Executive Vice President and Chief Investment Officer | 2017 | $1,000,000 | $— | $11,037,953 | — | $2,200,000 | $2,145 | $55,469 | $14,295,567 | | | 2016 | $1,000,000 | $— | $3,829,868 | — | $800,000 | $213 | $65,706 | $5,695,787 | | Kevin T. Hogan Executive Vice President— Life & Retirement | 2017 | $1,000,000 | $— | $10,130,983 | — | $2,090,000 | $219,112 | $106,575 | $13,546,670 | | | 2016 | $1,000,000 | $800,000(7) | $3,446,866 | — | $760,000 | $98,417 | $72,816 | $6,178,099 | | | 2015 | $1,038,462 | $1,150,000(7) | $3,613,812 | — | $1,482,000 | $12,995 | $620,888 | $7,918,157 | | Peter Zaffino Executive Vice President— General Insurance and Global Chief Operating Officer | 2017 | $552,885 | $— | $4,042,659 | $10,206,267 | $2,850,000 | $0 | $40,795 | $17,692,606 | | Separated during 2017 | | | | | | | | | | | Peter D. Hancock Former Chief Executive Officer | 2017 | $584,615 | $5,000,000(8) | $8,117,643 | — | $704,000 | $0 | $9,802,350 | $24,208,608 | | | 2016 | $1,600,000 | $— | $7,851,287 | — | $0 | $8,991 | $116,257 | $9,576,535 | | | 2015 | $1,661,538 | $— | $8,231,460 | — | $2,496,000 | $59,759 | $49,218 | $12,497,975 | | Robert S. Schimek Former Executive Vice President | 2017 | $834,615 | $— | $9,781,210 | — | $962,500 | $0 | $4,876,496 | $16,454,821 | | | 2016 | $1,000,000 | $— | $3,351,116 | — | $700,000 | $27,564 | $44,457 | $5,123,137 | | Peter Y. Solmssen Former Executive Vice President | 2017 | $792,308 | $— | $8,721,435 | — | $841,500 | $0 | $4,249,099 | $14,604,342 |
2017 Grants of Plan-Based Awards
2017 Grants of Plan-Based Awards Total 2017 Grants. The following table details all equity and non-equity plan-based awards granted to each of the named executives in 2017.
2017 Grants of Plan-Based Awards
2017 Grants of Plan-Based Awards
2017 Grants of Plan-Based Awards
| Name | Grant Date | Board Action Date | Estimated Possible Payouts Under Non-Equity Plan Awards(1) | | | Estimated Possible Payouts Under Equity Incentive Plan Awards (Performance Share Units)(2) | | | All Other Stock Awards (# of AIG Shares or Units)(3) | All Other Option Awards (# of Securities Underlying Options)(4) | Exercise or Base Price of Option Awards ($/Sh)(4) | Grant Date Fair Value of Equity Awards(5) | | | | | Threshold | Target | Maximum | Threshold | Target | Maximum | | | | | | Brian Duperreault | | | | | | | | | | | | | | 2017 STI | 05/14/17 | | $0 | $2,133,333 | $4,266,667 | — | — | — | — | — | — | — | | 2017 PSUs | 05/14/17 | 05/11/17 | — | — | — | 64,772 | 129,543 | 259,086 | — | — | — | $7,724,649 | | 2017 RSUs | 05/14/17 | 05/11/17 | — | — | — | — | — | — | 55,519 | — | — | $3,432,185 | | Options | 05/15/17 | 05/11/17 | — | — | — | — | — | — | — | 1,500,000 | $61.82 | $16,153,000 | | Siddhartha Sankaran | | | | | | | | | | | | | | 2017 STI | 03/15/17 | | $0 | $1,700,000 | $3,400,000 | — | — | — | — | | | — | | 2017 PSUs | 03/15/17 | | — | — | — | 17,982 | 35,963 | 71,926 | — | — | — | $2,446,563 | | 2017 RSUs | 03/15/17 | | — | — | — | — | — | — | 15,414 | — | — | $974,627 | | RSUs | 03/15/17 | | — | — | — | — | — | — | 93,414 | — | — | $5,906,567 | | Douglas A. Dachille | | | | | | | | | | | | | | 2017 STI | 03/15/17 | | $0 | $2,000,000 | $4,000,000 | — | — | — | — | | | — | | 2017 PSUs | 03/15/17 | | — | — | — | 21,797 | 43,593 | 87,186 | — | — | — | $2,965,632 | | 2017 RSUs | 03/15/17 | | — | — | — | — | — | — | 18,683 | — | — | $1,181,326 | | RSUs | 03/15/17 | | — | — | — | — | — | — | 108,983 | — | — | $6,890,995 | | Kevin T. Hogan | | | | | | | | | | | | | | 2017 STI | 03/15/17 | | $0 | $1,900,000 | $3,800,000 | — | — | — | — | | | — | | 2017 PSUs | 03/15/17 | | — | — | — | 19,617 | 39,233 | 78,466 | — | — | — | $2,669,021 | | 2017 RSUs | 03/15/17 | | — | — | — | — | — | — | 16,815 | — | — | $1,063,212 | | RSUs | 03/15/17 | | — | — | — | — | — | — | 101,198 | — | — | $6,398,750 | | Peter Zaffino | | | | | | | | | | | | | | 2017 STI | 07/24/17 | 06/27/17 | $0 | $3,000,000 | $6,000,000 | — | — | — | — | | | — | | 2017 PSUs | 07/24/17 | 06/27/17 | — | — | — | 23,388 | 46,776 | 93,552 | — | — | — | $2,749,026 | | 2017 RSUs | 07/24/17 | 06/27/17 | — | — | — | — | — | — | 20,047 | — | — | $1,293,633 | | Options | 07/24/17 | 06/27/17 | — | — | — | — | — | — | — | 1,000,000 | $64.53 | $10,206,267 | | Separated during 2017 | | | | | | | | | | | | | | Peter D. Hancock | | | | | | | | | | | | | | 2017 STI | 03/17/17 | | $0 | $1,066,667 | $2,133,334 | — | — | — | — | — | — | — | | 2017 PSUs | 03/17/17 | | — | — | — | 31,917 | 63,833 | 127,666 | — | — | — | $4,133,187 | | 2017 RSUs | 03/17/17 | | — | — | — | — | — | — | 63,833 | — | — | $3,984,456 | | Robert. S. Schimek | | | | | | | | | | | | | | 2017 STI | 03/15/17 | | $0 | $1,458,333 | $2,916,667 | — | — | — | — | — | — | — | | 2017 PSUs | 03/15/17 | | — | — | — | 19,072 | 38,143 | 76,286 | — | — | — | $2,594,868 | | 2017 RSUs | 03/15/17 | | — | — | — | — | — | — | 16,348 | — | — | $1,033,684 | | RSUs | 03/15/17 | | — | — | — | — | — | — | 97,306 | — | — | $6,152,658 | | Peter Y. Solmssen | | | | | | | | | | | | | | 2017 STI | 03/15/17 | | $0 | $1,275,000 | $2,550,000 | — | — | — | — | | | — | | 2017 PSUs | 03/15/17 | | — | — | — | 16,347 | 32,694 | 65,388 | — | — | — | $2,224,173 | | 2017 RSUs | 03/15/17 | | — | — | — | — | — | — | 14,013 | — | — | $886,042 | | RSUs | 03/15/17 | | — | — | — | — | — | — | 88,743 | — | — | $5,611,220 |
2017 Grants of Plan-Based Awards
(1) Amounts shown reflect the range of possible cash payouts under the STI Plan for 2017 performance. Actual amounts earned, as determined by the Committee in the first quarter of 2018, are reflected in the 2017 Summary Compensation Table under Non-Equity Incentive Plan Compensation. For more information on the 2017 short-term incentive awards, including the applicable performance metrics, please see “—Compensation Discussion and Analysis—2017 Compensation Structure—Annual Direct Compensation Components—Short-Term Incentive.” Amounts shown reflect the potential range of 2017 PSUs that may be earned. Actual amounts earned are based on achieving relative TSR over the 2017—2019 performance period. The TSR metric is balanced by using relative OAS as a gating metric to protect against excessive risk-taking. If AIG’s relative OAS percentile is below the 20th percentile of the peer group, the payout level is reduced by half. Results will be certified by the Committee in the first quarter of 2020. 2017 PSUs were granted under the LTI Plan. For more information on the 2017 PSUs, including the applicable performance metrics, please see “—Compensation Discussion and Analysis—2017 Compensation Structure—Annual Direct Compensation Components—Long-Term Incentive.” Holders of 2017 PSUs are also entitled to dividend equivalent rights in the form of additional 2017 PSUs beginning with the first dividend record date following the PSU grant date, which are subject to the same vesting and performance conditions as the related PSUs and are paid when such related earned shares (if any) are delivered. (3) Amounts shown reflect the grant of RSUs made under the LTI Plan. For more information on these awards, please see “—Compensation Discussion and Analysis—2017 Compensation Structure—Annual Direct Compensation Components—Long-Term Incentive” and “—Compensation Discussion and Analysis—Leadership and Strategic Change—Transition RSU Awards.” Holders of RSUs are also entitled to dividend equivalent rights in the form of additional RSUs beginning with the first dividend record date following the applicable grant date, which are subject to the same vesting conditions as the related RSUs and are paid when such related shares (if any) are delivered. (4) Amounts shown reflect stock options granted to Messrs. Duperreault and Zaffino as one-time, sign-on awards upon their joining AIG in 2017. The stock options were granted under the 2013 Omnibus Incentive Plan, except 500,000 stock options granted to Mr. Duperreault were granted as an “employment inducement award” under NYSE Listing Rule 303A.08, as approved by the Committee, and are otherwise governed by the 2013 Omnibus Incentive Plan. For more information on these awards, please see “—Compensation Discussion and Analysis—Leadership and Strategic Change.” (5) Amounts shown represent the grant date fair value of the awards determined in accordance with FASB ASC Topic 718 using the assumptions presented in Note 20 to the Consolidated Financial Statements in AIG’s 2017 Annual Report on Form 10-K.
Outstanding Equity Awards at December 31, 2017
Outstanding Equity Awards at December 31, 2017 Equity-based awards held at the end of 2017 by each named executive were issued under the incentive plans and arrangements described below. Shares of AIG Common Stock deliverable under AIG’s performance- and time-vested equity and option awards will be delivered under the 2013 Omnibus Incentive Plan or 2010 Stock Incentive Plan, as applicable, except as otherwise described below. The following table sets forth outstanding equity-based awards held by each named executive as of December 31, 2017.
Outstanding Equity Awards at December 31, 2017
Outstanding Equity Awards at December 31, 2017
Outstanding Equity Awards at December 31, 2017
| | | | | | | | | Stock Awards | | | | | | Option Awards(1) | | | | | | | Unvested (Not Subject to Performance Conditions) | | Equity Incentive Plan Awards (Unearned and Unvested) | | | Name | Year Granted | Number Exercisable | Number Unexercisable | Equity Incentive Plan Awards (Unexercised and Unearned) | Exercise Price | Expiration Date | Award Type(2) | Number | Market Value(3) | Number | Market Value(3) | | Brian Duperreault | 2017 | | 500,000 | 1,000,000 | $61.82 | 05/15/2024 | 2017 RSUs | 56,396 | $3,360,074 | | | | | | | | | | | 2017 PSUs | | | 65,794 | $3,920,007 | | Siddhartha Sankaran | — | — | — | — | — | — | 2017 RSUs | 15,657 | $932,844 | | | | | | | | | | | 2017 PSUs | | | 18,265 | $1,088,229 | | | | | | | | | RSUs | 94,890 | $5,653,546 | | | | | | | | | | | 2016 PSUs | | | 32,646 | $1,945,049 | | | | | | | | | 2015 PSUs | 8,894 | $529,905 | | | | | | | | | | | 2014 PSUs | 24,567 | $1,463,702 | | | | | | | | | | | 2013 PSUs | 18,457 | $1,099,668 | | | | | | | | | | | Total | 162,465 | $9,679,665 | 50,911 | $3,033,278 | | Douglas A. Dachille | — | — | — | — | — | — | 2017 RSUs | 18,978 | $1,130,709 | | | | | | | | | | | 2017 PSUs | | | 22,140 | $1,319,101 | | | | | | | | | RSUs | 110,705 | $6,595,804 | | | | | | | | | | | 2016 PSUs | | | 39,571 | $2,357,640 | | | | | | | | | 2015 PSUs | 17,040 | $1,015,243 | | | | | | | | | | | Total | 146,723 | $8,741,756 | 61,711 | $3,676,741 | | Kevin T. Hogan | — | — | — | — | — | — | 2017 RSUs | 17,080 | $1,017,626 | | | | | | | | | | | 2017 PSUs | | | 19,926 | $1,187,191 | | | | | | | | | RSUs | 102,797 | $6,124,645 | | | | | | | | | | | 2016 PSUs | | | 35,614 | $2,121,882 | | | | | | | | | 2015 PSUs | 17,788 | $1,059,809 | | | | | | | | | | | 2014 PSUs | 49,298 | $2,937,175 | | | | | | | | | | | 2013 PSUs | 32,990 | $1,965,544 | | | | | | | | | | | Total | 219,953 | $13,104,799 | 55,540 | $3,309,073 | | Peter Zaffino | 2017 | | 333,000 | 667,000 | $64.53 | 07/24/2024 | 2017 RSUs | 20,262 | $1,207,210 | | | | | | | | | | | 2017 PSUs | | | 23,639 | $1,408,412 | | Separated during 2017 | | | | | | | | | | | | | Peter D. Hancock | — | — | — | — | — | — | 2017 PSUs | | | 32,420 | $1,931,584 | | | | | | | | | 2016 PSUs | | | 81,122 | $4,833,249 | | | | | | | | | Total | | | 113,542 | $6,764,833 | | Robert S. Schimek | — | — | — | — | — | — | 2017 PSUs | | | 19,372 | $1,154,184 | | | | | | | | | 2016 PSUs | | | 34,625 | $2,062,958 | | | | | | | | | Total | | | 53,997 | $3,217,142 | | Peter Y. Solmssen | — | — | — | — | — | — | 2017 PSUs | | | 16,605 | $989,326 |
Outstanding Equity Awards at December 31, 2017
(1) Stock Options. Upon joining AIG in 2017, Messrs. Duperreault and Zaffino received one-time, sign-on awards of stock options. All outstanding options have seven-year terms and have exercise prices equal to the closing sale price of AIG Common Stock on the NYSE on the dates of grant. For Mr. Duperreault, his stock options to purchase 1,500,000 shares of AIG Common Stock have a grant date of May 15, 2017 and vest as follows: Stock options for 500,000 shares of AIG Common Stock vest in equal, annual installments on each of the first three anniversaries of the grant date; • Stock options for 300,000 shares of AIG Common Stock vest only if, for twenty consecutive trading days, the closing price per share is at least $70.99, but in no event will these stock options vest faster than in equal, annual installments on each of the first three anniversaries of the grant date; • Stock options for 300,000 shares of AIG Common Stock vest only if, for twenty consecutive trading days, the closing price per share is at least $80.99; and • Stock options for 400,000 shares of AIG Common Stock vest only if, for twenty consecutive trading days, the closing price per share is at least $90.99. For Mr. Zaffino, his stock options to purchase 1,000,000 shares of AIG Common Stock have a grant date of July 24, 2017 and vest as follows: • Stock options for 333,000 shares of AIG Common Stock vest in equal, annual installments on each of the first three anniversaries of the grant date; • Stock options for 200,000 shares of AIG Common Stock vest only if, for twenty consecutive trading days, the closing price per share is at least $74.53, but in no event will these stock options vest faster than in equal, annual installments on each of the first three anniversaries of the grant date; • Stock options for 200,000 shares of AIG Common Stock vest only if, for twenty consecutive trading days, the closing price per share is at least $84.53; and • Stock options for 267,000 shares of AIG Common Stock vest only if, for twenty consecutive trading days, the closing price per share is at least $94.53. All stock options were granted under the 2013 Omnibus Incentive Plan, except 500,000 stock options granted to Mr. Duperreault were granted as an “employment inducement award” under NYSE Listing Rule 303A.08, as approved by the Committee, and are otherwise governed by the 2013 Omnibus Incentive Plan. The 500,000 stock options granted outside of the 2013 Omnibus Incentive Plan consist of 100,000 stock options that vest if, for twenty consecutive trading days, the closing price per share is at least $80.99, and 400,000 stock options that vest if, for twenty consecutive trading days, the closing price per share is at least $90.99, each as described above. (2) Performance Share Units. All 2017 and 2016 PSUs are shown at threshold payout and all 2015 PSUs, PSUs for the 2014—2016 performance period (2014 PSUs), and PSUs for the 2013—2015 performance period (2013 PSUs) are shown at actual amounts earned. Actual amounts earned for the 2015, 2014 and 2013 PSUs were determined by the Committee in the first quarter of 2018, 2017 and 2016, respectively. For information on the earned 2015 PSUs, as determined by the Committee in the first quarter of 2018, see “—Compensation Discussion and Analysis—Adjudication of 2015 Long-Term Incentive Awards.” 2017, 2016 and 2015 PSUs also accrue dividend equivalent rights in the form of additional PSUs beginning with the first dividend record date following the PSU grant date, which are subject to the same vesting and performance conditions as the related PSUs and are paid when such related earned shares (if any) are delivered. The 2015 PSU amounts earned as shown above include the additional PSUs accrued in respect of dividend equivalent rights. 2017 and 2016 PSU amounts also include the additional PSUs accrued in respect of dividend equivalent rights assuming threshold payout. Whether the 2017 or 2016 PSUs (and related dividend equivalents) will be earned at the level shown or a different level, or at all, depends on AIG performance against plan metrics over a three-year performance period. Once earned, (i) all 2017 PSUs (and related dividend equivalents) to current named executives will vest on January 1, 2020, and (ii) 2016 PSUs (and related dividend equivalents) to current named executives will vest one-third on the first day of January in each of 2019, 2020 and 2021. One-third of the earned 2015 PSUs (and related dividend equivalents) to current named executives vested on January 1, 2018, and the remaining two-thirds will vest one-third on the first day of January in each of 2019 and 2020. Two-thirds of the earned 2014 PSUs to current named executives vested one-third on the first day of January in each of 2017 and 2018, and the remaining one-third will vest on January 1, 2019. The earned 2013 PSUs to current named executives vested one-third on the first day of January in each of 2016, 2017 and 2018. The one-third of 2014 PSUs and 2013 PSUs that vested January 2017 are reflected in the 2017 Vesting of Stock-Based Awards table below. Restricted Stock Units. RSUs accrue dividend equivalent rights in the form of additional RSUs beginning with the first dividend record date following the applicable grant date, which are subject to the same vesting conditions as the related RSUs and are paid when such related shares (if any) are delivered. The RSU amounts as shown above include the additional RSUs accrued in respect of dividend equivalent rights. All 2017 RSUs (and related dividend equivalents) granted to our current named executives will vest on January 1, 2020, and all other RSUs (and related dividend equivalents) granted to our current named executives will vest on March 15, 2019. Named Executive Officers Separated in 2017. Messrs. Hancock, Schimek and Solmssen became vested in their RSU and PSU awards, as applicable, upon their respective separation dates. For 2015 PSUs (and related dividend equivalents), 2014 PSUs and 2013 PSUs, the number of earned shares were based on actual performance as determined by the Committee in the first quarter of 2018, 2017 and 2016, respectively. These earned PSU awards and RSU awards, as applicable, are reflected in the 2017 Vesting of Stock-Based Awards table below. For 2017 and 2016 PSUs (and related dividend equivalents), the number of earned shares, if any, will be based on AIG performance over the applicable three-year performance period. These unearned awards are reflected in the table above, at threshold payout. Shares underlying RSUs, other than 2017 RSUs, were paid upon vesting. For all PSUs and 2017 RSUs, any earned amounts will be paid on the normal payment schedule. (3) Based on the closing sale price of AIG Common Stock on the NYSE on December 29, 2017 of $59.58 per share.
Pension Benefits
Pension Benefits AIG does not have any active defined benefit (pension) plans. Effective January 1, 2016, benefit accruals under our tax-qualified pension plan (the Qualified Retirement Plan) and our non-qualified pension plan (the Non-Qualified Retirement Plan) were frozen. As a result, the Qualified Retirement Plan and the Non-Qualified Retirement Plan were closed to new participants, and current participants can no longer accrue additional benefits after December 31, 2015. However, interest credits continue to accrue on existing cash balance accounts, and participants also continue to earn service credits for purposes of vesting and early retirement eligibility subsidies as they continue to work for AIG. Participants in the Qualified Retirement Plan vest in and receive their benefits based on length of service. Participants in the Non-Qualified Retirement Plan vest in and receive these benefits based on their age and length of service. The Qualified Retirement Plan covers participating employees of AIG and its subsidiaries who are paid on a U.S. dollar payroll and are citizens of the United States, or non-citizens working in the United States, and the Non-Qualified Retirement Plan covers participating employees whose formula benefit is restricted from being fully paid from the Qualified Retirement Plan due to IRS limits on compensation and benefits, including the named executives. Mr. Duperreault was employed by AIG from May 1, 1973 to September 7, 1994 and accrued pension benefits under the Qualified Retirement Plan and the Non-Qualified Retirement Plan during this employment. Mr. Duperreault was vested in his Qualified Retirement Plan benefit at the time of his resignation in 1994 and elected to commence this benefit on September 1, 2017. He has not received a distribution from the Non-Qualified Retirement Plan. Pursuant to the terms of these Plans, prior service is recognized for vesting and eligibility to participate. Therefore, upon rejoining AIG on May 14, 2017, Mr. Duperreault’s prior service was recognized for vesting purposes under the Plans, but benefit accruals did not commence when he rejoined AIG as the Plans were frozen effective January 1, 2016. Mr. Hogan was employed by AIG from September 4, 1984 to November 5, 2008 and accrued pension benefits under the Qualified Retirement Plan and the Non-Qualified Retirement Plan during this employment. Mr. Hogan did not receive a distribution from the Qualified Retirement Plan or the Non-Qualified Retirement Plan at the time of his resignation in 2008. Pursuant to the terms of these Plans, prior service is recognized for vesting and eligibility to participate. Therefore, upon rejoining AIG in 2013, benefit accruals commenced immediately under the Plans for Mr. Hogan, until benefit accruals were frozen for all participants effective January 1, 2016. While AIG was subject to the TARP restrictions on executive compensation, benefit accruals in the Non-Qualified Retirement Plan were frozen on December 11, 2009 for Mr. Schimek. Because the TARP restrictions ceased to apply as of December 14, 2012, the freeze on benefit accruals in the Non-Qualified Retirement Plan ended and benefit accruals commenced again under the plan after this date. In addition, benefit accruals commenced for Messrs. Hancock and Sankaran under the Non-Qualified Retirement Plan, as they had not accrued any benefits under this plan prior to the TARP restrictions. We are not permitted to restore service for benefit accruals for the length of time during which these executives were subject to the freeze. Mr. Dachille was hired on September 15, 2015 and benefit accruals under the Qualified Retirement Plan and the Non-Qualified Retirement Plan commenced on September 15, 2015. Messrs. Zaffino and Solmssen were not participants in the Qualified Retirement Plan or the Non-Qualified Retirement Plan because they joined AIG after the Plans were frozen effective January 1, 2016. The benefit formula under the Qualified Retirement Plan and the Non-Qualified Retirement Plan was converted effective April 1, 2012 from a final average pay formula to a cash balance formula comprised of pay credits, calculated based on 6 percent of a plan participant’s annual pensionable compensation. Pay credits under these Plans accrued through 2015 (subject to the IRS limitation on qualified plans of $265,000 in 2015) and ceased on December 31, 2015. However, annual interest credits continued (2.50 percent in 2017, based upon the 30-year long-term Treasury rate). This rate is adjusted annually on January 1. The definition of pensionable compensation under the cash balance formula is different from the definition used in the final average pay formula. Prior to the January 1, 2016 freeze date, and effective April 1, 2012, pensionable compensation under the cash balance formula included base salary, commissions, overtime and annual short-term incentive awards. The Qualified Retirement Plan was subject to IRS compensation limits and the Non-Qualified Retirement Plan was subject to an annual compensation limit of $1,050,000 in 2015. The final average pay formula and definition of pensionable compensation did not change under the Qualified Retirement Plan or the Non-Qualified Retirement Plan for employees whose age plus credited service as of March 31, 2012 equaled 65 or greater and who had at least five years of credited service in the Qualified Retirement Plan as of that date. None of the named executives met these requirements. For purposes of the Qualified Retirement Plan and Non-Qualified Retirement Plan, each final average pay formula has been based on the average pensionable compensation of a participant during those three consecutive years in the last ten years of credited service that afford the highest such average, not including amounts attributable to overtime pay, quarterly bonuses, annual cash bonuses or long-term incentive awards. However, as a result of the freeze of benefit accruals effective January 1, 2016 for the Qualified Retirement Plan and the Non-Qualified Retirement Plan, each final average pay formula is based on the average pensionable compensation of a participant during those three consecutive years in the last ten years of credited service through December 31, 2015. These participants will receive a benefit under the Qualified Retirement Plan and the Non-Qualified Retirement Plan calculated using either the final average pay formula or the cash balance formula, whichever produces the greater benefit. The Qualified Retirement Plan and Non-Qualified Retirement Plan final average pay formula ranges from 0.925 percent to 1.425 percent times average final salary for each year of credited service accrued since April 1, 1985 up to 44 years through December 31, 2015 and 1.25 percent to 1.75 percent times average final pay for each year of credited service accrued prior to April 1, 1985 up to 40 years. For participants who retire after the normal retirement age of 65, the retirement benefit is actuarially increased to reflect the later benefit commencement date. Participants in the Qualified Retirement Plan are vested after three years of service and participants in the Non-Qualified Retirement Plan are vested once they attain age 60 with five or more years of service or age 55 with ten or more years of service. The Non-Qualified Retirement Plan provides a benefit equal to the portion of the benefit that is not permitted to be paid from the Qualified Retirement Plan due to IRS limits on compensation and benefits.
Pension Benefits
Participants in the Qualified Retirement Plan can elect to receive their benefit in the form of an annuity or as a lump sum distribution. However, Mr. Duperreault can only receive his benefit in the form of an annuity because he was only eligible for the form of payment provided under the Plan at the time of his resignation in 1994. For Non-Qualified Retirement Plan participants, the benefit they accrued through March 31, 2012 can be paid only in the form of an annuity, and the benefit accrued on and after April 1, 2012 through December 31, 2015 can be paid only in a lump sum. Early retirement benefits. Each of the domestic pension plans provides for reduced early retirement benefits. These benefits are available to all vested participants in the Qualified Retirement Plan. The Non-Qualified Retirement Plan provides reduced early retirement benefits to participants who have reached age 55 with ten or more years of service or to participants who have reached age 60 with five or more years of service. The early retirement reduction factors in the Non-Qualified Retirement Plan are based upon age as of the retirement date and years of credited service excluding the TARP-related freeze period. In the case of early retirement, participants in the Qualified Retirement Plan and the Non-Qualified Retirement Plan under the final average pay formula will receive the plan formula benefit projected to normal retirement at age 65 (using average final salary as of the date of early retirement), but prorated based on years of actual service, then reduced by 3, 4 or 5 percent (depending on age and years of credited service at retirement, excluding the TARP-related freeze period with respect to the Non-Qualified Retirement Plan) for each year that retirement precedes age 65. Participants in the Qualified Retirement Plan and Non-Qualified Retirement Plan will continue to receive service credit on and after the January 1, 2016 freeze date in determining age and length of service for early retirement subsidies and vesting purposes. Participants in the Qualified Retirement Plan with at least three years of service to AIG have a vested reduced retirement benefit pursuant to which, in the case of termination of employment prior to reaching age 65, such participants may elect to receive a reduced early retirement benefit commencing at any date between their date of termination and age 65. Participants in the Qualified Retirement Plan can elect to receive their benefit in the form of an annuity or as a lump sum distribution upon normal or early retirement. For Non-Qualified Retirement Plan participants, the benefit they accrued through March 31, 2012 can be paid only in the form of an annuity, and the benefit accrued on and after April 1, 2012 through December 31, 2015 can be paid only in a lump sum. Death and disability benefits. Each of the domestic pension plans also provides for death and disability benefits. The death benefit payable to a participant’s designated beneficiary under the Qualified Retirement Plan and the Non-Qualified Retirement Plan will generally equal the participant’s lump sum benefit or cash balance account. Under the Qualified Retirement Plan and the Non-Qualified Retirement Plan, prior to the January 1, 2016 freeze date, participants who became disabled and received payments under AIG’s long-term disability plan, and whose benefit was determined under the final average pay formula, continued to accrue credited service, and participants whose benefit was determined under the cash balance formula continued to receive interest and pay credits to their cash balance account, for a maximum of three additional years. On and after the January 1, 2016 freeze date, participants who receive payments under AIG’s long-term disability plan continue to receive service credit in determining age and length of service for early retirement subsidies and vesting purposes, and participants whose benefit is determined under the cash balance formula continue to receive interest credits to their cash balance account, for a maximum of three additional years. As with other retirement benefits, in the case of death and disability benefits, the formula benefit under the Non-Qualified Retirement Plan is reduced by amounts payable under the Qualified Retirement Plan. 2017 pension benefits. The following table details the accumulated benefits under the pension plans in which each named executive participates. In accordance with SEC rules, these accumulated benefits are presented as if they were payable upon the named executive’s normal retirement at age 65 or current age if older. However, it is important to note that the benefits shown for the named executives are at least partially unvested and could be received at lower levels due to reduced benefits or forfeited entirely if the named executive does not continue to work at AIG for the next several years. As of year-end 2017, Mr. Duperreault was eligible for normal retirement benefits and Mr. Hogan was eligible for early retirement benefits under the Non-Qualified Retirement Plan. In addition, as of year-end 2017, Messrs. Sankaran, Dachille and Hogan were vested in the Qualified Retirement Plan and eligible to commence benefits under the Plan early. Mr. Duperreault was also vested in his Qualified Retirement Plan benefit and elected to commence his benefit under the Plan in September 2017. Mr. Hancock was not vested in or eligible for early retirement benefits under the Non-Qualified Retirement Plan upon his separation from employment on May 14, 2017. Mr. Hancock forfeited these benefits upon his separation from AIG. Mr. Hancock elected to receive his early retirement benefits under the Qualified Retirement Plan effective March 1, 2018. Mr. Schimek was not vested in or eligible for early retirement benefits under the Non-Qualified Retirement Plan upon his separation from employment on October 31, 2017. Mr. Schimek forfeited these benefits upon his separation from AIG. Mr. Schimek elected to receive his early retirement benefits under the Qualified Retirement Plan effective April 1, 2018. Mr. Solmssen was not a participant in the Qualified or Non-Qualified Retirement Plans. AIG has not granted extra years of credited service under the defined benefit plans described above to any named executive, other than recognizing prior service by Mr. Dachille to First Principles for purposes of determining vesting and eligibility pursuant to the terms of AIG’s acquisition of First Principles.
2017 Pension Benefits
2017 Pension Benefits
2017 Pension Benefits
| Name | Plan Name | Years of Credited Service(1) | Present Value of Accumulated Benefit(2) | Payments During 2017 | | Brian Duperreault | Qualified Retirement Plan | 18.750 | $1,225,069 | $28,367 | | | Non-Qualified Retirement Plan | 18.750 | $164,238 | $0 | | | Total | | $1,389,307 | $28,367 | | Siddhartha Sankaran | Qualified Retirement Plan | 4.583 | $73,166 | $0 | | | Non-Qualified Retirement Plan | 3.000 | $125,361 | $0 | | | Total | | $198,527 | $0 | | Douglas A. Dachille | Qualified Retirement Plan | 0.333 | $16,035 | $0 | | | Non-Qualified Retirement Plan | 0.333 | $2,289 | $0 | | | Total | | $18,324 | $0 | | Kevin T. Hogan | Qualified Retirement Plan | 25.917 | $713,720 | $0 | | | Non-Qualified Retirement Plan | 25.917 | $881,957 | $0 | | | Total | | $1,595,677 | $0 | | Peter Zaffino | Qualified Retirement Plan | 0 | $0 | $0 | | | Non-Qualified Retirement Plan | 0 | $0 | $0 | | | Total | | $0 | $0 | | Separated during 2017 | | | | | | Peter D. Hancock | Qualified Retirement Plan | 5.333 | $125,264 | $0 | | | Non-Qualified Retirement Plan | 3.000 | $0 | $0 | | | Total | | $125,264 | $0 | | Robert S. Schimek | Qualified Retirement Plan | 9.917 | $246,602 | $0 | | | Non-Qualified Retirement Plan | 6.917 | $0 | $0 | | | Total | | $246,602 | $0 | | Peter Y. Solmssen | Qualified Retirement Plan | 0 | $0 | $0 | | | Non-Qualified Retirement Plan | 0 | $0 | $0 | | | Total | | $0 | $0 |
2017 Pension Benefits
(1) The 2017 named executives had the following years of service with AIG as of December 31, 2017: Mr. Duperreault—22.083; Mr. Sankaran—7.167; Mr. Dachille—2.333; Mr. Hogan—28.500; and Mr. Zaffino—0.500. As of their respective separation dates, the named executive officers who separated in 2017 had the following years of service with AIG: Mr. Hancock—7.330, Mr. Schimek—12.333; and Mr. Solmssen—1.083. Mr. Duperreault. Mr. Duperreault has fewer years of credited service than actual service under the Qualified Retirement Plan and the Non-Qualified Retirement Plan because, at the time he was originally hired, the Qualified Retirement Plan was contributory and employees received credited service when they began to contribute to the Plan. Mr. Duperreault was employed by AIG starting on May 1, 1973, but did not begin to contribute to the Qualified Retirement Plan until January 1, 1976. He accrued pension benefits under the Qualified Retirement Plan and the Non-Qualified Retirement Plan during his employment until his resignation from AIG on September 7, 1994. Mr. Duperreault did not receive a distribution from the Qualified Retirement Plan or the Non-Qualified Retirement Plan at the time of his resignation in 1994. Mr. Duperreault was vested in his Qualified Retirement Plan benefit at the time of his resignation in 1994 and elected to commence this benefit on September 1, 2017. He has not received a distribution from the Non-Qualified Retirement Plan. Pursuant to the terms of these Plans, prior service is recognized for vesting and eligibility to participate. Therefore, upon rejoining AIG on May 14, 2017, his prior service was recognized for vesting purposes under the Qualified and Non-Qualified Retirement Plans. Mr. Duperreault’s credited service under the Non-Qualified Retirement Plan is equal to his credited service under the Qualified Retirement Plan because he was not an employee during the time period in which the freeze on service accrual in the Non-Qualified Retirement Plan was applicable. Benefit accruals did not commence for Mr. Duperreault when he rejoined AIG as the Plans were frozen effective January 1, 2016. Mr. Sankaran. Mr. Sankaran has fewer years of credited service than actual service under the Qualified Retirement Plan because, at the time he was hired, employees were required to wait a year after commencing employment with AIG before becoming participants in this plan and received credit for service retroactive to six months of employment. Mr. Sankaran became a participant in the Qualified Retirement Plan effective December 1, 2011 after he completed one year of service with AIG, with service credited retroactive to June 1, 2011. Mr. Sankaran began accruing credited service under the Non-Qualified Retirement Plan on January 1, 2013, the first of the month following December 14, 2012, the end of AIG’s TARP restrictions period. He participates in the Qualified Retirement and Non-Qualified Retirement Plans under the cash balance formula. He began to accrue pay credits under the Non-Qualified Retirement Plan cash balance formula following December 14, 2012, the end of AIG’s TARP restrictions period. The Qualified and Non-Qualified Retirement Plans were frozen effective January 1, 2016 and credited service accruals ceased under these Plans as of December 31, 2015. Mr. Dachille. Mr. Dachille has fewer years of credited service than actual service under the Qualified Retirement Plan and the Non-Qualified Retirement Plan because the Plans were frozen effective January 1, 2016 and credited service accruals ceased under these Plans as of December 31, 2015. Mr. Dachille became a participant in the Qualified Retirement Plan and the Non-Qualified Retirement Plan effective September 15, 2015, the date he joined AIG. He participates in the Qualified Retirement and Non-Qualified Retirement Plans under the cash balance formula. Mr. Hogan. Mr. Hogan has fewer years of credited service than actual service under the Qualified Retirement Plan and the Non-Qualified Retirement Plan because, at the time he was hired, employees were required to wait a year after commencing employment with AIG before becoming participants in these Plans and received credit for service retroactive to six months of employment. Mr. Hogan was employed by AIG from September 4, 1984 to November 5, 2008 and accrued pension benefits under the Qualified Retirement Plan and the Non-Qualified Retirement Plan during this employment. Mr. Hogan did not receive a distribution from the Qualified Retirement Plan or the Non-Qualified Retirement Plan at the time of his initial resignation. Upon his rehire on October 14, 2013, benefit accruals commenced immediately under the Qualified and Non-Qualified Retirement Plans calculated under the cash balance formula, and prior service, pursuant to the terms of these Plans, was recognized for vesting and eligibility purposes. Mr. Hogan’s credited service under the Non-Qualified Retirement Plan is equal to his credited service under the Qualified Retirement Plan because he was not an employee during the time period in which the freeze on service accrual in the Non-Qualified Retirement Plan was applicable. The Qualified and Non-Qualified Retirement Plans were frozen effective January 1, 2016 and credited service accruals ceased under these Plans as of December 31, 2015. Mr. Zaffino. Mr. Zaffino is not a participant in the Qualified Retirement Plan or the Non-Qualified Retirement Plan because he joined AIG after the Plans were frozen effective January 1, 2016. Mr. Hancock. Mr. Hancock had fewer years of credited service than actual service under the Qualified Retirement Plan because, at the time he was hired, employees were required to wait a year after commencing employment with AIG before becoming participants in this Plan and received credit for service retroactive to six months of employment. Mr. Hancock became a participant in the Qualified Retirement Plan effective March 1, 2011 after he completed one year of service with AIG, with service credited retroactive to September 1, 2010. Mr. Hancock began accruing credited service under the Non-Qualified Retirement Plan on January 1, 2013, the first of the month following December 14, 2012, the end of AIG’s TARP restrictions period. He participated in the Qualified Retirement and Non-Qualified Retirement Plans under the cash balance formula. He began to accrue pay credits under the Non-Qualified Retirement Plan cash balance formula following December 14, 2012, the end of AIG’s TARP restrictions period. The Qualified and Non-Qualified Retirement Plans were frozen effective January 1, 2016 and credited service accruals ceased under these Plans as of December 31, 2015. For Mr. Hancock, years of credited service and pension values reflect the values as of his separation date of May 14, 2017. Mr. Schimek. Mr. Schimek had fewer years of credited service than actual service under the Qualified Retirement Plan and Non-Qualified Retirement Plan because, at the time he was hired, employees were
2017 Pension Benefits
required to wait a year after commencing employment with AIG before becoming participants in these Plans and received credit for service retroactive to six months of employment. Mr. Schimek became a participant in the Qualified Retirement Plan and Non-Qualified Retirement Plan effective August 1, 2006 after he completed one year of service with AIG, with service credited retroactive to February 1, 2006. Mr. Schimek’s credited service under the Non-Qualified Retirement Plan is less than his credited service under the Qualified Retirement Plan due to the freeze on service accruals in the Non-Qualified Retirement Plan. He participated in the Qualified Retirement Plan and Non-Qualified Retirement Plan under the cash balance formula. Mr. Schimek resumed accrual of pay credits under the Non-Qualified Retirement Plan cash balance formula following December 14, 2012, the end of AIG’s TARP restrictions period and resumed accruing credited service under the Non-Qualified Retirement Plan on January 1, 2013. The Qualified and Non-Qualified Retirement Plans were frozen effective January 1, 2016 and credited service accruals ceased under these Plans as of December 31, 2015. For Mr. Schimek, years of credited service and pension values reflect the values as of his separation date of October 31, 2017. Mr. Solmssen. Mr. Solmssen was not a participant in the Qualified Retirement Plan or the Non-Qualified Retirement Plan because he joined AIG after the Plans were frozen effective January 1, 2016. (2) The actuarial present values of the accumulated benefits are based on service and earnings as of December 31, 2017 (the pension plan measurement date for purposes of AIG’s financial statement reporting), with the exception of Messrs. Hancock and Schimek, whose values reflect their separation dates. The actuarial present values of the accumulated benefits under the Qualified Retirement Plan and the Non-Qualified Retirement Plan are calculated based on payment of a life annuity beginning at age 65, or current age if older, consistent with the assumptions described in Note 21 to the Consolidated Financial Statements included in AIG’s 2017 Annual Report on Form 10-K. As described in that Note, the discount rate assumption is 3.61 percent for the Qualified Retirement Plan. The discount rate assumption is 3.53 percent for the Non-Qualified Retirement Plan. The mortality assumptions are based on the RP-2014 annuitant white collar mortality table projected using the AIG improvement scale. As a result of the TARP restrictions on executive compensation, benefit accruals in the Non-Qualified Retirement Plan were frozen on December 11, 2009 for Mr. Schimek. The TARP-related freeze on benefit accruals in the Non-Qualified Retirement Plan ended on December 14, 2012. Messrs. Duperreault, Dachille and Hogan were not employed by AIG during the TARP-related freeze period, and Messrs. Hancock and Sankaran did not begin accruing pay credits under the Non-Qualified Retirement Plan until December 14, 2012. We are not permitted to restore service for benefit accruals for the length of time during which these executives were subject to the TARP-related freeze. The Non-Qualified Retirement Plan benefits for these participants, if eligible, are equal to the lesser of the frozen Non-Qualified Retirement Plan (excluding service and earnings during the period in which benefit accruals were frozen due to the TARP restrictions) or the Non-Qualified Retirement Plan without taking into account the TARP-related freeze on service accruals. Vesting is determined in the Non-Qualified Retirement Plan based on age and years of service as of the executive’s actual retirement date. Early retirement reduction factors are based on age at the executive’s actual retirement date and years of credited service excluding credited service during the period in which benefit accruals were frozen due to the TARP restrictions. Participants will continue to receive service credit on and after the January 1, 2016 freeze date in determining age and length of service for both vesting and early retirement subsidies.
Nonqualified Deferred Compensation
Nonqualified Deferred Compensation None of the named executive officers participate in a nonqualified deferred compensation plan.
POTENTIAL PAYMENTS ON TERMINATION
POTENTIAL PAYMENTS ON TERMINATION Executive Severance Plan. As previously discussed, AIG maintains the 2012 ESP for AIG executives in grade level 27 or above, including the current named executives, and executives who participated in AIG’s prior executive severance plan (Prior Participants). Severance benefits. The 2012 ESP provides for severance payments and benefits upon a termination by AIG without “Cause” or by a qualifying executive (including Messrs. Duperreault, Sankaran, Dachille, Hogan and Zaffino) for “Good Reason,” including, for qualifying executives, after a “Change in Control.” In the event of a qualifying termination, subject to the participant’s execution of a release of claims and agreement to abide by certain restrictive covenants, a participant is generally eligible to receive: • For terminations on and after April 1 of the termination year, a pro-rata annual short-term incentive for the year of termination based on the participant’s target amount and actual company (and/or, if applicable, business unit or function) performance, paid at the same time as such short-term incentives are regularly paid to similarly situated active employees; and • Severance in an amount equal to the product of a multiplier times the sum of base salary and the average amount of short-term incentive paid for the preceding three completed calendar years. The multiplier is either 1 or 1.5 depending on the executive’s grade level and increases to 1.5 or 2 for qualifying terminations within two years following a Change in Control. Each of Messrs. Duperreault, Sankaran, Dachille, Hogan and Zaffino is eligible for the higher multipliers. If the qualifying termination occurs within twelve months after experiencing a reduction in base salary or annual short-term incentive, the payments described above are calculated as if the qualifying termination occurred immediately prior to the reduction. However, in any event, Prior Participants in grade level 27 or above, which includes Mr. Sankaran, may not receive less than the severance they would have received under the prior plan. Severance generally will be paid in a lump sum. Participants are also entitled to continued health coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA), a $40,000 payment that may be applied towards continued health coverage and life insurance and one year of additional age and service under AIG’s non-qualified pension plans and AIG Medical Plan solely for purposes of determining vesting and eligibility, not benefit accruals. The one year of additional age and service is also used for the purpose of determining eligibility to enroll in retiree medical coverage. Restrictive covenants. Pursuant to the release of claims that each participant must execute to receive benefits under the 2012 ESP, each participant is generally prohibited from: • Engaging in, being employed by, rendering services to or acquiring financial interests in certain businesses that are competitive with AIG for a period of six months after termination; • Interfering with AIG’s business relationships with customers, suppliers or consultants for a period of six months after termination; • Soliciting or hiring AIG employees for a period of one year after termination; and • Disclosing AIG’s confidential information at any time following termination. Definitions. Under the 2012 ESP: • “Cause” generally means • the participant’s conviction, whether following trial or by plea of guilty or nolo contendere (or similar plea), in a criminal proceeding (A) on a misdemeanor charge involving fraud, false statements or misleading omissions, wrongful taking, embezzlement, bribery, forgery, counterfeiting or extortion, (B) on a felony charge or (C) on an equivalent charge to those in clauses (A) and (B) in jurisdictions which do not use those designations; • the participant’s engagement in any conduct which constitutes an employment disqualification under applicable law (including statutory disqualification as defined under the Exchange Act); • the participant’s violation of any securities or commodities laws, any rules or regulations issued pursuant to such laws, or the rules and regulations of any securities or commodities exchange or association of which AIG or any of its subsidiaries or affiliates is a member; or the participant’s material violation of AIG’s codes of conduct or any other AIG policy as in effect from time to time. • “Change in Control” generally means • individuals who, on the effective date of the 2012 ESP, constitute the Board of Directors of AIG (or subsequent directors whose election or nomination was approved by a vote of at least two-thirds of such directors, including by approval of the proxy statement in which such person is named as a nominee for director) cease for any reason to constitute at least a majority of the Board; • any person is or becomes a beneficial owner of 50 percent or more of AIG’s voting securities (for this purpose, person is as defined in Section 3(a)(9) of the Exchange Act and as used in Sections 13(d)(3) and 14(d)(2) of the Exchange Act); • consummation of a merger, consolidation, statutory share exchange or similar form of corporate transaction involving AIG that results in any person becoming the beneficial owner of 50 percent or more of the total voting power of the outstanding voting securities eligible to elect directors of the entity resulting from such transaction; • a sale of all or substantially all of AIG’s assets; or • AIG’s stockholders approve a plan of complete liquidation or dissolution of AIG. • “Good Reason” generally means a reduction of more than 20 percent in the participant’s annual target direct compensation. Treatment of LTI Awards. Since 2013, LTI awards have been issued under the 2013 LTI Plan (for 2013, 2014, 2015 and 2016 PSUs) or the LTI Plan (for 2017 PSUs and 2017 RSUs), each of which provides for accelerated vesting of outstanding PSUs and 2017 RSUs in certain termination scenarios. In the case of a participant’s involuntary termination without Cause (defined in the same manner as in the 2012 ESP as set forth above), retirement or disability, or if the participant experiences a qualifying resignation after the first year of a performance period (e.g., on or after January 1, 2018 for the 2017–2019 performance period), the participant’s LTI award will vest and, with respect to PSUs, earned PSUs (if any) will be determined based on actual performance for the whole performance period. The earned amount of PSUs and full amount of 2017 RSUs will be delivered on the normal settlement schedule. Retirement requires attainment of age 60 with five years of service or attainment of age 55 with ten years of service, and a qualifying resignation requires attainment of both (1) age 50 with at least five years of service and (2) age plus years of service equal to at least 60. In the case of a participant’s death during or prior to adjudication for a performance period or involuntary termination without Cause within 24 months following a Change in Control (defined in the same manner as in the 2012 ESP as set forth above) during a performance period, an amount equal to the participant’s target amount of PSUs (unless the Committee determines to use actual performance through the date of the Change in Control) and the full amount of 2017 RSUs will vest and be delivered to the participant by the later of the end of the calendar year or two and a half months following death or termination. RSUs granted to our named executives other than the 2017 RSUs are not eligible for qualifying resignation or retirement treatment, but otherwise have the same accelerated vesting terms upon termination as the 2017 RSUs described above.
POTENTIAL PAYMENTS ON TERMINATION
Quantification of Termination Payments and Benefits. Our named executive officers who separated in 2017 are not included in the Termination Payments and Benefits table below because they were not employed by us on December 31, 2017. Below are the benefits each of our named executive officers who separated in 2017 received upon his separation from employment. Mr. Hancock. Mr. Hancock separated from AIG on May 14, 2017, and, pursuant to his Transition Agreement entered into with AIG on March 17, 2017, was entitled to termination without cause benefits under the 2012 ESP (with his lump sum severance payment calculated as if he had terminated on March 8, 2017, the day before Mr. Hancock announced his intent to resign). Upon separation, he received a lump sum severance payment of $9,528,890 and was entitled to a lump sum payment of $40,000 that may be applied towards continued health coverage and life insurance. For 2017, Mr. Hancock earned a pro-rata short-term incentive award of $704,000, 100 percent of which was vested and paid in March 2018. Mr. Hancock’s outstanding PSUs and 2017 RSUs vested upon his separation. For details regarding the market value of these awards, see “Holdings of and Vesting of Previously Awarded Equity.” Mr. Hancock’s earned but unpaid 2013, 2014 and 2015 PSUs (and for 2015 PSUs, related dividend equivalents) and unpaid 2017 RSUs (and related dividend equivalents) will be paid on the normal payment schedule applicable to these awards. Earned amounts for 2016 and 2017 PSUs (and for each, related dividend equivalents), if any, will be based on actual performance following the applicable performance period and paid on the normal payment schedule applicable to these awards. Pursuant to his Transition Agreement, Mr. Hancock also received a lump sum payment of $5,000,000 for his service through the transition to our new President and Chief Executive Officer. Mr. Hancock’s severance payments and benefits are subject to his release of claims against AIG and restrictive covenants, as described above in “—Executive Severance Plan—Restrictive Covenants.” Mr. Schimek. Mr. Schimek separated from AIG on October 31, 2017, and was entitled to termination without cause benefits under the 2012 ESP. Upon separation, he received a lump sum severance payment of $4,618,111 and was entitled to a lump sum payment of $40,000 that may be applied towards continued health coverage and life insurance. For 2017, Mr. Schimek earned a pro-rata short-term incentive award of $962,500, 100 percent of which was vested and paid in March 2018. Mr. Schimek’s outstanding PSUs and RSUs vested upon his separation. For details regarding the market value of these awards, see “Holdings of and Vesting of Previously Awarded Equity.” Mr. Schimek’s earned but unpaid 2013, 2014 and 2015 PSUs (and for 2015 PSUs, related dividend equivalents) and unpaid 2017 RSUs (and related dividend equivalents) will be paid on the normal payment schedule applicable to these awards. His other RSUs (and related dividend equivalents) were paid upon his separation. Earned amounts for 2016 and 2017 PSUs (and, for each, related dividend equivalents), if any, will be based on actual performance following the applicable performance period and paid on the normal payment schedule applicable to these awards. Mr. Schimek’s severance payments and benefits are subject to his release of claims against AIG and restrictive covenants, as described above in “—Executive Severance Plan—Restrictive Covenants.” Mr. Solmssen. Mr. Solmssen separated from AIG on October 16, 2017, and was entitled to termination without cause benefits under the 2012 ESP. Upon separation, he received a lump sum severance payment of $4,050,000 and was entitled to a lump sum payment of $40,000 that may be applied towards continued health coverage and life insurance. For 2017, Mr. Solmssen earned a pro-rata short-term incentive award of $841,500, 100 percent of which was vested and paid in March 2018. Mr. Solmssen’s outstanding 2017 PSUs and RSUs vested upon his separation. For details regarding the market value of these awards, see “Holdings of and Vesting of Previously Awarded Equity.” Mr. Solmssen’s unpaid 2017 RSUs (and related dividend equivalents) will be paid on the normal payment schedule applicable to this award, and his other RSUs (and related dividend equivalents) were paid upon his separation. Earned amounts for 2017 PSUs (and related dividend equivalents), if any, will be based on actual performance following the applicable performance period and paid on the normal payment schedule applicable to this award. Mr. Solmssen’s severance payments and benefits are subject to his release of claims against AIG and restrictive covenants, as described above in “—Executive Severance Plan—Restrictive Covenants.” The following table sets forth the compensation and benefits that would have been provided to each of the current named executives if he had been terminated on December 31, 2017 under the circumstances indicated (including following a Change in Control).
PAY RATIO
PAY RATIO The 2017 annual total compensation of the median employee identified by AIG (as described below) was $64,186, and the 2017 annual total compensation of Mr. Duperreault (AIG’s Chief Executive Officer) was $44,738,581. Accordingly, AIG’s estimated 2017 pay ratio was 1 to 697. Excluding Mr. Duperreault’s one-time, sign-on cash and stock option awards, Mr. Duperreault’s 2017 annual total compensation would have been $16,585,581, and the estimated pay ratio would have been 1 to 259. To identify the median employee, AIG used its active employee population (including both full-time and part-time employees) as of October 1, 2017 and used 2016 annual total compensation for that population comprising (i) base salary, which was annualized for full-time and part-time employees hired during 2016, (ii) overtime payments, (iii) target short-term and long-term incentive awards, in each case using 2017 targets for employees hired during 2016 who were not eligible for 2016 awards and (iv) sales incentives. For employees hired in 2017 (and who therefore did not have 2016 compensation), AIG used 2017 annual total compensation comprising (a) annualized base salary, (b) an estimate of annual overtime payments based on a calculation of median 2016 overtime payments, (c) 2017 target short-term and long-term incentive awards and (d) an estimate of annual sales incentives based on a calculation of median 2016 sales incentives. As required by SEC rules, after identifying our median employee (who is located in the U.S.), we calculated 2017 annual total compensation for both our median employee and Mr. Duperreault using the same methodology that we use to determine our named executive officers’ annual total compensation for the Summary Compensation Table, except that for purposes of the pay ratio disclosure, we annualized Mr. Duperreault’s compensation. Mr. Duperreault became AIG’s Chief Executive Officer on May 14, 2017. In calculating our pay ratio disclosure, we annualized his 2017 compensation by increasing his salary, short-term incentive award and life insurance premiums paid to the amounts he would have received for a full year of service in 2017. SEC rules for identifying the median employee and calculating the pay ratio based on that employee’s annual total compensation allow companies to adopt a variety of methodologies, to apply certain exclusions, and to make reasonable estimates and assumptions that reflect their employee populations and compensation practices. As a result, the pay ratio reported by other companies may not be comparable to the pay ratios reported above, as other companies have different employee populations and compensation practices and may utilize different methodologies, exclusions, estimates and assumptions in calculating their own pay ratios. In addition, the median employee’s annual total compensation is unique to that individual and therefore is not an indicator of the annual total compensation of any other individual or group of employees.

DEF 14A of American International Group, Inc.

PROPOSAL 1—ELECTION OF DIRECTORS

PROPOSAL 1—ELECTION OF DIRECTORS

PROPOSAL 1—ELECTION OF DIRECTORS

PROPOSAL 1—ELECTION OF DIRECTORS

PROPOSAL 1—ELECTION OF DIRECTORS

PROPOSAL 1—ELECTION OF DIRECTORS

PROPOSAL 1—ELECTION OF DIRECTORS

PROPOSAL 1—ELECTION OF DIRECTORS

PROPOSAL 1—ELECTION OF DIRECTORS

PROPOSAL 1—ELECTION OF DIRECTORS

PROPOSAL 1—ELECTION OF DIRECTORS

PROPOSAL 1—ELECTION OF DIRECTORS

PROPOSAL 1—ELECTION OF DIRECTORS

PROPOSAL 1—ELECTION OF DIRECTORS

PROPOSAL 1—ELECTION OF DIRECTORS

COMPENSATION OF DIRECTORS

2017 Non-Management Director Compensation

2017 Non-Management Director Compensation

2017 Non-Management Director Compensation

Other Measures to Support Leadership Transition

2017 Annual Compensation Structure

2017 Annual Compensation Structure

Compensation Philosophy

Compensation Philosophy

2017 Compensation Structure—Annual Direct Compensation Components

2017 Compensation Structure—Annual Direct Compensation Components

2017 Compensation Structure—Annual Direct Compensation Components

2017 Compensation Structure—Annual Direct Compensation Components

2017 Compensation Structure—Annual Direct Compensation Components

2017 Compensation Structure—Annual Direct Compensation Components

2017 Compensation Structure—Annual Direct Compensation Components

2017 Compensation Structure—Annual Direct Compensation Components

2017 Compensation Structure—Annual Direct Compensation Components

2017 Compensation Structure—Indirect Compensation Components

Leadership and Strategic Change

Leadership and Strategic Change

Process for Compensation Decisions

Other Considerations

Summary Compensation Table

2017 Summary Compensation Table

2017 Summary Compensation Table

2017 Grants of Plan-Based Awards

2017 Grants of Plan-Based Awards

2017 Grants of Plan-Based Awards

2017 Grants of Plan-Based Awards

Outstanding Equity Awards at December 31, 2017

Outstanding Equity Awards at December 31, 2017

Outstanding Equity Awards at December 31, 2017

Outstanding Equity Awards at December 31, 2017

Pension Benefits

Pension Benefits

2017 Pension Benefits

2017 Pension Benefits

2017 Pension Benefits

2017 Pension Benefits

Nonqualified Deferred Compensation

POTENTIAL PAYMENTS ON TERMINATION

POTENTIAL PAYMENTS ON TERMINATION

PAY RATIO