8-KMaterial AgreementsExhibits & Filings

AMERICAN INTERNATIONAL GROUP, INC. 8-K Report, Material Agreement (May 22, 2006)

Filed May 22, 2006For Securities:AIG

Summary

This Form 8-K filing by AMERICAN INTERNATIONAL GROUP, INC. (AIG) on May 22, 2006, primarily concerns the approval and adoption of significant executive compensation plans by its shareholders and Board of Directors. The most notable event is the shareholder approval of the Executive Incentive Plan (EIP) at the 2006 annual meeting, which became effective retroactively from January 1, 2006. This plan is designed as a performance-based compensation program for senior executives, linking awards to AIG's adjusted net income. Additionally, AIG's Compensation Committee approved modifications to the AIG Partners Plan, specifically altering its vesting period and the calculation of performance targets. These plans are designed to align executive compensation with the company's financial performance and regulatory requirements, providing transparency for investors regarding the structure and motivation behind executive remuneration.

Key Highlights

  • 1Shareholder approval of the Executive Incentive Plan (EIP) on May 17, 2006.
  • 2EIP effective retroactively from January 1, 2006.
  • 3EIP is a performance-based compensation program for senior executives tied to AIG's adjusted net income.
  • 4Awards under EIP can be up to 0.3% of AIG's adjusted net income annually, subject to Compensation Committee discretion.
  • 5EIP is structured to qualify as 'performance-based compensation' under Section 162(m) of the Internal Revenue Code.
  • 6Compensation Committee approved changes to the vesting period and performance target calculations for the AIG Partners Plan.
  • 7Both the EIP and the amended AIG Partners Plan are incorporated by reference as exhibits to the filing.

Frequently Asked Questions

The EIP is a performance-based compensation program designed to incentivize senior executives. It establishes a formula for annual incentive awards tied directly to AIG's adjusted net income, aiming to align executive rewards with the company's financial performance.

Under the EIP, eligible participants can receive an annual incentive award of up to three-tenths of one percent (0.3%) of AIG's adjusted net income for each fiscal year. However, the Compensation Committee of the Board of Directors retains the discretion to reduce these awards.

The EIP is designed to comply with Section 162(m) of the Internal Revenue Code. This classification is significant because it allows AIG to potentially deduct compensation expenses paid under the EIP from its corporate income taxes, provided certain conditions are met, which is generally favorable for the company's financial health.

The Compensation Committee approved modifications to the AIG Partners Plan, specifically altering its vesting period and the methodology for calculating performance targets. The specifics of these changes are detailed in the amended and restated plan filed as an exhibit.