Summary
This 8-K filing from American International Group (AIG) on July 1, 2008, primarily announces the resignation of Martin J. Sullivan as an officer and director, effective July 1, 2008. The company entered into a letter agreement with Mr. Sullivan, treating his resignation as being for "Good Reason" as defined in his employment agreement. This allows him to receive benefits outlined in that agreement, subject to compliance with restrictive covenants.
Key Highlights
- 1Resignation of Martin J. Sullivan as an officer and director, effective July 1, 2008.
- 2Resignation treated as for "Good Reason" under Mr. Sullivan's employment agreement.
- 3Mr. Sullivan to receive benefits including continued vesting of outstanding restricted stock units and long-term cash awards, valued at approximately $28 million.
- 4Severance package includes $15 million in cash and a pro rata bonus of $4 million.
- 5AIG confirmed continuation of its prior guarantee of Starr International Company (SICO) shares.
- 6Mr. Sullivan agreed to one year of non-competition, non-solicitation of employees, and non-solicitation of clients, with extended periods for non-solicitation based on continued benefit receipt.
- 7AIG will provide Mr. Sullivan with an office and an assistant through December 31, 2008.
Frequently Asked Questions
The primary reason for this 8-K filing is to report the resignation of Martin J. Sullivan as an officer and director of AIG, effective July 1, 2008, and to detail the terms of his separation agreement.
Mr. Sullivan will receive approximately $28 million in continued vesting of equity and long-term cash awards, $15 million in severance pay, and a pro rata bonus of $4 million. This valuation is based on AIG's stock price on June 30, 2008, and assumes target performance for current periods.
Yes, the benefits are contingent upon Mr. Sullivan's continued compliance with restrictive covenants, including non-competition, non-solicitation of employees, and non-solicitation of clients. Certain non-solicitation clauses have extended durations tied to the receipt of continued benefits.
Treating the resignation as for "Good Reason" allows Mr. Sullivan to receive the full benefits and severance outlined in his employment agreement, as opposed to potentially receiving less if it were considered a voluntary resignation without cause.