8-KLeadership ChangesExhibits & Filings

AMERICAN INTERNATIONAL GROUP, INC. 8-K Report, Executive Changes (Oct 23, 2009)

Filed October 23, 2009For Securities:AIG

Summary

This 8-K filing from American International Group, Inc. (AIG) dated October 23, 2009, announces significant new restrictions on executive compensation imposed by the Office of the Special Master for TARP Executive Compensation. These restrictions directly impact the compensation of AIG's top twenty-five most highly compensated employees, including key executives like the Chief Financial Officer, David L. Herzog. AIG had voluntarily delayed certain previously committed retention awards, and the Special Master's determination now makes the payment of these awards contingent on performance goals related to AIG's restructuring. Despite these new restrictions, AIG's Compensation Committee has authorized the payment of "Past Due Installments" for these executive retention awards, totaling $4 million for the covered executives and $12.1 million for all executive officers. The filing also addresses the retirement of a former Senior Vice Chairman and the payment of his contractual obligations. Importantly, AIG notes that these compensation restrictions could negatively impact its ability to retain and motivate top talent, potentially hindering business stabilization, asset disposition, and regulatory compliance efforts.

Key Highlights

  • 1New compensation restrictions for AIG's top 25 highest-paid employees imposed by the Office of the Special Master for TARP Executive Compensation.
  • 2Executive retention award payments are now contingent on meeting performance goals related to AIG's restructuring.
  • 3AIG authorized payment of $4 million in 'Past Due Installments' for executive retention awards to the top 25 covered employees.
  • 4Total authorized payments for "Past Due Installments" to all AIG executive officers amounted to $12.1 million.
  • 5The filing acknowledges potential adverse effects on AIG's ability to retain and motivate key employees due to compensation limitations.
  • 6The Determination Memorandum from the Special Master is included as an exhibit, detailing the new compensation directives.
  • 7Payment of contractual obligations for a retiring Senior Vice Chairman, Edmund S.W. Tse, was also authorized.

Frequently Asked Questions

The primary change is the imposition of significant new restrictions on the compensation of AIG's top twenty-five highest-paid employees by the Office of the Special Master for TARP Executive Compensation. Previously committed retention awards are now subject to performance goals tied to AIG's restructuring, and payments have been divided into installments contingent on meeting these targets.

Yes, AIG's Compensation Committee authorized the payment of 'Past Due Installments' for executive retention awards. This amounted to $4 million for the top 25 covered employees and $12.1 million for all executive officers, based on AIG meeting certain restructuring performance criteria.

AIG warns that these restrictions may adversely affect its ability to retain and motivate its highest-performing employees. This, in turn, could impact AIG's capacity to stabilize its businesses, execute its asset disposition plan, and comply with regulatory filings.

The 'Determination Memorandum' is a document issued by the Office of the Special Master for TARP Executive Compensation on October 22, 2009, which outlines the new, significant restrictions on executive compensation for AIG's covered employees. It is included as an exhibit to this 8-K filing.