Summary
This Form 8-K filing from American International Group (AIG) on May 28, 2010, primarily details changes in executive compensation related to stock salaries for its top executives. Following guidance from the Office of the Special Master for TARP Executive Compensation, AIG has approved the use of Long-Term Performance Units (LTPUs) as a component of stock salaries for senior employees, including several named executive officers. These LTPUs are designed to reflect AIG's long-term value and will be settled in cash according to the Special Master's determinations.
Key Highlights
- 1AIG is implementing Long-Term Performance Units (LTPUs) as a form of stock salary for its top twenty-five most highly compensated employees.
- 2These LTPUs are designed to be based on a basket of AIG common stock and debt securities to reflect the company's long-term value.
- 3The LTPU-based stock salaries will be settled in cash on dates determined by the Office of the Special Master for TARP Executive Compensation.
- 4The LTPUs are effective from January 1, 2010, and replace any stock salary previously earned by these employees in 2010.
- 5Specific reductions in cash salary rates for Rodney O. Martin, Jr. ($3,630,000) and Nicholas C. Walsh ($4,525,000) are noted, reflecting additional cash earned prior to the approved cash salary rates.
- 6Robert H. Benmosche will continue to receive stock salary on terms previously disclosed in an August 17, 2009, 8-K filing.
- 7The AIG Long-Term Performance Units Plan and a form Award Letter are attached as exhibits.
Frequently Asked Questions
LTPUs are a new form of stock salary approved by AIG for its top executives, designed to reflect the company's long-term value. They are based on a basket of AIG's common stock and debt securities and were implemented following guidance from the Office of the Special Master for TARP Executive Compensation.
Although referred to as stock salaries and based on company stock and debt, the LTPUs will be settled in cash on dates as required by the Determination Memorandum from the Office of the Special Master for TARP Executive Compensation.
No, Robert H. Benmosche's stock salary will continue on the terms previously disclosed in AIG's August 17, 2009, Form 8-K filing. No changes related to LTPUs for his compensation are mentioned in this filing.
The filing states that Rodney O. Martin, Jr. and Nicholas C. Walsh will have their 2010 stock salaries reduced to $3,630,000 and $4,525,000, respectively. These reductions are to account for additional cash salary they earned in 2010 before the new cash salary rates, as specified in the Determination Memorandum, were implemented.