8-KLeadership ChangesExhibits & Filings

AMERICAN INTERNATIONAL GROUP, INC. 8-K Report, Executive Changes (Mar 17, 2017)

Filed March 17, 2017For Securities:AIG

Summary

This 8-K filing by AMERICAN INTERNATIONAL GROUP, INC. (AIG) on March 17, 2017, primarily details changes in its executive compensation structure and leadership transition arrangements. The company adopted a new Long Term Incentive Plan (LTI Plan) designed to align executive pay with long-term company performance through performance share units and restricted stock units, replacing the previous plan. The filing also addresses compensation decisions for the Executive Leadership Team for 2016 short-term incentives and 2017 LTI grants, noting varied award levels. Most notably for investors, the report confirms Peter D. Hancock's continued service as CEO and director until a successor is named or December 31, 2017, a period referred to as the 'Transition Period.' Upon his departure, Mr. Hancock is set to receive severance benefits consistent with termination without cause, along with a $5 million payment for his service during the transition. The filing also states Mr. Hancock will not receive a 2016 short-term incentive award but will receive a 2017 LTI grant.

Key Highlights

  • 1AIG adopted a new Long Term Incentive Plan (LTI Plan) effective March 15, 2017, replacing the 2013 plan, to incentivize long-term performance.
  • 2The new LTI Plan features performance share units (PSUs) and restricted stock units (RSUs), with PSUs earning based on performance criteria over a three-year period (0-200% of target).
  • 32016 short-term incentive awards for the Executive Leadership Team (excluding CEO) were earned at 40% of target.
  • 4Peter D. Hancock will continue as CEO and director until a successor is appointed or December 31, 2017 (Transition Period).
  • 5Mr. Hancock will receive a $5 million cash payment for his service during the Transition Period and severance consistent with termination without cause upon departure.
  • 6Mr. Hancock will not receive a 2016 short-term incentive award but will receive a 2017 LTI grant based on his long-term target.
  • 7Specific one-time RSU grants were made to certain Executive Leadership Team members to promote continuity during this transition period.

Frequently Asked Questions

The new LTI Plan, adopted on March 15, 2017, replaces the 2013 plan and is designed to incentivize executives based on long-term company performance. It awards performance share units (PSUs) that vest based on achieving performance criteria over a three-year period, and restricted stock units (RSUs) that vest based on continued employment. Earned PSUs can range from 0% to 200% of the target award. The plan aims to balance risk and reward and includes provisions for dividend equivalents and clawbacks.

Peter D. Hancock will continue as CEO and director until a successor is named or December 31, 2017. During this 'Transition Period,' he will receive his normal 2017 compensation and an additional $5 million cash payment for his service. Upon his eventual departure, he will receive benefits consistent with a 'termination without cause' as outlined in the AIG 2012 Executive Severance Plan.

For 2016, short-term incentive awards for the Executive Leadership Team (excluding the CEO) were earned at 40% of their individual targets. Regular 2017 LTI grants were also made to the Executive Leadership Team (excluding the CEO), with grants comprising 70% PSUs and 30% RSUs, both vesting over three years. Mr. Hancock will not receive a 2016 short-term incentive award but will receive a 2017 LTI grant structured as 50% PSUs and 50% RSUs.

Yes, one-time grants of restricted stock units (RSUs) were made under the new LTI Plan to certain members of the Executive Leadership Team (excluding Mr. Hancock) to support continuity during the period of transition. Specific amounts were detailed for key executives like Sid Sankaran, Doug Dachille, Kevin Hogan, and Robert Schimek.