AIG 2013 Annual Report Download - page 330

In 2009, we established a program of regular grants of vested stock or units that is generally referred to as ‘‘Stock
Salary.’’ Stock Salary is determined as a dollar amount through the date that salary is earned and accrued at the
same time or times as the salary would otherwise be paid in cash. Stock Salary was granted to any individual
qualifying as a senior executive officer or one of our next twenty most highly compensated employees (the Top 25).
Stock Salary for a Top 25 employee (other than our CEO) is settled in three equal installments on the first, second
and third anniversary of grant. Stock Salary was also granted to individuals qualifying as an executive officer or one
of our next 75 most highly compensated employees (Top 26-100), and is generally settled on either the first or third
anniversary of grant in accordance with the terms of an employee’s award. Stock Salary grants were generally
issued in the form of immediately vested RSUs, and the number of units awarded was based on the value of AIG
Common Stock on the grant date.
RSUs are settled in cash based on the value of AIG Common Stock on the applicable settlement date. During 2013,
2012 and 2011, we paid $180 million, $111 million and $35 million, respectively, to settle awards. For those awards
that were vested and unsettled at the end of each year, we recognized charges of $73 million and $173 million in
compensation expense for the years ended December 31, 2013 and 2012, respectively, to reflect fluctuations in the
value of AIG Common Stock. At December 31, 2013, the number of vested but unsettled RSUs totaled 2,433,501.
TARP RSUs awarded require the achievement of objective performance metrics as a condition to entitlement. When
vested and transferable, an award would be settled in 25 percent installments in proportion to the settlement of our
TARP obligations. Prior to December 2011, TARP RSUs granted to the Top 25 (other than our CEO) vested on the
third anniversary of grant, while TARP RSUs granted to the Top 26-100 vested on the second anniversary of grant
and are subject to transferability restrictions for an additional year after vesting. TARP RSUs granted December 2011
and thereafter vest in two 50 percent installments on the second and third anniversary of the date of grant. With the
repayment of our TARP obligations in December 2012, 100 percent of outstanding TARP RSUs will vest when the
service requirements are satisfied.
Fully-vested performance-based RSUs were issued to certain employees in the Top 26-100 in March 2011. The
RSUs will be cash-settled three years after the date of issuance based on the value of AIG Common Stock on each
settlement date. For the vested and unsettled awards at year-end, we recognized charges of $3 million, $2 million,
and a reduction of $2 million in compensation expense for the years ended December 31, 2013, 2012, 2011,
respectively, to reflect fluctuations in the value of AIG Common Stock.
During 2013 and 2012, cash-settled performance-based RSUs granted and issued in March 2013 and 2012 to
certain highly compensated employees will vest in two 50 percent installments on the second and third anniversary of
the date of grant.
Certain employees were offered the opportunity to receive additional compensation in the form of cash and
cash-settled SARs for the 2009, 2010 and 2011 LTIP or 100 percent cash for the 2012 LTIP if certain performance
measures were met. The ultimate value of these awards was contingent on AIG achieving performance measures
over a two-year performance period and such value could range from zero to twice the target amount. Subsequent to
the performance period, the earned awards are subject to an additional time-vesting period. This results in a graded
vesting schedule for the cash portion of up to two years, while the SARs portion cliff-vests two years after the
performance period ends.
The cash portion of the awards expensed in 2013, 2012 and 2011 totaled approximately $249 million, $189 million,
and $199 million, respectively.
Restricted Stock Units
Stock Salary Awards
TARP RSUs
Other RSUs
Long Term Incentive Plans
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AIG 2013 Form 10-K312
ITEM 8 / NOTE 20. SHARE-BASED AND OTHER COMPENSATION PLANS
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