AIG 2008 Annual Report Download - page 308

Although none of the costs of the various benefits provided under the SICO Plans have been paid by AIG, AIG
has recorded compensation expense for the deferred compensation amounts payable to AIG employees by SICO,
with an offsetting amount credited to additional paid-in capital reflecting amounts deemed contributed by SICO.
A significant portion of the awards under the SICO Plans vest the year after the participant reaches age 65,
provided that the participant remains employed by AIG through age 65. The portion of the awards for which early
payout is available vest on the applicable payout date.
AIG DCPPP
The AIG DCPPP provides share-based compensation to key AIG employees, including senior executive
officers.
The AIG DCPPP contingently allocated a fixed number of time-vested RSUs to each participant if AIG’s
cumulative adjusted earnings per share in 2005 and 2006 exceeded that in 2003 and 2004 as determined by AIG’s
Compensation Committee. This goal was met, and pursuant to the terms of the DCPPP, 3,696,836 time-vested
RSUs were awarded in 2007. Due to the modification in March 2008, the vesting periods for these RSUs have been
shortened to vest in three installments with the final installment vesting in January 2012.
At December 31, 2008, RSU awards with respect to 2,987,955 shares remained outstanding.
AIG Partners Plan
On June 26, 2006, AIG’s Compensation Committee approved two grants under the AIG Partners Plan. The first
grant had a performance period that ran from January 1, 2006 through December 31, 2007. The second grant has a
performance period that runs from January 1, 2007 through December 31, 2008. In December 2007, the
Compensation Committee approved a grant with a performance period from January 1, 2008 through December 31,
2009. The Compensation Committee approved the performance metrics for this grant in the first quarter of 2008.
The first and the second grants vest 50 percent on the fourth and sixth anniversaries of the first day of the related
performance period. The third grant vests 50 percent on the third and fourth anniversaries of the first day of the
performance period. The Compensation Committee approved the performance metrics for the first two grants prior
to the date of grant. The measurement of the first two grants is deemed to have occurred on June 26, 2006 when there
was mutual understanding of the key terms and conditions of the first two grants. All grants were modified in March
2008. In 2008, no compensation cost was recognized for the second and the third grants under the Partners Plan
because the performance threshold for these awards was not met. In 2007, no compensation cost was recognized,
and the compensation cost recognized in 2006 was reversed for the first grant under the Partners Plan because the
performance threshold for these awards was not met.
Valuation
The fair value of RSUs and performance RSUs is based on the closing price of AIG stock on the date of grant.
302 AIG 2008 Form 10-K
American International Group, Inc., and Subsidiaries
Notes to Consolidated Financial Statements — (Continued)