AIG 2010 Annual Report Download - page 353

American International Group, Inc., and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
requires formal notice to the insurance department in which the particular insurance subsidiary is domiciled. For
example, unless permitted by the New York Superintendent of Insurance, general insurance companies domiciled
in New York may not pay dividends to shareholders that, in any 12-month period, exceed the lesser of ten percent
of such company’s statutory policyholders’ surplus or 100 percent of its ‘‘adjusted net investment income,’’ as
defined. Generally, less severe restrictions applicable to both general and life insurance companies exist in most of
the other states in which AIG’s insurance subsidiaries are domiciled. Under the laws of many states, an insurer
may pay a dividend without prior approval of the insurance regulator when the amount of the dividend is below
certain regulatory thresholds. Other foreign jurisdictions may restrict the ability of AIG’s foreign insurance
subsidiaries to pay dividends. There are also various local restrictions limiting cash loans and advances to AIG by
its subsidiaries. Largely as a result of these restrictions, approximately 80 percent of the aggregate equity of AIG’s
consolidated subsidiaries was restricted from transfer to AIG Parent at December 31, 2010. AIG cannot predict
how regulatory investigations may affect the ability of its regulated subsidiaries to pay dividends. To AIG’s
knowledge, no AIG insurance company is currently on any regulatory or similar ‘‘watch list’’ with regard to
solvency.
19. Share-based Compensation and Other Plans
AIG’s Consolidated Statement of Income included share-based compensation expense as follows:
Years Ended December 31,
(in millions) 2010 2009 2008
Share-based compensation expense – pre-tax*$333 $209 $389
Share-based compensation expense – after tax 216 151 284
* Includes pre-tax share-based compensation expense related to discontinued operations for the years ended December 31, 2010, 2009 and 2008
of $12 million ($9 million after tax), $21 million ($13 million after tax), and $32 million ($22 million after tax), respectively.
Employee Plans
As of December 31, 2010, AIG employees had been granted awards under the following employee
compensation plans:
• AIG 1999 Stock Option Plan, as amended (1999 Plan) (superseded by the 2007 Plan);
• AIG 2002 Stock Incentive Plan, as amended (2002 Plan), under which AIG has issued time-vested restricted
stock units (RSUs) and performance restricted stock units (performance RSUs) (superseded by the 2007
Plan);
• AIG 2007 Stock Incentive Plan, as amended (2007 Plan), under which AIG has issued restricted stock units
(RSUs), performance restricted stock units (performance RSUs) and restricted stock (superseded by the
2010 Plan);
• AIG 2010 Stock Incentive Plan, as amended (2010 Plan), under which AIG has issued restricted stock,
restricted stock units and stock appreciation rights; and
• SICO’s Deferred Compensation Profit Participation Plans (SICO Plans).
Although awards granted under the plans listed above remain outstanding at December 31, 2010, future grants
of restricted stock and other share-settled awards can be made only under the 2010 Plan. Share option exercises
and other share awards to participants were settled by issuing previously acquired shares held in AIG’s treasury
account through November 30, 2009. Effective December 1, 2009, AIG is settling its share-settled awards with
newly-issued shares of AIG Common Stock. Share awards made by SICO are settled by SICO.
AIG 2010 Form 10-K 337