AIG 2015 Annual Report Download - page 318

ITEM 8 / NOTE 19. SHARE-BASED AND OTHER COMPENSATION PLANS
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Common Stock relating to outstanding awards under the 2010 Plan at the time the 2013 Plan became effective that
subsequently are forfeited, expired, terminated or otherwise lapse or are settled in cash. Each share-based unit granted under
the 2013 Plan reduces the number of shares available for future grants by one share. However, shares with respect to awards
that are forfeited, expired or settled for cash, and shares withheld for taxes on awards (other than options and stock
appreciation rights (SARs) awards) are returned to the reserve.
During 2015, performance share units (PSUs) and deferred stock units (DSUs) were granted under the 2013 Plan and
45,670,678 shares are available for future grants as of December 31, 2015. PSUs were issued to employees as part of our
long-term incentive program in March 2015 and are also issued for off-cycle grants, which are made from time to time during
the year as sign-on awards to new hires or as a result of a change in employee status.
AIG 2010 Stock Incentive Plan
The 2010 Plan was adopted at the 2010 Annual Meeting of Shareholders. The total number of shares of AIG Common Stock
that could be granted under the 2010 Plan was 60 million. During 2013, we granted PSUs, DSUs and restricted stock units
(RSUs) under the 2010 Plan. Each PSU, DSU and RSU awarded reduced the number of shares available for future grants by
one share. Subsequent to the adoption of the 2013 Plan in May 2013, no additional grants were made under the 2010 Plan.
Share-settled Awards
AIG 2013 Long Term Incentive Plan
The 2013 LTIP provides for the annual grant of PSUs to certain employees, including our senior executive officers and other
highly compensated employees. Each recipient of an award is granted a number of PSUs (the target) that provides the
opportunity to receive shares of AIG Common Stock based on AIG achieving specified performance goals at the end of a
three-year performance period. These performance goals are pre-established by AIG’s Compensation and Management
Resources Committee for each annual grant and may differ from year to year. The actual number of PSUs earned can vary
from zero to 150 percent of the target depending on AIG’s performance relative to a specified peer group. Vesting occurs in
three equal installments beginning on January 1 of the year immediately following the end of a performance period and
January 1 of each of the next two years. Recipients must be employed at each vesting date to be entitled to share delivery,
except upon the occurrence of an accelerated vesting event, such as an involuntary termination without cause, disability,
retirement or death during the vesting period.
LTI awards granted in 2015 accrue dividend equivalent units (DEUs) in the form of additional PSUs whenever a cash dividend
is declared on shares of AIG Common Stock; the DEUs are subject to the same vesting terms and conditions as the underlying
PSUs. Neither dividends nor DEUs accrue on unvested PSUs or the shares underlying the PSUs for LTI awards granted in
2014 and 2013.
Performance Share Unit Goals and Valuation
The performance goals used to measure LTI awards granted in 2015 and 2014 pertain to AIG’s total shareholder return (TSR)
and credit default swap (CDS) spread, weighted 75 percent and 25 percent, respectively, in each case relative to a specified
peer group. The goals for the 2013 awards are AIG’s growth in tangible book value per common share (TBVPS) (excluding
accumulated other comprehensive income) and TSR weighted 50 percent each, in each case relative to a specified peer
group. The fair value of PSUs to be earned based on AIG’s TBVPS and CDS spreads was based on the closing price of AIG
Common Stock on the grant date. However, PSUs granted in 2014 and 2013 that vest based on these goals were discounted
by the present value of estimated dividends to be paid during the respective vesting periods as these awards do not accrue
dividends or DEUs. The fair value of PSUs to be earned based on AIG’s TSR relative to a specified peer group was
determined on the grant date using a Monte Carlo simulation.