AIG 2015 Annual Report Download - page 319

ITEM 8 / NOTE 19. SHARE-BASED AND OTHER COMPENSATION PLANS
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The following table presents the assumptions used to estimate the fair value of PSUs that vest based on AIG’s TSR:
2015 2014 2013
Expected dividend yield(a) 1.78 % 1.13 % 0.38 %
Expected volatility(b) 22.71 % 23.66 % 30.79 %
Risk-free interest rate(c) 1.01 % 0.76 % 0.50 %
(a) The dividend yield is the projected annualized AIG dividend yield estimated by Bloomberg Professional service as of the valuation date.
(b) The expected volatility is based on the implied volatilities of actively traded stock options from the valuation date through the end of the PSU performance
period as estimated by Bloomberg Professional service.
(c) The risk-free interest rate is the continuously compounded interest rate for the term between the valuation date and the end of the performance period that is
assumed to be constant and equal to the interpolated value between the closest data points on the U.S. dollar LIBOR-swap curve as of the valuation date.
The following table summarizes outstanding share-settled LTI awards(a):
Weighted Average
As of or for the Year Number of PSUs(b) Grant-Date Fair Value
Ended December 31, 2015 2015 LTI 2014 LTI 2013 LTI 2015 LTI 2014 LTI 2013 LTI
Unvested, beginning of year - 4,036,527 4,066,182 $ - $ 48.72 $ 37.09
Granted 6,445,639 10,225 - 54.55 52.83 -
Vested (3,212,976) (1,270,263) (1,593,595) 54.09 48.56 37.09
Forfeited (185,705) (217,130) (222,478) 53.66 48.78 37.38
Unvested, end of year 3,046,958 2,559,359 2,250,109 $ 55.08 $ 48.82 $ 37.07
(a) Excludes SICO awards, DSUs and options, which are discussed under the SICO Plans, Non-Employee Plans and Stock Options sections, respectively.
(b) Represents target number of PSUs granted, and does not reflect potential increases or decreases that could result from the final outcome of the
performance goals to be determined after the applicable performance period ends. The performance period for 2013 LTI awards ended December 31, 2015; the
number of earned PSUs based on the results of the 2013 performance goals will be adjudicated in March 2016 by the Compensation and Management
Resources Committee.
At December 31, 2015, the total unrecognized compensation cost (net of expected forfeitures) for the unvested PSUs was
$190 million and the weighted-average and expected period of years over which that cost is expected to be recognized are
1.29 years and 4 years.
SICO Plans
The SICO Plans, which have been closed to new participants since 2004, provide that shares of AIG Common Stock currently
held by SICO are set aside for the benefit of the participants and distributed upon retirement. The SICO Board of Directors
currently may permit an early payout of shares under certain circumstances. Prior to payout, the participant is not entitled to
vote, dispose of or receive dividends with respect to such shares, and shares are subject to forfeiture under certain conditions,
including but not limited to the participant’s termination of employment with us prior to normal retirement age. 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 us through age 65. The portion of the awards for which early payout is available vests on the applicable
payout date.
SICO Plan awards issued in the form of restricted stock were valued based on the closing price of AIG’s Common Stock on the
grant date. Although none of the costs of the various benefits provided under the SICO Plans have been paid by us, we have
recorded compensation expense for the deferred compensation amounts payable to our employees by SICO, with an offsetting
amount credited to Additional paid-in capital reflecting amounts deemed contributed by SICO. As of December 31, 2015,
31,964 shares of restricted stock remain unvested; the total unrecognized compensation cost (net of expected forfeitures) is
$10 million and the weighted average and expected period of years over which those costs are expected to be recognized are
5.28 years and 21years, respectively.
Non-Employee Plans