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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

 

SCHEDULE 14A INFORMATION

 

Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No.       )

 

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American International Group, Inc.

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American International Group, Inc.

 

2021 Notice of Annual Meeting and Proxy Statement

 

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March 30, 2021

 

Dear Fellow AIG Shareholder,

 

AIG’s Board of Directors, Executive Leadership Team and global workforce are maintaining significant momentum and a continued sense of urgency on our path to becoming a top performing company.

 

AIG is effectively managing through COVID-19 and its collateral effects on the global economy because of the strong foundation we have been building since late 2017. The company is well positioned for long-term, sustainable, and profitable growth.

 

AIG has instilled a culture of underwriting excellence, adjusted risk tolerances, implemented best-in-class reinsurance programs, strengthened its vast global footprint, de-risked the balance sheet and maintained a diversified investment portfolio.

 

Our announced intention to separate the Life and Retirement business from AIG, which we believe will enable each entity to achieve a more appropriate and sustainable valuation, was made possible by the team’s tremendous progress strengthening General Insurance in particular and positioning each of our businesses as a market leader.

 

Despite the challenges presented by COVID-19, the company accelerated the execution of AIG 200, our enterprise-wide transformation designed to position AIG for the future.

 

Over the last year, we prioritized the well-being of AIG colleagues, who showed resilience and attentiveness in service of all stakeholders despite unprecedented disruptions. We also enhanced our efforts to promote value creation in our communities and continue to make progress with respect to diversity, equity, and inclusion across AIG.

 

On March 1, 2021, we seamlessly transitioned into our new roles as Executive Chair and Lead Independent Director, respectively, and know that the company is in great hands with Peter Zaffino as President and Chief Executive Officer of AIG.

 

The Board would like to thank Henry Miller, who is retiring as a Director, for his service and valuable contributions since 2010. In addition, we were pleased to welcome James Cole, Jr. to the Board on March 15, 2021.

 

We invite you to attend the virtual 2021 Annual Meeting of Shareholders on Wednesday, May 12, 2021, at 11:00 a.m. Eastern Daylight Time.

 

We also encourage you to read this Proxy Statement and the Annual Report, and to vote as we recommend on the enclosed proposals in advance of the meeting. Please vote in advance of the meeting even if you plan to participate virtually. Every vote matters.

 

Thank you for your investment in AIG. We remain focused on delivering value for you as we strive to become a leading insurance franchise.

 

Sincerely,

 

Brian Duperreault Douglas M. Steenland
Executive Chair Lead Independent Director

 

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  Notice of Annual Meeting of Shareholders March 30, 2021  

 

 

 

AMERICAN INTERNATIONAL GROUP, INC. (AIG)
175 Water Street, New York, N.Y. 10038

 

Time and Date* 11:00 a.m., Eastern Daylight Time, on Wednesday, May 12, 2021.
Access* Meeting live via the Internet—please visit www.virtualshareholdermeeting.com/AIG2021.
Mailing Date This Proxy Statement, 2020 Annual Report and proxy card or voting instructions were either made available to you over the Internet or mailed to you on or about March 30, 2021.
Items of Business 1.    To elect the thirteen nominees recommended by our Board of Directors as directors of AIG to hold office until the next annual election and until their successors are duly elected and qualified
  2.    To vote, on a non-binding advisory basis, to approve executive compensation
  3.    To vote on a proposal to approve the American International Group, Inc. 2021 Omnibus Incentive Plan
  4.    To act upon a proposal to ratify the selection of PricewaterhouseCoopers LLP as AIG’s independent registered public accounting firm for 2021
  5.    To vote on a shareholder proposal to give shareholders who hold at least 10 percent of AIG’s outstanding common stock the right to call special meetings
  6.    To transact any other business that may properly come before the meeting
Record Date You can vote if you were a shareholder of record at the close of business on March 17, 2021.
Admission to the Annual Meeting To participate in the Annual Meeting, you will need the 16-digit control number included on your Notice of Internet Availability of Proxy Materials or on your proxy card.
Additional Information Additional information regarding the matters to be acted on during the Annual Meeting is included in this Proxy Statement.
Proxy Voting You can vote your shares before the Annual Meeting over the Internet or by telephone. If you received a paper proxy card by mail, you may also vote by signing, dating and returning the proxy card in the envelope provided. You may also vote your shares during the Annual Meeting by logging into the virtual meeting site using the 16-digit control number included on your Notice of Internet Availability of Proxy Materials, proxy card, or voting instruction form.

 

* In light of COVID-19, for the safety and well-being of our shareholders and employees, and taking into account the protocols of local, state and federal governments, we have determined that the 2021 Annual Meeting will be held in a virtual meeting format only, via the Internet, with no physical in-person meeting. We believe that the virtual meeting format affords our shareholders an opportunity for meaningful participation, and we have taken steps to ensure that shareholders will be able to attend, vote and submit questions from any location via the Internet. For more details regarding how to participate in the virtual meeting, please see “Voting Instructions and Information.”

 

By order of the Board of Directors,

 

ROSE MARIE E. GLAZER
Corporate Secretary

 

Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting of Shareholders to be held virtually via the Internet on May 12, 2021. This Proxy Statement, the 2020 Annual Report to Shareholders and other materials are available in the Investors section of AIG’s corporate website at www.aig.com.

 

 

 

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Table of Contents

 

 

Executive Summary  1
   
Proposal 1—Election of Directors 13
   
Corporate Governance 21
Our Corporate Governance Practices 21
Director Independence  22
Board Leadership Structure  22
Board Effectiveness  23
Board Composition and Refreshment  24
Areas of Board Oversight  27
Board Committees  32
Compensation of Directors  37
Corporate Governance Materials Available on our Website 40
   
Year-Round Shareholder Engagement  41
   
Ownership of Certain Securities  44
   
Delinquent Section 16(a) Reports 46
   
Relationships and Related-Party Transactions  46
   
Our Executive Officers  47
   
Executive Compensation  51
Letter from the Compensation and Management Resources Committee 51
Compensation Discussion and Analysis  52
Report of the Compensation and Management Resources Committee  96
2020 Compensation  97
Holdings of and Vesting of Previously Awarded Equity  101
Post-Employment Compensation  104
Potential Payments on Termination  107
Pay Ratio  112
   
Equity Compensation Plan Information  113

 

Proposal 2—Non-Binding Advisory Vote to Approve Executive Compensation  114
   
Proposal 3—Approval of American International Group, Inc. 2021 Omnibus Incentive Plan  116
   
Report of the Audit Committee and Ratification of Selection of Accountants  126
Report of the Audit Committee  126
   
Proposal 4—Ratification of Selection of PricewaterhouseCoopers LLP  128
Fees Paid to PricewaterhouseCoopers LLP  129
   
Proposal 5—Shareholder Proposal on Special Shareholder Meetings  131
Shareholder Proposal  131
AIG Statement in Opposition  133
   
Voting Instructions and Information  136
   
Other Matters  141
Other Matters to be Presented during the 2021 Annual Meeting of Shareholders  141
Shareholder Proposals for the 2022 Annual Meeting  141
Communications with the Board of Directors  141
Electronic Delivery of Proxy Materials  142
Important Notice Regarding Delivery of Shareholder Documents  142
Incorporation by Reference   142
   
Cautionary Statement Regarding Forward-Looking Information  143
   
Non-GAAP Financial Measures  A-1
   
American International Group, Inc. 2021 Omnibus Incentive Plan  B-1


 

 

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Executive Summary

 

Executive Summary

 

 

This summary highlights information contained in this Proxy Statement. It does not contain all of the information you should consider in making a voting decision, and you should read the entire Proxy Statement carefully before voting. These proxy materials are first being sent to shareholders of American International Group, Inc., a Delaware corporation (AIG), commencing on or about March 30, 2021.

 

VOTING MATTERS AND VOTE RECOMMENDATION

Matter Board Vote
Recommendation
For More Information, see:
Management Proposals    
1. Election of thirteen directors FOR EACH DIRECTOR
NOMINEE
Page 13
2. Advisory vote on executive compensation FOR Page 114
3. Approval of American International Group, Inc. 2021 Omnibus Incentive Plan (the 2021 Plan) FOR Page 116
4. Ratification of PricewaterhouseCoopers LLP as AIG’s independent registered public accounting firm for 2021 FOR Page 128
Shareholder Proposal    
5. Shareholder proposal to give shareholders who hold at least 10 percent of our outstanding common stock the right to call special meetings AGAINST Page 131

 

 

 

 

 

AIG believes that the virtual meeting format affords our shareholders an opportunity for meaningful participation, including the ability to vote and ask questions electronically during the meeting. For detailed information on the voting process and how to attend the AIG Annual Meeting of Shareholders to be held virtually via the Internet on May 12, 2021 (Annual Meeting), or any adjournment or postponement thereof, please see “Voting Instructions and Information” beginning on page 136.

 

2021 Proxy Statement 1

 

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Executive Summary

 

 

 

 

ABOUT AIG

 

AIG is a leading global insurance organization. We provide a wide range of property casualty insurance, life insurance, retirement solutions, and other financial services to customers in approximately 80 countries and jurisdictions.

 

 

2020 HIGHLIGHTS

 

In 2020, AIG effectively managed through COVID-19 and its collateral effects on the global economy thanks to the strong foundation created since late 2017 to instill a culture of underwriting excellence, adjust risk tolerances, implement a best-in-class reinsurance program, de-risk our balance sheet and maintain a balanced investment portfolio. We continue this momentum and embark on an important phase of our journey to becoming a top performing company with our proactive leadership transition and planned corporate structure changes.

 

 

 

 

2   2021 Proxy Statement

 

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Executive Summary

 

 

 

 

   
* Accident Year Combined Ratio, As Adjusted is a non-GAAP financial measure. AIG’s 2020, 2019 and 2018 Calendar Year Combined ratio was 104.3%, 99.6% and 111.4%, respectively. See Appendix A for a reconciliation showing how this metric is calculated from our consolidated financial statements.
** On October 26, 2020, AIG announced its intention to separate its Life and Retirement business from AIG. See “—Announcement of Planned Life and Retirement Separation.”
*** RBC is a formula designed to measure the adequacy of an insurer’s statutory surplus compared to the risks inherent to the business. The inclusion of RBC measures is not intended for the purpose of ranking any insurance company or for use in connection with any marketing, advertising or promotional activities.

 

2021 Proxy Statement 3

 

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Executive Summary

 

AIG’S RESPONSE TO COVID-19 

AIG acted quickly in early 2020 to respond to the COVID-19 crisis, with a focus on supporting our colleagues and communities and on business resiliency.

 

 

 

 

4   2021 Proxy Statement

 

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Executive Summary

 

ANNOUNCEMENT OF PLANNED LIFE AND RETIREMENT SEPARATION

Planned initial disposition of up to 19.9% interest
Seek to unlock value for shareholders and other stakeholders
Made possible due to strengthening of General Insurance business since 2017

In October 2020, AIG announced its intention to separate its Life and Retirement business from AIG. This decision followed a comprehensive review by the Board of Directors (Board) and management of AIG’s composite structure and was made possible by significant work done since 2017 to strengthen the fundamentals of AIG’s General Insurance business. Any separation transaction, which is currently contemplated to include an initial disposition of up to a 19.9 percent interest in our Life and Retirement business, will be subject to the satisfaction of various conditions and approvals, including approval by the Board, receipt of insurance and other required regulatory approvals, and satisfaction of any applicable requirements of the U.S. Securities and Exchange Commission (SEC). The Board intends to accomplish the separation in a way that unlocks value for our shareholders and other stakeholders and establishes two strong, market-leading companies.

 

No assurance can be given regarding the structure of the initial disposition of up to a 19.9 percent interest in the Life and Retirement business or the specific terms or timing thereof, or that a separation will in fact occur.

 

EXECUTION OF THOUGHTFUL, WELL-COORDINATED SUCCESSION PLAN

On October 26, 2020, AIG announced that Peter Zaffino would become President and Chief Executive Officer, Brian Duperreault would become Executive Chair and Douglas Steenland would become Lead Independent Director, in each case effective March 1, 2021. Mr. Zaffino also joined the Board on October 26, 2020. This transition reflects the execution of a thoughtful, well-coordinated Chief Executive Officer succession plan overseen by the Board with support from the Compensation and Management Resources Committee (CMRC) in consultation with the Chair of the Nominating and Corporate Governance Committee (NCGC). The Board determined that Mr. Zaffino was the right choice to become AIG’s next Chief Executive Officer on the basis of the success he demonstrated as AIG’s President and Global Chief Operating Officer and his leadership over the turnaround of AIG’s General Insurance business as its Chief Executive Officer. Mr. Duperreault’s extensive experience and established relationships with AIG’s directors and stakeholders enable him to lead the Board in overseeing the company through the transition of a new Chief Executive Officer and major transformative transactions, including the separation of AIG’s Life and Retirement business. Mr. Duperreault’s term as Executive Chair will end on December 31, 2021, at which time he will become a non-officer employee of AIG for one year, providing assistance and advice to the extent requested by the Chief Executive Officer. Mr. Steenland leverages his extensive business experience and leadership to ensure continued robust, independent oversight of management by the independent directors.

 

2021 Proxy Statement 5

 

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Executive Summary

 

 

 

2021 PRIORITIES

 

 

 

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Executive Summary

 

COMPENSATION HIGHLIGHTS

The onset of the COVID-19 crisis and its collateral effects on the global economy in the first quarter of 2020 required the CMRC to pivot and adapt its approach to executive compensation to address AIG’s changing priorities, while continuing to reinforce the importance of transformation initiatives.

 

 
Important aspects of our 2020 executive compensation framework remained consistent with the framework for 2019:
 
Short-term incentive (STI) awards continued to be based on a combination of Business and Individual Performance Scores combined on a multiplicative basis, meaning if either element is zero, no STI award is earned;
   
The Individual Performance Score component of STI awards continued to assess performance under four pillars—Financial, Strategic, Operational and Organizational—which reflect various important initiatives for AIG including employee engagement, well-being, and diversity, equity and inclusion;
   
Long-term incentive (LTI) awards continued to be granted in a combination of performance share units (PSUs) (50%), stock options (25%) and restricted stock units (RSUs) (25%);
   
2020 PSUs continued to be subject to performance measures combining financial, operational and total shareholder return (TSR) metrics; and
   
Performance requirements for the 2018 and 2019 PSUs granted to our named executives remained unchanged and the CMRC did not use discretion when adjudicating the performance of the 2018 PSU awards for our named executives.
   
However, other aspects of our 2020 program and some of the underlying details changed to align with our priority focus areas within the context of an uncertain operating environment as a result of the COVID-19 crisis:
   
The Business Performance Score component of the 2020 STI plan was assessed on a company-wide basis rather than on a business unit basis, reflecting our enterprise-wide focus on liquidity, capital preservation and de-risking;
   
Business unit accountability was maintained, but through the Financial pillar of our Individual Performance Score assessment in the STI plan in 2020;
   
Overall business performance and business unit performance were assessed using a disciplined discretion framework that assessed quantifiable results against internal expectations with respect to AIG’s capital and liquidity position and risk profile in the context of the COVID-19 crisis; and
   
The 2020 PSUs granted as part of our LTI awards were subject to new performance metrics: Relative Tangible Book Value Per Common Share (BVPS)* growth, AIG 200 Cumulative Run-rate Net General Operating Expense (GOE) Savings* and TSR. Both BVPS and TSR will be measured on a relative basis, mitigating the need to calibrate long-term goals that might ultimately be too challenging or too easy to attain. The AIG 200 Cumulative Run-rate Net GOE Savings* goals were unchanged from those developed as part of AIG 200 when it was announced in 2019.
   
* We make adjustments to U.S. GAAP financial measures for purposes of this performance metric to ensure that results properly reflect management contributions. See Appendix A for an explanation of how this metric is calculated from our audited financial statements.
   

 

2021 Proxy Statement 7

 

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Executive Summary

 

2020 CHIEF EXECUTIVE OFFICER COMPENSATION

The 2020 annual target total direct compensation opportunity and pay mix for Mr. Duperreault, our Chief Executive Officer during 2020, is set forth below.

 

    Annual
Base Salary
  Target
Short-Term
Incentive
  Target
Long-Term
Incentive
  Target
Total Direct
Compensation
Brian Duperreault $1,600,000 $4,500,000 $12,900,000 $19,000,000
Chief Executive Officer*                

*  Mr. Duperreault became Executive Chair, effective March 1, 2021.

 

 

AIG’s 2020 compensation programs and the Board and CMRC’s 2020 compensation decisions, which are outlined in detail in under “Executive Compensation—Compensation Discussion and Analysis” beginning on page 52, balanced rewarding our named executives for their extraordinary leadership through the unprecedented COVID-19 crisis with taking into account the experience of our shareholders in a year of significant global market volatility. This was demonstrated in particular in the STI decisions made with respect to Mr. Duperreault, our Chief Executive Officer in 2020. In light of AIG’s TSR relative to compensation peers in 2020, the CMRC and Mr. Duperreault determined that the Chief Executive Officer’s 2020 STI award should be paid at target, notwithstanding AIG’s successful navigation of the unprecedented COVID-19 crisis and Mr. Duperreault’s efforts in executing a well-coordinated Chief Executive Officer succession process.

 

The Board and CMRC remain committed to executive compensation programs that attract, motivate, reward and incentivize highly qualified leaders as AIG continues its transformation to become a leading insurance franchise and a top performing company.

 

8   2021 Proxy Statement

 

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Executive Summary

 

CORPORATE GOVERNANCE HIGHLIGHTS

BALANCED AND INDEPENDENT BOARD OF DIRECTORS

AIG strives to maintain a balanced and independent Board that is committed to representing the long-term interests of AIG’s shareholders and has the substantial and diverse skills, experience and attributes necessary to provide strategic oversight of AIG’s journey. The following table provides summary information about each of our thirteen director nominees. We are asking our shareholders to elect all thirteen director nominees during the Annual Meeting, to hold office until the next annual election and until their successors are duly elected and qualified or their earlier resignation. Each nominee is elected annually by a majority of votes cast.

 

Name Age Director
Since
Occupation/Background Independent Other Public Boards

Current Board
Committee
Memberships
(1)

James Cole, Jr. 52 2021 Chairman and Chief Executive Officer of The Jasco Group, LLC; Former Delegated Deputy Secretary of Education and General Counsel of the U.S. Department of Education   (2)  
W. Don Cornwell 73 2011 Former Chairman of the Board and Chief Executive Officer of Granite Broadcasting Corporation Natura &Co Holding S.A.; Viatris Inc.
(Chair)
Brian Duperreault 73 2017 Executive Chair of AIG        
John H. Fitzpatrick 64 2011 Former Secretary General of The Geneva Association; Former Chief Financial Officer, Head of the Life and Health Reinsurance Business Group and Head of Financial Services of Swiss Re  
William G. Jurgensen 69 2013 Former Chief Executive Officer of Nationwide Insurance

Lamb Weston Holdings, Inc.    

 

 

 


(Chair)
Christopher S. Lynch 63 2009 Former National Partner in Charge of Financial Services of KPMG LLP Tenet Healthcare Corporation
(Chair)
   
Linda A. Mills 71 2015 Former Corporate Vice President of Operations of Northrop Grumman Corporation Navient Corporation
(Chair)
Thomas F. Motamed 72 2019 Former Chairman and Chief Executive Officer of CNA Financial Corporation Kairos Acquisition Corp  
Peter R. Porrino  64 2019 Former Executive Vice President and Chief Financial Officer of XL Group Ltd  
(Chair)
Amy L. Schioldager 58 2019 Former Senior Managing Director and Global Head of Beta Strategies at BlackRock, Inc.        
Douglas M. Steenland,
Lead Independent Director
69 2009 Former President and Chief Executive Officer of Northwest Airlines Corporation   American Airlines Group Inc.; Hilton Worldwide Holdings Inc. (3)  
Therese M. Vaughan 64 2019 Former Chief Executive Officer of the National Association of Insurance Commissioners; Executive in Residence and Former Visiting Distinguished Professor and Dean of the College of Business and Public Administration at Drake University Verisk Analytics, Inc.; West Bancorporation, Inc.  
Peter S. Zaffino  54 2020 President and Chief Executive Officer of AIG        

(1)  Committees of the Board (Board Committees)

 

Audit Committee Risk and Capital Committee
Compensation and Management Resources Committee Technology Committee
Nominating and Corporate Governance Committee    

 

(2)  Mr. Cole has been appointed to serve as a member of the Audit and Technology Committees, effective March 31, 2021.

(3)  Mr. Steenland, as Lead Independent Director, is an ex-officio, non-voting member of all Board Committees.

 

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We believe our nominees’ diverse and complementary skills, experience and attributes promote a well-functioning, highly qualified and independent Board. AIG has undertaken significant Board refreshment in recent years to ensure that the directors are positioned to provide strategic guidance to AIG as we continue our journey to becoming a top performing company.

 

DIRECTOR NOMINEE SKILLS, EXPERIENCE AND ATTRIBUTES

 

 

 

 

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Executive Summary
 

 

ROBUST CORPORATE GOVERNANCE PRACTICES 

AIG’s robust corporate governance policies and practices promote Board effectiveness and accountability to our shareholders. 

Independent, Diverse and Qualified Board · All directors are independent except for our Chief Executive Officer and our Executive Chair
· All Board Committee members are independent
· Lead Independent Director role has clearly defined responsibilities and oversees meeting materials, agendas and schedules
· Independent directors meet in executive session in conjunction with each regularly scheduled Board meeting
· Three of AIG’s independent director nominees are women and two are ethnically and/or racially diverse
· The NCGC continuously reviews the composition of our Board, taking into consideration the skills, experience and attributes of the existing directors, both individually and as a group
Effective Board Policies and Practices · Directors’ interests are aligned with those of our shareholders through robust director stock ownership requirements
· The Board, through the NCGC, conducts annual evaluations of the Board, the Lead Independent Director and other individual directors, and all Board Committees conduct annual self-evaluations
· No director attending less than 75 percent of meetings for two consecutive years will be re-nominated
· Directors generally may not stand for election after reaching age 75
· All directors may contribute to the agenda for Board meetings
· All directors are prohibited from serving on more than three other public company boards with additional restrictions for AIG’s Chief Executive Officer and directors who are executive officers of other public companies
· Board Committee Chair positions generally rotate every five years to ensure diverse perspectives
Strong Shareholder Rights Hold Board Accountable · Directors are elected annually by a majority of votes cast (in uncontested elections)
· AIG’s amended and restated by-laws (By-laws) include a proxy access right for shareholders
· AIG’s By-laws provide shareholders the ability to call a special meeting at appropriate levels
· AIG has an extensive shareholder engagement program with participation by independent directors
Key Matters Overseen by the Board · The Board oversees robust management succession planning, with support from the CMRC, in consultation with the Chair of the NCGC
· The Board, through the CMRC, oversees diversity, equity and inclusion matters and monitors AIG’s progress on related initiatives
· The Board, through the NCGC, oversees sustainability, including climate-related issues, corporate social responsibility and lobbying and public policy matters
· The Board provides strong risk management oversight, including through the Risk and Capital Committee, Audit Committee and other Board Committees
· The Board, through the Technology Committee, oversees AIG’s cybersecurity risks, policies, controls and procedures

 

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Proposal 1—Election of Directors

 

Proposal 1—Election of Directors

 

Proposal 1—Election of Directors  

What am I voting on?
We are asking shareholders to elect thirteen directors to hold office until the next annual election.

 

Voting Recommendation

      FOR the election of each director nominee. The Board believes that, if elected, the nominees will continue to provide effective oversight of AIG’s business and continue to advance our shareholders’ interests by drawing upon their collective qualifications, skills, experience and attributes, as summarized on pages 10-11 and below.

 

AIG's Board currently consists of fourteen directors. All directors serve a one-year term. Mr. Miller is not standing for re-election and is retiring from the Board at the Annual Meeting because he has reached the age of 75, which is the general retirement age under AIG's Corporate Governance Guidelines. The Board would like to thank Mr. Miller, whose term will end at the Annual Meeting, for his service and valuable contribution as a director. We are asking our shareholders to re-elect the remaining thirteen directors at the Annual Meeting, to hold office until the next annual election and until their successors are duly elected and qualified or their earlier resignation.   Thirteen director nominees
  All independent other than Chief Executive Officer and Executive Chair
  Elected by majority of votes cast
  One year terms

 

It is the intention of the persons named in the accompanying form of proxy to vote for the election of the nominees. All of the nominees are currently members of AIG’s Board. It is not expected that any of the nominees will become unavailable for election as a director, but if any should become unavailable prior to the Annual Meeting, proxies will be voted for such other persons as the persons named in the accompanying form of proxy may determine in their discretion. Alternatively, the Board may reduce its size.

 

Directors will be elected by a majority of the votes cast by the shareholders of AIG’s common stock, which votes are cast either “for” or “against” election. Pursuant to AIG’s By-laws and Corporate Governance Guidelines, each nominee has submitted to the Board an irrevocable resignation from the Board that would become effective upon (1) the failure of such nominee to receive the required vote at the shareholder meeting and (2) Board acceptance of such resignation. In the event that a nominee fails to receive the required vote, the NCGC will then make a recommendation to the Board on the action to be taken with respect to the resignation. The Board will accept such resignation unless the NCGC recommends, and the Board determines, that the best interests of AIG and its shareholders would not be served by doing so.

 

Below are biographies of each of the nominees for director, including the principal occupation or affiliation and public company directorships held by each nominee during the past five years. We believe our director nominees have the right mix of skills, experience and attributes and background to provide strategic guidance to AIG, particularly as the Board oversees AIG through its continued transformation to becoming a top performing insurance company. For additional details on the Board’s approach to Board composition and refreshment, see “Corporate Governance—Board Composition and Refreshment.”

 

RECOMMENDATION 

Your Board of Directors unanimously recommends a vote FOR this resolution.

 

2021 Proxy Statement 13

 

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Proposal 1—Election of Directors
 

 

 

Director since: 2021
Age: 52
Committees:
 Audit*
 Technology*

Other Directorships:
None
* Effective March 31, 2021

 

JAMES COLE, JR. 

Chairman and Chief Executive Officer of The Jasco Group, LLC; Former Delegated Deputy Secretary of Education and General Counsel of the U.S. Department of Education

 

CAREER HIGHLIGHTS 

Mr. Cole founded and has been Chairman and Chief Executive Officer of The Jasco Group, LLC, a multidimensional investment management firm, since January 2017. He previously served at the U.S. Department of Education as Delegated Deputy Secretary of Education and General Counsel from January 2016 to January 2017, General Counsel, a U.S. Senate confirmed seat, from December 2014 to January 2017, and Senior Advisor to the Secretary from August 2014 to December 2014. As Deputy Secretary, Mr. Cole served as the chief operating officer of the Department of Education and oversaw a broad range of operational, management, policy, legal and program functions. From November 2011 to August 2014, Mr. Cole served as Deputy General Counsel of the U.S. Department of Transportation. Prior to joining the Department of Transportation, Mr. Cole was a corporate law partner at Wachtell, Lipton, Rosen & Katz, with a primary focus on Mergers & Acquisitions and Corporate Governance. Mr. Cole began his career as a financial analyst at GE Capital Corporation.

 

KEY EXPERIENCE AND QUALIFICATIONS 

In light of Mr. Cole’s considerable public policy and government experience, as well as his professional experience as a corporate lawyer advising on strategic transactions and corporate governance matters, AIG’s Board has concluded that Mr. Cole should be re-elected to the Board. 

   


 

Director since: 2011
Age: 73
Board Committees:

•   Compensation and Management Resources (Chair) 

  Nominating and Corporate Governance

Other Directorships:

  Current: Natura &Co Holding S.A.; Viatris Inc.

  Former (past 5 years) Pfizer Inc.; Avon Products, Inc.

W. DON CORNWELL 

Former Chairman of the Board and Chief Executive Officer of Granite Broadcasting Corporation

 

CAREER HIGHLIGHTS 

Mr. Cornwell is the former Chairman of the Board and Chief Executive Officer of Granite Broadcasting Corporation, which he founded in 1988, serving from 1988 until his retirement in August 2009, and Vice Chairman until December 2009. Mr. Cornwell spent 17 years at Goldman, Sachs & Co. where he served as Chief Operating Officer of the Corporate Finance Department from 1980 to 1988 and Vice President of the Investment Banking Division from 1976 to 1988.

 

KEY EXPERIENCE AND QUALIFICATIONS 

In light of Mr. Cornwell’s experience in significant finance and strategic business transformations, as well as his professional experience across the financial services industry, AIG’s Board has concluded that Mr. Cornwell should be re-elected to the Board.

 

14   2021 Proxy Statement

 

TABLE OF CONTENTS 

Proposal 1—Election of Directors
 

 

 

Director since: 2017
Age: 73
Other Directorships:

  Former (past 5 years): Johnson Controls International plc (formerly Tyco International, plc)

 

BRIAN DUPERREAULT 

Executive Chair of AIG

 

CAREER HIGHLIGHTS 

Mr. Duperreault has been the Executive Chair of AIG’s Board since March 1, 2021. He previously served as AIG’s Chief Executive Officer since May 2017, when he also joined the Board of Directors. He also served as AIG’s President from May 2017 until January 2020. Previously, Mr. Duperreault was the Chief Executive Officer of Hamilton Insurance Group, Ltd., a Bermuda-based holding company of property and casualty insurance and reinsurance operations in Bermuda, the U.S. and the U.K., from December 2013 to May 2017, and served as Chairman of Hamilton Insurance Group, Ltd. from February 2016 to May 2017. He served as President and Chief Executive Officer of Marsh & McLennan Companies, Inc. from February 2008 until his retirement in December 2012. Before joining Marsh & McLennan Companies, he served as non-executive Chairman of ACE Limited from 2006 until 2008, as Chairman of the Board from 2004 to 2006, as Chairman and Chief Executive Officer from 1999 to 2004, and as Chairman, President and Chief Executive Officer from 1994 to 1999. Prior to joining ACE, Mr. Duperreault served in various senior executive positions with AIG and its affiliates from 1973 to 1994.

 

KEY EXPERIENCE AND QUALIFICATIONS 

In light of Mr. Duperreault’s deep experience in the insurance industry, his history with AIG and his management of large, complex, international institutions, AIG’s Board has concluded that Mr. Duperreault should be re-elected to the Board.

 

     

Director since: 2011
Age: 64
Board Committees:

  Audit

  Technology

Other Directorships:

  None

 

JOHN H. FITZPATRICK 

Former Secretary General of The Geneva Association; Former Chief Financial Officer, Head of the Life and Health Reinsurance Business Group and Head of Financial Services of Swiss Re

 

CAREER HIGHLIGHTS 

Mr. Fitzpatrick has been Chairman of Oak Street Management Co., LLC, an insurance/management consulting company, and Oak Family Advisors, LLC, a registered investment advisor, since 2010. He was Chairman of White Oak Global Advisors LLC, an asset management firm lending to small- and medium-sized companies, from September 2015 to September 2017. In 2014, Mr. Fitzpatrick completed a two-year term as Secretary General of The Geneva Association. From 2006 to 2010, he was a partner at Pension Corporation and a director of Pension Insurance Corporation Ltd. From 1998 to 2006, Mr. Fitzpatrick was a member of Swiss Re’s Executive Board Committee and served at Swiss Re as Chief Financial Officer, Head of the Life and Health Reinsurance Business Group and Head of Financial Services. From 1996 to 1998, Mr. Fitzpatrick was a partner in insurance private equity firms sponsored by Zurich Financial Services, Credit Suisse and Swiss Re. From 1990 to 1996, Mr. Fitzpatrick served as the Chief Financial Officer and a Director of Kemper Corporation. Mr. Fitzpatrick is a Certified Public Accountant and a Chartered Financial Analyst.

 

KEY EXPERIENCE AND QUALIFICATIONS 

In light of Mr. Fitzpatrick’s broad experience in the insurance, reinsurance and financial services industries, as well as his professional experience in insurance policy and regulation, AIG’s Board has concluded that Mr. Fitzpatrick should be re-elected to the Board. 

 

2021 Proxy Statement 15

 

TABLE OF CONTENTS 

Proposal 1—Election of Directors
 

 

 

Director since: 2013

Age: 69

Board Committees:

 Risk and Capital (Chair)

 Nominating and Corporate Governance

Other Directorships:

 Current: Lamb Weston Holdings, Inc.

 Former (past 5 years): Conagra Foods, Inc.

 

WILLIAM G. JURGENSEN 

Former Chief Executive Officer of Nationwide Insurance

 

CAREER HIGHLIGHTS 

Mr. Jurgensen is the former Chief Executive Officer of Nationwide Mutual Insurance Company and Nationwide Financial Services, Inc., serving from May 2000 to February 2009. During this time, he also served as director and Chief Executive Officer of several other companies within the Nationwide enterprise. Prior to his time in the insurance industry, he spent 27 years in the commercial banking industry. Before joining Nationwide, Mr. Jurgensen was an Executive Vice President with BankOne Corporation (now a part of JPMorgan Chase & Co.) where he was responsible for corporate banking products, including capital markets, international banking and cash management. He managed the merger integration between First Chicago Corporation and NBD Bancorp, Inc. and later was Chief Executive Officer for First Card, First Chicago’s credit card subsidiary. At First Chicago, he was responsible for retail banking and began his career there as Chief Financial Officer in 1990. Mr. Jurgensen started his banking career at Norwest Corporation (now a part of Wells Fargo & Company) in 1973.

 

KEY EXPERIENCE AND QUALIFICATIONS 

In light of Mr. Jurgensen’s deep experience in insurance, financial services and his executive experience managing a large, complex, institution, AIG’s Board has concluded that Mr. Jurgensen should be re-elected to the Board. 

     

 

Director since: 2009
Age: 63
Board Committees:

  Nominating and Corporate Governance (Chair)

  Audit

  Risk and Capital

Other Directorships:

  Current: Tenet Healthcare Corporation

  Former (past 5 years): Federal Home Loan Mortgage Corporation

 

CHRISTOPHER S. LYNCH 

Former National Partner in Charge of Financial Services of KPMG LLP

 

CAREER HIGHLIGHTS 

Mr. Lynch has been an independent consultant since 2007, providing a variety of services to public and privately held companies, including enterprise strategy, corporate restructuring, risk management, governance, financial accounting and regulatory reporting, and troubled-asset management. Prior to that, Mr. Lynch was the former National Partner in Charge of KPMG LLP’s Financial Services Line of Business. He held a variety of positions with KPMG over his 29-year career, including chairing KPMG’s Americas Financial Services Leadership team and being a member of the Global Financial Services Leadership and the U.S. Industries Leadership teams. Mr. Lynch was an audit signing partner under the Sarbanes-Oxley Act of 2002 and served as lead or client service partner for some of KPMG’s largest financial services clients. He also served as a Partner in KPMG’s National Department of Professional Practice and as a Practice Fellow at the Financial Accounting Standards Board. Mr. Lynch is a member of the Audit Committee Chair Advisory Council of the National Association of Corporate Directors and a former member of the Advisory Board of the Stanford Institute for Economic Policy Research.

 

KEY EXPERIENCE AND QUALIFICATIONS 

In light of Mr. Lynch’s extensive experience in finance, accounting and strategic business transformations, as well as his professional experience across the financial services industry, AIG’s Board has concluded that Mr. Lynch should be re-elected to the Board. 

 

16   2021 Proxy Statement

 

TABLE OF CONTENTS 

Proposal 1—Election of Directors
 

 

 

Director since: 2015
Age: 71
Board Committees:

  Technology (Chair)

  Audit

  Compensation and Management Resources

Other Directorships:

  Current: Navient Corporation

 

LINDA A. MILLS 

Former Corporate Vice President of Operations of Northrop Grumman Corporation

 

CAREER HIGHLIGHTS 

Ms. Mills is the former Corporate Vice President of Operations for Northrop Grumman Corporation, with responsibility for operations, including risk management, engineering and information technology. During her 12 years with Northrop Grumman, from 2002 to 2015, Ms. Mills held a number of operational positions, including Corporate Vice President and President of Information Systems and Information Technology sectors; President of the Civilian Agencies Group; and Vice President of Operations and Process in the firm’s Information Technology Sector. Prior to joining Northrop Grumman, Ms. Mills was Vice President of Information Systems and Processes at TRW, Inc. She began her career as an engineer at Bell Laboratories, Inc.

 

KEY EXPERIENCE AND QUALIFICATIONS 

In light of Ms. Mills’ in-depth experience with large and complex, international operations, risk management, information technology and cybersecurity, and her prior management of a significant line of business at Northrop Grumman, AIG’s Board has concluded that Ms. Mills should be re-elected to the Board.

 

     

 

Director since: 2019
Age: 72
Board Committees:

  Compensation and Management Resources

  Risk and Capital

Other Directorships:

  Current: Kairos Acquisition Corp.

  Former (past 5 years): CNA Financial Group; Verisk Analytics, Inc.

 

THOMAS F. MOTAMED 

Former Chairman and Chief Executive Officer of CNA Financial Corporation

 

CAREER HIGHLIGHTS 

Mr. Motamed was Chairman and Chief Executive Officer of CNA Financial Corporation, an insurance holding company, from 2009 to 2016. Prior to CNA, Mr. Motamed spent 31 years at The Chubb Corporation, an insurance company, where he began his career as a claims trainee and rose to Vice Chairman and Chief Operating Officer. He is a past Chairman of the Insurance Information Institute and is Chair Emeritus for Adelphi University.

 

KEY EXPERIENCE AND QUALIFICATIONS 

In light of Mr. Motamed’s deep experience in insurance, risk management and management of insurance organizations, AIG’s Board has concluded that Mr. Motamed should be re-elected to the Board.

 

 

2021 Proxy Statement 17

 

TABLE OF CONTENTS 

Proposal 1—Election of Directors
 

 

 

Director since: 2019
Age: 64

Board Committees:

  Audit (Chair)

  Risk and Capital

Other Directorships:

  None

 

PETER R. PORRINO 

Former Executive Vice President and Chief Financial Officer of XL Group Ltd

 

CAREER HIGHLIGHTS 

Mr. Porrino is the former Executive Vice President and Chief Financial Officer of XL Group Ltd, a global insurance and reinsurance company, a role which he held from 2011 to 2017. He was Senior Advisor to the Chief Executive Officer at XL Group from 2017 to 2018. Prior to joining XL Group, Mr. Porrino served as the Global Insurance Industry Leader at Ernst & Young LLP from 1999 through 2011, where he was responsible for Ernst & Young’s Americas and Global insurance industry practices and served as the lead partner on Ernst & Young’s largest insurance account until his departure. Prior to Ernst & Young, Mr. Porrino served as President and Chief Executive Officer of Consolidated International Group and as Chief Financial Officer and Chief Operating Officer of Zurich Re Centre, a subsidiary of Zurich Insurance Group focused on property and casualty reinsurance. Mr. Porrino began his career as an auditor at Ernst & Young.

 

KEY EXPERIENCE AND QUALIFICATIONS 

In light of Mr. Porrino’s considerable professional experience related to the global insurance industry, as well as his experience in finance, accounting and risk management, AIG’s Board has concluded that Mr. Porrino should be re-elected to the Board.

 

     

 

Director since: 2019
Age: 58
Board Committees:

  Audit

  Nominating and Corporate Governance

  Technology

Other Directorships:

  None

 

AMY L. SCHIOLDAGER 

Former Senior Managing Director and Global Head of Beta Strategies at BlackRock, Inc.

 

CAREER HIGHLIGHTS 

Ms. Schioldager is the former Senior Managing Director and Global Head of Beta Strategies at BlackRock, Inc., a global investment management corporation. In this role, which she held from 2006 to 2017, Ms. Schioldager was responsible for managing the Index Equity business across seven global offices. During her more than 25 years at BlackRock, Ms. Schioldager held various other leadership positions and also served as a member of the Global Executive Committee from 2012 to 2017 and Vice Chair of the Corporate Governance Committee from 2008 to 2015. She also founded and led BlackRock’s Women’s Initiative. Ms. Schioldager began her career as a fund accountant at Wells Fargo Investment Advisors.

 

KEY EXPERIENCE AND QUALIFICATIONS 

In light of Ms. Schioldager’s broad experience in corporate governance, technology and managing international businesses, as well as her professional experience in investments, global asset management and financial services, AIG’s Board has concluded that Ms. Schioldager should be re-elected to the Board. 

 

18   2021 Proxy Statement

 

TABLE OF CONTENTS 

Proposal 1—Election of Directors
 

 

 

Director since: 2009

Age: 69
Board Committees:

•   As Lead Independent Director, Mr. Steenland is an ex-officio, non-voting member of all Board Committees

Other Directorships:

  Current: American Airlines Group Inc.; Hilton Worldwide Holdings Inc.

  Former (past 5 years): Performance Food Group Company; Travelport Worldwide Limited

 

DOUGLAS M. STEENLAND 

Former President and Chief Executive Officer of Northwest Airlines Corporation

 

CAREER HIGHLIGHTS 

Mr. Steenland is the former Chief Executive Officer of Northwest Airlines Corporation, serving from 2004 to 2008, and President, serving from 2001 to 2004. Prior to that, he served in a number of Northwest Airlines executive positions after joining Northwest Airlines in 1991, including Executive Vice President, Chief Corporate Officer and Senior Vice President and General Counsel. Mr. Steenland retired from Northwest Airlines upon its merger with Delta Air Lines, Inc. Prior to joining Northwest Airlines, Mr. Steenland was a senior partner at a Washington, D.C. law firm that is now part of DLA Piper.

 

KEY EXPERIENCE AND QUALIFICATIONS 

In light of Mr. Steenland’s notable experience in managing a large, complex institution and his experience in strategic business transformations, AIG’s Board has concluded that Mr. Steenland should be re-elected to the Board.

 

     

 

Director since: 2019

Age: 64
Board Committees:

  Compensation and Management Resources

  Risk and Capital

Other Directorships:

  Current: Verisk Analytics, Inc.; West Bancorporation, Inc.

  Former (past 5 years): Validus Holdings, Ltd.

 

THERESE M. VAUGHAN 

Former Chief Executive Officer of the National Association of Insurance Commissioners; Executive in Residence and Former Visiting Distinguished Professor and Dean of the College of Business and Public Administration at Drake University

 

CAREER HIGHLIGHTS 

Ms. Vaughan is currently an Executive in Residence at Drake University, where she was previously the Robb B. Kelley Visiting Distinguished Professor of Insurance and Actuarial Science from 2017 to 2019 and served as the Dean of the College of Business and Public Administration from 2014 to 2017. From 2009 to 2012, she served as the Chief Executive Officer of the National Association of Insurance Commissioners (NAIC). During her time at NAIC, Ms. Vaughan also served as a member of the Executive Committee of the International Association of Insurance Supervisors and the steering committee for the U.S./E.U. Insurance Dialogue Project. In 2012, she chaired the Joint Forum, a Basel, Switzerland-based group of banking, insurance, and securities supervisors. Additionally, Ms. Vaughan was the first female Insurance Commissioner for the State of Iowa, a role which she held for over ten years.

 

KEY EXPERIENCE AND QUALIFICATIONS 

In light of Ms. Vaughan’s considerable experience in the insurance industry as well as her professional experience in insurance regulation, education, research and corporate governance, AIG’s Board has concluded that Ms. Vaughan should be re-elected to the Board. 

 

2021 Proxy Statement 19

 

TABLE OF CONTENTS 

Proposal 1—Election of Directors
 

 

 

Director since: 2020

Age: 54

Other Directorships:

•   None

 

PETER ZAFFINO 

President and Chief Executive Officer of AIG

 

CAREER HIGHLIGHTS 

Peter Zaffino has been AIG’s Chief Executive Officer since March 1, 2021 and joined AIG’s Board in October 2020. He joined AIG in July 2017 as Executive Vice President—Global Chief Operating Officer and was also appointed Chief Executive Officer, General Insurance in November 2017 and President of AIG in January 2020. Prior to joining AIG, he served in various executive roles at Marsh & McLennan Companies, Inc., a global professional services firm, including as Chief Executive Officer of Marsh, LLC from 2011 to 2017 and as Chairman for the Risk and Insurance Services segment of Marsh & McLennan Companies from 2015 to 2017. Prior to that, Mr. Zaffino served as President and Chief Executive Officer of Guy Carpenter, a risk and insurance-focused subsidiary of Marsh & McLennan Companies. Prior to joining Guy Carpenter, he held several senior positions, most recently serving in an executive role with a GE Capital portfolio company that specialized in alternative risk insurance and reinsurance.

 

KEY EXPERIENCE AND QUALIFICATIONS 

In light of Mr. Zaffino’s significant experience in the insurance industry, including his leadership of the turnaround of AIG’s General Insurance business, AIG’s Board has concluded that Mr. Zaffino should be re-elected to the Board. 

 

20   2021 Proxy Statement

 

TABLE OF CONTENTS 

Corporate Governance     Our Corporate Governance Practices

 

Corporate Governance

OUR CORPORATE GOVERNANCE PRACTICES

The AIG Board is committed to good corporate governance. Our strong corporate governance policies and practices are set forth in our Amended and Restated Certificate of Incorporation, By-laws, Corporate Governance Guidelines and Board Committee Charters, among other documents. AIG’s Board regularly reviews these corporate governance documents and makes modifications from time to time based on corporate governance developments and shareholder feedback to ensure continued effectiveness.

 

What we do:
The NCGC continuously reviews the composition of the Board to ensure the Board has the substantial and diverse skills, experience and attributes necessary to evaluate and oversee AIG’s strategy and performance
Directors are elected annually by a majority of votes cast (in uncontested elections)
All directors are independent except for our Chief Executive Officer and our Executive Chair, and independent directors meet in executive session in conjunction with each regularly scheduled Board meeting
All Board Committee members are independent
Lead Independent Director role has clearly defined responsibilities and oversees meeting materials, agendas and schedules
Directors’ interests are aligned with those of our shareholders through robust stock ownership requirements
The Board, through the NCGC, conducts annual evaluations of the Board, the Lead Independent Director and other individual directors, and all Board Committees conduct annual self-evaluations
All directors may contribute to the agenda for Board meetings
Corporate Governance Guidelines include sound policy on directors’ service on other public company boards
Board Committee structure organized around key strategic issues and designed to facilitate dialogue and efficiency
The Board, with support from the Board Committees, oversees key matters, including robust management succession planning; diversity, equity and inclusion; sustainability (including climate-related issues), corporate social responsibility and lobbying and public policy matters; risk management; and cybersecurity
Extensive shareholder engagement program with participation by independent directors
By-laws include a proxy access right for shareholders
By-laws provide shareholders the ability to call a special meeting at appropriate levels
   
What we don’t do:
x Any director attending less than 75% of meetings for two consecutive years will not be re-nominated
x Directors generally may not stand for election after reaching age 75
x Board Committee Chairs generally do not serve for longer than a five-year term
x No supermajority voting requirements in charter or By-laws
x Directors may not serve on more than three other public company boards with additional restrictions for AIG’s Chief Executive Officer and directors who are executive officers of other public companies

 

2021 Proxy Statement 21

 

TABLE OF CONTENTS 

Corporate Governance     Director Independence

 

DIRECTOR INDEPENDENCE

All directors independent other than Chief Executive Officer and Executive Chair
Lead Independent Director

AIG aims to maintain a balanced and independent Board that is committed to representing the long-term interests of AIG’s shareholders and has the substantial and diverse expertise necessary to oversee AIG’s strategic and business planning as well as management’s approach to addressing significant risks and challenges facing AIG.

  

DIRECTOR INDEPENDENCE ASSESSMENT

The Board, on the recommendation of the NCGC, determined that each of AIG’s eleven independent director nominees—Mss. Mills, Schioldager and Vaughan and Messrs. Cole, Cornwell, Fitzpatrick, Jurgensen, Lynch, Motamed, Porrino and Steenland—are independent under the New York Stock Exchange (NYSE) listing standards. Messrs. Duperreault and Zaffino are the only director nominees who hold AIG management positions and, therefore, are not independent directors. Mr. Miller, who is not standing for re-election to the Board, and Ms. Nora Johnson, who did not stand for re-election at the 2020 Annual Meeting, were also determined by the Board, on the recommendation of the NCGC, to be independent under the NYSE listing standards for the period that they served on the Board.

 

In making the independence determinations, the NCGC and the Board considered relationships arising from: (1) in the case of certain directors, contributions by AIG to charitable organizations with which they are affiliated; (2) in the case of certain directors, investments and insurance products AIG provides to them and/or entities they are affiliated with in the ordinary course of business and on the same terms made available to third parties; and (3) in the case of Mr. Lynch, the employment of his son by AIG. None of these relationships exceeded the thresholds set forth in the NYSE listing standards.

 

BOARD LEADERSHIP STRUCTURE

Flexible leadership structure reviewed regularly
New leadership structure created in 2021, consistent with thoughtful, well-coordinated succession plan

AIG’s Corporate Governance Guidelines provide the Board with flexibility to select the appropriate leadership structure for the company. The Board regularly reviews its leadership structure, taking into account many factors, including the specific needs of AIG and its businesses, corporate governance best practices, shareholder feedback and succession planning. The Board believes it is in the best interests of AIG and our shareholders to retain this flexibility in determining the appropriate leadership structure, recognizing that different structures may be appropriate in different circumstances.

 

LEADERSHIP TRANSITION IN 2021

Effective March 1, 2021, in connection with the execution of AIG’s thoughtful, well-coordinated Chief Executive Officer succession plan, the Board created a new leadership structure for the company. Mr. Duperreault became our newly appointed Executive Chair upon stepping down as AIG’s Chief Executive Officer; Mr. Zaffino succeeded Mr. Duperreault as the new Chief Executive Officer; and Mr. Steenland, who previously served as our Independent Chair, took on our newly created Lead Independent Director role. The Board believes this current leadership structure is in the best interests of AIG and its shareholders. With Mr. Duperreault in the Executive Chair role, AIG continues to leverage his significant industry expertise and effective working relationship with the Board to focus the Board’s attention on strategic matters and facilitate effective communication between the Board and management. Mr. Duperreault’s term as Executive Chair will end on December 31, 2021, at which time he will become a non-officer employee of AIG for one year, providing assistance and advice to the extent requested by the Chief Executive Officer. Mr. Zaffino, who became a director in October 2020, will also serve as a bridge between the Board and management while focusing on developing and implementing AIG’s business initiatives. In a Lead Independent Director role with clearly defined responsibilities, Mr. Steenland continues to ensure robust independent oversight of the company by the Board. The Board is confident that AIG has the right team to lead AIG through the next phase of our journey.

 

22   2021 Proxy Statement

 

TABLE OF CONTENTS 

Corporate Governance    Board Effectiveness

 

LEAD INDEPENDENT DIRECTOR ROLE

In his role as Lead Independent Director, Mr. Steenland has clearly defined duties as set forth in our Corporate Governance Guidelines, including:

 

Calling, setting the agenda for and chairing periodic executive sessions and meetings of the independent directors;
Consulting on and approving, in consultation with the Executive Chair and Chief Executive Officer, the agendas for and the scheduling of meetings of the Board;
Chairing meetings of the Board in the absence of the Executive Chair;
Serving as a liaison between the Executive Chair and the independent directors;
Reviewing and approving, in consultation with the Executive Chair, the quality, quantity, appropriateness and timeliness of information provided to the Board;
Communicating with shareholders, stakeholders, and government officials in consultation with the Executive Chair and Chief Executive Officer; and
Conferring regularly with the Executive Chair on matters of importance that may require action or oversight by the Board.

 

The Board believes that its leadership structure is well-aligned with the current needs of AIG and its shareholders. Mr. Duperreault’s extensive experience and established relationships with AIG’s directors and stakeholders will enable him to lead the Board in overseeing the company through the transition to a new Chief Executive Officer and major transformative transactions, including the separation of AIG’s Life and Retirement business. Mr. Steenland will leverage his extensive business experience and leadership to ensure continued robust, independent oversight of management by the independent directors.

 

BOARD EFFECTIVENESS

 

ATTENDANCE AT BOARD AND BOARD COMMITTEE MEETINGS 

12 Board meetings and 30 Board Committee meetings during 2020
Executive sessions at all regularly scheduled Board meetings
All directors attended at least 75% of relevant Board and Board Committee meetings

The Board considers director attendance at Board and Board Committee meetings an essential duty of a director. As a result, AIG’s Corporate Governance Guidelines provide that any director who, for two consecutive calendar years, attends fewer than 75 percent of the total regular meetings of the Board and the meetings of all Board Committees of which such director is a voting member will not be nominated for re-election at the annual meeting in the next succeeding calendar year, absent special circumstances that may be taken into account by the Board and the NCGC in making its recommendations to the Board.

 

There were 12 meetings of the Board during 2020. The independent directors meet in executive session, without the Chief Executive Officer present, in conjunction with each regularly scheduled Board meeting. Mr. Steenland, in his prior role as Chair of the Board, presided at the executive sessions. There were a total of 30 meetings of the Board Committees during 2020. For 2020, all of the directors attended at least 75 percent of the aggregate of all meetings of the Board and of the Board Committees on which they served.

 

Pursuant to AIG’s Corporate Governance Guidelines, all directors are generally expected to attend the Annual Meeting. All directors who stood for election at the 2020 Annual Meeting attended the 2020 Annual Meeting.

 

2021 Proxy Statement 23

 

TABLE OF CONTENTS 

Corporate Governance    Board Composition and Refreshment

 

DIRECTOR AND BOARD ACCOUNTABILITY AND EVALUATIONS

The Board believes that self-evaluations of the Board, the Board Committees and individual directors are important elements of corporate governance and essential to ensure a well-functioning Board. Pursuant to AIG’s Corporate Governance Guidelines, the Board, acting through the NCGC and under the general oversight of the Lead Independent Director and Executive Chair, conducts an annual self-evaluation and an evaluation of each member of the Board. Throughout the year, each standing Board Committee also conducts its own annual self-evaluation.

 

 

 

BOARD COMPOSITION AND REFRESHMENT

Balanced and effective Board composition, supplemented by a thoughtful approach to refreshment, is a priority for AIG. The selection of a qualified group of directors with an appropriate mix of skills, experience and attributes is essential to the Board’s successful oversight of AIG’s complex business, particularly as the Board provides strategic oversight of AIG’s journey. The Board manages Board composition and refreshment with significant support from the NCGC.

 

The NCGC continuously reviews the composition of our Board, taking into consideration the characteristics of the existing directors, both individually and as a group. The NCGC considers Board refreshment in light of various factors, including expected director departures, the Board’s mix and interplay of skills, experience and attributes, including diversity, and individual director performance.

 

24   2021 Proxy Statement

 

TABLE OF CONTENTS 

Corporate Governance    Board Composition and Refreshment

 

DIRECTOR RECRUITMENT PROCESS

The NCGC has a robust director recruitment process. New director candidates are identified through various channels, including third-party search firms, other directors, shareholders and members of management. Once a candidate has been identified, the NCGC conducts a rigorous review, taking into consideration the criteria set forth in AIG’s Corporate Governance Guidelines, including:

 

skill, expertise, diversity, background, and experience with businesses and other organizations that the Board deems relevant;
the contribution represented by the individual’s skills, experience and attributes to ensuring that the Board has the necessary tools to perform its oversight function effectively;
the interplay of the individual’s experience with the experience of other Board members;
high personal and professional ethics, values and integrity;
ability to work together as part of an effective, collegial group;
ability and willingness to commit adequate time to AIG over an extended period of time;
commitment to representing the long-term interests of AIG; and
the extent to which the individual would otherwise be a desirable addition to the Board and any Board Committees.

 

Following this review, the NCGC recommends potential directors to the full Board for approval of their appointment or election by our shareholders.

 

Six new directors added in last two years – 50% of whom are women or ethnically and/or racially diverse

The NCGC oversaw the identification, recruitment and review of Mr. Cole, who was appointed to our Board in 2021. Mr. Cole was identified and recommended to the NCGC by our Chief Executive Officer and Executive Chair. The NCGC retained a global search firm to interview Mr. Cole and compile information about his attributes, experience, skills and independence to help them assess his suitability for our Board. Mr. Cole brings considerable experience in public policy and government and is a seasoned legal advisor on strategic transactions. The NCGC also oversaw the identification, recruitment and review of one new director—Mr. Zaffino—in 2020 and four new directors—Messrs. Motamed and Porrino and Mss. Schioldager and Vaughan—in 2019. Messrs. Motamed, Porrino and Zaffino and Ms. Vaughan each have considerable insurance industry experience, and Mr. Zaffino serves as a bridge between the Board and management. Ms. Schioldager has substantial experience in investments and global asset management. Further, the additions of Mr. Cole and Mss. Schioldager and Vaughan enhanced the diversity of our Board.

 

DIRECTOR ORIENTATION

All new directors participate in a comprehensive director orientation program. This program includes one-on-one meetings with key members of management and fellow directors, as well as extensive written materials to help familiarize the new director with AIG’s business, industry, strategy, culture, policies and practices. Each new director is also paired with an existing director to help integrate them during the course of their first year on the Board. Further, each new director is encouraged to attend the meetings of all Board committees, including those on which they do not sit, during their first year on the Board.

 

DIRECTOR TENURE 

Average tenure: Five years
Retirement age: 75

The Board believes that it is desirable to maintain a mix of longer-tenured, experienced directors and newer directors with fresh perspectives. The average tenure of the independent director nominees is five years. In addition, under AIG’s Corporate Governance Guidelines, the Board Committee Chairs generally do not serve for longer than a five-year term. No individual may stand for election as a director after reaching the age of 75. The Board may waive this requirement if, on the recommendation of the NCGC, it determines such waiver to be in the best interests of AIG.

 

2021 Proxy Statement 25

 

TABLE OF CONTENTS 

Corporate Governance    Board Composition and Refreshment

 

DIVERSITY CONSIDERATION

Three independent directors are women
Two independent directors are ethnically and/or racially diverse

The Board strives to maintain a diverse Board, and diversity continues to be an important consideration in the NCGC’s director search and nomination process. As set forth in AIG’s Corporate Governance Guidelines, while the Board has not adopted a specific diversity policy, the Board believes that important diversity characteristics include race, gender identity, ethnicity, religion, nationality, disability, sexual orientation and cultural background. Additionally, in assessing each director candidate, the NCGC considers diversity in a broad sense, including a candidate’s work experience, skills and perspective. Three of AIG’s independent director nominees are women and two are ethnically and/or racially diverse.

 

DIRECTOR RECOMMENDATIONS BY SHAREHOLDERS

The NCGC considers shareholder feedback when determining whether to recommend that the Board nominate a director for re-election and takes into account the views of interested shareholders as appropriate when filling a vacancy on the Board. The AIG Corporate Governance Guidelines include characteristics that the NCGC considers important for director nominees and information for shareholders with respect to director nominations. The NCGC will consider director nominees recommended by shareholders and will evaluate those shareholder nominees on the same basis as all other nominees. Shareholders who wish to recommend nominees for director for consideration by the NCGC may do so by submitting names and supporting information to: Chair, Nominating and Corporate Governance Committee, c/o Corporate Secretary, American International Group, Inc., 175 Water Street, New York, New York 10038. Nominations of director candidates made pursuant to AIG’s By-laws must comply with the requirements set forth in our By-laws. See “Other Matters—Shareholder Proposals for the 2022 Annual Meeting.”

 

PROXY ACCESS

AIG’s By-laws also permit eligible shareholders with a significant long-term interest in AIG to include their own director nominees in AIG’s proxy statement for the annual meeting. The Board believes such proxy access is an additional mechanism for Board accountability and for ensuring that Board nominees are supported by AIG’s long-term shareholders.

 

Under the proxy access by-law, a shareholder, or a group of up to 20 shareholders, owning three percent or more of AIG common stock continuously for at least three years may nominate and include in AIG’s annual meeting proxy materials director nominees constituting up to the greater of two individuals or 20 percent of the Board, so long as the shareholder(s) and the nominee(s) satisfy the requirements specified in AIG’s By-laws. Qualifying shareholders who wish to submit director nominees for election at the 2022 Annual Meeting of Shareholders pursuant to the proxy access by-law may do so in compliance with the procedures described in “Other Matters—Shareholder Proposals for the 2022 Annual Meeting.”

 

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AREAS OF BOARD OVERSIGHT

The Board fulfills its oversight role with respect to AIG’s strategy through year-round discussions and presentations covering company-wide and business unit-specific updates. The Board also provides oversight with respect to other key areas, including management succession planning, human capital management (including diversity, equity, and inclusion), sustainability (including climate-related issues), corporate social responsibility, lobbying and public policy, risk management and cybersecurity.

 

MANAGEMENT SUCCESSION PLANNING

Peter Zaffino appointed Chief Executive Officer effective March 1, 2021
Result of execution of thoughtful, well-coordinated succession plan

In October 2020, AIG announced that Mr. Zaffino was named Chief Executive Officer, effective March 1, 2021. Mr. Zaffino was also appointed to serve as a director, effective at the time of the announcement. This transition reflects the execution of a thoughtful, well-coordinated Chief Executive Officer succession plan overseen by the Board with support from the CMRC in consultation with the Chair of the NCGC. One of the key strengths that the Board considered when appointing Mr. Duperreault to lead AIG in 2017 was his proven track-record for developing talent and grooming successors internally. The Board determined that Mr. Zaffino was the right choice to become AIG’s next Chief Executive Officer on the basis of the success he demonstrated as AIG’s President and Global Chief Operating Officer and his leadership over the turnaround of AIG’s General Insurance business. This leadership transition is supported by Mr. Duperreault’s continued service to AIG as Executive Chair.

 

The Board continues to recognize the importance of planning for management succession and oversees succession planning with support from the CMRC, in consultation with the Chair of the NCGC. In accordance with AIG’s Corporate Governance Guidelines and the CMRC’s charter, at least annually:

 

the Chief Executive Officer reports to the CMRC and the Chair of the NCGC on plans for succession for both the Chief Executive Officer role and other senior management roles; and
the CMRC reports to the Board on its view of those plans.

 

Pursuant to the CMRC’s and NCGC’s charters, the Chair of the NCGC also consults with the CMRC with respect to Chief Executive Officer succession.

 

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HUMAN CAPITAL MANAGEMENT

Our Board believes that a major strength of AIG is the dedication, commitment, and loyalty of our colleagues. AIG’s key human capital management objectives include attracting, developing and retaining the highest quality talent. The CMRC oversees AIG’s initiatives and progress on various human capital management efforts and metrics, including diversity, equity and inclusion.

 

To improve our employee experience and assess the health of our organization, we periodically undertake cultural and employee engagement surveys. In August 2019, AIG conducted an Organizational Health Index survey, which was responded to by approximately 80 percent of our workforce and which covered topics across multiple dimensions, including leadership, business operations and effectiveness, diversity, equity and inclusion and customer focus. In response to this feedback, many of our colleagues’ ideas and suggestions have been applied across AIG and informed the development of the AIG 200 operational programs. In January 2021, we launched our second Organizational Health Index survey to give our colleagues another opportunity to share their insights, gather input on how AIG has progressed over the past year and continue to help make AIG a more rewarding place to work.

 

We believe that we foster a constructive and healthy work environment for our employees. Some examples of key programs and initiatives that are designed to attract, develop and retain our diverse workforce include:

 

  Competitive Compensation and Benefits
AIG seeks to provide competitive compensation opportunities and benefits that attract and retain highly skilled employees for our various business needs.
 

     Performance-driven compensation structure that consists of base salary and short- and long-term incentive awards.

 

     Subsidized health care plans, life insurance and disability.

 

     Wellness and mental health benefits.

 

     Liberal paid time off and parental leave policies.

 

     Matching 401(k) contributions.

  Health and Safety
AIG prioritizes the health and safety of its employees, which was apparent in our response to the COVID-19 crisis.
 

     90 percent of our employees quickly and effectively transitioned to remote work.

 

     Cross-functional COVID-19 Task Force created to ensure that AIG implemented best practices to protect the safety of colleagues while continuing to serve clients, distribution partners and other stakeholders.

 

     Return-to-office planning is informed by a Return to Workplace survey recently completed by our employees.

 

     Employee Assistance Program provides employees with mental health resources, including counseling sessions and webinars.

  Career Development
AIG believes that professional development is a positive investment in our talent and has created numerous programs to foster leadership, growth and development opportunities for our employees.
 

     Library of on-demand learning options, combined with immersive learning experiences to build skills, available at all levels.

 

     Tuition and certification and training reimbursement programs to encourage employees to enhance their education, skills and knowledge for their continued growth.

 

     Annual review of talent development and succession plans for each of our functions and operating segments, to identify and develop a pipeline of diverse talent for positions at all levels of the organization.

 

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  Diversity, Equity and Inclusion
AIG is committed to creating an inclusive workplace focused on attracting, retaining and developing diverse talent that fosters a culture of belonging for all employees.
 

     Diversity, equity and inclusion objective embedded into each executive officer’s individual performance goals tied to their annual short-term incentive awards.

 

     Executive Diversity Council established in September 2020, tasked with ensuring that diversity, equity and inclusion initiatives are an integral part of AIG’s business strategies.

 

     New Chief Diversity Officer appointed in October 2020 to coordinate AIG’s efforts in making meaningful strides as it relates to diversity, equity and inclusion.

 

     Three leadership programs targeted at our diverse talent pool.

 

     Women’s Executive Leadership Initiative and the Executive Men’s Development Initiative (for men of color) seek to hone executive leadership skills of high-potential employees.

 

     Accelerated Leadership Development program matches mid-level men and women of color in AIG’s leadership pipeline with senior executive mentors and coaches them on essential senior management and executive leadership skills.

 

     In 2020, more than 17,000 global colleagues participated in Courageous Conversations, a training program about unconscious bias and systemic racism. 

 

Spotlight on AIG’s Robust Network of ERGs

ERGs are groups of employees who come together based on a shared interest in a specific dimension of diversity. The ERGs are a cornerstone of our diversity, equity and inclusion efforts, with significant employee participation. Our ERGs represent and support our diverse workforce, facilitate networking and connections with peers, and create a culture of inclusion and engagement within AIG.

 

 

 

 

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SUSTAINABILITY AND CORPORATE SOCIAL RESPONSIBILITY

AIG’s Sustainability Priorities
Community resilience
Financial security
Sustainable operations
Sustainable investing

AIG believes that the challenges we face in the world today are as serious as they are complex. As risk managers, insurers, and investors, we have a unique role to play in building a more sustainable, secure world. To that end, AIG has developed a sustainability agenda intended to help future-proof our communities—a unified sustainability approach that supports our business strategy and addresses expectations from many of our key stakeholders including investors, regulators, clients, and employees. AIG’s four sustainability priorities (community resilience, financial security, sustainable operations and sustainable investing) align with our core business strategy and focus on the future proofing communities.

 

The NCGC oversees and reports to the Board as necessary with respect to sustainability (including climate-related issues), corporate social responsibility and lobbying and public policy matters. AIG’s Chief Sustainability Officer is responsible for leading the development and implementation of AIG’s company-wide sustainability strategy. Our Chief Sustainability Officer sits within AIG’s Global Legal, Compliance & Regulatory Group, which provides visibility and influence with AIG’s executive leadership. The NCGC receives regular reports from our Chief Sustainability Officer on sustainability-related matters.

 

Under the leadership of the Chief Sustainability Officer, cross-functional teams and working groups have been established to drive integration and advancement of AIG’s sustainability priorities into all lines of business. Each working group is sponsored by one of AIG’s Executive Officers to cascade the tone at the top throughout the entire organization.

 

 

 

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  Recent Sustainability Milestones
Performed AIG’s first materiality assessment to identify and prioritize ESG issues that are most significant for AIG’s long-term value creation and of most importance to our key stakeholders
Developed a unified position on climate change risks and strategy recommendation
Launched AIG’s Employee Sustainability Network to provide an opportunity for employees to get involved in sustainability initiatives on a more local, grassroots level, while also helping advance AIG’s sustainability agenda
Published a second Taskforce on Climate-related Financial Disclosures (TCFD) report and became a TCFD supporter
Became a Carbon Disclosure Project (CDP) investor signatory and continued to report on CDP’s Climate Investor Questionnaire for 11 consecutive years
Became a member of the UN Global Compact, committing to align with the UN Global Compact principles and to support the UN Sustainable Development Goals

 

Additional Information Available on our Sustainability Site

To review our TCFD report and detailed information about AIG’s philosophy and practices regarding sustainability (including climate change projects) and corporate responsibility (including philanthropy, volunteerism and diversity, equity and inclusion), please visit our sustainability site at www.aig.com/about-us/sustainability. The reports and any other information on this website are not incorporated by reference in, and do not form part of, this Proxy Statement or any other SEC filing.

 

RISK MANAGEMENT

The Board oversees the management of risk (including, for example, risks related to market conditions, reserves, catastrophes, investments, liquidity, capital and cybersecurity) through the complementary functioning of the Risk and Capital Committee and the Audit Committee and interacting and coordinating with other Board Committees. The Risk and Capital Committee oversees AIG’s ERM practices as one of its core responsibilities and reviews AIG’s risk assessment and risk management policies. The Audit Committee also evaluates and oversees the guidelines and policies governing AIG’s risk assessment and management processes relating to financial reporting as well as the risk control framework. The Audit and Risk and Capital Committee Chairs then coordinate with each other and the Chairs of the other Board Committees with the aim to ensure that each Board Committee has received the information that it needs to carry out its responsibilities with respect to risk management. Both the Risk and Capital Committee and the Audit Committee report to the Board with respect to relevant risk management issues. The CMRC, in conjunction with AIG’s Chief Risk Officer, is responsible for reviewing the relationship between AIG’s risk management policies and practices and the incentive compensation arrangements applicable to senior executives. For further information regarding the annual risk assessment of compensation plans, see “Executive Compensation—Report of the Compensation and Management Resources Committee.”

 

CYBERSECURITY

The Technology Committee reviews AIG’s cybersecurity risks, policies, controls and procedures, including: (1) AIG’s procedures to identify and assess internal and external cybersecurity risks, (2) AIG’s controls to protect from cyberattacks, unauthorized access or other malicious acts and risks, (3) AIG’s procedures to detect, respond to, mitigate negative effects from and recover from cybersecurity attacks, (4) AIG’s controls and procedures for fulfilling applicable regulatory reporting and disclosure obligations related to cybersecurity risks, costs and incidents and (5) AIG’s cybersecurity practices as compared to industry practices. Management reports to the Technology Committee on cybersecurity matters at every meeting of the Technology Committee, which meets at least two times a year in accordance with the Technology Committee charter. At least once a year, AIG’s Chief Information Security Officer also meets with the full Board to report on AIG’s internal and external cybersecurity risks and our actions and responses.

 

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BOARD COMMITTEES

AIG’s Board Committee structure is organized around key strategic issues. Board Committee Chairs regularly coordinate with one another to ensure appropriate information sharing. To further facilitate information sharing, all Board Committees provide a summary of significant actions at regular meetings of the Board. As required under AIG’s Corporate Governance Guidelines, each standing Board Committee conducts an annual self-assessment and review of its charter.

 

The following table sets forth the current membership and the number of meetings held in 2020 for each standing Board Committee. Messrs. Duperreault and Zaffino do not serve on any Board Committees. Mr. Steenland serves as an ex-officio, non-voting member of each Board Committee. Mr. Cole joined our Board effective March 15, 2021 and thus did not attend any Board or Board Committee meetings during 2020.

 

  Audit
Committee
Compensation
and
Management
Resources
Committee
Nominating
and
Corporate
Governance
Committee
Risk and
Capital
Committee
Technology
Committee
Director          
James Cole, Jr.(1)          
W. Don Cornwell   C    
Brian Duperreault          
John H. Fitzpatrick      
William G. Jurgensen     C  
Christopher S. Lynch   C  
Henry S. Miller      
Linda A. Mills     C
Thomas F. Motamed      
Peter R. Porrino C      
Amy L. Schioldager    
Douglas M. Steenland
Therese M. Vaughan      
Peter Zaffino          
Number of meetings in 2020 7 9 5 5 4

C= Chair 

■= Member 

♦ Mr. Steenland, as Lead Independent Director (formerly Independent Chair), is an ex-officio, non-voting member. 

(1) Mr. Cole has been appointed to serve as a member of the Audit and Technology Committees, effective March 31, 2021.

 

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AUDIT COMMITTEE

 

Primary responsibilities

 

Assists the Board in its oversight of AIG’s financial statements, including internal control over financial reporting.

 

Reviews and discusses with senior management the guidelines and policies by which AIG assesses and manages risk.

 

Coordinates with the Risk and Capital Committee to help ensure the Board and each Board Committee has received the information it needs to carry out their responsibilities with respect to oversight of risk assessment and risk management.

 

Assists the Board in its oversight of the qualifications, independence and performance of AIG’s independent registered public accounting firm, including responsibility for the appointment, compensation, retention and oversight of the work of the firm.

 

Assists the Board in its oversight of the performance of AIG’s internal audit function, including responsibility for the appointment, replacement, reassignment or dismissal of, and being involved in the performance reviews of, AIG’s chief internal auditor.

 

Assists the Board in its oversight of AIG’s compliance with legal and regulatory requirements, including reviewing periodically with management any significant legal, compliance and regulatory matters that have arisen or that may have a material impact on AIG’s business, financial statements or compliance policies, AIG’s relations with regulators and governmental agencies, and any material reports or inquiries from regulators and government agencies.

 

Approves regular, periodic cash dividends on AIG common stock and preferred stock consistent with Board-approved dividend policies and with support from the Risk and Capital Committee to confirm adequacy of AIG’s capital and liquidity.

 

Reviews and discusses any significant topics raised at the audit committee meetings of AIG’s material foreign subsidiaries.
HELD 7 MEETINGS IN 2020
MEMBERS

Peter R. Porrino, Chair
John H. Fitzpatrick
Christopher S. Lynch
Linda A. Mills
Amy L. Schioldager
Douglas M. Steenland (ex-officio, non-voting member) 

INDEPENDENCE

The Board has determined, on the recommendation of the NCGC, that all members of the Audit Committee are independent under both NYSE listing standards and the SEC rules. 

FINANCIAL LITERACY

The Board has determined, on the recommendation of the NCGC, that all members of the Audit Committee are financially literate and have accounting or related financial management expertise, each as defined by NYSE listing standards. 

FINANCIAL EXPERTS

The Board has determined, on the recommendation of the NCGC, that Messrs. Fitzpatrick, Lynch, Porrino and Steenland (as an ex-officio member) are audit committee financial experts, as defined under SEC rules. 

 

 

 

 

 

 

 

 



 

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COMPENSATION AND MANAGEMENT RESOURCES COMMITTEE

 

Primary responsibilities

 

Oversees AIG’s compensation programs generally.

 

Reviews and approves incentive award performance metrics and goals relevant to the compensation of AIG’s Chief Executive Officer, evaluates the Chief Executive Officer’s performance and determines and approves the compensation awarded to the Chief Executive Officer (subject to ratification or approval by the Board).

 

Reviews and approves the incentive award performance metrics relevant to the compensation of the other senior executives under its purview (which includes all of the named executives listed in the 2020 Summary Compensation Table) and, based on the recommendation of the Chief Executive Officer, approves the compensation of each such senior executive.

 

Reviews reports about the compensation of other key corporate officers of AIG, as the CMRC deems appropriate.

 

Oversees AIG’s management development and succession planning programs for the Chief Executive Officer and his direct reports and consults with the Chair of the NCGC with respect to Chief Executive Officer succession planning.

 

Reviews and approves compensation-related disclosures for inclusion in AIG’s annual Proxy Statement.

 

Oversees the assessment of the risks related to AIG’s compensation policies and programs.

 

Reviews periodic updates from management on initiatives and progress in the area of human capital, including diversity, equity and inclusion.

 

Engages the services of an independent compensation consultant to advise on executive compensation matters.

 

The foregoing responsibilities may not be delegated to persons who are not members of the CMRC.

HELD 9 MEETINGS IN 2020
MEMBERS
W. Don Cornwell, Chair
Henry S. Miller
Linda A. Mills
Thomas F. Motamed
Therese M. Vaughan
Douglas M. Steenland (ex-officio, non-voting member)
INDEPENDENCE
The Board has determined, on the recommendation of the NCGC, that all members of the CMRC are independent under both NYSE listing standards and SEC rules.
COMPENSATION AND MANAGEMENT
RESOURCES COMMITTEE INTERLOCKS AND
INSIDER PARTICIPATION
During his or her service on the CMRC, no member served as an officer or employee of AIG at any time or had any relationship with AIG requiring disclosure as a related-party transaction under SEC rules. During 2020, none of AIG’s executive officers served as a director of another entity, one of whose executive officers served on the CMRC; and none of AIG’s executive officers served as a member of the compensation committee of another entity, one of whose executive officers served as a member of AIG’s Board or on the CMRC.


 

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NOMINATING AND CORPORATE GOVERNANCE COMMITTEE

 

Primary responsibilities

 

Identifies individuals qualified to become Board members, consistent with criteria approved by the Board, and recommends these individuals to the Board for nomination, election or appointment as members of the Board and Board Committees.

 

Considers board refreshment in light of various factors, including expected director departures, the Board’s mix and interplay of skills, experience and attributes, including diversity, and individual director performance.

 

Oversees the annual evaluation of the Board, individual directors and Board Committees.

 

Periodically reviews and makes recommendations to the Board regarding the form and amount of independent director compensation.

 

Receives reports from the NCGC Chair relating to succession planning for the Chief Executive Officer.

 

Reviews and reports to the Board with respect to (1) AIG’s position, policies, practices and reporting with respect to sustainability, (2) current and emerging corporate social responsibility issues of significance to AIG and its stakeholders, including the manner in which AIG conducts its public policies, social and environmental practices, climate-related activities, government relations activities, and other issues, (3) public policy issues of significance to AIG and its stakeholders and (4) AIG’s relationships with public interest groups, legislatures, government agencies and the media, as well as AIG stakeholders, and how those constituencies view AIG as those relationships relate to issues of public policy and social responsibility.
HELD 5 MEETINGS IN 2020
MEMBERS

Christopher S. Lynch, Chair
W. Don Cornwell
William G. Jurgensen
Amy L. Schioldager
Douglas M. Steenland (ex-officio, non-voting member) 

INDEPENDENCE
The Board has determined that all members of the NCGC are independent under NYSE listing standards and SEC rules.


 

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RISK AND CAPITAL COMMITTEE

 

Primary responsibilities

 

Assists the Board in overseeing and reviewing information regarding AIG’s ERM practices, including the significant policies, procedures, and practices employed to manage liquidity risk, credit risk, market risk, operational risk and insurance risk.

 

Provides strategic guidance to management as to AIG’s capital structure and financing, the allocation of capital to its businesses, methods of financing its businesses and other related strategic initiatives.

 

Reviews and makes recommendations to the Board with respect to AIG’s financial and investment policies.

 

Approves issuances, investments, dispositions and other transactions and matters as authorized by the Board.

 

Advises the Audit Committee with respect to AIG’s capital and liquidity position to support the Audit Committee’s approval of regular, periodic cash dividends on AIG common and preferred stock.

 

Coordinates with the Board, the CMRC and the Audit Committee to help ensure that the Board and each Board Committee has received the information it needs to carry out their responsibilities with respect to risk management.
HELD 5 MEETINGS IN 2020
MEMBERS
William G. Jurgensen, Chair
Christopher S. Lynch
Thomas F. Motamed
Peter R. Porrino
Therese M. Vaughan
Douglas M. Steenland (ex-officio, non-voting member)
INDEPENDENCE

The Board has determined, on the recommendation of the NCGC, that all members of the Risk and Capital Committee are independent under NYSE listing standards and SEC rules.

 

 

 

 

 

 

 


  

TECHNOLOGY COMMITTEE

 

Primary responsibilities

 

Assists the Board in its oversight of AIG’s information technology projects and initiatives.

 

Reviews the financial, tactical and strategic benefits of proposed significant information technology-related projects and initiatives.

 

Reviews and makes recommendations to the Board regarding significant information technology investments in support of AIG’s information technology strategy.

 

Reviews AIG’s risk management and risk assessment guidelines and policies regarding information technology security, including the quality and effectiveness of AIG’s information technology security, business continuity management capabilities and disaster recovery capabilities.

 

Reviews AIG’s cybersecurity risks, policies, controls and procedures.
HELD 4 MEETINGS IN 2020
MEMBERS
Linda A. Mills, Chair
John H. Fitzpatrick
Henry S. Miller
Amy L. Schioldager
Douglas M. Steenland (ex-officio, non-voting member)
INDEPENDENCE
The Board has determined, on the recommendation of the NCGC, that all members of the Technology Committee are independent under NYSE listing standards and SEC rules.


 

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COMPENSATION OF DIRECTORS

 

  Highlights of our Director Compensation Program
No fees for Board meeting attendance
Emphasis on equity, aligning director interests with shareholders
Formulaic annual equity grants with immediate vesting to support independence
Benchmarking against peers with advice from independent compensation consultant
No compensation is payable to non-independent directors for their service as directors

  

We use a combination of cash and deferred stock-based awards to attract and retain qualified candidates to serve as independent directors on our Board. In setting director compensation, the NCGC considers the significant amount of time that members of the Board spend in fulfilling their duties to AIG, as well as the diverse and complementary skills, experience and attributes of our directors. The following table describes the compensation structure for AIG’s independent directors in 2020.

 

2020 COMPENSATION STRUCTURE FOR INDEPENDENT DIRECTORS

 

Base Annual Retainer ($)
Cash Retainer 125,000
Deferred Stock Units (DSUs) Award(1) 170,000
Annual Independent Chair Cash Retainer(2) 260,000
Annual Board Committee Chair Cash Retainers  
Audit Committee 40,000
Risk and Capital Committee 40,000
Compensation and Management Resources Committee 30,000
Other Board Committees 20,000

 

(1)DSUs granted in 2020 were granted under the AIG 2013 Omnibus Incentive Plan (2013 Plan). Going forward, DSUs will be granted under the 2021 Plan, subject to shareholder approval of such plan.

 

(2)This Independent Chair Cash Retainer became a Lead Independent Director Retainer effective March 1, 2021 concurrent with the effective date of the changes to AIG’s leadership structure. No Lead Independent Director Retainer was paid in 2020.

 

The annual cash retainer of $125,000, as well as any cash retainers due for service as Independent Chair/Lead Independent Director or a Board Committee Chair, are payable in four equal installments on the first business day of each quarter in arrears of service for the preceding quarter. The annual grant of $170,000 in DSUs is made for prospective service, at the time of AIG’s Annual Shareholder Meeting, for the upcoming one-year term. Unless independent directors have made a special deferral election for their DSUs (discussed below), DSUs vest on the last trading day of the month in which the independent director ceases to be a director of AIG.

 

Independent directors are also eligible for the AIG Matching Grants Program, through which AIG provides a two-for-one match on charitable donations in an amount of up to $10,000 per employee or director annually (the same terms and conditions that apply to AIG employees). For 2020 only, the maximum amount of AIG’s charitable donation match was increased to $12,000 per employee or director annually.

 

Independent directors may elect to receive their base annual, Independent Chair/Lead Independent Director and Board Committee Chair cash retainer amounts in the form of DSUs. The number of DSUs received is based on the closing sale price of AIG common stock on the date the cash retainer would otherwise be payable.

 

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Each DSU provides that one share of AIG common stock will be delivered when the independent director ceases to be a member of the Board and includes dividend equivalent rights that entitle the independent director to a quarterly payment, in the form of DSUs, equal to the amount of any regular quarterly dividend that would have been paid by AIG if the shares of AIG common stock underlying the DSUs had been outstanding. Annually, directors may elect to defer the settlement date of 100 percent of their DSUs received in the following year. In addition, no less than 12 months prior to retirement, retiring directors may make an election to defer the settlement of 100 percent of any DSUs not previously deferred pursuant to an annual election and/or any previously deferred DSUs.

 

Under director stock ownership guidelines, independent directors should own a number of shares of AIG common stock (including deferred stock and DSUs) with a value equal to at least five times the base annual retainer for independent directors.

 

AIG’s Insider Trading Policy prohibits directors from engaging in hedging transactions with respect to any AIG securities, including by trading in any derivative security relating to AIG’s securities. In particular, other than pursuant to an AIG compensation or benefit plan or dividend distribution, directors may not acquire, write or otherwise enter into an instrument that has a value determined by reference to AIG securities, whether or not the instrument is issued by AIG. Examples include put and call options, forward contracts, collars and equity swaps relating to AIG securities. In addition, AIG’s Insider Trading Policy prohibits directors from pledging AIG securities and none of AIG’s directors have pledged any AIG securities.

 

Messrs. Duperreault and Zaffino, who are not independent directors, were not eligible to receive any compensation for their service as directors.

 

Frederic W. Cook & Co. (FW Cook) provided advice to the NCGC with respect to AIG director compensation and related market practices. Both the cash and equity components of independent director compensation remain subject to the shareholder-approved limits established in the 2013 Plan and will be subject to such limits established in the 2021 Plan. 

 

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The following table contains information with respect to the compensation of the individuals who served as independent directors of AIG for all or part of 2020.

 

2020 INDEPENDENT DIRECTOR COMPENSATION

 

Independent Members of the
Board in 2020
Fees Earned
or Paid in
Cash ($)(1)
Stock
Awards ($)(2)
All Other
Compensation ($)(3)
Total ($)
W. Don Cornwell 155,000 169,977 10,000 334,977
John H. Fitzpatrick 125,000 169,977 0 294,977
William G. Jurgensen 165,000 169,977 0 334,977
Christopher S. Lynch 145,000 169,977 0 314,977
Henry S. Miller 125,000 169,977 10,000 304,977
Linda A. Mills 145,000 169,977 12,000 326,977
Thomas F. Motamed 125,000 169,977 0 294,977
Suzanne Nora Johnson 60,288 0 0 60,288
Peter R. Porrino 150,385 169,977 12,000 332,362
Amy L. Schioldager 125,000 169,977 0 294,977
Douglas M. Steenland 385,000 169,977 0 554,977
Therese M. Vaughan 125,000 169,977 9,980 304,957

 

(1)This column represents annual retainer fees, Independent Chair retainer fees and Board Committee Chair retainer fees. For Mr. Jurgensen, the amount includes (i) a prorated Board Committee Chair retainer fee for his service as Chair of the Audit Committee until the date of the 2020 Annual Meeting; and (ii) a prorated Committee Chair retainer fee for his service as Chair of the Risk and Capital Committee, effective as of the date of the 2020 Annual Meeting. For Mr. Porrino, the amount includes a prorated Board Committee Chair retainer fee for his service as Chair of the Audit Committee, effective as of the date of the 2020 Annual Meeting. For Ms. Nora Johnson, the amount includes prorated annual retainer fees for her service as director and as Chair of the Risk and Capital Committee until the date of the 2020 Annual Meeting. For Ms. Nora Johnson, the amount does not include (i) $813,153.06, which represents the value of shares of AIG common stock delivered when she ceased to be a member of the Board as of the 2020 Annual Meeting in accordance with the terms of DSUs previously granted; and (ii) $2,247.90, which represents a cash payment with respect to warrant equivalents granted to her related to DSUs granted prior to the distribution of warrants to all holders of AIG common stock in January 2011.

 

(2)This column represents the grant date fair value of DSUs granted in 2020 to independent directors determined in accordance with Financial Accounting Standards Board Accounting Standards Codification (FASB ASC) Topic 718, based on the closing sale price of AIG common stock on the date of grant.

 

(3)This column represents charitable contributions disbursed by AIG during 2020 under AIG’s Matching Grants Program, through which AIG provides a two-for-one match on charitable donations in an amount of up to $10,000 per independent director annually. For 2020 only, the maximum amount of AIG’s charitable donation match was increased to $12,000 per employee or director annually.

 

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Corporate Governance      Corporate Governance Materials Available on Our Website 

 

  

The following table sets forth information with respect to the stock awards outstanding at December 31, 2020 for the independent directors of AIG during 2020. None of the independent directors hold option awards.

 

OUTSTANDING STOCK AWARDS AT DECEMBER 31, 2020

 

Independent Members of the Board in 2020 Deferred
Stock Units(1)
W. Don Cornwell 30,856
John H. Fitzpatrick 29,603
William G. Jurgensen 25,785
Christopher S. Lynch 31,016
Henry S. Miller 31,016
Linda A. Mills 20,675
Thomas F. Motamed 15,529
Suzanne Nora Johnson 0
Peter R. Porrino 16,105
Amy L. Schioldager 11,886
Douglas M. Steenland 31,016
Therese M. Vaughan 11,886

 

(1)DSUs shown include DSUs awarded in 2020 and prior years, any cash retainer amounts that a director elected to receive in DSUs and DSUs awarded as dividend equivalents. Receipt of shares of AIG common stock underlying DSUs is deferred until the director ceases to be a member of the Board unless the director has made an election to defer settlement to a later date. DSUs granted prior to May 15, 2013 were granted under the 2010 Stock Incentive Plan and DSUs granted on or after May 15, 2013 were granted under the 2013 Plan.

 

CORPORATE GOVERNANCE MATERIALS AVAILABLE ON OUR WEBSITE 

The following documents are available in the About Us—Leadership and Governance—Corporate Governance Documents section of AIG’s corporate website at www.aig.com or in print by writing to American International Group, Inc., 175 Water Street, New York, New York 10038, Attention: Investor Relations:

 

Amended and Restated Certificate of Incorporation

 

By-laws

 

Charters of the Audit Committee, the CMRC, the NCGC, the Risk and Capital Committee and the Technology Committee

 

Corporate Governance Guidelines

 

AIG’s Diversity/Equal Opportunity Policy

 

Related-Party Transactions Approval Policy

 

Social Media Guidelines

 

AIG’s Director, Executive Officer and Senior Financial Officer Code of Business Conduct and Ethics

 

Employee Code of Conduct

 

Supplier Code of Conduct

 

Third Party Code of Conduct

 

Any amendment to AIG’s Director, Executive Officer and Senior Financial Officer Code of Business Conduct and Ethics and any waiver applicable to AIG’s directors, executive officers or senior financial officers will be posted on AIG’s website within the time period required by the SEC and the NYSE. Information on our website is not, and will not be deemed to be, a part of this Proxy Statement or incorporated into any of our other filings.

 

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Year-Round Shareholder Engagement     Year-Round Shareholder Engagement Program

 

Year-Round Shareholder Engagement

 

Fostering long-term relationships with our shareholders and maintaining their trust is a priority for the Board. Direct engagement with shareholders helps us gain useful feedback on a wide variety of topics, including corporate governance, executive compensation, sustainability and corporate responsibility, human capital management matters, business strategy and performance and related matters. Shareholder feedback also helps to better tailor the public information we disclose to address the interests and inquiries of shareholders.

 

YEAR-ROUND SHAREHOLDER ENGAGEMENT PROGRAM

AIG has developed a robust engagement program that ensures an active, year-round, open dialogue with shareholders and other stakeholders. These meetings strengthen AIG’s relationship with our shareholders and reinforce our commitment to incorporate shareholder feedback into various decisions made by the Board and management.

 

 

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Year-Round Shareholder Engagement     2020 Shareholder Engagement
 

 

2020 SHAREHOLDER ENGAGEMENT

During 2020, we continued our efforts to engage consistently and productively with our shareholders. Our then Independent Chair and the Chair of our CMRC participated in some of these engagement meetings, alongside our General Counsel, Chief Human Resources Officer, Corporate Secretary, Head of Executive Compensation, Head of Investor Relations and Chief Sustainability Officer.

 

 

These efforts are complementary to outreach conducted by members of senior management through AIG’s Investor Relations department as they regularly meet with shareholders and participate in investor conferences in the U.S. and abroad. In 2020, our Investor Relations department led over 200 meetings with over 250 equity shareholders representing approximately 53 percent of our shares outstanding. Investor presentations are made available in the Investors—Webcasts and Presentations section of AIG’s corporate website at www.aig.com.

 

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Year-Round Shareholder Engagement     2020 Shareholder Engagement
 

 

TOPICS COVERED DURING 2020 SHAREHOLDER ENGAGEMENT

Our engagement with shareholders in 2020 covered a broad set of topics, including corporate strategy, AIG’s response to the COVID-19 crisis, corporate governance, environmental and social issues, Board and management succession planning and executive compensation. Some key messages we heard, and examples of actions we took in response to this feedback, included:

 

Key Messages AIG Actions
Concerns from shareholders about the stock price performance of AIG’s common stock Announced in October 2020 that AIG is evaluating alternatives for the separation of our Life and Retirement business in a manner intended to unlock value for shareholders and other stakeholders and establish two strong, market-leading companies (See “Executive Summary—2020 Highlights—Announcement of Planned Life and Retirement Separation”)

Requests from shareholders for updates on the Board’s plan with respect to management succession

 

Announced in October 2020 that Mr. Zaffino would become Chief Executive Officer, Mr. Duperreault would become Executive Chair and Mr. Steenland would become Lead Independent Director, each effective March 1, 2021 (See “Executive Summary—2020 Highlights—Execution of Thoughtful, Well-Coordinated Succession Plan”)
Strong interest in disclosures describing AIG’s response to the COVID-19 crisis, in particular with respect to the impact on both business strategy and human capital management Provided robust disclosures in this Proxy Statement relating to AIG’s response to the COVID-19 crisis (See “Executive Summary—2020 Highlights—AIG’s Response to COVID-19”)

Positive feedback related to the publication of AIG’s second TCFD report and requests for expanded sustainability reporting

 

Performed AIG’s first materiality assessment to identify and prioritize ESG issues that are most significant for AIG’s long-term value creation and of most importance to our key stakeholders, which we see as an initial step towards expanded sustainability disclosures (See “Corporate Governance—Areas of Board Oversight—Sustainability and Corporate Social Responsibility”)
Support for AIG’s diversity, equity and inclusion initiatives and requests for increased disclosure of demographic data and goals to help shareholders assess the success of those initiatives Agreed to publish our official consolidated EEO-1 Report on our website beginning with the 2019 and 2020 Reports, which are due in April 2021; and augmented disclosures in this Proxy Statement relating to the diversity of our Board to provide self-identified diversity information for each individual director (See “Executive Summary—Director Nominee Skills, Experience and Attributes”)

 

Our engagement meetings in 2020 also provided us with an opportunity to further understand our shareholders’ views with respect to our executive compensation programs, although shareholders inquired about the subject less frequently than in recent years. For details on the executive compensation-related feedback we heard from shareholders and how we responded see “Executive Compensation—Compensation Discussion and Analysis—Engagement with Shareholders on Executive Compensation Topics.”

 

Shareholder feedback is communicated directly to our directors and helps inform Board discussions on a range of key areas. AIG and the Board remain committed to consistent and substantive shareholder engagement and to incorporating shareholder perspectives in our governance and compensation discussions and corporate responsibility initiatives.

 

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Ownership of Certain Securities

 

Ownership of Certain Securities

 

The following table contains information regarding the only persons who, to the knowledge of AIG, beneficially own more than five percent of AIG common stock at January 31, 2021.

 

Name and Address Shares of Common Stock
Beneficially Owned
Number Percent
(%)
BlackRock, Inc.
55 East 52nd Street
New York, NY 10055
76,696,098(1) 8.9
T. Rowe Price Associates, Inc.
100 E. Pratt Street
Baltimore, MD 21202
64,038,129(2) 7.4
The Vanguard Group
100 Vanguard Blvd.
Malvern, PA 19355
80,337,158(3) 9.3
(1)Based on a Schedule 13G/A filed on February 5, 2021 by BlackRock, Inc. reporting beneficial ownership as of December 31, 2020. Item 4 to this Schedule 13G/A provides details as to the voting and investment power of BlackRock, Inc. as well as the right to acquire AIG common stock within 60 days. All information provided in “Ownership of Certain Securities” with respect to this entity is provided based solely on information set forth in the Schedule 13G/A. This information may not be accurate or complete, and AIG takes no responsibility therefor and makes no representation as to its accuracy or completeness as of the date hereof or any subsequent date.

(2)Based on a Schedule 13G filed on February 16, 2021 by T. Rowe Price Associates, Inc. reporting beneficial ownership as of December 31, 2020. Item 4 to this Schedule 13G provides details as to the voting and investment power of T. Rowe Price Associates, Inc. as well as the right to acquire AIG common stock within 60 days. All information provided in “Ownership of Certain Securities” with respect to this entity is provided based solely on information set forth in the Schedule 13G. This information may not be accurate or complete, and AIG takes no responsibility therefor and makes no representation as to its accuracy or completeness as of the date hereof or any subsequent date.

(3)Based on a Schedule 13G/A filed on February 10, 2021 by The Vanguard Group reporting beneficial ownership as of December 31, 2020. Item 4 to this Schedule 13G/A provides details as to the voting and investment power of The Vanguard Group as well as the right to acquire AIG common stock within 60 days. All information provided in “Ownership of Certain Securities” with respect to this entity is provided based solely on information set forth in the Schedule 13G/A. This information may not be accurate or complete, and AIG takes no responsibility therefor and makes no representation as to its accuracy or completeness as of the date hereof or any subsequent date.

 

From time to time, we engage in ordinary course, arms-length transactions with entities or affiliates of entities that are the beneficial owner of more than five percent of our outstanding common stock.

 

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Ownership of Certain Securities

 

 

The following table summarizes the ownership of AIG common stock by (1) each of our current directors, (2) each of our named executive officers included in the 2020 Summary Compensation Table in “Executive Compensation—2020 Compensation” and (3) our current directors and executive officers as a group.

 

  AIG Common Stock Owned Beneficially
as of January 31, 2021
 
Amount and Nature
of Beneficial Ownership(1)(2)
Percent (%) of
Class
 
James Cole, Jr. 0  
W. Don Cornwell 31,121 (3)  
Douglas A. Dachille 260,127 0.03  
Brian Duperreault 1,091,767 0.13  
Lucy Fato 93,914 0.01  
John H. Fitzpatrick 29,857 (3)  
William G. Jurgensen 61,007 0.01  
Christopher S. Lynch 34,438 (3)  
Mark D. Lyons 114,856 0.01  
Henry S. Miller 31,283 (3)  
Linda A. Mills 20,853 (3)  
Thomas F. Motamed 41,503 (3)  
Peter R. Porrino 17,353 (3)  
Amy L. Schioldager 11,988 (3)  
Douglas M. Steenland 36,083 (3)  
Therese M. Vaughan 12,988 (3)  
Peter Zaffino 526,716 0.06  
All current directors and current executive officers of AIG as a group (23 individuals) 2,868,432 0.33  
(1)Amount of equity securities shown includes (i) shares of AIG common stock subject to options which may be exercised within 60 days as follows: Dachille—133,256 shares, Duperreault—851,170 shares, Fato—65,321 shares, Lyons—112,379 shares, Zaffino—466,256 shares and all current directors and current executive officers of AIG as a group—1,830,711 shares; and (ii) DSUs granted to each independent director with delivery of the underlying AIG common stock deferred until such director ceases to be a member of the Board as follows: Cornwell—31,121 shares, Fitzpatrick—29,857 shares, Jurgensen—26,007 shares, Lynch—31,283 shares, Miller—31,283 shares, Mills—20,853 shares, Motamed—16,503 shares, Porrino—17,353 shares, Schioldager—11,988 shares, Steenland—31,283 shares and Vaughan—11,988 shares.

(2)Amount of equity securities shown excludes the following securities owned by or held in trust for members of the named individual’s immediate family as to which securities such individual has disclaimed beneficial ownership: Fitzpatrick—100 shares.

(3)Less than .01 percent.

 

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Delinquent Section 16(a) Reports

 

Delinquent Section 16(a) Reports

 

Section 16(a) of the Securities Exchange Act of 1934 (Exchange Act) requires directors, certain officers, and greater than ten percent holders of AIG common stock to file reports with respect to their ownership of AIG equity securities. Based solely on the review of the Forms 3, 4 and 5 and amendments thereto furnished to AIG and certain representations made to AIG, AIG believes that the only filing deficiency under Section 16(a) by our directors, officers and greater than ten percent holders during 2020 was a late filing by amendment to the original Form 3 filed by Kevin T. Hogan in 2013 relating solely to the number of AIG warrants held directly by Mr. Hogan at the time he became an AIG executive officer.

 

Relationships and Related-Party Transactions

 

RELATED-PARTY TRANSACTIONS APPROVAL POLICY

The Board of AIG has adopted a related-party transactions approval policy. Under this written policy, any transaction between AIG or any of its subsidiaries and any director or executive officer, or their related persons that involves more than $120,000 and would be required to be disclosed in AIG’s Proxy Statement must be approved by the NCGC (or, in certain circumstances where it is impractical or undesirable to seek the approval of the full NCGC, by its Chair, acting on behalf of the full NCGC). In determining whether or not to approve a related-party transaction, the NCGC or its Chair, as applicable, considers:

 

Whether the terms of the transaction are fair to AIG and on terms at least as favorable as would apply if the other party was not or did not have an affiliation with a director, executive officer or employee of AIG;

Whether there are demonstrable business reasons for AIG to enter into the transaction;

Whether the transaction would impair the independence of a director; and

Whether the transaction would present an improper conflict of interest for any director, executive officer or employee of AIG, taking into account the size of the transaction, the overall financial position of the director, executive officer or employee, the direct or indirect nature of the interest of the director, executive officer or employee in the transaction, the ongoing nature of any proposed relationship and any other factors the NCGC or its Chair, as applicable, deems relevant.

 

AIG did not have any related-party transactions in 2020.

 

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Our Executive Officers

 

Our Executive Officers

 

Each of AIG’s executive officers is elected to a one-year term and serves at the pleasure of the Board. There are no arrangements or understandings between any executive officer and any other person pursuant to which the executive officer was elected to such position. Information concerning the executive officers of AIG as of the date hereof is set forth below.

 

Name Title and Biographical Information Age Served
as
Officer
Since

BRIAN DUPERREAULT

 

 

Executive Chair

For information on Mr. Duperreault’s experience, please see “Proposal 1—Election of Directors.”

73 2017

PETER ZAFFINO

 

 

President and Chief Executive Officer 

For information on Mr. Zaffino’s experience, please see “Proposal 1—Election of Directors.”

54 2017

MARK D. LYONS

 

 

Executive Vice President and Chief Financial Officer

Mark D. Lyons joined AIG in June 2018 as Senior Vice President and Chief Actuary and was appointed Executive Vice President and Chief Financial Officer in December 2018. From 2012 until joining AIG, Mr. Lyons served as Executive Vice President, Chief Financial Officer and Treasurer at Arch Capital Group, Ltd., a Bermuda-based global insurance company. Prior to that role, Mr. Lyons had served in various capacities within Arch Insurance U.S. operations, including as Chairman and Chief Executive Officer of Arch Worldwide Insurance Group. Prior to joining Arch Capital Group, Mr. Lyons held various positions at Zurich U.S., Berkshire Hathaway and AIG.

 

64 2018

 

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Our Executive Officers

 

Name Title and Biographical Information Age Served
as
Officer
Since

DOUGLAS A. DACHILLE

 

 

Executive Vice President and Chief Investment Officer

Douglas A. Dachille joined AIG in September 2015 as Executive Vice President and Chief Investment Officer. Mr. Dachille served as Chief Executive Officer of First Principles Capital Management, LLC (First Principles), an investment management firm, from September 2003 until its acquisition by AIG in September 2015. Prior to co-founding First Principles, he was President and Chief Operating Officer of Zurich Capital Markets. Mr. Dachille began his career at JPMorgan Chase, where he served as Global Head of Proprietary Trading and Co-Treasurer.

56 2015

LUCY FATO

 

 

Executive Vice President, General Counsel & Global Head of Communications and Government Affairs

Lucy Fato joined AIG in October 2017 as Executive Vice President & General Counsel and also served as Interim Head of Human Resources from October 2018 to July 2019. She took on additional responsibilities as Global Head of Communications and Government Affairs in November 2020. From October 2016 until joining AIG, she was Managing Director, Head of the Americas and General Counsel at Nardello & Co. LLC, a global private investigative firm, where she remains on the Advisory Board. Previously, she worked at S&P Global (formerly known as McGraw Hill Financial), a financial information and analytics corporation, where she served as Executive Vice President & General Counsel from August 2014 to October 2015, and as a Consultant from October 2015 to October 2016. Prior to that, Ms. Fato was Vice President, Deputy General Counsel and Corporate Secretary at Marsh & McLennan Companies, Inc. from 2005 to 2014. Ms. Fato began her legal career at Davis Polk & Wardwell LLP where she spent fourteen years, including five as a partner in the Capital Markets Group.

 

54 2017

SHANE FITZSIMONS

 

 

Executive Vice President and Chief Administrative Officer

Shane Fitzsimons joined AIG as Global Head of Shared Services in July 2019 and currently serves as Executive Vice President and Chief Administrative Officer. He also oversees AIG’s Shared Services, Financial Planning and Analysis and Corporate Real Estate groups. Prior to joining AIG, he was Group Synergy Officer at TATA Group, an Indian multinational conglomerate from April 2018 to June 2019. Previously, Mr. Fitzsimons served in various operational and financial leadership roles at General Electric Company from March 1994 to September 2017. Prior to his time at General Electric Company, Mr. Fitzsimons spent seven years in public accounting in Ireland and the Netherlands.

 

53 2020

 

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Our Executive Officers

 

Name Title and Biographical Information Age Served
as
Officer
Since

KEVIN T. HOGAN

 

 

Executive Vice President and Chief Executive Officer, Life and Retirement

Kevin Hogan joined AIG as Chief Executive Officer of Global Consumer Insurance in October 2013 and currently serves as Executive Vice President and Chief Executive Officer, Life and Retirement. Prior to joining AIG, Mr. Hogan was Chief Executive Officer, Global Life for Zurich Insurance Group. Prior to Zurich, Mr. Hogan was previously employed by AIG where he began his career and held various positions in Property Casualty and Life and Retirement.

 

58 2013

KAREN LING

 

 

Executive Vice President and Chief Human Resources Officer

Karen Ling joined AIG as Executive Vice President and Chief Human Resources Officer in July 2019. From July 2014 until joining AIG, she served as Executive Vice President and Chief Human Resources Officer at Allergan plc., a pharmaceutical company. Prior to Allergan, Ms. Ling was Senior Vice President, Human Resources, for Merck & Co., Inc.’s Global Human Health and Consumer Care businesses worldwide. She previously served as Group Vice President, Global Compensation & Benefits at Schering-Plough Corporation prior to its acquisition by Merck & Co., Inc. Prior to joining Schering-Plough Corporation, Ms. Ling held various positions at Wyeth, LLC.

 

57 2019

DAVID MCELROY

 

 

Executive Vice President and Chief Executive Officer, General Insurance

David McElroy joined AIG in October 2018 as President and Chief Executive Officer of Lexington Insurance Company and was promoted to President and Chief Executive Officer of North America General Insurance in June 2019. He was promoted to Executive Vice President and Chief Executive Officer, General Insurance in August 2020. Prior to joining AIG, Mr. McElroy served as Executive Chairman of Arch Insurance Group Inc. from January 2018 to July 2018 and as Vice Chairman of Arch Worldwide Insurance Group from October 2017 to December 2017. He previously served as Chairman and Chief Executive Officer of Arch Worldwide Insurance Group from September 2012 to September 2017. Arch Insurance Group, Inc. and Arch Worldwide Insurance Group are divisions of Arch Capital Group, Ltd., a Bermuda based global insurance company. Prior to joining Arch Capital Group, Mr. McElroy served in various leadership roles at The Hartford Financial Services Group, Inc., Reliance National Insurance Company and The Chubb Corporation.

 

62 2020

 

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Our Executive Officers

 

Name Title and Biographical Information Age Served
as
Officer
Since

NAOHIRO MOURI

 

 

Executive Vice President and Chief Auditor

Naohiro Mouri joined AIG in July 2015 as Senior Managing Director of Asia Pacific Internal Audit and was appointed Executive Vice President and Chief Auditor in March 2018. From November 2013 to July 2015, he was a Statutory Executive Officer, Senior Vice President and Chief Auditor for MetLife Japan and, from July 2007 to November 2013, he was Chief Auditor at JP Morgan Chase for Asia Pacific. He has also held chief auditor positions at Shinsei Bank, Morgan Stanley Japan and Deutsche Bank Japan.

 

62 2018

JOHN P. REPKO

 

 

Executive Vice President and Chief Information Officer

John P. Repko joined AIG in September 2018 as Executive Vice President and Chief Information Officer. Additionally, he leads Global Sourcing. Prior to joining AIG, he was Vice President and Global Chief Information Officer of Johnson Controls International plc, a technology and industrial company, taking up this position with the merger of Johnson Controls, Inc. and Tyco International plc. Previously, he worked at Tyco International plc as Senior Vice President, Chief Information Officer and Enterprise Transformation Leader from 2012 to 2016. Prior to joining Tyco International plc, Mr. Repko held various chief information officer roles at Covance Inc., SES Global and General Electric’s GE Americom division.

 

58 2018

 

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Executive Compensation     Letter from the Compensation and Management Resources Committee

 

Executive Compensation

 

LETTER FROM THE COMPENSATION AND MANAGEMENT RESOURCES COMMITTEE

The Board and CMRC remain committed to overseeing executive compensation programs that attract, motivate, reward and incentivize highly qualified leaders, to working with management on initiatives and progress related to human capital management, including diversity, equity and inclusion and to taking into account the experience and feedback of our shareholders.

 

Upon the onset of the COVID-19 crisis and its collateral effects on the global economy in the first quarter of 2020, we pivoted quickly and adapted our approach to executive compensation to address AIG’s changing priorities, while continuing to reinforce the importance of AIG’s in-flight transformation initiatives. The CMRC increased our meeting cadence in 2020, meeting nine times during the year, and deferred taking certain critical compensation-related actions, so that we could monitor the evolving crisis in real-time to ensure we made prudent, informed decisions in a challenging year.

 

While the impact of the COVID-19 crisis on the global economy raised challenges for AIG and the price of our common stock, the strong business fundamentals and substantial work done to de-risk the company’s balance sheet since 2017 left AIG well-positioned to navigate the crisis with remarkable strength and resiliency. In 2020, the named executives continued to work to strengthen AIG’s core businesses and leverage our financial position to strategically deploy our capital in alignment with three strategic priorities: liquidity, capital preservation and de-risking. The named executives also drove significant accomplishments across the company, including:

 

Implemented a robust response to the COVID-19 crisis that provided critical support to our clients, policyholders, partners and communities and prioritized the health, safety and mental well-being of our employees.

 

Took concrete actions to support our diverse employees and position AIG as an ally with movements for racial equality following events in the summer of 2020 that exposed the depth of racial injustice that continues to exist in the U.S. and around the world.

 

Executed a thoughtful, well-coordinated succession plan, leading to Mr. Zaffino becoming President and Chief Executive Officer, Mr. Duperreault becoming Executive Chair and Mr. Steenland becoming Lead Independent Director, in each case effective March 1, 2021.

 

Completed a comprehensive review of AIG’s composite structure, leading to the October 2020 announcement of AIG’s intention to separate its Life and Retirement business from AIG, which we hope will unlock value for our shareholders.

 

The CMRC’s 2020 compensation decisions, which are outlined in detail in our Compensation Discussion and Analysis that follows, balanced rewarding our named executives for their extraordinary leadership through the unprecedented COVID-19 crisis with taking into account the experience of our shareholders in a year of significant global market volatility.

 

Looking ahead, the CMRC will continue to refine and evolve its compensation programs to ensure alignment with our transformation to become a leading insurance franchise and a top performing company.

 

Compensation and Management Resources Committee
American International Group, Inc.

 

W. Don Cornwell (Chair)

Henry S. Miller

Linda A. Mills

Thomas F. Motamed

Therese M. Vaughan

 

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Executive Compensation    Compensation Discussion and Analysis
 

 

COMPENSATION DISCUSSION AND ANALYSIS

 

OUR COMPENSATION DISCUSSION AND ANALYSIS AT A GLANCE

 

Named Executives in 2020 52
Executive Summary 53
AIG’s Journey | Aligning AIG’s Compensation Programs with our Transformation Journey | The Impact of the COVID-19 Crisis on our Executive Compensation Programs | Overview of 2020 Compensation Program and Decisions | Alignment of Pay with Shareholder Experience | Special Awards  
Engagement with Shareholders on Executive Compensation Topics 60
Compensation Design 61
Our Philosophy | Compensation Best Practices | Balanced Compensation Framework | Use of Market Data  
2020 Compensation Decisions and Outcomes 66
2020 Target Direct Compensation | 2020 Base Salary | 2020 Short-Term Incentive Awards | 2020 Long-Term Incentive Awards | Special Awards | Assessment of 2018 Performance Share Units | Indirect Elements of Compensation  
2021 Compensation Program Design and Decisions 89
2021 Short-Term Incentive Program Structure | 2021 Long-Term Incentive Program Structure | Compensation Decisions Relating to the Chief Executive Officer Transition  
Compensation Governance 91
Role of the CMRC | The Annual Process | Compensation Risk  
Additional Information 96
Use of Non-GAAP Financial Metrics | Tax and Accounting Considerations  

 

 

NAMED EXECUTIVES IN 2020

 

Named Executive Title as of December 31, 2020
Brian Duperreault Chief Executive Officer(1)
Mark D. Lyons Executive Vice President and Chief Financial Officer
Peter Zaffino President and Global Chief Operating Officer(2)
Douglas A. Dachille Executive Vice President and Chief Investment Officer
Lucy Fato Executive Vice President, General Counsel & Global Head of Communications and Government Affairs(3)
(1)Mr. Duperreault became Executive Chair, effective March 1, 2021.

(2)Mr. Zaffino was promoted to President and Chief Executive Officer, effective March 1, 2021.

(3)Ms. Fato’s role was expanded to include Global Head of Communications and Government Affairs, effective September 10, 2020.

 

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Executive Compensation     Compensation Discussion and Analysis
 

 

EXECUTIVE SUMMARY

 

AIG’s Journey

     
AIG demonstrated resiliency in 2020 made possible by work to strengthen fundamentals since late 2017  
     
As the COVID-19 crisis spread, AIG pivoted to focus on liquidity, capital preservation and de-risking  
     

Beginning in late 2017, AIG undertook significant foundational work under a committed new leadership team to instill a culture of underwriting excellence and adjust our risk tolerances to minimize volatility. As a result of that work, AIG delivered improved financial and TSR performance in 2019 and entered 2020 in a robust capital and liquidity position. As 2020 began, the leadership team turned their focus to further strengthening our balance sheet, unlocking shareholder value and pursuing strategic change through our multi-year operational transformation initiative, AIG 200.

 

In the first quarter of 2020, the COVID-19 crisis manifested as an unprecedented catastrophe with uncertain severity and duration and had a significant effect on the global economy. Our strong business fundamentals and substantial work done to de-risk the company’s balance sheet left AIG well-positioned to navigate the crisis with remarkable strength and resiliency. Early on in the crisis, the Board and management identified three priority focus areas for AIG—liquidity, capital preservation and de-risking—aimed at protecting and strengthening our balance sheet to enable AIG to effectively manage through the COVID-19 crisis and its collateral effects.

 

Focusing on liquidity and capital preservation provided financial flexibility to weather the volatility of the global capital markets and the ramifications of the COVID-19 crisis on our various lines of business.

Focusing on de-risking enabled our operating companies to maintain their financial strength by reducing market risk exposures, optimizing reinsurance programs, accelerating remediation actions on unprofitable lines of business, divesting legacy liabilities and leveraging transformational initiatives to maximize short-term expense reductions.

 

Early on in the crisis, the global markets suffered an extreme downturn and AIG’s stock price reflected this turmoil, erasing the emerging positive effects of our transformational efforts. However, we continued to work to strengthen our core businesses and leverage our financial position to strategically deploy our capital. Beyond AIG’s focus on maintaining balance sheet strength, AIG implemented a robust response to the COVID-19 crisis by providing critical support to our employees. AIG prioritized the health and safety of our employees by quickly and effectively transitioning 90 percent of our employees to remote work, providing a $500 grant to all employees globally in March 2020, establishing a pandemic loan program and providing employees with two additional paid holidays in April and October 2020 to help them focus on mental health and well-being. Additionally, following events in the summer of 2020 that exposed the depth of racial inequality that continues to exist in the U.S. and around the world, AIG took concrete actions to support its diverse employees and position AIG as an ally with movements for racial equality.

 

Over the course of 2020, we also undertook a comprehensive review of our composite structure as both a property and casualty company and a life and retirement company. We concluded that, over time, a separation of these two businesses could unlock value for our shareholders that could be greater than maintaining our current structure. As such, in October 2020, we announced our intent to separate the Life and Retirement business from AIG. As a resilient AIG emerges from this period of uncertainty, we remain focused on our strong capital position and AIG 200, enabling the pursuit of longer-term strategies while delivering superior value to our clients, distribution partners, shareholders and other stakeholders.

 

In October 2020, AIG also executed on a thoughtful, well-coordinated succession plan, announcing that Mr. Zaffino would become President and Chief Executive Officer, Mr. Duperreault would become Executive Chair and Mr. Steenland would become Lead Independent Director, in each case effective March 1, 2021. The Board is confident that AIG has the right team to lead AIG through the next phase of our journey.

 

Please see “Executive Summary—2020 Highlights” beginning on page 2 for an overview of AIG’s key 2020 performance highlights.

 

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Aligning AIG’s Compensation Programs with our Transformation Journey

As AIG continues its journey to become a leading insurance franchise and a top-performing company, the CMRC refines and evolves the compensation programs to ensure alignment. This was particularly true in 2020, as the COVID-19 crisis led the CMRC to approve changes to our compensation programs to ensure they reflected our strategic priorities in an uncertain operating environment and the effective alignment of pay and performance.

 

 

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The Impact of the COVID-19 Crisis on our Executive Compensation Programs

The onset of the COVID-19 crisis and its collateral effects on the global economy in the first quarter of 2020 required the CMRC to pivot and adapt its approach to executive compensation to address AIG’s changing priorities, while continuing to reinforce the importance of transformation initiatives. Per its usual timelines, target compensation levels were approved in the first months of the new year with incentive plan goals due to be approved in March. However, by March, uncertainties and growing concerns about the magnitude of the potential impact of the COVID-19 crisis led the CMRC to delay the finalization of the STI plan and PSU performance metrics, while proceeding with the grant of stock options and RSUs in order to project stability to the leadership team and employee base. This bifurcated incentive issuance process provided AIG with time to better assess and forecast the potential impact of the COVID-19 crisis on AIG’s short-, medium- and long-term business strategies, and develop metrics that supported our most urgent corporate priorities. The CMRC revisited the STI plan and PSU design and metrics at four meetings between March and July. In May, the CMRC approved the performance metrics for our STI program, which were aligned with AIG’s three priority focus areas of liquidity, capital preservation and de-risking. The CMRC designed a disciplined discretion framework for the STI program, so that overall business performance and business unit performance would be measured by assessing quantifiable results against internal expectations in the context of the COVID-19 crisis. In July, as AIG and the CMRC had better insight into the broad range of potential long-term impacts of the COVID-19 crisis on our business, the CMRC approved metrics for the 2020 PSUs, incorporating Relative Tangible BVPS and relative TSR metrics, to mitigate the need to calibrate absolute long-term goals in the midst of continued uncertainty, and an absolute metric relating to AIG 200 Cumulative Run-rate Net GOE Savings*. While the operating environment remained uncertain, these areas of focus are integral to AIG’s long-term, sustainable growth and resiliency.

 

 
Important aspects of our 2020 executive compensation framework remained consistent with the framework for 2019:
STI awards continued to be based on a combination of Business and Individual Performance Scores combined on a multiplicative basis, meaning if either element is zero, no STI award is earned;
The Individual Performance Score component of STI awards continued to assess performance under four pillars—Financial, Strategic, Operational and Organizational—which reflect various important initiatives for AIG including employee engagement, well-being, and diversity, equity and inclusion;
LTI awards continued to be granted in a combination of PSUs (50%), stock options (25%) and RSUs (25%);
2020 PSUs continued to be subject to performance measures combining financial, operational and TSR metrics; and
Performance requirements for the 2018 and 2019 PSUs granted to our named executives remained unchanged and the CMRC did not use discretion when adjudicating the performance of the 2018 PSU awards for our named executives.
However, other aspects of our 2020 program and some of the underlying details changed to align with our priority focus areas within the context of an uncertain operating environment as a result of the COVID-19 crisis:
The Business Performance Score component of the 2020 STI plan was assessed on a company-wide basis rather than on a business unit basis, reflecting our enterprise-wide focus on liquidity, capital preservation and de-risking;
Business unit accountability was maintained, but through the Financial pillar of our Individual Performance Score assessment in the STI plan in 2020;
Overall business performance and business unit performance were assessed using a disciplined discretion framework that assessed quantifiable results against internal expectations with respect to AIG’s capital and liquidity position and risk profile in the context of the COVID-19 crisis; and
The 2020 PSUs granted as part of our LTI awards were subject to new performance metrics: Relative Tangible BVPS* growth, AIG 200 Cumulative Run-rate Net GOE Savings* and TSR. Both BVPS and TSR will be measured on a relative basis, mitigating the need to calibrate long-term goals that might ultimately be too challenging or too easy to attain. The AIG 200 Cumulative Run-rate Net GOE Savings* goals were unchanged from those developed as part of AIG 200 when it was announced in 2019.
   

 

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2020 Short-Term Incentive Plan

 

 

This approach means that:

Financial performance is considered as part of both the business performance assessment on a company-wide basis, and the individual performance assessment as it pertains to each named executive’s area of accountability;

No payout is earned if the Business Performance Score is zero (even if the Individual Performance Score is greater than zero); and

Individual Performance Score cannot account for more than one-third of the total amount earned.

 

2020 Performance Share Units

 

 

*We make adjustments to U.S. GAAP financial measures for purposes of this performance metric to ensure that results properly reflect management contributions. See Appendix A for an explanation of how this metric is calculated from our audited financial statements.

 

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The CMRC believes that these changes collectively resulted in an executive compensation framework for 2020 that appropriately balanced a performance orientation and pay for performance mindset with the uncertainty that dominated the year, requiring agility from our leaders.

 

Additional information on the programs in place for 2020 can be found under “—2020 Compensation Decisions and Outcomes,” beginning on page 66.

 

Overview of 2020 Compensation Program and Decisions

Our executive compensation program is designed to incentivize and reward performance that supports long-term, sustained value creation, while taking into account the experience of our shareholders. This is achieved through a balanced pay mix that is weighted towards at-risk pay, featuring variable and performance-based pay and a combination of STI and LTI performance metrics that focus on insurance profitability and operational excellence.

 

The table below summarizes our 2020 compensation program and decisions for each named executive. Ms. Fato was the only named executive to receive an individual modifier to her target LTI award for 2020. In granting this individual modifier of 125 percent, the CMRC recognized the additional responsibilities she assumed in October 2018 as Interim Head of Human Resources pending the arrival of Karen Ling in July 2019 and was in recognition of her positive performance in that role, including leading the search process that led to the hiring of Ms. Ling.

 

2020 Compensation Component Duperreault   Lyons   Zaffino   Dachille   Fato(1)
Target compensation, informed by market practices in our peer group
Base Salary $ 1,600,000   $ 1,000,000   $ 1,400,000   $ 1,250,000   $ 1,000,000
Target STI $ 4,500,000   $ 1,900,000   $ 3,000,000   $ 2,500,000   $ 1,900,000
Target LTI $ 12,900,000   $ 3,300,000   $ 8,600,000   $ 4,250,000   $ 3,300,000
Target Direct Compensation $ 19,000,000   $ 6,200,000   $ 13,000,000   $ 8,000,000   $ 6,200,000
Compensation decisions, informed by target compensation and business and individual performance
2020 STI Percent of Target Earned
(Business Performance Score x Individual Score)(2)
  100%(3 )   161%     150%     132%     151%
Business Performance Score   107.5%     107.5%     107.5%     107.5%     107.5%
Business Performance Score, as adjusted   100%(3 )       100%(4 )      
Individual Score   140%(3 )   150%     150%     123%     140%
2020 Actual STI Award $ 4,500,000(3 ) $ 3,059,000   $ 4,500,000   $ 3,300,000   $ 2,869,000
2020 LTI Individual Modifier                   125%
2020 Target LTI Grant   12,900,000     3,300,000     8,600,000     4,250,000     3,950,000
                               
(1)In September 2020, the CMRC approved an increase to Ms. Fato’s target compensation in recognition of her expanded role and responsibilities. Ms. Fato’s base salary increased to $1,000,000, her target STI opportunity increased to $1,900,000 and her target LTI opportunity increased to $3,300,000. The LTI Individual Modifier of 125% was applied to her pre-adjustment target LTI value of $2,600,000.

(2)See the “—2020 Compensation Decisions and Outcomes—2020 Short-Term Incentive Awards” for detailed explanation of the underlying performance considered in assessing the Business and Individual Performance Scores.

(3)In light of AIG’s TSR relative to compensation peers in 2020, the CMRC and Mr. Duperreault determined that (i) the Business Performance Score applied to Mr. Duperreault’s 2020 STI award should be 100%; and (ii) the Chief Executive Officer’s 2020 STI award should be paid at target, notwithstanding AIG’s successful navigation of the unprecedented COVID-19 crisis and Mr. Duperreault’s efforts in executing a well-coordinated Chief Executive Officer succession process, resulting in an Individual Performance Score of 140%.

(4)The CMRC and Mr. Zaffino agreed to lower the Business Performance Score applied to Mr. Zaffino’s 2020 STI award from 107.5% to 100%.

 

As discussed below, the 2018-2020 PSUs were earned at 91 percent of target, with no adjustments made to the metrics, goals or outcome for our named executives given the long-term nature of the program.

 

Additional information on individual pay decisions can be found under “—2020 Compensation Decisions and Outcomes,” beginning on page 66.

 

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Alignment of Pay with Shareholder Experience

   
92% of target pay to our Chief Executive Officer is variable or “at-risk”
 22% of target: realized value of performance-based equity awards made to Chief Executive Officer through 2019
   

Our executive compensation program aligns pay with performance, as demonstrated through a compensation framework where 92 percent of our Chief Executive Officer’s annual target total direct compensation is variable or “at-risk.” We also seek to align pay with shareholder experience by employing metrics and vehicles that provide exposure to stock price movements, and that reward both in-year delivered performance and leading performance indicators critical to long-term success. In 2019, the success of the foundational work undertaken since 2017 was evident in both our financial results and our returns to stockholders, with TSR outperforming the S&P 500 and the median S&P 500 insurance company. Early in 2020, at the beginning of the COVID-19 crisis, the global markets suffered a downturn and AIG’s stock price reflected this turmoil, erasing the emerging positive effects of our transformational efforts. Given the performance-based structure of our executive compensation program, this stock performance has impacted equity payouts and realized equity value for our executives, commensurate with returns to our shareholders.

 

The alignment of pay for performance with the experience of our shareholders is further evidenced through the outcomes earned under our incentive programs over the last four years. In two of the three most recent vesting cycles of PSUs, the earned payout factor was 0 percent. The 2018-2020 PSUs were earned at 91 percent of target, reflecting positive outcomes for two of the three performance metrics as a result of the improved operational performance under our new leadership team. See “—2020 Compensation Decisions and Outcomes—Assessment of 2018 Performance Share Units.”

 

As we continue to improve operational performance to drive transformative growth that will unlock value for our shareholders, realized pay remains low relative to target. This reflects that, while there are improvements in our underlying performance, it has not yet translated into meaningful returns to our shareholders, with most stock option awards underwater. If the leadership team is successful in steering AIG through the COVID-19 crisis, executing the separation of Life and Retirement from AIG and delivering on AIG 200, these actions should result in share price appreciation for our shareholders, and the pay realized by our named executives should also improve.

 

PRE-2020 LONG-TERM INCENTIVE PAY FOR PERFORMANCE
VALUE OF 2016-2019 PERFORMANCE-BASED AWARDS (PSUS AND STOCK OPTIONS)
AS OF DECEMBER 31, 2020*

  
  
Value as of December 31, 2020
  
*Represents value of all performance-based LTI awards (i.e., PSUs and stock options) granted between 2016 and 2019 as a percentage of target value at grant as of December 31, 2020 based on performance levels (as applied to our PSUs) and our stock price. 2019 PSUs assume target performance. Stock option value based on intrinsic value. Messrs. Duperreault and Zaffino and Ms. Fato joined AIG in 2017 and accordingly received no 2016 LTI awards. Mr. Lyons joined AIG in 2018 and accordingly received no 2016 or 2017 LTI awards. Amounts for Messrs. Duperreault, Lyons and Zaffino include new hire stock options that were granted when they joined AIG.

 

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Special Awards

The CMRC is committed to identifying, attracting, motivating, rewarding and retaining highly qualified leaders who drive AIG’s long-term success. These goals were particularly important to the CMRC in 2020, where the strength and performance of our senior leaders made them attractive targets in a competitive market for talent with turnaround experience.

 

The CMRC examined the role of our leadership team in our strategic priority areas and assessed the extraordinary efforts of certain named executives assuming new roles and responsibilities. In recognition of their demonstrated performance, the CMRC approved one-time RSU awards for Messrs. Zaffino and Lyons and Ms. Fato having target values of $10 million, $3 million and $1 million, respectively.

 

In each case, the vesting schedule for the award was aligned with the role of the named executive and the size of the named executive’s award, with Mr. Zaffino’s special award vesting in equal thirds on the third, fourth and fifth anniversaries of the grant date. Further details regarding these awards can be found under “—2020 Compensation Decisions and Outcomes—Special Awards” below.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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ENGAGEMENT WITH SHAREHOLDERS ON EXECUTIVE COMPENSATION TOPICS

     
  Year-round, proactive engagement
  34 meetings with shareholders representing over 50% of shares outstanding
  93.9% of votes cast in favor of say-on-pay in 2020
     

The CMRC views shareholder feedback as an important input into its decisions on executive compensation. AIG has developed a robust shareholder engagement program that ensures an active, year-round, open dialogue with shareholders on various topics. In 2020 we reached out to 57 of our top shareholders and other key stakeholders representing over 79 percent of our shares outstanding with invitations to meet with our management and/or directors. We held 34 meetings with shareholders representing over 50 percent of our shares outstanding.

 

At our 2020 shareholder meeting, 93.9 percent of votes were cast in favor of our say-on-pay resolution. This reinforced the positive feedback we received during our 2019 engagement for the responsive changes made to our programs and support for the executive leadership team. Our engagement in 2020 provided additional insights that were incorporated into the CMRC’s decision-making process this year.

 

Discussions on the topic of executive compensation during our 2020 engagement meetings primarily focused on the potential impact of the COVID-19 crisis on compensation design and outcomes and on AIG’s employees. Our shareholders acknowledged the unique challenges the macro operating environment presented, and they provided directional input reflective of the broader market sentiment which the CMRC had been monitoring. In particular, our shareholders anticipated that a more discretionary approach would be required in the STI plan to address the difficulties in setting appropriate performance goals tied to changing priorities, and they strongly advised against changes to unvested LTI awards. This feedback was underpinned by a continuing ask for pay that aligns with the shareholder experience and that disclosure regarding the eventual decisions made by the CMRC be clear and transparent.

 

Executive Compensation Themes Discussed AIG’s Response to Shareholder Feedback
Many shareholders anticipated that a more discretionary approach would be required in the STI plan as a result of the COVID-19 crisis and expressed a desire for clear disclosures around the CMRC’s decision-making

•  Modified the STI plan approach and metrics, using disciplined discretion to assess performance and determine STI awards

•  Continued commitment to clear and transparent disclosure regarding the application of judgment and discretion in assessing performance outcomes

Shareholders desired fewer changes to LTI programs as a result of the COVID-19 crisis and stressed the need to continue to align long-term awards with the shareholder experience

•  Delayed grant of 2020 PSUs to enable informed review of performance metrics and goal setting following more clarity as to the possible impacts of the COVID-19 crisis on AIG’s long-term strategic priorities

•  Core 2020 PSU goals based on areas of focus integral to AIG’s long-term, sustainable growth

•  Continued use of a three-year relative TSR metric to provide a direct tie to the shareholder experience

Shareholders strongly advised against changes to unvested in-flight LTI award metrics

•  Made no changes to any aspect of the 2018 or 2019 PSUs for the named executives

 

The Board and CMRC remain committed to an ongoing dialogue with shareholders and view these discussions and feedback as important input into the oversight and design of AIG’s executive compensation programs. Additional information on our year-round shareholder engagement program can be found under “Year-Round Shareholder Engagement” beginning on page 41.

 

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COMPENSATION DESIGN

 

Our Philosophy

     
  Long-term oriented
  Strategically aligned
  Risk-balanced
  Talent attracting
     

 

Our compensation philosophy is based on a set of foundational principles that guide both how we structure our compensation program and how we reach compensation decisions. It is intended to be long-term oriented and risk-balanced, enabling us to deploy the best talent across our company for our various business needs. In the face of a global pandemic, these principles continued to be relevant and provided a strong grounding for our decision-making.

 

Consistent with this philosophy, the CMRC evaluates and adjusts the programs annually, balancing our strategic priorities, talent needs, stakeholder feedback and market considerations to ensure the programs continue to meet their intended purpose.

 

Principle Component How We Apply It
We attract and retain the best talent Offer market-competitive compensation opportunities to attract and retain the best employees and leaders for our various business needs

ü   Compensation levels set with reference to market data for talent peers with relevant experience and skillsets in the insurance and financial services industries where we compete for talent

We pay for performance

Create a pay for performance culture by offering STI and LTI compensation opportunities that reward employees for individual contributions and business performance

 

Provide a market-competitive, performance-driven compensation structure through a four-part program that consists of base salary, STI, LTI and benefits

 

ü   Majority of compensation is variable and at-risk

 

ü   Incentives tied to AIG performance, business performance and individual contributions

 

ü   Objective performance measures and goals used, which are clearly disclosed

 

ü   Compensation provides significant upside and downside potential for superior and under performance

We align interests with our shareholders

Motivate all AIG employees to deliver long-term, sustainable and profitable growth, while balancing risk to create long-term, sustainable value for shareholders

 

Align the long-term economic interests of key employees with those of our shareholders by ensuring that a meaningful component of their compensation is provided in equity

 

Avoid incentives that encourage employees to take unnecessary or excessive risks that could threaten the value or reputation of AIG by rewarding both annual and long-term performance

 

Maintain strong compensation best practices by meeting evolving standards of compensation governance and complying with regulations applicable to employee compensation

ü   Majority of compensation delivered in equity-based vehicles

 

ü   Majority of equity-based compensation is performance-based, in the form of PSUs and stock options

 

ü   Named executives subject to risk management policies, including a clawback policy, share ownership requirements both during and for a period following employment and anti-hedging and pledging policies

 

ü   Performance goals are set with rigorous standards commensurate with both the opportunity and our risk guidelines

 

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Compensation Best Practices

AIG is committed to embracing the highest standards of corporate governance. We design our programs to pay for performance in alignment with the expectations of our shareholders and to minimize risk.

 

   
What We Do: What We Avoid:
   

ü   Pay for performance

 

ü   Deliver majority of executive compensation in the form of at-risk, performance-based pay

 

ü   Align performance objectives with our strategy

 

ü   Engage with our shareholders on matters including executive compensation and governance

 

ü   Require meaningful share ownership and retention during employment and for six months following departure

 

ü   Prohibit pledging and hedging of AIG securities

 

ü   Cap payout opportunities under our incentive plans

 

ü   Maintain a robust clawback policy

 

ü   Maintain double-trigger change-in-control benefits

 

ü   Conduct annual compensation risk assessment

 

ü   Engage an independent compensation consultant

û    No tax gross-ups other than for tax equalization and relocation benefits

 

û    No excessive perquisites, benefits or pension payments

 

û    No reloading or repricing of stock options or stock appreciation rights

 

û    No equity grants below 100% of fair market value

 

û    No dividends or dividend equivalents vest unless and until long-term incentive awards vest

 

   

 

Balanced Compensation Framework

Our compensation program is designed to give appropriate weighting to fixed and variable pay, short and long-term performance and business unit and enterprise-wide contributions. We provide three elements of annual total direct compensation: base salary, an STI award and an LTI award in the form of PSUs, stock options and RSUs. Our annual target total direct compensation and mix of components are set with reference to market data for comparable positions at our business and talent competitors. We also provide market-based perquisites and benefits.

 

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Use of Market Data

  Four peer groups
  Reflect competitors for talent, business and investors
  Aligns peer group with intended purpose

We use data for our relevant peer groups to support the key principles of our compensation philosophy, including attracting and retaining the best talent and paying for performance.

 

AIG used four peer groups for executive compensation in 2020: one to inform compensation levels and design, and three for measuring relative performance in our LTI program. Each serves a distinct purpose to enhance relevance of the data being considered.

 

 

Compensation Peer Group Review

In late 2019, the CMRC conducted a review of the compensation peer group with the support of its independent adviser. Six guiding principles were established to inform peer selection:

 

 

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Following this analysis, the CMRC approved the following peer group for 2020 compensation decisions:

 

 

Those companies removed from the peer group did not sufficiently meet the established guiding principles or were no longer standalone listed companies. We believe the new 2020 group comprises companies our shareholders will consider relevant in assessing AIG’s executive compensation. At the time of assessment, AIG ranked at the 58th percentile on total assets, 38th percentile on market cap, the 57th percentile on revenue and the 36th percentile on headcount among our 2020 compensation peer group.

 

Long-Term Incentive Peer Groups

The remaining three peer groups are used for the purpose of assessing relative performance under our LTI program. Beginning in 2019, relative TSR was added as an element of the performance metrics applied to PSUs. For the 2020 PSUs, we also changed the previously used BVPS metric to be measured on a relative basis, to mitigate the challenges of setting long-term goals in the current operating environment. To enhance the alignment of payouts with performance, separate peer groups, each consisting of seven companies, were developed for General Insurance and Life and Retirement, with performance for each peer group assessed separately and combined on a weighted basis. This reflects the different BVPS expectations for each business unit both within AIG and observed in the market. The constituent companies of each peer group are longstanding competitor reference points for each business. In assessing relative TSR performance, these two groups of seven companies are then combined with five other composite insurance companies into a single reference group of 19 companies.

 

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For more information on the definitions and operation of these metrics, see “—2020 Compensation Decisions and Outcomes—2020 Long-Term Incentive Awards.”

 

2020 COMPENSATION DECISIONS AND OUTCOMES

 

2020 Target Direct Compensation

During the first quarter of 2020, the CMRC established target compensation for our named executives, comprising base salary, a target STI opportunity and a target LTI opportunity.

 

2020 Compensation Component     Duperreault     Lyons     Zaffino     Dachille     Fato(1)  
Base Salary   $ 1,600,000   $ 1,000,000   $ 1,400,000   $ 1,250,000   $ 1,000,000  
Target STI   $ 4,500,000   $ 1,900,000   $ 3,000,000   $ 2,500,000   $ 1,900,000  
Target LTI   $ 12,900,000   $ 3,300,000   $ 8,600,000   $ 4,250,000   $ 3,300,000  
Target Direct Compensation   $ 19,000,000   $ 6,200,000   $ 13,000,000   $ 8,000,000   $ 6,200,000  

 

(1)In September 2020, the CMRC approved an increase to Ms. Fato’s target compensation in recognition of her expanded role and responsibilities. Ms. Fato’s base salary increased from $900,000 to $1,000,000; her target STI opportunity increased from $1,750,000 to $1,900,000 and her target LTI opportunity increased from $2,600,000 to $3,300,000.

 

Actual STI awards vary from target based on a combination of business and individual scorecard outcomes. Similarly, LTI award grants can vary from target based on the CMRC’s assessment of a range of factors, including prior-year performance and contributions, consideration of the complexity of expected contributions and the desire to enhance retention and/or provide incremental incentive for future success over the three-year performance period. Only Ms. Fato received an individual modifier to her 2020 LTI award grant. See “—2020 Long-Term Incentive Awards.” Further information on the design and outcomes in relation to each of these elements of compensation is described below.

 

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2020 Base Salary

 

At a Glance:

   Fixed cash compensation

   Represents approximately 8%-16% of a named executive’s annual target direct compensation

   Effective in March of each year, or on a change in role where appropriate

 

Base salary is intended to fairly compensate the named executive for the responsibilities of his or her position, achieve an appropriate balance of fixed and variable pay and provide the executive with sufficient liquidity to discourage excessive risk-taking. The CMRC undertakes an annual review of named executive salaries to determine whether they should be adjusted. In making this determination, the CMRC considers a broad range of factors including role scope, experience, skillset, performance and salaries for comparable positions within the Compensation Peer Group, as well as internal parity among AIG’s executive officers. The following salaries were approved for 2020.

 

Named Executive 2019 Base Salary 2020 Base Salary Percent Increase  
Brian Duperreault $1,600,000 $1,600,000 0%  
Mark D. Lyons $1,000,000 $1,000,000 0%  
Peter Zaffino $1,400,000 $1,400,000 0%  
Douglas A. Dachille $1,250,000 $1,250,000 0%  
Lucy Fato $   900,000 $1,000,000 11.1%  

 

Mr. Duperreault has not received a base salary increase since his appointment in 2017. Ms. Fato was the only named executive receiving a base salary increase in 2020. The CMRC approved the increase to Ms. Fato’s base salary effective September 2020 to reflect the expansion of her role and responsibilities to include Global Communications and Government Affairs.

 

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2020 Short-Term Incentive Awards

 

At a Glance:

   Modified design for 2020 to enhance relevance during a period of uncertainty

   2020 payouts ranged from 100% to 161% of target reflecting:

   The CMRC’s approval of an AIG Business Performance Score of 107.5% applied to the STI decisions for Messrs. Lyons and Dachille and Ms. Fato, reflecting AIG’s significant achievements on our strategic financial priorities against the backdrop of unprecedented market volatility and challenges resulting from the COVID-19 crisis.

   The CMRC’s recognition of significant individual accomplishments by each of the named executives in each of the four strategic pillars—Financial, Strategic, Operational and Organizational.

   A determination by the CMRC and Mr. Duperreault that, in light of AIG’s TSR relative to compensation peers in 2020, (i) the Business Performance Score applied to the 2020 STI decision for Mr. Duperreault should be 100%; and (ii) the Chief Executive Officer’s 2020 STI award should be paid at target, notwithstanding AIG’s successful navigation of the unprecedented COVID-19 crisis and Mr. Duperreault’s efforts in executing a well-coordinated Chief Executive Officer succession process, resulting in an Individual Performance Score of 140%.

   An agreement by the CMRC and Mr. Zaffino to lower the Business Performance Score applied to Mr. Zaffino’s 2020 STI award from 107.5% to 100%.

 

What’s Unchanged for 2020:

    Payouts based on combination of business and individual performance

    Earned awards equal the Business Performance Score (0% to 150%), multiplied by the Individual Performance Score (0% to 150%)

    Individual assessments continue to be based on performance in four core areas (Financial, Strategic, Operational and Organizational)

    Payouts capped at 200% of target

    Subject to clawback

 

Changes for 2020:

    Guiding principle of rewarding for a strong capital position that allows AIG to pursue longer-term strategies that unlock shareholder value

    Business Performance Score in 2020 based on company-wide performance in three strategic priority areas of de-risking, liquidity and capital preservation

    Business performance was measured using a disciplined discretion framework that assessed quantifiable results against internal expectations with respect to the AIG’s capital and liquidity position and risk profile in the context of the COVID-19 crisis

    Financial pillar of the individual assessment included assessment of supporting quantitative financial metrics for the business unit relevant to each named executive

    Mr. Duperreault’s and Mr. Lyons’ 2020 target opportunities increased to address market alignment shortfalls; Ms. Fato’s target opportunity increased in September 2020 in recognition of the expansion of her duties and responsibilities

 

STI awards are designed to drive AIG’s business objectives and strategies and reward for performance delivered during the year. In 2020 the CMRC determined it was appropriate to depart from the design established last year, which was based on quantitative business metrics and an Individual Performance Scorecard. The COVID-19 crisis presented unparalleled uncertainty and resulted in a global economic crisis. Due to the significant work done since 2017 to improve the fundamentals of our businesses and substantially de-risk the company’s balance sheet, AIG was in a strong position entering 2020. The CMRC designed the 2020 STI program to reward for a strong capital position emerging from the COVID-19 crisis with which to

 

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pursue longer-term strategies that unlock shareholder value, including the announcement of the planned separation of AIG’s Life and Retirement business from AIG.

 

The fundamental structure of the STI program is unchanged from 2019: Business and Individual Performance Scores are combined on a multiplicative basis. This combination provides an opportunity to incentivize and reward for both leading and lagging indicators of performance, with a focus on guiding the organization towards balancing profitability, growth and risk. The payout profile for the 2020 STI Plan is also unchanged, with 50 percent of target payable for threshold performance and 150 percent of target payable for maximum performance in each area. Awards are subject to an overall cap of 200 percent of target. The CMRC applied judgment under the disciplined discretion framework of the 2020 STI plan to determine whether performance constituted ‘threshold’, ‘target’, ‘maximum’, or some other level of performance. For performance deemed to fall below threshold no STI awards would be earned.

 

 

  

*We make adjustments to U.S. GAAP financial measures for purposes of this performance metric to ensure that results properly reflect management contributions. See Appendix A for an explanation of how this metric is calculated from our audited financial statements.

 

This approach means that:

 

·Financial performance is considered as part of both the business performance assessment on a company-wide basis, and the individual performance assessment as it pertains to each named executive’s area of accountability;

 

·No payout is earned if the Business Performance Score is zero (even if the Individual Performance Score is greater than zero); and

 

·Individual Performance Score cannot account for more than one-third of the total amount earned.

 

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Business Performance Scorecard

For 2020, the Business Performance Scorecard pivoted from business unit metrics to an assessment of company-wide performance given the uncertainty posed by the COVID-19 crisis. In May 2020, the CMRC established a program to focus on three priority areas of strategic significance: liquidity, capital preservation and de-risking. Within each area, potential actions were identified for management to pursue, although the CMRC purposefully did not establish formal objectives. This deference incentivized management to adopt an agile mindset in navigating the uncertain environment with a fundamental focus on maintaining the financial strength of the holding and operating companies. In the first quarter of 2021, the CMRC assessed performance in each of these three areas as summarized below.

 

Strategic Priority Area Achievements
Liquidity     Liability Management: Implemented measures to actively increase liquidity in the face of the COVID-19 crisis, uncertain government policies and capital market conditions, including a $4.1 billion senior debt offering
      Parent Liquidity: Maintained a strong liquidity position that exceeded all defined limits
Capital Preservation     Operating Company Capital: All Material Tier 1 and Tier 2 Entities were operating at or above their operating ranges at year-end
      General Insurance Capital Position: General Insurance Companies RBC* ratio of 460%—well above the target operating range; implemented letters of credit to maximize AIG UK and Validus Re’s Tier 2 capital
      Life and Retirement Capital Position: Life and Retirement Companies RBC* ratio 433%—well above the operating range; net credit losses were $460 million and net asset downgrades were approximately $700 million of lower excess capital as a result
De-risking     Fortitude Holdings: The sale of Fortitude Holdings in June 2020 significantly de-risked AIG’s balance sheet and generated $2.2 billion in net proceeds
      Private Client Group (PCG): Significantly de-risked the PCG portfolio through a number of significant actions, including the launch of Syndicate 2019, a partnership with Lloyd’s
      Investments: Capitalized on improved market liquidity to make select reductions in risk positions in several sectors
*RBC is a formula designed to measure the adequacy of an insurer’s statutory surplus compared to the risks inherent to the business. The inclusion of RBC measures is not intended for the purpose of ranking any insurance company or for use in connection with any marketing, advertising or promotional activities.

 

The CMRC reviewed AIG’s significant achievements on these strategic priorities against the backdrop of unprecedented market volatility and challenges resulting from the COVID-19 crisis and approved a 2020 Business Performance Score of 107.5 percent, which was applied to the STI decisions for Messrs. Lyons and Dachille and Ms. Fato.

 

Notwithstanding the general 2020 Business Performance Score of 107.5 percent, in light of AIG’s TSR relative to compensation peers in 2020, the CMRC and Mr. Duperreault determined that the Business Performance Score applied to the 2020 STI decision for Mr. Duperreault should be 100 percent. The CMRC and Mr. Zaffino also agreed to lower the Business Performance Score applied to Mr. Zaffino’s 2020 STI award from 107.5 to 100 percent.

 

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Individual Performance Scorecard

Given the importance of our named executives in making and operationalizing decisions that maintain AIG’s capital strength and position AIG for future growth, the CMRC retained an individual performance assessment as part of each named executive’s STI award determination in 2020. The Individual Performance Score is in addition to the Business Performance Score and is based on an assessment of their individual performance in four pillars (Financial, Strategic, Operational and Organizational) for the areas for which they are accountable.

 

 

The CMRC tailored specific areas of focus for each named executive to maximize the alignment of pay with their individual performance. As described above, in 2020 the CMRC pivoted to a company-wide performance assessment in determining the Business Performance Score.

 

To ensure a level of accountability for financial performance at the business unit level was maintained, the Financial pillar portion of the Individual Performance Score in 2020 was based on an assessment of the relevant business financial metrics applicable to the individual’s area of responsibility. These metrics were set based on a thoughtful and deliberate process (See “—Compensation Governance—The Annual Process”). While formal targets were not assigned, the CMRC and Board communicated general expectations for business performance in each area and in the first quarter of 2021 assessed actual performance in the context of those expectations. The financial metrics that each named executive is subject to reflects the scope of responsibility for his or her respective role:

 

Headquarters performance was considered for Mr. Duperreault, Mr. Lyons, Mr. Zaffino (in combination with General Insurance), and Ms. Fato;

General Insurance performance was considered for Mr. Zaffino (in combination with Headquarters); and

Investments performance was considered for Mr. Dachille.

 

The Life and Retirement scorecard is included in the table below because it is an indirect component of the Headquarters performance assessment. While the final score for Headquarters and General Insurance resulted in the same numerical outcome as the Business Performance Score, there is no direct correlation for this outcome.

 

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Business Performance Metric 2020 Actual Assessment*  
Headquarters Direct GOE for full year(1) $1,447 million Target  
Duperreault, Lyons, Zaffino, AIG 200 Cumulative Run-rate Net GOE Savings(1) ~$400 million Above Target  
Fato Weighted Average of General Insurance, Investments and Life and Retirement Performance N/A Above target  
  Headquarters Performance Assessment vs. Expectations 107.5%  
General Insurance Accident Year Combined Ratio, As Adjusted(1) 94.1% Above Target  
Zaffino; indirect component Underwriting Capital—RBC(2) 460% Above target  
of Headquarters Underwriting Capital—Liquidity to Parent $1,318 million Target  
  General Insurance Performance Assessment vs. Expectations 107.5%  
Investments Performance relative to Benchmark +31 bps Above target  
Dachille; indirect component Direct GOE for full year(1) $386 million Above target  
of Headquarters Investments Performance Assessment vs. Expectations 115.0%  
Life and Retirement Normalized Return on Adjusted Segment Common Equity(1) 13.6% Target  
Indirect component of GOE (Net)(1) $1,513 million Below target  
Headquarters Capital—RBC(2) 433% Above target  
  Capital—Liquidity to Parent $2,296 million Above target  
  Life and Retirement Performance Assessment vs. Expectations 102.5%  
*Above Target (101%-150% payout); Target (100% payout); Threshold (50%-99% payout); Below Threshold (0% payout).

(1)We make adjustments to U.S. GAAP financial measures for purposes of this performance metric to ensure that results properly reflect management contributions. See Appendix A for an explanation of how this metric is calculated from our audited financial statements.

(2)RBC is a formula designed to measure the adequacy of an insurer’s statutory surplus compared to the risks inherent to the business. The inclusion of RBC measures is not intended for the purpose of ranking any insurance company or for use in connection with any marketing, advertising or promotional activities.

 

The following tables summarize the 2020 objectives and describe the achievements considered by the CMRC in assessing each named executive’s performance.

 

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Brian Duperreault | Chief Executive Officer

 

Area and Purpose Achievements

Financial

Position AIG for long-term, profitable growth

    AIG delivered strong results in key performance areas for 2020, including:

    Accident Year Combined Ratio, As Adjusted* of 94.1%

    Life and Retirement Normalized Return on Adjusted Segment Common Equity* of 13.6%

    Final score was determined with reference to the Headquarters performance assessment detailed above

    Assessed above target—107.5%

Strategic

Successfully execute key business initiatives, build AIG’s brand as a leading global insurance company and ensure robust succession plans for critical roles

    AIG conducted a strategic review of its portfolio and potential levers for unlocking shareholder value while positioning the enterprise for growth that resulted in the October 2020 announcement of the intent to separate the Life and Retirement business from AIG

    AIG completed the sale of a majority interest in Fortitude Holdings, a de-risking priority

    Partnered with the AIG Board to implement a thoughtful, well-coordinated Chief Executive Officer succession process, resulting in Mr. Zaffino being named as the incoming Chief Executive Officer effective March 1, 2021

Operational

Lead effective COVID-19 response with a focus on employee safety, drive risk management improvements

    In connection with the COVID-19 crisis, AIG expended significant efforts to support employees following rapid decision to shut down offices and stand-up robust remote working for over 40,000 employees; provided a $500 grant to all employees for unforeseen expenses; created a pandemic loan program; and developed a comprehensive Wellness at AIG program

    AIG continued to drive focus on risk-based decision-making and mindset and advanced risk management and governance frameworks to address emerging risks

Organizational

Foster a rewarding and inclusive culture with a focus on talent development, diversity, equity and inclusion, and employee well-being related to the COVID-19 crisis

    Launched an Executive Diversity Council focused on culture of inclusion and belonging, engaging 17,000 employees in Courageous Conversations and implementing a variety of employee suggested programs and initiatives

Brian Duperreault Individual Performance Score: 140%

*We make adjustments to U.S. GAAP financial measures for purposes of this performance metric to ensure that results properly reflect management contributions. See Appendix A for an explanation of how this metric is calculated from our audited financial statements.

 

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Based on these accomplishments, the CMRC determined that Mr. Duperreault exceeded expectations with strong AIG financial performance in light of the unprecedented COVID-19 crisis and his efforts in executing a well-coordinated Chief Executive Officer succession process which culminated in the October 2020 announcement of Mr. Zaffino as the next Chief Executive Officer of AIG, effective March 1, 2021. As a result, the CMRC recommended, and the Board approved, an Individual Performance Score for Mr. Duperreault of 140 percent. In light of AIG’s TSR relative to compensation peers in 2020, the CMRC and Mr. Duperreault determined that the Business Performance Score applied to the 2020 STI decision for Mr. Duperreault should be 100 percent. When combined, these scores resulted in a calculated STI award to Mr. Duperreault of $6,300,000, representing 140 percent of target. However, given AIG’s stock price performance, the CMRC and Mr. Duperreault determined that Mr. Duperreault’s 2020 STI award should be paid at target. Accordingly, Mr. Duperreault’s 2020 STI award was adjusted downward to $4,500,000, representing 100 percent of target.

 

*   In light of AIG’s TSR relative to compensation peers in 2020. The CMRC and Mr. Duperreault determined that (i) the Business Performance Score applied to Mr. Duperreault’s 2020 STI award should be 100%; and (ii) the Chief Executive Officer’s 2020 STI award should be paid at target, notwithstanding AIG’s successful navigation of the unprecedented COVID-19 crisis and Mr. Duperreault’s efforts in executing a well-coordinated CEO succession process, resulting in an Individual Performance Score of 140%.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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Mark D. Lyons | Executive Vice President and Chief Financial Officer

 

Area and Summary
of Goals
Achievements

Financial

Position AIG for long-term, profitable growth

     Determined with reference to the Headquarters performance assessment detailed above

     Assessed above target—107.5%

Strategic 

Provide decision support to execute on key strategies; provide M&A execution support; engage with investors and key ratings agencies; deliver against critical strategic initiatives for Finance

     Participated in a comprehensive review of AIG’s composite structure, including review of strategic, operational, capital and tax implications and developed output that resulted in the October 2020 announcement of intent to separate the Life and Retirement business from AIG

     Led continuous proactive engagement with investors and rating agencies to ensure understanding of AIG’s COVID-19 response and strong capital position against the backdrop of earnings pressures and volatile markets

Operational

Effectively execute against the 2020 Budget and Capital Plan; meet tax and accounting objectives; progress on AIG 200 finance initiatives for 2020; maintain a robust control environment; lead effective crisis response to the COVID-19 crisis regarding business continuity, employee engagement and liquidity

     Successfully executed revised capital plan goals, including a successful raising of $4.1 billion in debt which provided additional financial flexibility in the face of capital market volatility

     Delivered considerable savings through effective tax management solutions, including planning and implementing strategies that protected against the potential expiration of foreign tax credits

     Achieved meaningful accounting outcomes, including the successful implementation of current expected credit losses methodology and progress on the implementation of Long-Duration Targeted Improvements accounting

Organizational

Enhance development and demonstration of leadership competences in interactions within Finance across AIG; continue to develop a best-in class workforce; promote a culture of integrity; improve representation of diverse talent

     Ensured ongoing engagement of the AIG Finance function in a remote work environment through video technology, increased communication, townhalls and ’skip level’ meetings for informal small group discussions

     Continued best practices, filling more senior roles through internal promotions, increasing the proportion of external diverse hires, hosting listening sessions to drive a more inclusive culture, conducting special sessions for high performing employees and early career employees, and furthered early career programs and partnered with Early Careers to increase the diversity of candidate pools

     Active and continued promotion of a culture of integrity through behavior-driven leadership, regular communication and encouraging open dialogue

Mark Lyons Individual Performance Score: 150%

 

Based on these accomplishments, the CMRC determined that Mr. Lyons provided significant contributions to AIG in 2020 well beyond achievement of his individual goals. In particular, the CMRC recognized Mr. Lyons’ essential role in meeting AIG’s key strategic priorities of maintaining liquidity and capital preservation. He also led AIG’s engagement with rating agencies and investors, ensuring recognition from these key stakeholders that the COVID-19 crisis was an earnings event and not a capital event for AIG. As a result, the CMRC approved an Individual Performance Score for Mr. Lyons of 150 percent, which, when combined with the Business Performance Score of 107.5 percent, resulted in an STI payment of $3,059,00, representing 161 percent of target.

 

 

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Peter Zaffino | President and Global Chief Operating Officer

 

Area and Summary
of Goals
Achievements

Financial

Position AIG for long-term, profitable growth

     Determined with reference to the Headquarters and General Insurance performance assessments detailed above

     Both assessed above target—107.5%

Strategic

Execute on General Insurance strategic plan 2020 and drive the planned 2020 AIG 200 actions for operational and financial performance improvement

     Led a comprehensive review of AIG’s composite structure and development of a strategic plan to unlock shareholder value, that resulted in the October 2020 announcement of intent to separate the Life and Retirement business from AIG, pursuit of which was enabled by strengthening of the General Insurance business since 2017

     Designed and operationalized continued General Insurance underwriting improvements and strategic portfolio optimization, including improved underwriting discipline in General Insurance’s North America and International businesses; growth in higher margin lines, continued improvement in the overall mix of business despite the impact of the COVID-19 crisis; the launch of Syndicate 2019 in partnership with Lloyd’s; and achieved significant rate improvement across multiple lines

     Further evolved AIG’s reinsurance program without increasing net exposures and reducing spend enabled by improvements in gross underwriting; purchased additional aggregate protection with favorable terms

Operational

Continue to drive efforts to streamline end-to-end business processes, increase the quality and speed of decision-making, improve data quality and enhance governance processes; lead effective crisis response to the COVID-19 crisis regarding business continuity, employee engagement and liquidity

     Successfully led the AIG 200 transformational initiative including the accelerated execution of certain programs in a remote working environment resulting in AIG 200 Cumulative Run-rate Net GOE Savings* of approximately $400 million, which exceeded target by 30% 

     Led AIG’s COVID-19 response, maintaining high employee engagement and productivity through frequent and transparent communications across the organization and deployment of effective technology and collaboration platforms

     Conducted extensive outreach with regulators, rating agencies and investors to provide assurances regarding AIG’s financial strength and liquidity and ability to manage through the COVID-19 crisis

Organizational

Continue to execute on multi-year General Insurance Human Capital Plan; implement transformation change under AIG 200; promote a culture of integrity; provide leadership to diversity, equity and inclusion actions

     Aggressively pursued talent development commitment by making critical strategic hires, including diverse talent, and evaluating internal talent across the firm to strengthen the leadership bench, improve succession planning, and place needed skills and capabilities in the right roles

     Built an exceptional pipeline of senior leaders, transitioning members of the General Insurance leadership team into new roles, including the promotion of a new Chief Executive Officer of General Insurance in August 2020

Peter Zaffino Individual Performance Score: 150%
*We make adjustments to U.S. GAAP financial measures for purposes of this performance metric to ensure that results properly reflect management contributions. See Appendix A for an explanation of how this metric is calculated from our audited financial statements.

 

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Based on these accomplishments, the CMRC determined that Mr. Zaffino significantly exceeded his expected contributions to AIG in 2020. In particular, the Committee recognized Mr. Zaffino’s exceptional leadership of AIG’s response to the unprecedented COVID-19 crisis in his role as President and Global Chief Operating Officer that enabled AIG to continue to execute on key priorities, including AIG 200 and the strategic decision to separate the Life and Retirement business from AIG. Further, the Committee acknowledged Mr. Zaffino’s leadership of the General Insurance business through most of the year, which saw continued improvement in the face of the significant challenges of the global pandemic. As a result, the CMRC approved an Individual Performance Score for Mr. Zaffino of 150 percent. The CMRC and Mr. Zaffino agreed to lower the Business Performance Score applied to Mr. Zaffino’s 2020 STI award from 107.5 to 100 percent. When combined, these scores, resulted in an STI payment to Mr. Zaffino of $4,500,000, representing 150 percent of target.

 

*  The CMRC and Mr. Zaffino agreed to lower the Business Performance Score applied to Mr. Zaffino’s 2020 STI award from 107.5% to 100%.

 

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Douglas A. Dachille | Executive Vice President and Chief Investment Officer

 

Area and Summary
of Goals
Achievements

Financial

Position AIG for long-term, profitable growth through Investments performance

     Determined with reference to the Investment performance assessment detailed above

     Assessed above target—115%

Strategic

Establish best in class third-party asset management practices and achieve key milestones in the strategic plan; complete Fortitude Holdings transaction

     Led the sale of a majority interest in Fortitude Holdings, a significant de-risking priority

     Exceeded new business goal for third-party asset management with several new client wins, operationalizing the business with a strategic business plan that included clear metrics and deliverables, with a focus on governance

Operational

Contribute to operating structure and transformation work in Investments as part of AIG 200; reinforce a culture of integrity and prudent risk management; lead effective crisis response to the COVID-19 crisis regarding business continuity, employee engagement and liquidity

     Made progress on de-risking the investments portfolio; enhanced governance frameworks that improve transparency and oversight in a range of areas including vendors

     Quickly and successfully pivoted investments team to work from home model while maintaining control levels through protocols such as no voice trading; focused on employee engagement and prioritizing wellness through increased communication, access to resources and virtual events

     Developed and maintained comprehensive COVID-19 stress scenarios

Organizational

Develop a comprehensive Human Capital Management Program to attract, retain, develop and reward top talent; engage teams through cross-functional initiatives; champion diversity efforts to increase representation in under-represented groups

     Successfully realigned Investments senior leadership team responsibilities focused on building internal talent capabilities

     Enhanced recruitment strategy to increase diversity and intern and analyst programs aimed at high-potential candidates with diverse backgrounds; launched a mentoring program and manager training program

     Established a monthly Asset Management Learning Series to promote cross-team collaboration and develop talent and assembled a cross-functional team tasked with developing an ESG Investment framework to address client, consultant and regulatory needs

Douglas Dachille Individual Performance Score: 123%

 

Based on these accomplishments, the CMRC determined that Mr. Dachille’s contributions to AIG in 2020 exceeded expectations. In particular, the CMRC recognized that, at a time of unprecedented market volatility, Mr. Dachille focused on AIG’s strategic priority of de-risking to produce net investment income results that exceeded benchmarks. As a result, the CMRC approved an Individual Performance Score for Mr. Dachille of 123 percent, which, when combined with the Business Performance Score of 107.5 percent, resulted in an STI payment of $3,300,000, representing 132 percent of target.

 

 

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Lucy Fato | Executive Vice President, General Counsel & Global Head of Communications and Government Affairs

 

Area and Summary
of Goals
Achievements

Financial

Position AIG for long-term, profitable growth

     Determined with reference to the Headquarters performance assessment detailed above

     Assessed above target—107.5%

Strategic

Maintain positive relationships with regulators and policymakers; support strategic transactions and de-risking initiatives; and enable actions to strengthen AIG’s balance sheet and liquidity position, and reduce risk, particularly in light of the COVID-19 crisis

     Oversaw and participated in enhanced engagement efforts with global regulators and policymakers, including real time communication regarding the COVID-19 crisis and its impact on AIG’s businesses, employees, policyholders and remote work environment; and responding to a significantly higher volume of requests for data throughout 2020

     Led Legal, Compliance & Regulatory efforts on several strategic transactions and de-risking initiatives, including the sale of a majority interest in Fortitude Holdings; the successful raising of $4.1 billion in debt; the launch of Syndicate 2019 through a novel partnership with Lloyd’s; and the announcement of leadership transitions and the planned separation of the Life and Retirement business from AIG

     Favorably resolved a number of legacy and other complex litigation matters

     Supported the evolution of AIG’s Sustainability agenda and the enhancement of its reporting frameworks; and led AIG’s robust year-round shareholder engagement program, which resulted in meetings with shareholders representing over 50% of AIG’s outstanding shares in 2020

Operational

Support AIG 200 as a member of the Steering Committee; and serve as executive sponsor of Organizational Health Initiatives

     Served as a member of the AIG 200 Steering Committee with a focus on risk and control frameworks, and Organizational Health

     Oversaw Legal, Compliance & Regulatory support of AIG 200 initiatives, including partnerships with third parties to ensure compliance with applicable laws, regulations, and governance protocols in the jurisdictions in which AIG operates

     Led an enterprise-wide initiative to embed Organizational Health programs in AIG 200 workstreams

     Designed an enhanced internal and external communications strategy in connection with the COVID-19 crisis, social unrest in the U.S. and abroad, AIG 200, and leadership transition announcements

Organizational

Promote a culture of integrity and risk awareness; support diversity, equity, and inclusion initiatives; and encourage participation in ERGs and Pro Bono matters

     Oversaw AIG’s Global Compliance department’s efforts and initiatives designed to maintain a robust culture of integrity and compliance framework, particularly in a remote work environment

     Promoted AIG’s diversity, equity, and inclusion goals, including by following the “Rooney Rule” with respect to open positions; and encouraged participation in ERGs and talent development programs, specifically those targeted at developing women and other underrepresented groups

     Oversaw AIG’s award-winning Pro Bono Program; established a new pillar of the Pro Bono Program focused on criminal and social justice reform; and created a full-time position for a Pro Bono Coordinator to reinforce AIG’s commitment to providing legal and other services to those most in need

Lucy Fato’s Individual Performance Score: 140%

 

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Based on these accomplishments, the CMRC determined that Ms. Fato made significant contributions to AIG and demonstrated exemplary leadership on key priorities. In particular, the CMRC recognized Ms. Fato’s success at leading the support of AIG’s employees, and promoting transparent communication with key stakeholders, regarding AIG’s response to the COVID-19 crisis. As a result, the CMRC approved an Individual Performance Score for Ms. Fato of 140 percent, which, when combined with the Business Performance Score of 107.5 percent, resulted in an STI payment of $2,869,000, representing 151 percent of target.

 

 

In summary, 2020 performance resulted in the following STI awards to each named executive relative to his or her target:

 

Named Executive     2020 Target
Short-Term
Incentive Award
    Business
Performance Result
    Individual
Performance
Scorecard Result
    2020 Actual
Short-Term
Incentive
Award
 
Brian Duperreault     $4,500,000     100%(1)     140 % $ 4,500,000(1)  
Mark D. Lyons     $1,900,000     107.5%     150 % $ 3,059,000  
Peter Zaffino     $3,000,000     100%(2)     150 % $ 4,500,000  
Douglas A. Dachille     $2,500,000     107.5%     123 % $ 3,300,000  
Lucy Fato     $1,900,000     107.5%     140 % $ 2,869,000  
(1)In light of AIG’s TSR relative to compensation peers in 2020, the CMRC and Mr. Duperreault determined that (i) the Business Performance Score applied to the 2020 STI decision for Mr. Duperreault should be 100%; and (ii) the Chief Executive Officer’s 2020 STI award should be paid at target, notwithstanding AIG’s successful navigation of the unprecedented COVID-19 crisis and Mr. Duperreault’s efforts in executing a well-coordinated Chief Executive Officer succession process, resulting in an Individual Performance Score of 140%.
(2)The CMRC and Mr. Zaffino agreed to lower the Business Performance Score applied to Mr. Zaffino’s 2020 STI award from 107.5% to 100%.

 

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2020 Long-Term Incentive Awards

 

At a Glance:

     Modified PSU metrics for 2020 to increase the use of relative metrics given market uncertainty, and incorporate an AIG 200 metric following its launch in 2019

 

What’s Unchanged for 2020:

     75% performance-based in PSUs (50%) and stock options (25%); 25% time-based in RSUs

     All equity awards subject to cliff vesting over a three-year time horizon

     Target value established annually informed by market data

     Actual target grant can reflect up to 150% of the target value, informed by factors, including extraordinary achievements, to provide an incremental incentive for future success and/or to enhance retention

     PSU payout capped at 200% of target

     Subject to clawback

 

Changes for 2020:

     Delayed grant of 2020 PSUs until July 2020, providing more time to develop informed metrics and set goals in a challenging environment

     PSUs based on two new metrics (Relative Tangible BVPS* and AIG 200 Cumulative Run-rate Net GOE Savings*) and a new more expansive approach to assessing relative TSR (modifier rather than cap)

     Relative Tangible BVPS* and GOE* metrics assessed on a one-year and three-year basis which, in combination with the use of a relative performance assessment for BVPS and TSR, is intended to most effectively align pay with performance over the next three years

     Mr. Duperreault’s and Mr. Zaffino’s 2020 target opportunities increased to address market alignment shortfalls; Ms. Fato’s target opportunity increased in September 2020 in recognition of the expansion of her duties and responsibilities

*       We make adjustments to U.S. GAAP financial measures for purposes of this performance metric to ensure that results properly reflect management contributions. See Appendix A for an explanation of how this metric is calculated from our audited financial statements.

 

LTI awards, made in the form of AIG equity awards under the LTI plan, represent the largest percentage of a named executive officer’s annual target compensation opportunity, in vehicles that reward long-term value creation, performance achievements and stock price appreciation. In considering awards to named executives, there are several design principles that the CMRC considers, including:

 

üProviding a risk-balanced portfolio of incentive vehicles

üAligning performance with AIG’s strategic direction and trajectory that are within management control

üSimplicity

 

Typically, AIG grants LTI awards in March each year. In March 2020, COVID-19 was already impacting global economies and was on the brink of being declared a global pandemic. There was a great deal of uncertainty in the market regarding the impact the COVID-19 crisis would have on global economies, and the outlook for AIG was challenging to project. The CMRC determined that, while it was appropriate to proceed with determining the total target LTI award for each named executive and granting stock options and RSUs to provide a degree of continuity and certainty to all participants, it was prudent to delay the grant of PSUs. This provided time to better understand the potential impact of the COVID-19 crisis on our businesses, for global economies to partially stabilize, and to update our performance expectations for the year. In turn this enabled a more informed determination of appropriate long-term performance metrics that would successfully align pay

 

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and performance over the next three years as our named executives led AIG through the COVID-19 crisis and its collateral effects on the global economy.

 

As a result of this review, which spanned four CMRC meetings, two new performance metrics were identified to reflect our priorities in a COVID-19 environment: Relative Tangible BVPS* and AIG 200 Cumulative Run-rate Net GOE Savings*. Changing the measurement of the BVPS metric from an absolute normalized basis to a relative tangible basis against defined peer groups mitigated the need to predict long-term performance and set rigorous absolute goals during an uncertain period. Details of these metrics are summarized below and discussed in more detail under “—2020 Performance Awards—Performance Share Units (50%).”

 

*We make adjustments to U.S. GAAP financial measures for purposes of this performance metric to ensure that results properly reflect management contributions. See Appendix A for an explanation of how this metric is calculated from our audited financial statements.

 

 

All vehicles are subject to a three-year time horizon, with cliff vesting on January 1, 2023, following the three-year period and are covered by AIG’s clawback policy, further enhancing long-term alignment with shareholder interests and retention impact. We believe providing this mix of PSUs, stock options and RSUs continues to support maintaining a high-performance culture and attracting and retaining key talent through competitive compensation opportunities that do not encourage excessive risk-taking.

 

When determining the appropriate LTI awards to grant, the CMRC considers whether to modify any individual LTI award grants. The actual target LTI award granted can reflect up to 150 percent of an individual’s target value, based on the CMRC’s assessment of a range of factors, including consideration of prior year performance and contributions, the complexity of expected contributions and the desire to enhance retention and/or provide incremental incentive for future success over the three-year performance period.

 

Ms. Fato was the only named executive to receive a modification to her LTI grant in 2020. This individual modifier of 125 percent reflected additional responsibilities she assumed in October 2018 as Interim Head of Human Resources pending the arrival of Karen Ling in July 2019 and was in recognition of her performance in that role, including leading the search process that led to the hiring of Ms. Ling. Separately, on the expansion of Ms. Fato’s role in September 2020 to include Global Communications and Government Affairs, her annual LTI target value was increased to $3,300,000 resulting in an additional LTI award of $700,000 in September 2020. This represented the incremental additional grant value, prior to the application of the individual modifier. No individual modifier was applied to the September award. This award took the same form in terms of mix and performance metrics as the award received earlier in the year.

 

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In 2020, the CMRC approved the following target LTI values and actual target LTI grants for the named executives:

 

Named Executive   2020 Target LTI
Value
  2020 Individual
Modifier
  2020 Target LTI
Grant Value
 
Brian Duperreault   $ 12,900,000       $ 12,900,000  
Mark D. Lyons   $ 3,300,000       $ 3,300,000  
Peter Zaffino   $ 8,600,000       $ 8,600,000  
Douglas A. Dachille   $ 4,250,000       $ 4,250,000  
Lucy Fato(1)   $ 3,300,000     125%   $ 3,950,000  
(1)Total award comprises (i) Ms. Fato’s target LTI opportunity prior to the expansion of her role and responsibilities ($2,600,000), modified by 125% ($2,600,000 x 125% = $3,250,000); and (ii) an additional LTI grant of $700,000 relating to the increase to her target opportunity she received in connection with her role expansion in September 2020, resulting in a total 2020 LTI grant of $3,950,000. Ms. Fato’s total target LTI value for 2020, prior to the application of the individual modifier was $3,300,000.

 

In making the actual awards, the CMRC approved target dollar amounts that are converted into a number of PSUs, RSUs and stock options. The number of PSUs and RSUs in an annual grant is based on the average closing price of AIG common stock over the five trading days preceding the grant date, rounded down to the nearest whole unit. The number of stock options is based on the grant date fair value of a stock option to purchase a share of AIG common stock. In 2020, the annual grant date for RSUs and stock options was in March, and for PSUs was in July. The number of any PSUs or RSUs granted outside of the annual grant process is based on the average closing price of AIG common stock over the first five trading days of the month of the offer of employment or effective month of a promotion, as applicable.

 

2020 Performance Awards

 

Performance Share Units (50%)

The 2020 PSU awards can be earned based on performance over a period of three years. The approach for 2020 was established with careful consideration to the uncertain duration and ultimate impact of the COVID-19 crisis. The grant of awards was delayed from March to July, given the lack of visibility as to the true dimensions of the COVID-19 crisis and the related market volatility at the time which made it challenging to establish performance goals in light of evolving strategic priorities. To address concerns regarding goal setting and ensuring the successful alignment of pay with performance the CMRC approved a plan that combines Relative Tangible BVPS* growth on an additive basis with AIG 200 Cumulative Run-rate Net GOE Savings* under our AIG 200 strategy, subject to a relative TSR modifier.

 

*       We make adjustments to U.S. GAAP financial measures for purposes of this performance metric to ensure that results properly reflect management contributions. See Appendix A for an explanation of how this metric is calculated from our audited financial statements.

 

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These performance metrics will be critical to AIG emerging from the COVID-19 crisis stronger, in a position to unlock further value for shareholders.

 

Metric Description Why It Matters to AIG
Relative Tangible
BVPS(1)
To enhance the alignment of payouts with performance, separate peer groups were developed for General Insurance and Life and Retirement. This reflects the different BVPS expectations for each, both within AIG and observed in the market. To assess aggregate performance, the outcome related to each group will be weighted on a 60% (General Insurance) and 40% (Life and Retirement) basis, reflecting AIG’s portfolio mix. Measures AIG’s progress as compared to peers on a key performance metric that drives stock performance
AIG 200 AIG 200 Cumulative Run-rate Net GOE Savings(1) Measures the success of our transformation program’s sustainable impact on AIG’s overall cost structure
Relative TSR

TSR delivered during the period from July 1, 2020 ending December 31, 2022 relative to a custom group of AIG peers(2)

 

Peer group comprises BVPS peers for General Insurance and Life and Retirement peers, and five additional composite insurance companies

 

If AIG TSR is in the top quartile, payouts are increased by 10%; if AIG TSR is in the lower quartile, payouts are reduced by 10%.

Measures our success in delivering market competitive returns to shareholders as compared to peers
(1)We make adjustments to U.S. GAAP financial measures for purposes of this performance metric to ensure that results properly reflect management contributions. See Appendix A for an explanation of how this metric is calculated from our audited financial statements.

(2)TSR calculated based on (i) the average stock prices for the month preceding the performance period; and (ii) the average stock prices for the final month of the performance period.

 

To reflect the ongoing global economic uncertainty, the Relative Tangible BVPS and AIG 200 Cumulative Run-rate Net GOE Savings goals combine one-year and three-year performance horizons. This dual perspective uses one-year goals to mitigate the risk of setting unrealistic three-year goals while maintaining executives’ focus on three-year performance.

 

The performance assessment comprises three components as detailed below.

 

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Performance assessed over three one-year periods and a combined three-year performance period

Final score reflects three-year performance, but not less than the average annual performance scores

Rank 1st 2nd 3rd 4th 5th 6th 7th 8th
Payout 200% 175% 150% 100% 100% 75% 50% 0%
Results weighted 60% for General Insurance and 40% for Life and Retirement, reflecting AIG’s portfolio mix
Relative performance is assessed against two distinct groups of peers (General Insurance peers and Life and Retirement peers)

Performance is assessed against each group separately to determine the payout

The final score is calculated by combining the General Insurance and Life and Retirement payouts on a weighted basis (60/40)

Payout is capped at 75% if AIG ranks 8th on three or more of the six one-year periods (three one-year periods measured relative to each of the General Insurance and Life and Retirement peers)

For a list of the General Insurance and Life and Retirement peers, see”—Compensation Design—Use of Market Data—Long-Term Incentive Peer Groups”

 

 

Performance assessed over three one-year periods and a combined three-year performance period

Final score reflects three-year performance, but not less than the average annual performance scores

 

  AIG 200 Cumulative Run-rate Net GOE Savings*
  2020 2021 2022
Threshold (50%) $150 M $350 M $700 M
Target (100%) $200 M $450 M $850 M
Stretch (150%) $300 M $600 M $1,000 M
Maximum (200%) n/a n/a $1,200 M
Payout is capped at 75% if AIG 200 Cumulative Run-rate Net GOE Savings* by 2022 are below $700M

Performance is assessed relative to this grid to determine the level of payout that has been earned