Item 5.02
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Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
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(c) On July 5, 2017, American International Group, Inc. (AIG) announced that it appointed Peter Zaffino as Executive Vice President and Global
Chief Operating Officer, effective August 1, 2017.
Mr. Zaffino, age 50, has more than 25 years of experience in the insurance and reinsurance
industry. He previously served, since 2011, as the Chief Executive Officer of Marsh LLC, a global insurance brokerage and risk management firm and a subsidiary of Marsh & McLennan Companies, Inc. (MMC), and also served as
Chairman of the Risk and Insurance Services segment of MMC since 2015. Mr. Zaffino was also a member of MMCs Executive Committee since 2008. Prior to his being named Chief Executive Officer of Marsh LLC, Mr. Zaffino as President and
Chief Executive Officer of Guy Carpenter & Company, LLC, a global risk and reinsurance firm and also a subsidiary of MMC (Guy Carpenter), having previously held a number of senior roles at the firm. Prior to joining Guy
Carpenter in 2001, he held several senior positions, including serving in an executive role with a GE Capital portfolio company.
In connection with
Mr. Zaffinos appointment, AIG and Mr. Zaffino entered into a letter agreement (the Letter Agreement) establishing Mr. Zaffinos initial compensation, which will consist of an annual base salary of $1.25 million,
a short-term annual incentive target of $3 million and an annual long-term incentive award of $4.25 million. For 2017, consistent with AIGs compensation program for other executive officers, Mr. Zaffinos long-term incentive award is
70% in the form of performance share units earned based on achievement of performance criteria for the three-year performance period covering January 2017 through December 2019, and 30% in the form of restricted stock units earned based on continued
employment through such three-year period.
In addition, in consideration of compensation foregone from his prior employer, Mr. Zaffino will receive
a one-time, sign-on award having a target value of $15 million (the Sign-on Award). Part of the Sign-on Award will be in the form of stock options (the Stock Options) to purchase 1,000,000 shares of AIG common stock (the
Shares). The Stock Options will have an exercise price equal to the fair market value per Share on the grant date, a seven-year term and will vest as follows:
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Stock Options for 333,000 Shares will vest in equal, annual installments on each of the first three anniversaries of the grant date;
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Stock Options for 200,000 Shares will vest only if, for twenty consecutive trading days, the closing price per Share is at least $10.00 over the closing price on August 1, 2017 (the Reference Price),
but in no event will these Stock Options vest faster than in equal, annual installments on each of the first three anniversaries of the grant date;
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Stock Options for 200,000 Shares will vest only if, for twenty consecutive trading days, the closing price per Share is at least $20.00 over the Reference Price; and
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Stock Options for 267,000 shares will vest only if, for twenty consecutive trading days, the closing price per Share is at least $30.00 over the Reference Price.
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The Stock Options are exercisable only after vesting and are issued under, and subject to the terms of, the AIG 2013 Omnibus Incentive Plan. The remainder of
the Sign-on Award ($15 million minus the grant date fair value of the Stock Options) will be paid in cash, fifty percent on February 28, 2018 and fifty percent on January 31, 2019, subject to Mr. Zaffinos continued employment
through such dates.
Any bonus, equity or equity-based award or other incentive compensation granted to Mr. Zaffino will be
subject to the AIG Clawback Policy (and any other AIG clawback policies as may be in effect from time to time). Mr. Zaffino will be entitled to severance in accordance with AIGs Executive Severance Plan. Pursuant to the Letter Agreement,
Mr. Zaffinos employment with AIG is contingent upon his agreement to fully liquidate any ownership position he holds in MMC and its affiliates as soon as practicable, but in no event later than with 10 business days after the expiration
of MMCs blackout period in relation to second quarter 2017 earnings.
There are no arrangements or understandings between Mr. Zaffino and any
other persons pursuant to which he was selected as an officer. Mr. Zaffino has no direct or indirect material interest in any transaction required to be disclosed pursuant to Item 404(a) of Regulation S-K.
The foregoing summary is qualified in its entirety by reference to the Letter Agreement and the related form of Stock Option award agreement, which are
attached as Exhibits 10.1 and 10.2 to this Current Report on Form 8-K, respectively, and which are incorporated by reference.