2013 Short-Term Incentive Plan by AMERICAN INTERNATIONAL GROUP INC
Company: AMERICAN INTERNATIONAL GROUP INC
SEC CIK: 5272
SEC Type: EX-10.4
SIC Code: 6331
SIC Industry: FIRE, MARINE & CASUALTY INSURANCE
Date Filed: 2013-03-27
American International Group, Inc.
2013 Short-Term Incentive Plan
The purpose of the American International Group, Inc. 2013 Short-Term Incentive Plan (the Plan) of the American International Group, Inc. (AIG and together with its consolidated subsidiaries, the Company) is to strengthen our pay-for-performance culture by rewarding employees for overall AIG, Business/Functional Segment and individual performance during the Performance Year (as defined in Section 3 below) and to provide the Company with effective means of attracting, retaining and motivating employees and encouraging the continued commitment of participants on behalf of the Company and its Business/Functional Segments. Incentive Awards under the Plan will be in the form of cash. Capitalized terms not otherwise defined herein shall have the meaning set forth in the Glossary of Terms set forth in Appendix C.
All full and part-time employees of the Company, excluding external contractors, independent contractors, temporary workers and independent agents (the Participants) are eligible to participate in the Plan, unless the employee is a participant in another variable pay or sales plan that the business has determined is in lieu of the Plan during the Performance Year. Being eligible for any bonus plan that is required to be provided under local law shall not cause an employee who satisfies the definition above to lose eligibility for this Plan (unless the business expressly elects to so exclude such employee). Subject to Sections 7 and 11 and Appendix B, in order to be eligible to be a Participant in this Plan for a Performance Year, the employee must be employed by the Company in the Performance Year. Employees who have an employment contract with AIG or its subsidiaries for ongoing employment of unlimited duration and that is not confined to a specific, finite project will not be excluded from being eligible to participate in this Plan.
The Plan will operate for successive one calendar year (January 1 December 31) periods (each, a Performance Year) until the Plan is terminated by the CMRC (as defined in Section 4 below). The first Performance Year will be from January 1, 2013 through December 31, 2013.
|4.||Funding Approval and Plan Administration|
A. In General
The aggregate Funding of the Plan (the amount that represents the sum of the Business/Functional Segment Short-Term Incentive Pools) is approved by the members of the Compensation and Management Resources Committee of AIGs Board of Directors (the CMRC). Compensation Center of Excellence (Compensation COE) under the direction of the Executive Group then allocates portions of the Funding to each of the Business/Functional Segments (the Business/Functional Segment Funding).
B. Funding Approval
The Funding approval process begins with an assessment by the CMRC of the Companys overall performance against pre-determined goals and objectives. Next, the CMRC determines how each Business/Functional Segment performed against its pre-determined goals. If a Business/Functional Segments performance exceeded its pre-determined goals, funding of the Business/Functional Segments Short-Term Incentive Pool above 100% will only be permitted if the Companys overall performance meets or exceeds the minimum threshold of the Companys goals and objectives.
The CMRC determines the performance metrics and a threshold, target and maximum achievement level for each metric within the first ninety (90) days of a Performance Year. For Business/Functional Segments that are business units, the performance metrics are specific to the business unit. For Business/Functional segments that are the global functional units, the performance metrics are a mix of AIG and functional unit metrics. Following the end of the Performance Year, the CMRC will measure and certify performance against the performance metrics. The CMRCs assessment of performance against the pre-determined goals will be expressed in the form of a Modifier ranging from 0% to 125%. The Modifier will be determined based upon whether performance is at minimum, target or maximum achievement levels. Each Business/Functional Segment may be assigned a Modifier that, when applied to the targeted amount of the Short-Term Incentive Pool for that Business/Functional Segment, will be used to establish the Business/Functional Segments Short-Term Incentive Pool. Once the process described above is complete, the CMRC will approve the aggregate Funding at the Company level.
Additionally, final pool sizes are subject to adjustment at the discretion of the Executive Group and the CMRC to ensure that the Plan rewards all Participants appropriately and in the intended manner.
Excluded from the Funding are any guaranteed bonuses pursuant to an individual offer letter or employment agreement.
C. Plan Administration
The Plan is administered by the CMRC who, in its sole discretion and subject to Section 22, may allocate among its members and delegate to any person who is not a member of the CMRC any of its powers, responsibilities or duties under the Plan, including, but not limited to delegating (i) all or a portion of the day-to-day administration of the Plan to the Compensation COE and (ii) Plan interpretation issues to a committee (the Plan Interpretation Committee) consisting of the highest level executive overseeing each of Compensation and Benefits, Human Resources Legal, and Employee Relations. The CMRC will have the power to construe, interpret and implement this Plan, to make rules for carrying out its purposes and to make all other determinations in connection with its administration, all of which will, unless otherwise determined by the CMRC, be final, binding and conclusive.
|5.||Individual Participant Target and Performance Measurement|
For each Performance Year, each Participant will be assigned an annual Incentive Target Amount by the CMRC or the applicable Business/Functional Segment in which the Participant
is Employed, expressed as a flat local currency amount, which takes into consideration the Participants job grade, business, local market, job scope, responsibilities and experience. The Participants performance during the Performance Year will be determined by the CMRC or the applicable Business/Functional Segment in which the Participant is Employed in accordance with Appendix A (the Performance Measurement Methodology), which will result in a Relative Performance Rating (RPR) for the Participant and an Incentive Opportunity Percent that corresponds to the RPR.
|6.||Calculation of Incentive Payment/Determination of Awards|
A. As described in this Section 6, each Participants Incentive Award Recommendation will take into account the Participants RPR, the Incentive Target Amount, the Incentive Opportunity Range as described in Appendix A and the Short-Term Incentive Pool that was approved for the Participants Business/Functional Segment as outlined in Section 4B.
B. Subject to the Funding limit described in Section 4, once the Participants performance has been determined, the CMRC or the Participants manager, as applicable, uses discretion, taking into account the Participants RPR, to multiply the Participants Incentive Target Amount by the Incentive Opportunity Percent to arrive at the Participants Incentive Award Recommendation. The Participants Incentive Award Recommendation will then be adjusted by the applicable Modifier that was determined in Section 4B. Following the application of the Modifier, the CMRC or the Participants manager, as applicable, has the discretion to further revise the Participants Incentive Award Recommendation. In the event an individual is hired after the Performance Year commences, the individual may become a Participant in the Plan and be assigned an annual Incentive Target Amount which is based on the job grade, business, local market, job scope, responsibilities for the position, as well as the Participants experience; provided, however, the amount of the Incentive Award may be pro-rated to reflect the portion of the Performance Year that such Participant worked for the Company.
C. The total Incentive Award Recommendations (after each has been adjusted by the applicable Business/Functional Segment Modifier) must not exceed the Funding approved by the CMRC pursuant to Section 4B. The CMRC or the applicable Business/Functional Segment is responsible for allocating awards among the Participants based on the applicable Business/Functional Segments Short-Term Incentive Pool in accordance with the guidelines set forth in Appendix A.
D. The Compensation COE will conduct validation analyses to determine that the Plan is generally operated in accordance with the Performance Measurement Methodology in Section 5 and Appendix A, and in accordance with paragraphs 6A and 6B as well as to determine whether the Incentive Award percentages are differentiated for each RPR level as a whole in accordance with the range for that level. It will also prepare an exception report for the Executive Groups review.
E. Aggregate Business/Functional Segment recommendations are presented to the CMRC for approval no later than March 31st following the Performance Year. On such date or dates following such CMRC approval as the CMRC determines in its sole discretion, but no later than April 30th following the Performance Year (the Award Date), each Participant will be granted
an Incentive Award equal to the Participants final Incentive Award Recommendation as adjusted by the applicable Modifier, payable pursuant to Section 7. The CMRC expressly reserves the right not to pay an Incentive Award to any, some or all Participants for a Performance Year.
|7.||Vesting; Payout of Incentive Award|
A Participant must be Employed by the Company on the Award Date to be eligible to receive his or her Incentive Award except to the extent provided in Section 11 and Appendix B. Each Incentive Award will be fully-vested on the Award Date. Except as provided in the paragraph below, Incentive Awards will be paid 100% in cash on the Award Date.
Prior to March 31 of a Performance Year, the CMRC may determine that all or a specified percentage of a Participants Incentive Award will be a Deferred Award, in which case such Incentive Award will be paid in cash on March 1 of the year following the year in which the Award Date occurs. For the 2013 Performance Year, 50% of Incentive Awards for Participants in grade level 27 and above will be Deferred Awards.
To the extent a Participant does not receive a payment for a Performance Year on or before March 15 of the calendar year following the year in which the Award Date occurs, the Participant shall forfeit all rights to payment.
|8.||Limitation of Incentive Payment under Certain Conditions|
In the event any Incentive Award payment received or to be received by any Participant under this Plan would be subject to the excise tax imposed by Section 4999 of the Code or any similar or successor provision to Section 4999 (the Excise Tax) then, at the discretion of the Chief Human Resources Officer such Incentive Award payment shall be reduced up to the largest amount which would result in no portion of the Incentive Award payment being subject to the Excise Tax. The determination of any such reduction pursuant to this Section 8 will be made by the Executive Vice President, Human Resources (or, in the event no individual with such a title is employed by the Company, then the most senior Human Resources executive overseeing the entire global Human Resources function of the