| Item 5.02 | Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain
Officers. |
Peter Zaffino Employment Agreement
On November 10, 2022, American International Group,
Inc. (the “Company” or “AIG”) and Peter Zaffino, the Company’s President & Chief Executive Officer and
Chairman of the Board of Directors (the “Board”), entered into an employment agreement (the “Employment Agreement”),
pursuant to which Mr. Zaffino will continue to serve as the Company’s President & Chief Executive Officer for a five-year employment
term which will continue through November 10, 2027. During the term of the Employment Agreement, Mr. Zaffino will be nominated to continue
to serve as a member of the Board and, if elected by AIG’s shareholders as a director, will continue to serve as Chairman of the
Board, in accordance with the voting standards set forth in AIG’s By-Laws and Corporate Governance Guidelines.
As consideration for AIG’s entry into the Employment
Agreement, including the Special RSU Grant (both of which are described in further detail below), Mr. Zaffino will be subject to new non-competition
restrictions that apply during his employment and for a period of one year following his termination of employment for any reason other
than upon expiration of the five-year term (which represents an expansion from his existing six-month non-compete that applied only in
limited instances), and he will otherwise remain subject to his one-year non-solicitation and perpetual confidentiality obligations. In
addition, Mr. Zaffino will be required to provide AIG with at least 12 months’ notice prior to a termination of his employment without
good reason or due to his retirement (which represents an expansion from his existing six-month notice period).
Under the Employment Agreement, Mr. Zaffino will
receive an annual base salary of $1,500,000 and will continue to be eligible to receive a target annual cash bonus of $4,500,000, determined
based on the Board’s assessment of corporate and individual performance goals under AIG’s Annual Short-Term Incentive Plan.
In addition, Mr. Zaffino will be eligible to receive an annual award under AIG’s Long-Term Incentive Plan, which annual award will
have a grant date target value of $14,000,000 and will now be comprised 75% of performance share units and 25% of stock options (which
represents a shift toward a more performance-based award mix as compared to the Company’s historic annual long-term incentive award
mix comprised 50% of performance share units, 25% of stock options and 25% of restricted stock units).
In recognition of Mr. Zaffino’s continued leadership
and the highly competitive market for talent, the Board approved a special, one-time grant to Mr. Zaffino in the form of restricted stock
units having a grant date value of $50,000,000 (the “Special RSU Grant”). The Special RSU Grant will cliff vest in full on
November 10, 2027, subject to Mr. Zaffino’s continued employment with AIG through such date (except as described below).
The Special RSU Grant reflects the Board’s
expectation that Mr. Zaffino will continue to provide exceptional leadership to the Company for at least an additional five years. In
developing the Special RSU Grant, the Board considered the critical nature of retaining Mr. Zaffino to lead the Company over the long
term, his exceptional performance since joining AIG in 2017, and the importance of leadership continuity as the Company continues to execute
on significant strategic and operational initiatives, including continued profitability improvement in the General Insurance business,
AIG’s reinsurance strategy, the continued operational separation of Corebridge Financial, Inc. and eventual full separation of Corebridge
from AIG, and the redesign of AIG’s investment management strategy. The Board also expects that Mr. Zaffino will continue to build
on his prior achievements, which include AIG’s strong financial results, particularly over the last two years, his exceptional leadership
and financial, technical and operational capabilities, the recruitment of high-caliber executives to AIG across the global organization,
and his significant contributions to AIG’s overall performance during his tenure, including during the COVID-19 pandemic, an unstable
geopolitical environment, and volatile market conditions.
In the event of a termination of Mr. Zaffino’s
employment by AIG without “cause” or if he resigns for “good reason” (each as defined in the Employment Agreement),
Mr. Zaffino will be eligible to receive severance payments and benefits that are substantially comparable in amount to those he would
have been eligible to receive under the
AIG Amended and Restated 2012 Executive
Severance Plan, as modified by his offer letter with the Company, dated February 11, 2021 (the “Prior Agreement”)
(including, for the avoidance of doubt, accelerated vesting of his outstanding equity awards). In addition, if Mr. Zaffino’s
employment terminates due to his death, disability or retirement or upon
expiration of the initial five-year employment term, he will be eligible to receive (i) a pro rata bonus for the year of termination
and (ii) accelerated vesting of unvested equity awards. All severance payments and benefits payable to Mr. Zaffino under the
Employment Agreement are subject to his execution and non-revocation of a release of claims.
A copy of the press release announcing the Company’s
entry into the Employment Agreement with Mr. Zaffino is attached as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated
by reference herein. The descriptions of the Employment Agreement and Special RSU Grant set forth above are qualified in their entirety
by the Employment Agreement and the award agreement governing the Special RSU Grant, copies of which will be filed as exhibits to the
Company’s Annual Report on Form 10-K for the fiscal year ending December 31, 2022.