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August 27, 2014

 

Mr. Philip Fasano

816 Leigh Mill Road

Great Falls, VA 22066

Email: fasanophil@gmail.com

 

Dear Phil:

 

We are pleased to confirm the terms of your joining American International
Group, Inc. (“AIG”):

 

·      Start Date.  Your start date will be on or about November 3, 2014 (“Start
Date”).

 

·      Position.  On your Start Date, you will serve as Executive Vice President
and Chief Information Officer of AIG.  In this capacity, you will be a member of
the AIG Executive Group and report directly to the Chief Executive Officer of
AIG, Peter Hancock.

 

·      Location & Employer.  You will be based in New York, New York and
employed directly by AIG (your “Employer”).

 

·      Total Direct Compensation.  Your initial annual target direct
compensation will be US$4,000,000 as follows:

 

·      Base Salary.  Your initial base cash salary will be at a rate of
US$1,000,000 per year.

 

·      Short Term Incentive.  Your annual incentive target for 2015 will be
US$1,400,000.

 

Annual incentives are currently determined and paid in accordance with the AIG
Short-Term Incentive Plan.  The actual amount earned ranges from 0% to 187.5% of
your target award, based on a combination of funding of the incentive pool for
AIG (ranging from 0% to 125%) and your individual

 

 

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performance (ranging from 0% to 150%), each as determined in AIG’s discretion. 
For 2015, your award will vest upon grant (in the first quarter of the year
following the performance year) provided you are still an employee of AIG on the
grant date, and be payable 50% in March following the performance year and 50%
following the one-year anniversary of the first payment.

 

Any bonus or incentive compensation paid to you is subject to the AIG Clawback
Policy as may be amended from time to time.

 

·      Long Term Incentive.  For 2015, a recommendation on your behalf will be
made to the Compensation and Management Resources Committee (CMRC) of the Board
of Directors in March 2015 that, under the AIG Long Term Incentive Plan, you be
granted Target Performance Share Units (PSUs) based on a cash value of
US$1,600,000 for the three-year performance period covering January 2015 through
December 2017, which will provide you the opportunity to earn shares of AIG
Common Stock based on the degree of AIG’s achievement of its performance
criteria, during the Performance Period.  This recommendation and grant is
contingent on your being an active employee of AIG on the date of CMRC approval
of the grant, and will be subject to the terms and conditions of the relevant
Long Term Incentive Plan and the agreement governing the grant.

 

The number of PSUs granted will be determined by dividing the approved LTI
target award by the monthly average closing price of a share of AIG Common Stock
for February 2015.  Following the performance period, in the first quarter of
2018, the number of PSUs earned (from 0% to 150%) will be determined in
accordance with the plan.  Earned PSUs will vest in three equal installments, on
January 1 of each 2018, 2019 and 2020, and each installment will be delivered in
shares of AIG Common Stock no later than April 2018, January 2019 and January
2020, respectively.

 

Any long term incentive compensation paid to you is subject to the AIG Clawback
Policy as may be amended from time to time.

 

·      Incentive Award Buy-out.  In consideration of the compensation foregone
from your current employer, you will receive a guaranteed payment of

 

 

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US$3,400,000 (the “Incentive Award Buy-out Payment”), payable in cash on March
31, 2015, provided you have not resigned your employment (other than for Good
Reason as defined below) or been terminated by AIG for Cause (as defined below)
prior to the payment date.

 

·      Buy-out of Kaiser Permanente SERP.  In consideration of compensation
foregone from your current employer, you will receive a $12,000,000 award
payable as follows:

 

·         A transition payment of US$8,000,000 (the “Transition Payment”),
payable in cash US$1,000,000 on January 15, 2015; US$1,000,000 on January 15,
2016; US$1,000,000 on January 15, 2017; US$1,000,000 on January 15, 2018; and
US$4,000,000 on January 15, 2019, provided you have not resigned your employment
(other than for Good Reason as defined below) or been terminated by AIG for
Cause (as defined below) prior to the payment date.

 

·         A recommendation on your behalf will be made to the CMRC following
your start date in November 2014 that, under the AIG Long Term Incentive Plan,
you be granted Target Performance Shares Units (PSUs) based on a cash value of
US$4,000,000 for the three-year performance period covering January 2014 through
December 2016.

 

The number of PSUs granted will be determined by dividing the approved LTI
target award by the monthly average closing price of a share of AIG Common Stock
for October 2014.  Following the performance period, in the first quarter of
2017, the number of PSUs earned (from 0% to 150%) will be determined in
accordance with the plan.  Earned PSUs will vest in three equal installments, on
January 1 of each 2017, 2018 and 2019, and each installment will be delivered in
shares of AIG Common Stock no later than April 2017, January 2018 and January
2019, respectively.

 

·      Benefits.  You will be entitled to benefits consistent with senior
executives of AIG and reimbursement of reasonable business expenses, in each
case in accordance with applicable AIG policies as in effect from time to time.

 

 

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·      Relocation.  As an additional aid to ease your transition into our
organization, the cost of your relocation to New York will be provided, in
accordance with the Company’s relocation policy and subject to the enclosed
Relocation Reimbursement Agreement.

 

·      Paid Time Off.  You will be entitled to 5 days of Paid Time Off (PTO)
during the current calendar year and up to 30 days of PTO for 2015, accruing in
accordance with the terms set forth in the Employee Handbook.

 

·      Executive Severance Plan.  Beginning as of your Start Date, you will
participate in AIG’s Executive Severance Plan at grade level 29.

 

·      Clawback Policy.  Any bonus, equity or equity-based award or other
incentive compensation granted to you will be subject to the AIG Clawback Policy
(and any other AIG clawback policies as may be in effect from time to time).

 

·      Indemnification and Cooperation.  During and after your employment, AIG
will indemnify you in your capacity as a director, officer, employee or agent of
AIG to the fullest extent permitted by applicable law and AIG’s charter and
by-laws, and will provide you with director and officer liability insurance
coverage (including post-termination/post-director service tail coverage) on the
same basis as AIG’s other executive officers.  AIG agrees to cause any successor
to all or substantially all of the business or assets (or both) of AIG to assume
expressly in writing and to agree to perform all of the obligations of AIG in
this paragraph.

 

You agree (whether during or after your employment with AIG) to reasonably
cooperate with AIG in connection with any litigation or regulatory matter or
with any government authority on any matter, in each case, pertaining to AIG and
with respect to which you may have relevant knowledge, provided that, in
connection with such cooperation, AIG will reimburse your reasonable expenses
and you shall not be required to act against your own legal interests.

 

·      Tax Matters.  Tax will be withheld by your Employer and/or AIG as
appropriate under applicable tax requirements for any payments or deliveries
under this letter.  To the extent any taxable expense reimbursement or in-kind
benefits under this letter is subject to Section 409A of the U.S. Internal
Revenue Code of 1986, the amount thereof eligible in one taxable year shall not
affect the amount eligible for any other taxable year, in no event shall any

 

 

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expenses be reimbursed after the last day of the taxable year following the
taxable year in which you incurred such expenses and in no event shall any right
to reimbursement or receipt of in-kind benefits be subject to liquidation or
exchange for another benefit.  Each payment under this letter will be treated as
a separate payment for purposes of Section 409A.

 

·      No Guarantee of Employment or Target Direct Compensation.  This offer
letter is not a guarantee of employment or target direct compensation for a
fixed term.  Your employment will be on an “at-will” basis, meaning that you and
your Employer may terminate your employment at any time and for any reason, with
or without prior notice.

 

·      Entire Agreement.  This offer letter constitutes AIG and your Employer’s
only statement relating to its offer of employment to you and supersedes any
previous communications or representations, oral or written, from or on behalf
of AIG or any of its affiliates.

 

·      Miscellaneous Representations.  You confirm and represent to AIG, by
signing this letter, that: (a) you are under no obligation or arrangement
(including any restrictive covenants with any prior employer or any other
entity) that would prevent you from becoming an employee of AIG or that would
adversely impact your ability to perform the expected services on behalf of AIG
other than as previously disclosed in writing to AIG; (b) you have not taken (or
failed to return) any confidential information belonging to your prior employer
or any other entity, and, to the extent you remain in possession of any such
information, you will never use or disclose such information to AIG or any of
its employees, agents or affiliates; (c) you understand and accept all of the
terms and conditions of this offer; and (d) you acknowledge that your Employer
is an intended third party beneficiary of this offer letter.

 

·      Non-solicitation.  This offer and your employment with AIG are contingent
on your entering into the enclosed Non-Solicitation and Non-Disclosure
Agreement.

 

·      Employment Dispute Resolution.  You are a participant in the Company’s
Employment Dispute Resolution (“EDR”) program, which provides for various ways
to address work-related disputes, including mediation and arbitration, through
the American Arbitration Association (“AAA”).  Information on the company’s EDR
Program is available to employees via the Company Intranet

 

 

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and can be made available to you prior to your date of hire upon request.

 

·      Good Reason.  For purposes of this offer letter as it relates to the
Incentive Award Buy-out Payment and Transition Payment only, “Good Reason”
means, in the absence of your written consent, a reduction of more than twenty
percent (20%) in your annual target direct compensation (including annual base
salary, short-term incentive opportunity and long-term incentive opportunity);
provided that such reduction will not constitute Good Reason if it results from
a Board-approved program generally applicable to similarly-situated employees. 
Notwithstanding the foregoing, a resignation for Good Reason shall not have
occurred unless (a) you give written notice to AIG of termination of employment
within 30 days after you first become aware of the occurrence of the
circumstances constituting Good Reason, specifying in detail the circumstances
constituting Good Reason, and AIG has failed within 30 days after receipt of
such notice to cure the circumstances constituting Good Reason, and (b) your
“separation from service” (within the meaning of Code section 409A) occurs no
later than two years following the initial existence of the circumstances giving
rise to Good Reason.

 

·      Cause.   For purposes of this offer letter as it relates to the Incentive
Award Buy-out and Transition Payment only, “Cause” shall be defined as (1) any
conduct involving intentional wrongdoing, fraud, dishonesty, gross negligence or
willful misconduct or (2) any act or omission that constitutes a material breach
of the terms of my Offer Letter, the Company’s Code of Conduct, or any other
personnel or compliance policy applicable to you.

 

 

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We look forward to having you as a member of AIG’s senior leadership team.

 

 

 

Sincerely,

AMERICAN INTERNATIONAL GROUP, INC.

 

 

 

/S/ JEFFREY J. HURD

 

By:         Jeffrey J. Hurd

 

Executive Vice President – Human Resources and Communications

 

I agree with and accept the foregoing terms.

 

/S/ PHILIP FASANO

8/29/2014

 

Philip Fasano

Date

 

 

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