Exhibit 10.7


 





 


180 Maiden  Lane,  22nd  Floor 


New  York,  New  York 10038 


 


 


 









	
  Jeffrey  J.  Hurd  

  Senior Vice 
  President  

  Human Resources  &  

  Communications

  	
  Phone:  212  770  7292 

  Fax: 212  770  9817 

  






 


 


 


November 3,  2010 


Mr.  Sid  Sankaran 


36 Strathcona  Avenue 


Toronto, Ontario  M4K  1K7 Canada


 


Dear Sid: 


 


I am  pleased 
to  confirm  the   terms  of  your
  employment  with   American   International Group,  Inc. 


 


1.       
Effective  Date.  October  1,  2010,  or  as  soon thereafter as  possible. 


 


2.        
Position.  On  the  Effective  Date,  you  will  begin  to  serve
as Chief  Risk  Officer  of AIG .  In  this  capacity,  you  will  initially  report  to  the  Executive  Vice  President-  Finance, Risk and  Investments  and  the  Finance 
and  Risk Committee of  AIG's  Board  of  Directors 
and  have  all  of  the  customary authorities, duties and responsibilities that accompany 
your  position. 


 


3.         
Base  Cash  Salary.  Your  initial 
base  cash  salary  will  be  $500,000  per  year (prorated for  partial  years  under  this  letter). 


 


4.         
Stock  Salary.   In  addition  to  your  cash  salary,  you  will  receive 
semi-monthly awards of  Long-Term 
Performance  Units,  also  known  as  LTPUs,  issued  under the  American 
International  Group,  Inc.  Long-Term  Performance  Units Plan.  These  awards, 
which  we  refer 
to  as  stock  salary,  will  be  at  a  rate  of
$830,000 per  year  (prorated  for  partial  years  under  this  letter).
  Your  stock salary awards  will  be  subject  to  additional 
terms,  including: 


 


•      Of your total annual stock salary, LTPUs earned at
a rate of $165,000 per year (prorated for partial years under this letter) will
be settled on the first anniversary of the date of grant, and the remaining
LTPUs will be settled on the third anniversary of the date of grant; and


 


•      Stock salary is immediately vested upon grant.













 












 





Mr. Sid  Sankaran  


November 3,  2010 


Page 2 


 


5.        
Annual  Incentive 
Awards.   You  will  be  eligible 
to  receive  an  annual  incentive award based  on  a  target  amount 
of  $1,960,000  (prorated  for  partial  years under this  letter).   AIG's 
Compensation  and  Management  Resources Committee (the  "Committee"),  in  consultation  with  the  Executive  Vice President- Finance,
  Risk  and  Investments,  will  determine
  the 
amount  of your  annual incentive  award  based   on  its  performance
  assessment  against objective performance  metrics.   Any  annual 
incentive  award  earned 
will  be paid in  three  installments  (in  each  case  prorated
  for 
partial  years  under  this
letter):


 


•      Twenty-five  percent 
(25%)  of  your  earned  incentive  award  (target
$490,000) will  be  paid  in  cash  in  March  of  the  year  following  the  year  for which
it  was  earned; 


 


•      Twenty-five  percent 
(25%)  of  your  earned  incentive  award  (target
$490,000) will  be  paid  in  cash  in  March  of  the  second  year  following  the year for  which  it  was  earned;  and 


 


•     
Fifty  percent  (50%) 
of your earned  incentive 
award  (target  $980,000)  will be paid  in  LTPUs  and/or 
AIG  stock.   About  sixty-six  percent 
(66.3%)  of this part  of  your  earned  incentive 
award  (target:  $650,000) 
will  be  in  the
form of  LTPUs  that  are  immediately  vested  when  granted 
and  will  be settled on  the  third  anniversary  of  grant,  and  the  remaining  part  (target: $330,000) will  be  in  the  form  of  AIG  long-term  restricted  stock  units  that will
vest  on  the  second  anniversary  of  grant  and  be  subject  to
transfer/payout restrictions  as  required  by  the  TARP  Standards  for Compensation and  Corporate  Governance,  31  C.F.R.  Part  30,  (the  "TARP
Standards") for  long-term 
restricted  stock,  except  that  in  no  event  may
this portion  be  transferable/payout  before 
the  third  anniversary  of  grant. 


 


6.        
Transition  Incentive 
Award.   AIG  places  great  importance  on  your  immediate and successful  transition  to  the  role  of  Chief  Risk  Officer 
and  integration  into the
business.   Therefore,  for  2010  only,  you  will  be  eligible 
to  receive  a transition  incentive  award  based   on  a  target  amount 
of  $2,250,000,   subject to
the  following  terms: 


 


•     
The  Committee  will determine the  amount of your  transition  incentive award based  on  its  performance  assessment  against  objective performance metrics 
related  to  key  transition  goals. 


 


•     
Any  transition  incentive 
award  earned  will  be  granted 
in  March  2011  and
paid in  three  installments: 


 


•     
About  twenty-two  percent 
(22.2%)  of  your  earned  transition  incentive   award  (target 
$500,000)  will  be  paid  in  cash  on  the  grant  date; 


 


•     
About  twenty-two  percent   (22.2%)  of your
earned  transition incentive award  (target  $500,000) 
will  be  immediately  vested  on  the   grant  date  but  payment 
in  cash  will  be  deferred 
until  March  2012;   and 













 












 





Mr. Sid  Sankaran November 3,  2010 


Page 3 


 


•     
About  fifty-six  percent 
(55.6%)  of  your  earned  transition  incentive award (target  $1,250,000)  will  be  paid  in  immediately  vested LTPUs on  the  grant  date, 
and  such  LTPUs  will  be  settled  on  the  third anniversary of  the  grant  date. 


 


•     
Notwithstanding   any  contrary 
provision  in  the  preceding,  any  transition
incentive award  earned 
will  be  subject  to  the  following  forfeiture  and repayment requirement: 


 


•     
If  you  voluntarily  terminate  your  employment  prior  to  or  on  the first anniversary  of  grant,  you  will  forfeit  the  LTPUs  and  any
unpaid cash  and  be  obligated 
to  repay  AIG  the  full  amount  of  any
cash already  paid  to  you. 


 


Please note  that  receipt  of  this  Transition  Incentive 
Award  is  predicated  upon your providing  written  documentation  to  AIG  within  30  days  of  your  start
date showing  forfeiture  of  your  unvested  and/  or  unpaid 
incentives, commissions, and/  or  equity  awards  from
your current  employer. 


 


7.         
Restructuring  of  Future  Payments. 
It  is  possible 
that  you  will  be  among 
AIG's top 25  most  highly  compensated employees and  subject  to  the  most stringent restrictions  imposed  by  the  TARP  Standards  (the  "Restricted  Top 25") in  the  future. If  that  is  reasonably 
expected  to  occur,  the  payment 
of your earned  incentive 
or  other  amounts  may  be  restructured  in  order  to comply
with  the  applicable  TARP  Standards  and  guidance  provided 
by  the Office of  the  Special 
Master  for  TARP  Executive  Compensation. 


 


8.        
Benefits.   Subject  to  the  limits 
of  this  letter  and  the  TARP  Standards,  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.  Beginning 
as  of the date  hereof,  you  will  participate  in  AIG's  Executive 
Severance  Plan  as  an
Eligible Employee  (without 
regard  to  the  Partners  Plan,  for  which  you  are  not
eligible, or  any  other  eligibility  requirement).  For  purposes 
of  the  Executive Severance Plan,  your  "Severance  Period"  will  be  twelve  months  and,  for
2010, your  2010  cash  incentive 
target  under  Section 
5  (not  prorated)  will  be treated as  your  historic  average  "Annual  Cash  Bonuses".   Thereafter,  your actual 2010  cash  incentive  award  under  Section  5  (annualized)  will  serve  as your
2010  Annual  Cash  Bonus  for  purposes  of  the  Executive 
Severance Plan. Your  2010  stock  salary 
will  not  be  treated  as  "Annual  base  salary"  for purposes of the Executive  Severance 
Plan.  In  addition,  compensation payments and  structures  approved 
by  the  Special  Master  for  TARP  Executive Compensation for  years  after  2010  may  not  result  in  an  increase  in  the
amounts payable  under  the  Executive 
Severance  Plan. 


 


9.         
Executive  Compensation  Standards.  Any  bonus or
incentive  compensation paid to  you  is  subject  to  recovery  or  "clawback''  by  AIG  if  the  payments were based on  materially  inaccurate  financial  statements  or  any  other  materially
inaccurate performance  metric 
criteria,  or  if  you  are  terminated  due  to
misconduct that  occurred 
during  the  period  the  bonus  or  incentive compensation was  earned  (all  within  the  meaning  of,  and  to  the  full  extent
necessary to  comply  with,  the  TARP  Standards).  In  addition,  you  will
not be 













 












 





Mr. Sid  Sankaran 


November 3,  2010 


Page 4 


 


entitled to  any  golden 
parachute  payment  or  tax  gross-up 
from  AIG  or  its
affiliates to  the  extent  prohibited  by  the  TARP  Standards  (which 
AIG  does  not expect to  affect  your  rights  under  the  Executive  Severance  Plan  unless 
you enter the  Restricted  Top  25). 


 


Your compensation  is  subject  to  applicable  regulations  issued  by  the  U.S.
Department of  the  Treasury  and  applicable  requirements  of  agreements between AIG  and  the  U.S.  government,  as  the  same  are  in  effect
from time  to time. You  may  receive  compensation  from  AIG  only  to  the  extent  that it
is consistent with  those  regulations  and  requirements. 


 


If, after  your  start  date,  AIG  determines  it  necessary  under  any
compensation requirements  or  regulations,  you  shall  (a)  promptly  execute  a
waiver of  claims  against  AIG  and  its  affiliates  and  the  United  States  relating to the  compensation  requirements  or  regulations  and  (b)  execute 
such  other agreements, acknowledgments  or  other  documents 
necessary  to  implement such compensation  requirements  or  regulations  (in  each  case  in  such  form
as AIG  determines  is  appropriate). 


 


10.   
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. 


 


11.  
Tax  Matters. 
To  the  extent 
any  taxable  expense  reimbursement  or  in-kind
benefits under  Section  8  or  10  is  subject  to  Section  409A  of  the  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 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  of  the
Code.


 


12.   
Withholding.  Tax  will  be  withheld 
by  AIG  as  appropriate  under  applicable
Federal or  other  governmental  tax  requirements
for any  payments or deliveries under  this  letter,  including 
by  withholding  in-kind 
from  awards  of shares or  LTPUs. 













 












 





Mr. Sid  Sankaran  


November 3,  2010 


Page 5 


 


13.   
Non-competition 
and  non-solicitation.  In  connection  with  your  joining 
AIG, you agree  to  sign  the  attached 
Non-competition,  Non-solicitation  and  Non-disclosure  Agreement. 


 


14.  
No  Guarantee  of  Employment.  This  offer  letter  is  not  a  guarantee  of employment for  a  fixed  term.
  Your  employment  with  AIG  (as  set  forth  in  the
employment application)  will  be  on  an  "at-will"  basis,  meaning  that  you  and AIG
may  terminate  your  employment  with  AIG  at  any  time  and  for  any
reason, with  or  without  prior  notice. 


 


15.   
Entire  Agreement.  Together  with  the  employment  application,  this  offer  letter constitutes AIG'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.   Notwithstanding  the foregoing, your  signed  Fair  Credit  Reporting  Act  Consumer  Disclosure  and General Authorization  is  expressly  incorporated  by  reference  into  this  offer letter.


 


16.   
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;  (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; and  (c)  you  understand
  and 
accept  all  of  the  terms  and  conditions of this offer.


 


17.   
Dispute  resolution.  Any  contest  or  dispute  between 
AIG  and  you  arising  out of or  relating 
to  or  concerning  this  letter 
or  your  other  employment arrangements with  AIG  (including  termination  of  your  employment)  shall  be
submitted to  arbitration  in  New  York  City  before,  and  in  accordance  with  the commercial arbitration  rules  then  obtaining  of,  the  American 
Arbitration Association.   Each  party  will  bear  his  or  its  own  expenses  of  the  arbitration including legal 
fees.   Any  dispute 
will  be  subject  to  the  jurisdiction  of  a  State or
Federal  court  located  in  the  City  of  New  York  to  the  extent  necessary 
to obtain injunctive  relief. 


 


 


 


[Signature page  follows] 









 




 












 





Mr.  Sid  Sankaran 


November 3,  2010 


Page 6


 


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


                                                          


                                                         Sincerely,


                                                                      


                                                         AMERICAN
INTERNATIONAL GROUP, INC.


                      


 


                                                         By:
/s/ Jeffrey J. Hurd                                        


                                                                          
      Jeffrey J. Hurd


                                                                          
      Senior Vice President – 


                                                                          
      Human Resources and Communications


 


 


 


 


 


 


 


 


I agree  with  and  accept  the  foregoing  terms. 


 


 


/s/ Sid Sankaran                       









Sid Sankaran