Document:

exv10w1

Exhibit 10.1

					
	
	 	DEPARTMENT OF THE TREASURY

WASHINGTON, D.C. 20220

	 	 
	 
	 	 	 	 

December 21, 2009

Mr. Robert Benmosche

President and Chief Executive Officer

American International Group, Inc.

70 Pine Street

27th Floor

New York, NY 10270

			
	     Re:	 	Reconsideration Request and Supplemental Determination Regarding 2009

Compensation Payments and Structures for Senior Executive Officers and Most Highly

Compensated Employees

Dear Mr. Benmosche:

     Pursuant to the Department of the Treasury’s Interim Final Rule on TARP Standards for
Compensation and Corporate Governance (the “Rule”), on October 22, 2009, the Special Master issued
an initial determination (the “Initial Determination”) with respect to compensation payments for
the senior executive officers and next 20 most highly compensated employees (“Top 25 Employees”) of
American International Group, Inc. (“AIG”). 31 C.F.R. § 30.16(a)(3)(i). Under the Rule, AIG is
permitted, within 30 days of the issuance of the Initial Determination, to request that the Special
Master reconsider that determination, provided that the request specified relevant new information
not previously considered by the Special Master. See id. § 30.16(c)(1).

     On November 20, 2009, AIG submitted a written request for reconsideration (the
“Reconsideration Request”) of the Initial Ruling with respect to one Top 25 Employee. AIG’s prior
submissions to the Office of the Special Master indicated that the Top 25 Employee would terminate
employment with AIG during 2009, and the Initial Determination with respect to the Top 25 Employee
reflected those submissions. The Reconsideration Request indicated, however, that the Top 25
Employee will remain in the employ of AIG. In light of that information, which was not previously
considered by the Special Master, AIG requested that the Special Master reconsider the compensation
payments approved in the Initial Determination for the Top 25 Employee.

     Under the Rule, the Special Master must, upon receipt of a written request for
reconsideration, provide a final determination setting forth the facts and analysis that formed the
basis for the determination. Id. This letter sets forth the final determination of the Special
Master in light of AIG’s Reconsideration Request. In addition, this letter addresses certain other
matters, including, as set forth below, certain technical corrections to the Initial Determination
and to the Special Master’s December 11, 2009 determination with respect to compensation structures
for certain employees (“Covered Employees 26–100) not subject to the Initial Determination (the
“Second Determination”).

 

 

1. Reconsideration Request

     AIG’s previous submissions to the Office of the Special Master indicated that a specified Top
25 Employee (the “Specified Employee”) intended to depart AIG prior to the end of 2009. Based on
that information, the Special Master’s Initial Determination approved compensation for the
Specified Employee limited to a base salary of $450,000, payable through the Specified Employee’s
departure date, and no further compensation for the remainder of 2009.

     AIG’s Reconsideration Request states that, rather than depart AIG prior to the end of 2009,
the Specified Employee will remain in the employ of AIG. AIG has indicated that the employee is
critical to AIG’s long-term performance and stability, and that his continued employment by AIG
will significantly aid AIG’s ability to repay the taxpayer. In light of those facts, AIG’s
Reconsideration Request seeks approval of two additional types of compensation for the Specified
Employee for 2009: (1) a nunc pro tunc grant of stock salary, with a grant-date value of $3,258,333,
and (2) an annual long-term incentive award, in an amount up to $1,000,000 depending on the
Specified Employee’s achievement of objective performance metrics, to be granted in the form of
“long-term restricted stock” as defined in the Rule (the “Proposed Structure”).

     The Rule requires that the Special Master determine for each Top 25 Employee whether the
proposed compensation structure, including amounts payable or potentially payable under the
compensation structure, “will or may result in payments that are inconsistent with the purposes of
[S]ection 111 of EESA or TARP, or [is] otherwise contrary to the public interest.” 31 C.F.R. §
30.16(a)(3) (the “Public Interest Standard”). The Rule requires that the Special Master consider
six principles when making these compensation determinations. Id. § 30.16(b)(1).

     The Special Master has reviewed the Reconsideration Request in detail by application of the
principles set forth in the Rule. In particular, the Special Master’s review has been guided by the
principle that compensation structures should be “performance-based over a relevant performance
period.” Id. § 30.16(b)(l)(iv). The Initial Determination authorized no stock salary or annual
long-term incentive award for the Specified Employee because AIG’s submissions indicated that the
Specified Employee would depart AIG. Under those circumstances, no performance-based pay was
necessary to align the interests of the Specified Employee with those of AIG and taxpayers.
However, in light of the fact that the Specified Employee will remain in the employ of AIG, it is
appropriate to provide the Specified Employee with long-term incentives to ensure that the employee
contributes to AIG’s long-term success and, ultimately, AIG’s ability to repay taxpayers.

     Accordingly, the Special Master has determined that, in addition to the compensation approved
for the Specified Employee in the Initial Determination, the Proposed Structure will not, by virtue
of its structural design or the amounts potentially payable thereunder, result in payments
inconsistent with the Public Interest Standard. In all other respects, the compensation structure
for the Specified Employee must comply

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with the terms of the Initial Determination, including requirements related to the
transferability of salary stock and the grant of long-term incentives.

     In addition, the Specified Employee shall remain subject to the requirement that “other”
compensation and perquisites not exceed $25,000, except where a satisfactory independent
justification is provided in formal submissions to the Office of the Special Master. To date, no
satisfactory justification with respect to the Specified Employee has been provided to the Office
of the Special Master. Accordingly, to the extent that the “other” compensation and perquisites in
excess of $25,000 described in AIG’s submissions have been provided to the Specified Employee
during 2009, in order to be consistent with the Public Interest Standard the compensation structure
must provide for the reduction of amounts payable to the Specified Employee by any such excess, and
such reduction may be subject to further review by the Office of the Special Master.

2. Technical Corrections

     The Initial Determination requires that stock salary granted to Top 25 Employees may only be
redeemed by the employee in three equal, annual installments beginning on the second anniversary of
grant, with each installment redeemable one year early if AIG repays its TARP obligations. The
determinations were intended to accelerate the sale of stock salary only if AIG repays its
obligations to taxpayers. AIG’s obligations, however, include both TARP obligations and obligations
to other federal institutions. Thus, the Second Determination requires that stock salary granted to
Covered Employees 26 – 100 may only be redeemed by the employee in three equal, annual installments
beginning on the second anniversary of grant, with each installment redeemable one year early if
AIG repays its federal obligations. Accordingly, Exhibit I sets forth corrections to the Initial
Determination that bring the requirements of the Initial Determination with respect to salary stock
into conformity with the requirements of the Second Determination.

     The Second Determination included the determinations of the Special Master with respect to
amounts payable to Covered Employees 26 – 100 pursuant to certain expatriate arrangements. These
arrangements are designed to make the employees whole for the costs of living overseas, at AIG’s
request, in order to perform their duties. Those determinations were intended also to address
payments pursuant to “tax equalization agreements,” as defined in the Rule; however, the Second
Determination did not expressly address those arrangements. Accordingly, Exhibit I sets forth
corrections to the Second Determination that clarify the determinations of the Special Master.

     In addition, upon further review of AIG’s submissions, it has come to the attention of the
Office of the Special Master that one Top 25 Employee is also subject to expatriate arrangements.
These arrangements were not expressly addressed in the Initial Determination. Accordingly, Exhibit
I sets forth corrections to the Initial Determination
that address payments pursuant to expatriate arrangements for that Top 25 Employee.

3

 

3. Additional Determinations

     Following the Initial Determination, AIG requested approval to alter the terms of the “stock
salary” that may be granted to Top 25 Employees. The Initial Determination requires that any such
“stock salary” be granted in the form of stock units reflecting the value of a “basket”
of four particularly critical AIG insurance subsidiaries: American International Assurance Co.
Ltd., American Life Insurance Co., Chartis, and AIG Domestic Life & Retirement Services Group. AIG
has requested that such “stock salary,” in appropriate cases, now be granted in the form of vested
common stock (or stock units reflecting the value of common stock) of AIG rather than the “basket.”

     The Special Master has reviewed this request in light of the principles set forth in the Rule.
In particular, the Special Master’s review has been guided by the principle that compensation
structures should be “performance-based over a relevant performance period.” Id. § 30.16(b)(1)(iv).
Providing Top 25 Employees with stock salary in the form of common stock will provide those
employees with incentives to maximize the value of AIG and, therefore, its ability to repay the
taxpayer. Accordingly, the Special Master has determined that, for purposes of the Initial
Determination, “stock salary” may include vested common stock (or stock units reflecting the value
of common stock) of AIG, and that compensation structures for Top 25 Employees pursuant to the
foregoing will not, by virtue of their structural design or the amounts potentially payable
thereunder, result in payments inconsistent with the Public Interest Standard.

     The conclusions reached herein are limited to the authority vested in me by Section
30.16(a)(3) of the Rule, and shall not constitute, or be construed to constitute, the judgment of
the Office of the Special Master or the Department of the Treasury with respect to the compliance
of the proposed compensation structure or any other compensation structure for the subject employee
with any other provision of the Rule. Moreover, my evaluation and conclusions have relied upon, and
are qualified in their entirety by, the accuracy of the materials submitted by AIG to the Office of
the Special Master, including without limitation the Reconsideration Request, and the absence of
any material misstatement or omission in such materials.

	 	 	 	 	 
	 	Very truly yours, 

 	 
	 	/s/
Kenneth R. Feinberg 
 	 
	 	Kenneth R. Feinberg 	 
	 	Office of the Special Master

for TARP Executive Compensation 	 
	 

			
	cc:	 	Anastasia D. Kelly, Esquire

Marc R. Trevino, Esquire

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EXHIBIT I

AIG 2009 COMPENSATION DETERMINATIONS

TECHNICAL CORRECTIONS

	1.	 	In Part IV.B.1.b. (on page A9) of the Initial Determination, the second sentence of the
second paragraph is restated in its entirety as follows:

	 	 	“Instead, stock salary may only be redeemable in three equal, annual installments beginning on
the second anniversary of grant, with each installment redeemable one year early if AIG repays
its federal obligations.”

	2.	 	In Part IV.B.3. (on page A9) of the Second Determination, footnote 4 is restated in its
entirety as follows:

	 	 	“AIG has identified Covered Employees subject to expatriate arrangements providing for the
payment of certain “other” compensation in excess of this limitation. These arrangements are
designed to make the employees whole for the costs of living overseas, at AIG’s request, in
order to perform their duties. The Special Master has reviewed these arrangements and has
concluded that such payments, not to exceed $350,000 per employee (except in exceptional cases
for good cause shown), are consistent with the Public Interest Standard, and that such payments
may be disregarded for purposes of determining whether a Covered Employee’s compensation
structure meets the requirements of the Public Interest Standard as set forth in this Part
IV.B. In addition, the Special Master has concluded that payments to these employees pursuant
to “tax equalization agreements,” as defined in the Rule, are consistent with the Public
Interest Standard, and may be disregarded for purposes of determining whether a Covered
Employee’s compensation structure meets the requirements of the Public Interest Standard as set
forth in this Part IV.B.”

	3.	 	In Part IV.B.l.d. (on page A10) of the Initial Determination, a footnote is added at the
end of the last sentence of that Part, reading as follows:

	 	 	“AIG has, however, identified one employee subject to an expatriate arrangement providing for
the payment of certain “other” compensation in excess of this limitation, These arrangements are
designed to make the employees whole for the costs of living overseas, at AIG’s request, in
order to perform their duties. The Special Master has reviewed these arrangements and has
concluded that such payments, not to exceed $350,000, in addition to payments to these employees
pursuant to “tax equalization agreements,” as defined in the Rule, are consistent with the
Public Interest Standard.”exv10w2

Exhibit 10.2

American International Group, Inc.

Stock Salary Award Agreement

          AIG is awarding you a regular, periodic grant of restricted stock units (“RSUs”) at the
initial rate set forth on Schedule A (your “Annual Stock Salary”). This Award Agreement sets forth
the terms and conditions of your Annual Stock Salary.

     1. Defined Terms. Capitalized terms used but not defined in this Award Agreement have
the meanings given in the Glossary of Terms.

     2. Periodic Grant of RSUs.

          (a) Beginning on the date of this Award Agreement, your Annual Stock Salary will accrue and be
earned equally over the course of the year, subject to your continued Employment. Your Annual
Stock Salary may be changed from time to time by the Committee, including to increase, decrease or
terminate your Annual Stock Salary. Your Annual Stock Salary will be given retroactive effect to
January 1, 2009.

          (b) On each Grant Date you will be issued RSUs equal to (1) the amount of your Annual Stock
Salary earned over the relevant payroll period, net of any applicable tax withholdings and
deductions (e.g., FICA and FUTA) pursuant to Paragraph 6(a), divided by (2) the Fair Market Value
of one share of Common Stock on the Grant Date, rounded down to the nearest whole share.

          (c) For any Grant Date that would have occurred during the period beginning on January 1, 2009
and the date of this Award Agreement, you are being issued RSUs on the date of this Award Agreement
determined on the basis of the Fair Market Value of one share of Common Stock on the date of this
Award Agreement.

     3. Vesting and Settlement.

          (a) Each RSU constitutes an unfunded and unsecured promise to pay the Fair Market Value of one
share of Common Stock on the applicable Redemption Date. RSU’s will be payable solely in cash and,
as a holder of RSUs, you will have only the rights of a general unsecured creditor and no rights as
a shareholder of AIG.

          (b) RSUs granted pursuant to the Award shall be immediately vested on the applicable Grant
Date.

          (c) Following the Redemption Date of any RSU, AIG shall pay you the Fair Market Value of the
share of Common Stock, net of any applicable tax withholding and deductions pursuant to Paragraph
6(a). In addition, except to the extent reflected in any adjustment pursuant to Paragraph 10, AIG
will pay you the Fair Market Value on the Redemption Date of any dividend or distribution in

 

 

respect of the underlying share of Common Stock with a record date that occurred on or after
the close of business on the Grant Date and before the Redemption Date, net of any applicable tax
withholding and deductions pursuant to Paragraph 6(a). Payments of amounts owed under this Section
3(c) will be made on the next immediately following payroll date that is at least one week after
the applicable Redemption Date.

     4. Termination. Your rights in respect of future grants under this Award shall
immediately terminate if at any time your Employment with the Company terminates for any reason,
except that you shall be entitled to receive a final grant of RSUs determined in accordance with
Paragraph 2 for any portion of your Annual Stock Salary that you had accrued through the date of
your termination of Employment but had not yet been granted.

     5. Nonassignability; No Hedging; Successor Entity.

          (a) Neither this Award nor any rights and obligations under this Award Agreement may be sold,
exchanged, transferred, assigned, pledged, hypothecated or otherwise disposed of or hedged in any
manner (including through the use of any cash-settled instrument), whether voluntarily or
involuntarily and whether by operation of law or otherwise, other than by will or by the laws of
descent and distribution. Any sale, exchange, transfer, assignment, pledge, hypothecation or other
disposition in violation of this Section 5 will be null and void and any RSU that is hedged in any
manner will immediately be forfeited. All of the terms and conditions of this Award Agreement will
be binding upon any permitted successors and assigns.

          (b) Unless otherwise determined by the Committee, in the event of a merger, consolidation,
mandatory share exchange or other similar business combination of AIG with or into any other entity
(“Successor Entity”) or any transaction in which another person or entity acquires all of the
issued and outstanding Common Stock of AIG, or all or substantially all of the assets of AIG, this
Award may be assumed or a substantially equivalent award may be substituted by such successor
entity or a parent or subsidiary of such successor entity.

     6. Withholding.

          (a) The Company will satisfy applicable tax withholdings and make applicable deductions in
respect of Annual Stock Salary earned by you over a payroll period and issue RSUs pursuant to
Paragraph 2(b) in respect of the remainder. On each Redemption Date, AIG will satisfy any
additional tax withholdings and make applicable deductions in respect of the amount to be paid to
you and make payment to you pursuant to Section 3(c) in respect of the remainder.

          (b) In all cases, you shall be solely responsible for any applicable taxes (including, without
limitation, income and excise taxes) and penalties, and any interest that accrues thereon, that may
be incurred in connection with the Award and/or settlement of the RSUs.

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     7. No Rights to Continued Employment. Nothing in this Award Agreement shall be
construed as giving you any right to continued Employment by the Company or affect any right that
the Company may have to terminate or alter the terms and conditions of your Employment.

     8. No Increase in Severance. Neither your Annual Stock Salary nor amounts you receive
pursuant to this Award Agreement will increase the amounts payable to you pursuant to AIG’s
severance plans and arrangements.

     9. Offset. AIG has the right to offset against its obligation to pay cash under this
Award Agreement any outstanding amounts (including, without limitation, travel and entertainment or
advance account balances, loans, repayment obligations under any awards, or amounts repayable to
AIG pursuant to tax equalization, housing, automobile or other employee programs) that you then owe
to AIG and any amounts the Committee otherwise deems appropriate pursuant to any tax equalization
policy or agreement.

     10. Adjustment. The Committee shall adjust equitably the terms of this Award to
preserve the benefits or potential benefits intended to be made available to you for any increase
or decrease in the number of issued shares of Common Stock resulting from a recapitalization,
spin-off, split-off, stock split, stock dividend, combination or exchange of shares of Common
Stock, merger, consolidation, rights offering, separation, reorganization or liquidation, or any
other change in the corporate structure or shares of AIG. Notwithstanding the foregoing, the
Committee may, in its sole discretion, decline to adjust the terms of this Award if it determines
that such adjustment would violate applicable law or result in adverse tax consequences to you or
to AIG.

     11. Arbitration; Choice of Forum.

          (a) Any dispute, controversy or claim between the Company and you, arising out of or relating
to or concerning this Award Agreement, shall be finally settled by arbitration in New York City
before, and in accordance with the rules then obtaining of, the New York Stock Exchange, Inc. (the
“NYSE”) or, if the NYSE declines to arbitrate the matter (or if the matter otherwise is not
arbitrable by it), the American Arbitration Association (the “AAA”) in accordance with the
commercial arbitration rules of the AAA. Prior to arbitration, all claims maintained by you must
first be submitted to the Committee in accordance with claims procedures determined by the
Committee. This paragraph is subject to the provisions of Paragraphs 11(b) and (c) below.

          (b) THE COMPANY AND YOU HEREBY IRREVOCABLY SUBMIT TO THE EXCLUSIVE JURISDICTION OF ANY STATE
OR FEDERAL COURT LOCATED IN THE CITY OF NEW YORK OVER ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF
OR RELATING TO OR CONCERNING THIS AWARD AGREEMENT THAT IS NOT OTHERWISE ARBITRATED OR RESOLVED
ACCORDING TO PARAGRAPH 11(a) OF THIS AWARD AGREEMENT. This includes any suit, action or proceeding
to compel arbitration or to enforce an arbitration award. The Company and you acknowledge that the
forum designated by this Paragraph 11(b) has a reasonable relation to this Award Agreement, and to
your relationship with the Company. Notwithstanding the foregoing, nothing herein

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shall preclude the Company from bringing any action, suit or proceeding in any other court for
the purpose of enforcing the provisions of this Paragraph 11.

          (c) The agreement by you and the Company as to forum is independent of the law that may be
applied in the action, suit or proceeding, and you and the Company agree to such forum even if the
forum may under applicable law choose to apply non-forum law. You and the Company hereby waive, to
the fullest extent permitted by applicable law, any objection which you or the Company now or
hereafter may have to personal jurisdiction or to the laying of venue of any such suit, action or
proceeding in any court referred to in Paragraph 11(b). You and the Company undertake not to
commence any action, suit or proceeding arising out of or relating to or concerning this Award
Agreement in any forum other than a forum described in this Paragraph 11. You and (subject to the
last sentence of Paragraph 11(b)) the Company agree that, to the fullest extent permitted by
applicable law, a final and non-appealable judgment in any such suit, action or proceeding in any
such court shall be conclusive and binding upon you and the Company.

          (d) You irrevocably appoint the Secretary of AIG as your agent for service of process in
connection with any action, suit or proceeding arising out of or relating to or concerning the
Award Agreement which is not arbitrated pursuant to the provisions of Paragraph 11(a), who shall
promptly advise you of any such service of process.

          (e) You hereby agree to keep confidential the existence of, and any information concerning,
this Award Agreement and any dispute, controversy or claim relating to this Award Agreement, except
that you may disclose information concerning such dispute or claim to the arbitrator or court that
is considering such dispute or to your legal counsel (provided that such counsel agrees not to
disclose any such information other than as necessary to the prosecution or defense of the
dispute).

          (f) You recognize and agree that prior to the grant of this Award you have no right to any
benefits hereunder. Accordingly, in consideration of the receipt of this Award, you expressly
waive any right to contest the amount of this Award, terms of this Award Agreement, any
interpretation, determination, action or omission hereunder by the Committee, or any amendment to
this Award Agreement and you expressly waive any claim related in any way to the Award including
any claim based on any promissory estoppel or other theory in connection with this Award and your
Employment with the Company.

     12. Section 409A.

          (a) RSUs awarded under this Award Agreement are intended to be “deferred compensation” subject
to Section 409A, and this Award Agreement is intended to, and shall be interpreted, administered
and construed to, comply with Section 409A with respect to the RSUs. The Committee shall have full
authority to give effect to the intent of this Paragraph 12(a).

          (b) Each payment under the RSUs shall be treated as a separate payment for purposes of Section
409A.

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     13. Amendment; Committee Discretion. The Committee may at any time amend the terms
and conditions set forth in this Award Agreement; provided that, notwithstanding the foregoing, no
such amendment shall materially adversely affect your rights and obligations under this Award
Agreement with respect to amounts that you have already earned and accrued without your prior
written consent (or the consent of your estate, if such consent is obtained after your death). Any
amendment of this Award Agreement shall be in writing signed by an authorized member of the
Committee or a person or persons designated by the Committee. Subject to the other provisions of
this Paragraph 13, the Committee shall have full discretion with respect to the interpretation of
this Award Agreement and any actions to be taken or determinations to be made in connection with
this Award Agreement, and its interpretations, actions and determinations shall be final, binding
and conclusive.

     14. Governing Law. THIS AWARD SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS.

     15. TARP Restrictions. Payment under this Award Agreement 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 under this Award Agreement only to the extent that it is consistent with those
regulations and requirements. Without limiting the generality of the foregoing, this Award
Agreement is intended constitute stock salary that complies with the Determination Letter and shall
be interpreted in all respects to so comply.

          In Witness Whereof, the Company has caused this Award Agreement to be duly executed
and delivered as of                     , 20     .

	 	 	 	 	 	 	 
	 	 	American International Group, Inc.
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 

	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 

	 	 

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[Applicable to Top 25]

Schedule A

Recipient:

	 	 	 
	Annual Stock Salary

	 	$• per year

Redemption Dates:

	 	 	 	 	 
	Tranche	 	Amount of Tranche	 	Redemption Date
	1

	 	One-third of total
	 	Second anniversary of Grant Date
	2

	 	One-third of total
	 	Third anniversary of Grant Date
	3

	 	One-third of total
	 	Fourth anniversary of Grant Date

In accordance with the Determination Letter and to the extent permitted by IRS Notice 2009-92, each
Redemption Date shall be accelerated by one year if AIG’s federal obligations are repaid.

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[Applicable to Top 100]

Schedule A

Recipient:

	 	 	 
	Total Annual Stock Salary:

	 	$• per year

Redemption Dates:

	 	 	 	 	 
	Tranche	 	Amount of Tranche	 	Redemption Date
	1

	 	 	 	First anniversary of Grant Date
	2

	 	 	 	Third anniversary of Grant Date

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Glossary of Terms

The following terms shall have the meanings set forth below.

          “AIG” or the “Company” means American International Group, Inc.

          “Award” means the award of Annual Stock Salary pursuant to this Award Agreement.

          “Award Agreement” means the award agreement to which this Glossary of Terms is attached, as it
may be amended, supplemented or replaced from time to time.

          “Committee” means the Compensation and Management Resources Committee of the Board of
Directors of AIG, including any substitute or successor committee .

          “Common Stock” means the common stock of AIG, par value $2.50 per share, and any other
securities or property issued in exchange therefor or in lieu thereof.

          “Determination Letter” means the [December 11, 2009 Determination Letter issued with respect
to AIG under 31 C.F.R. § 30.16(a)(3)(ii)] [October 22, 2009 Determination Letter issued with
respect to AIG under 31 C.F.R. § 30.16(a)(3)].

          “Employment” means your performance of services for AIG, as an employee of AIG, as determined
by the Committee.

          “Fair Market Value” means, with respect to a share of Common Stock on any day, the closing
price of a share of Common Stock on the New York Stock Exchange on that day (or, if the New York
Stock Exchange is closed on that day, on the next following day on which the Common Stock is traded
on that Exchange). If the Common Stock ceases to be listed or traded in the regular way on the New
York Stock Exchange, the Fair Market Value Stock shall be determined by a methodology approved by
the Committee.

          “Grant Date” means each date that your base salary with the Company is payable in accordance
with the Company’s payroll practices then in effect.

          “Redemption Date” means each redemption date set forth in Schedule A.

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