AMERICAN INTERNATIONAL GROUP, INC.
CHIEF EXECUTIVE OFFICER ANNUAL COMPENSATION PLAN
For each calendar year beginning with 2004, the Chief Executive Officer of American International Group, Inc. (“AIG”) shall be paid a bonus under this AIG Chief Executive Officer Annual Compensation Plan (the “Plan”) based upon performance goals established for such year (each such year, a “Plan Year”) by the Compensation Committee of the Board of Directors (such Committee, or any subcommittee thereof, the “Committee”). The performance goals for each Plan Year shall be selected no later than March 30 of each calendar year using one or more of the following criteria: return on equity; net income; increases in net income over one or more prior years; earnings per share; book value per share; increases in share value as measured by stock price performance; combined loss and expense ratio; and expansion of geographic and product markets. The maximum bonus for any Plan Year shall not exceed (i) $8,000,000 for the 2004 Plan Year, (ii) $9,000,000 for the 2005 Plan Year or (iii) $10,000,000 for the 2006 Plan Year and each Plan Year thereafter. The Committee shall have the authority to reduce (but not increase) any bonus earned by the Chief Executive Officer for any Plan Year.
For purposes of this Plan, Net Income shall mean AIG’s net income for the calendar year as reflected in the financial statements of AIG and its consolidated subsidiaries for such year, but excluding realized and unrealized capital gains and losses, the effect of catastrophic losses for such period in excess of $100,000,000 and the effect of any changes in accounting principles that may be required by the Financial Accounting Standards Board subsequent to March 17, 2004. Catastrophic losses shall mean losses which would be deemed catastrophic under the standards established by the National Association of Insurance Commissioners. Return on Equity shall mean Net Income expressed as a percentage of common stockholders equity at the beginning of the calendar year, exclusive of unrealized appreciation or depreciation of investments, net of taxes.
The Board of Directors may from time to time alter, amend or terminate the Plan or any part thereof, provided that no alteration or amendment may be made without the approval of shareholders if such approval is required by Section 162(m) of the Internal Revenue Code to allow compensation payable hereunder to be tax deductible pursuant to such section.