2007 Annual Report - AIG.com

American International Group, Inc. and Subsidiaries
Notes to Consolidated Financial Statements Continued
17. Share-based Employee Compensation Plans
Continued
Additional information with respect to AIG’s stock option plans at December 31, 2007, and changes for the year then
ended, were as follows:
Weighted
Average
Remaining Aggregate
Weighted Average Contractual Intrinsic Values
Options: Shares Exercise Price Life (in millions)
Outstanding at beginning of year 47,655,720 $ 57.99
Granted 1,738,530 $ 57.43
Exercised* (12,308,493) $ 40.00
Forfeited or expired (721,988) $ 69.00
Outstanding at end of year 36,363,769 $ 63.83 4.81 $59
Options exercisable at end of year 30,703,527 $ 63.98 4.10 $57
Weighted average fair value per share of options granted $ 20.97
* Includes options with respect to 8,489,584 shares exercised with delivery deferred, resulting in obligations to issue 4,138,713 shares.
Vested and expected-to-vest options at December 31, 2007, under the 2002 Plan vest on the fourth anniversary of the date of
included in the table above, totaled 34,349,762, with a weighted grant.
average exercise price of $64.14, a weighted average contractual
life of 4.46 years and an aggregate intrinsic value of $57 million. 2007 Stock Incentive Plan
At December 31, 2007, total unrecognized compensation cost
The 2007 Plan was adopted at the 2007 Annual Meeting of
(net of expected forfeitures) was $100 million and $3 million related
shareholders and amended and restated by AIG’s Board of
to non-vested share-based compensation awards granted under the
Directors on November 14, 2007. The 2007 Plan supersedes the
1999 Plan and the 1996 Plan, respectively, with blended weighted
1999 Plan and the 2002 Plan. During 2007, 7,121,252 RSUs,
average periods of 1.38 years and 0.41 years, respectively. The cost
including performance RSUs were granted under the 2007 Plan.
of awards outstanding under these plans at December 31, 2007 is
Each RSU, performance RSU and DSU awarded reduces the
expected to be recognized over approximately four years and one
number of shares available for future grants by 2.9 shares. At
year, respectively, for the 1999 Plan and the 1996 Plan.
December 31, 2007, there were 157,562,672 shares reserved
The intrinsic value of options exercised during 2007 was
for issuance under the 2007 Plan. A significant majority of the
approximately $360 million. The fair value of options vesting
time-vested RSUs granted in 2007 under the 2007 Plan vest on
during 2007 was approximately $63 million. AIG received
the fourth anniversary of the date of grant.
$482 million and $104 million in cash during 2007 and 2006,
respectively, from the exercise of stock options. The tax benefits
realized as a result of stock option exercises were $16 million
and $35 million in 2007 and 2006, respectively.
Non-Employee Director Stock Awards
The methodology used for valuing employee stock options is also
used to value director stock options. Director stock options vest one
2002 Stock Incentive Plan year after the grant date, but are otherwise the same as employee
The 2002 Plan was adopted at the 2002 Annual Meeting of
shareholders and amended and restated by AIG’s Board of
Directors on September 18, 2002. During 2007 and 2006,
179,106 and 6,836,785 RSUs, respectively, including performance
RSUs, were granted under the 2002 Plan. Because the
2002 Plan has been superseded by the 2007 Plan, there were no
shares reserved for issuance in connection with future awards at
December 31, 2007. Substantially all time-vested RSUs granted
stock options. Commencing in 2007, directors no longer receive
awards of options. Options with respect to 40,000 shares and
32,500 shares were granted during 2006 and 2005, respectively.
In 2007, AIG granted to directors 22,542 DSUs, including DSUs
representing dividend-equivalent amounts. AIG also granted to direc-
tors 6,375 shares, 14,000 shares and 6,250 shares, with delivery
deferred, during 2007, 2006 and 2005, respectively, under the
Director Stock Plan.
186 AIG 2007 Form 10-K