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ITEM 8 / NOTE 21. SHARE-BASED COMPENSATION AND OTHER PLANS.....................................................................................................................................................................................During 2012, with the exception of 139,169 fully-vested RSUs issued to certain employees, RSUs granted and issuedin March 2012 for Recipients’ 2011 performance will vest in two 50 percent installments on the second and thirdanniversary of the date of grant.Long Term Incentive Plans..............................................................................................................................................................................................Under our Long-Term Incentive Plan (LTIP), certain employees are offered the opportunity to receive additionalcompensation in the form of cash and/or SARs if certain performance metrics are met. The ultimate value of LTIPawards is contingent on the achievement of performance measures aligned to the participant’s business unit over atwo-year period and such value could range from zero to twice the target amount. Subsequent to the performanceperiod, the earned awards are subject to an additional time-vesting period. This results in a graded vesting schedulefor the cash portion of up to two years, while the SARs portion cliff-vests two years after the performance periodends. For a majority of SARs issued under the 2011 LTIP, the strike price, which is based on our average shareprice over the 30-day period prior to the March grant date, was $37.40. On January 19, 2011, the previous strikeprice of $31.91 for SARs issued under both the 2010 LTIP and the 2009 LTIP was adjusted to $26.97 pursuant toanti-dilution provisions of the LTIP due to the issuance of warrants in connection with the Recapitalization (seeNote 25 for additional discussion). No SARs were granted in connection with the 2012 LTIP.The cash portion of the awards expensed in 2012, 2011 and 2010 totaled approximately $189 million, $199 million,and $258 million, respectively.The following table presents a rollforward of SARs and cash-settled RSUs (excluding stock salary) as well asthe related expenses:Number of UnitsYear Ended December 31, 2012 SARs TARP RSUs RSUsUnvested, beginning of year (a) 14,123,062 1,549,622 7,389Granted (b) 1,809,842 678,188 836,355Vested (c) (1,864,801) (246,434) (139,169)Forfeited (1,711,530) (91,942) (18,285)Unvested, end of year 12,356,573 1,889,434 686,290Net compensation expense for the year (in millions) $ 84 $ 31 $ 17(a) Adjusted to reflect our election in 2012 to cash-settle RSUs that were previously expected to be share-settled.(b)Represents additional SARs earned as a result of the completion of the performance period for the 2010 LTIP.(c) Pursuant to the terms of the LTIP, vesting was accelerated for SARs awarded to employees who became retirement eligible or weredeceased.The total unrecognized compensation cost (net of expected forfeitures) related to unvested SARs andcash-settled RSUs excluding stock salary and the weighted-average periods over which those costs areexpected to be recognized are as follows:Unrecognized Weighted- ExpectedAt December 31, 2012 Compensation Average Period Period(in millions) Cost (years) (years)SARs $ 28 0.87 2TARP RSUs 33 1.04 3RSUs 14 1.00 2..................................................................................................................................................................................................................................318 AIG 2012 Form 10-K