SHARE-BASED COMPENSATION PLANS (Tables)
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12 Months Ended |
Dec. 31, 2019 |
SHARE-BASED COMPENSATION PLANS |
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Schedule of share-based compensation expense recognized in Consolidated Statements of Income |
Years Ended December 31, | | | | | | | | (in millions) | | | 2019 | | 2018 | | 2017 | Share-based compensation expense - pre-tax(a) | | $ | 314 | $ | 337 | $ | 353 | Share-based compensation expense - after tax(b) | | | 248 | | 266 | | 229 | (a)As a result of accelerated vesting events, such as retirement eligibility in the year of grant and involuntary terminations, we recognized $82 million, $104 million and $196 million in 2019, 2018 and 2017, respectively, prior to the end of the specified vesting periods. It is our policy to reverse compensation expense for forfeited awards when they occur.(b)We also recognized $27 million of additional tax expense due to share settlements occurring in 2019.
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Schedule of assumptions used to estimate the fair value of PSUs based on AIG's TSR |
| | | | | 2017 | | Expected dividend yield(a) | | | | | 2.37 | % | Expected volatility(b) | | | | | 17.58 | % | Risk-free interest rate(c) | | | | | 2.00 | % | (a)The dividend yield is the projected annualized AIG dividend yield estimated by Bloomberg Professional service as of the valuation date. (b)The expected volatility is based on the historical volatility of the stock price for the 360 most recent trading days prior to the valuation date estimated by Bloomberg Professional service. (c)The risk-free interest rate is the continuously compounded interest rate for the term between the valuation date and the end of the performance period that is assumed to be constant and equal to the interpolated value between the closest data points on the U.S. dollar LIBOR-swap curve as of the valuation date.
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Summary of outstanding share-settled LTI awards |
| | | | | | | Weighted Average | As of or for the Year | Number of Units | | Grant-Date Fair Value | Ended December 31, 2019(b) | 2019 LTI | 2018 LTI | 2017 LTI | 2016 LTI | 2015 LTI | | 2019 LTI | 2018 LTI | 2017 LTI | 2016 LTI | 2015 LTI | Unvested, beginning of year | - | 3,322,028 | 1,579,995 | 640,660 | 272,332 | | $ | - | $ | 55.32 | $ | 62.32 | $ | 61.55 | $ | 60.51 | Granted | 6,185,729 | 5,499 | - | - | - | | | 44.81 | | 47.57 | | - | | - | | - | Vested(c) | (1,445,746) | (529,576) | (540,580) | 456,396 | (250,708) | | | 44.39 | | 55.72 | | 64.22 | | 53.85 | | 60.51 | Forfeited(d) | (216,085) | (140,957) | (1,039,415) | (873,692) | (21,624) | | | 44.28 | | 55.47 | | 64.97 | | 50.88 | | 60.40 | Unvested, end of year(e) | 4,523,898 | 2,656,994 | - | 223,364 | - | | $ | 44.98 | $ | 55.21 | $ | - | $ | 62.14 | $ | - | (a) Excludes stock options, other RSUs and DSUs, which are discussed under Stock Options, Other RSU Grants and Non-Employee Plan, respectively.(b)Except for the 2015 LTI, 2016 LTI and 2017 LTI awards, PSUs represent target amount granted, and does not reflect potential increases or decreases that could result from the final outcome of the performance goals for the respective awards, which is determined by the CMRC in the quarter after the applicable performance period ends. (c)Also reflects units that vest as a result of an accelerated vesting event that occurred prior to the specified vesting date. (d) Includes PSUs for which the performance metric was not met at the end of the performance period. (e)At December 31, 2019, the total unrecognized compensation cost for outstanding RSUs and PSUs was $203 million and the weighted-average and expected period of years over which that cost is expected to be recognized are 0.96 year and 2 years. Stock Options
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Schedule of weighted-average assumptions |
The following weighted-average assumptions were used for stock options granted: | 2019 | | 2018 | | 2017 | | Expected annual dividend yield(a) | 2.86 | % | 2.32 | % | 2.03 | % | Expected volatility(b) | 23.17 | % | 23.29 | % | 20.96 | % | Risk-free interest rate(c) | 2.47 | % | 2.83 | % | 1.94 | % | Expected term(d) | 6.38 | years | 4.50 - 6.47 | years | 4.5 | years | (a)The dividend yield is the projected annualized AIG dividend yield estimated by Bloomberg Professional service as of the valuation date.(b)The expected volatility is based on the implied volatility of 24 months stock option estimated by the Bloomberg Professional service as of the valuation date. (c)The risk-free interest rate is the continuously compounded interest rate for the term between the valuation date and the expiration date that is assumed to be constant and equal to the interpolated value between the closet data points on the U.S. dollar LIBOR-swap curve as of the valuation date. (d)The contractual terms are 7 and 10 years from the date of grant.
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Schedule of stock option activity |
The following table provides a rollforward of stock option activity: | | | | | Weighted Average | | | Aggregate | As of or for the Year | | | | Weighted Average | | Remaining | | | Intrinsic Values | Ended December 31, 2019 | Units | | | Exercise Price | Contractual Life | | (in millions) | Outstanding, beginning of year | 5,205,799 | | $ | 58.99 | | 7.38 | | | | Granted | 3,235,290 | | | 44.89 | | | | | | Exercised | (36,194) | | | 47.61 | | | | | | Forfeited or expired | (39,004) | | | 44.28 | | | | | | Outstanding, end of year | 8,365,891 | | $ | 53.66 | | 7.65 | | $ | 22 | Exercisable, end of year | 1,330,226 | | $ | 57.28 | | 3.53 | | $ | 1 |
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Summary of outstanding share-settled RSU grants |
| | | | | Weighted Average | As of or for the Year | Number of Units | | Grant-Date Fair Value | Ended December 31, | 2019 | 2018 | 2017 | | | 2019 | | 2018 | | 2017 | Unvested, beginning of year | 1,634,610 | 595,250 | - | | $ | 56.11 | $ | 62.93 | $ | - | Granted | 399,779 | 1,385,929 | 869,241 | | | 52.40 | | 54.07 | | 63.02 | Vested | (774,350) | (342,481) | (273,991) | | | 57.32 | | 59.68 | | 63.21 | Forfeited | (28,854) | (4,088) | - | | | 55.23 | | 60.31 | | - | Unvested, end of year | 1,231,185 | 1,634,610 | 595,250 | | $ | 54.17 | $ | 56.11 | $ | 62.93 |
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