(Bloomberg) — American International Group Inc.’s Peter Hancock will get a compensation package of $11.8 million a year as the insurer’s new chief executive officer.
The short-term incentive will be $3.2 million of cash and the long-term will be $7 million in performance share units for meeting targets, plus he will get an annual salary of $1.6 million, the New York-based company said today in a regulatory filing. That package compares with a total target of $9 million last year when Hancock was CEO of the property-casualty operation, the company’s largest business.
Hancock, 56, takes over Sept. 1 from Robert Benmosche, who had a $13 million target for last year after repaying a U.S. bailout in 2012. The incoming CEO has been preparing the company for increased supervision from the Federal Reserve after AIG was named a systemically important financial institution.
“Hancock will have the critical role of managing the company while it is newly regulated by the Fed,” Jay Gelb, an analyst at Barclays Plc, said June 10, when the transition was announced.
The new CEO will also get a $2.05 million grant on Sept. 1, according to the filing. That’s equal to the difference between his new long-term target of $7 million and the prior figure of $4.95 million.
AIG has focused on the profitability of its insurance coverage, rather than the total level of sales, under Hancock’s leadership. He’s sought expansion in emerging markets and targeted consumers while limiting sales in capital-intensive business-insurance segments.
Hancock was promoted to the property-casualty post in 2011 after joining a year earlier to manage finance and risk. The initial job included oversight of the credit-default swaps unit whose money-losing contracts forced AIG to take a 2008 bailout. He previously spent 20 years at a predecessor to JPMorgan Chase & Co. where he established the derivatives group and served as chief financial officer.
Jay Wintrob, who runs the unit that offers life insurance and retirement products, was the runner-up for the top job. His total target compensation was $8 million last year. Both Wintrob, 57, and Hancock got short-term awards for 2013 that exceeded targets after the company determined that the executives and their businesses topped goals. Wintrob got a $3.8 million award, which was 58 percent above the plan. Hancock’s $3.5 million exceeded the target by 30 percent.
“We hope Mr. Wintrob as well as CFO David Herzog will remain in their current roles,” Gelb wrote.
Herzog, 54, had a $7 million target pay package for 2013.
AIG was freed from government restrictions on executive compensation after its repayment in 2012 of a rescue that swelled to $182.3 billion. Benmosche had previously sparred with Kenneth Feinberg, the lawyer who oversaw pay at bailout recipients for the U.S. Treasury Department.
“Bob Benmosche during the 16 months that I was at Treasury on executive pay was the most effective negotiator on behalf of any of those top corporate recipients of taxpayer funds,” Feinberg told Bloomberg Television’s Betty Liu in a June 11 interview. “Those are tough, tough shoes to fill.”