(Bloomberg) -- American International Group Inc., the insurer being pressured by activist investors to split up, cut short-term incentive pay for Chief Executive Officer Peter Hancock by 29% last year as he missed profit targets.

The CEO received $2.5 million from the non-equity incentive plan as he failed to meet goals tied to return-on-equity and expense reductions, AIG said Tuesday in a regulatory filing. That compares with $3.5 million in 2014.

“Mr. Hancock and our other executives received an earned award equal to 78% of their target amount,” AIG said in the filing. “Payment of 50% of this amount is deferred until 2017.”

Hancock has been reshaping management since taking over in September 2014, including a shakeup late last year amid pressure from billionaire investors Carl Icahn and John Paulson to shrink the insurer. Some of the firm’s highest-paid executives have announced their departures, including longtime Chief Financial Officer David Herzog and John Doyle, who led commercial insurance operations.

Icahn’s view

AIG agreed in February to name Paulson and a representative from Icahn’s firm to the insurer’s board. Icahn won another victory with the announcement in Tuesday’s filing that credit-default swaps, a metric of creditworthiness, will no longer count toward setting Hancock’s compensation. The activist had said that the link between swaps and pay reduced the CEO’s incentive to consider breaking up the company.

Long-term incentive awards starting this year will probably be based 100% on total shareholder return relative to peers, AIG said Tuesday. Still, “to protect against excessive risk-taking,” there is a provision to account for creditworthiness in setting compensation if bond yields perform poorly compared with industry rivals, AIG said. Hancock’s total package rose 3.6% to $12.5 million as his stock awards climbed in his first full year as CEO.

Herzog leaves with an exit package worth more than $18 million, according to company filings. That is based on Tuesday’s share price, assumes that AIG meets performance targets set by the board and includes equity awards that will be fully paid out by 2020. Herzog has been appointed as a director at insurer Ambac Financial Group Inc.

Doyle has a similar package. Insurance broker Marsh Inc. has said Doyle will join as president, starting next month.

Fasano, Dachille

Philip Fasano, who was hired by Hancock, received an $8.4 million package as his annual pay at AIG was disclosed for the first time in the newly created position of chief information officer. The insurer also said it paid $20 million in cash and restricted stock to Doug Dachille when AIG acquired his First Principles Capital Management last year.

Dachille, a former colleague of Hancock at J.P. Morgan & Co., became chief investment officer when AIG acquired the firm. He had a stake of 43% in First Principles, according to the document.

--With assistance from Katherine Chiglinsky.

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AIG slashes CEO incentive award 29% after missing profit targets

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