(Bloomberg) – American International Group Inc. willgive Brian Duperreault $12 million in cash, 1.5 million stockoptions and an annual pay package valued at $16 million to turnaround the company as its seventh chief executive officer since2005.

AIG will also pay Duperreault's previous employer, Hamilton Insurance Group, as much as $40million over two years to waive their former CEO's non-competeagreement, according to a regulatory filing Monday.

Deputy to Hank Greenberg

Duperreault, 70, spent time at AIG earlier in his career as adeputy to Maurice “Hank” Greenberg, who builtthe company into the world's largest insurer before departing in2005. Duperreault will begin immediately, AIG said in a statement.He succeeds Peter Hancock, who said in March he would leave becauseof insufficient support from investors such as activist Carl Icahn.

Related: AIG CEO Peter Hancock to step down: What'snext?

The new CEO will seek to bring stability to AIG, which hasendured the departures of top executives, higher-than-expectedclaims costs and four losses in seven quarters. Before joiningHamilton, he was CEO of insurance broker Marsh & McLennan Cos.,where he helped restore confidence of investors and clients. Healso led Ace Ltd., which is now known as Chubb Ltd. and is one ofAIG's largest rivals.

“It is extremely gratifying that the activist strategy continuesto create value for all shareholders,” Icahn said in a Twitter postMonday, adding that he was pleased AIG was making “much-needed”changes he's been advocating.

Salary, target bonus & restricted shares

The annual pay comprises $1.6 million in salary, a $3.2 milliontarget bonus and an $11.2 million long-term incentive consisting ofrestricted shares, some of which are linked to performance. Takentogether, that's 23 percent more than Hancock's $13 million targetannual pay.

Of the 1.5 million options, Duperreault will get a third withinthree years and the remaining will vest in increments if AIG'sshare price exceeds hurdles set $10, $20 and $30 above its currentlevel.

Related: AIG turns to Luxembourg as Brexit makes U.K. lessattractive

AIG also agreed to pay about $110 million to acquire a U.S.operation from Hamilton, which includes a $30 million premium tothe book value of the Bermuda-based firm. AIG will allow Hamiltonthe chance to collect about $150 million of reinsurance premiumsover six years. AIG said it will work with hedge fund firm TwoSigma Investments, which already works with Hamilton, to create a“next generation insurance platform” for Duperreault's newcompany.

Duperreault helped create Hamilton in 2013 with backing fromprincipals of Two Sigma. Former Citigroup Inc. CEO Sanford “Sandy”Weill had a stint as Hamilton's chairman and remained a shareholderwhen he stepped down from the board.

'Real innovator'

Duperreault “has an excellent grasp of the global insuranceindustry and he has proven to be a real innovator over manydecades,” Weill said in an email. “He views change as creatingopportunities, and I really believe that we will see good thingsfrom AIG as a result of Brian's leadership.”

Hamilton focused on data analytics with Two Sigma to help decidewhich insurance risks to take, and how much to charge for them. Thecompany formed a venture last year with AIG to provide coverage tosmall- and medium-size businesses.

Duperreault will seek to improve return on equity, and alsoboost AIG's stock price. Shares of the company have slumped 6.6percent this year, while the S&P 500 Index has climbed 6.8percent.

Right size for AIG?

He will need to decide the right size for AIG, which has beenshrinking for years through asset sales. Icahn sought a breakupwhen he disclosed a stake in AIG in late 2015, and the billionairehas representation on the insurer's board. Chairman Doug Steenlandsaid earlier this year that a split would compromise the company'sglobal reach, and that the plan is to continue returning capital toshareholders and cutting expenses.

Related: AIG headcount falls by 10,000 in2016

AIG has returned more than $18 billion to shareholders sinceHancock announced in early 2015 that he had a two-year target for$25 billion. AIG has struck reinsurance deals to limit risks at theP&C operation, and the company has sold $91 billion worth ofassets since he joined in 2010. Recently, the insurer has exitedsome operations in Brazil, Turkey, Japan and the U.K., while alsodivesting a mortgage guarantor.

Hancock became CEO in 2014.

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