SHARE-BASED AND OTHER COMPENSATION PLANS (Tables)

12 Months Ended

Dec. 31, 2014

SHARE-BASED AND OTHER COMPENSATION PLANS

Schedule of share-based compensation expense recognized in Consolidated Statements of Income

Years Ended December 31,
(in millions)		2014		2013		2012
Share-based compensation expense - pre-tax*	$	349	$	457	$	286
Share-based compensation expense - after tax		227		297		186

* For the years ended December 31,2014, 2013 and 2012, $86 million, $315 million and $286 million of pre-tax compensation expense was attributed to unsettled liability-classified awards, the values of which are based on our share price at the reporting date. Our share price was $56.01, $51.05 and $35.30 at December 31,2014, 2013 and 2012, respectively. In addition, we recognized $120 million and $101 million for immediately vested stock-settled awards issued to retirement eligible employees in 2014 and 2013, respectively.

Schedule of assumptions used to estimate the fair value of PSUs based on AIG's TSR

	2014		2013
Expected dividend yield(a)	1.13	%	0.38	%
Expected volatility(b)	23.66	%	30.79	%
Risk-free interest rate(c)	0.76	%	0.50	%

(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 volatilities of actively traded stock options from the valuation date through the end of the PSU performance period as 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

Summary of outstanding share-settled awards

				Weighted Average
	Number of PSUs(b)/Shares			Grant-Date Fair Value
As of or for the Year	AIG	SICO		AIG		SICO
Ended December 31, 2014	Plans	Plans		Plans		Plans
Unvested, beginning of year	5,195,408	85,949	$	36.92	$	1,195.05
Granted	6,882,136	-		48.50		-
Vested	(3,566,014)	(23,494)		45.21		85.60
Forfeited	(408,821)	(4,143)		41.59		1,181.04
Unvested, end of year	8,102,709	58,312	$	42.89	$	1,191.01

(a) Excludes DSUs and options, which are discussed under the Non-Employee Plans and Stock Options sections, respectively.

(b) Represents target number of PSUs granted, and does not reflect potential increases or decreases that could result from the final outcome of the performance goals to be determined after the applicable performance period ends.

Schedule of stock option activity

					Weighted
					Average
					Remaining
		Weighted Average			Contractual
As of or for the Year Ended December 31, 2014	Shares	Exercise Price			Life
Options:
Exercisable at beginning of year	289,790		$	1,113.99	2.58
Expired	(87,515)		$	1,290.22
Exercisable at end of year	202,275		$	1,037.74	2.17

Summary of SARs (based on target amounts) and cash-settled RSUs (excluding stock salary) including the related expenses

		Number of Units
Year Ended December 31, 2014		TARP RSUs(a)		Other RSUs(b)		SARs(d)
Unvested, beginning of year		857,579		1,563,687		8,966,246
Granted		-		-		-
Vested(c)		(529,049)		(382,468)		(5,521,171)
Forfeited		(89,417)		(15,687)		(160,166)
Unvested, end of year		239,113		1,165,532		3,284,909
Net compensation expense for the year (in millions)	$	12	$	31	$	36

(a) Total unrecognized compensation and the weighted-average period for which it will be recognized is $3 million and 0.55 year, respectively.

(b) Total unrecognized compensation and the weighted-average period for which it will be recognized is $13 million and 0.61 year, respectively.

(c) Also includes SARs for which vesting was accelerated for employees who became retirement eligible or were deceased.

(d) The ending balance represents awards granted under the 2011 LTIP that vested on January 1, 2015 and were automatically exercised. The value of a SAR as of December 31, 2014 was determined based on the excess of the fair value (as defined) of one share of AIG Common Stock over the strike price of $37.40; the fair value was $55.29 based on the average of the closing sale prices on each trading day during the month of December 2014 in accordance with the plan provisions. No SARs are outstanding after January 1, 2015.