The two greatest proxy advisers have urged AIG shareholders to vote in opposition to its chief govt’s $50mn pay award, saying the particular five-year scheme is extreme and never sufficiently tied to efficiency.
Peter Zaffino, who has led the US insurer since 2021, was hailed as a “visionary, insightful leader” when AIG announced a five-year extension to his contract in November that included the restricted inventory award, which vests on the finish of the interval.
In a notice forward of AIG’s annual assembly subsequent month, proxy agency Glass Lewis mentioned the award pushed Zaffino’s annual pay “well above the median of Glass Lewis peers and self-disclosed peers, without sufficient rationale”, and advisable investors vote in opposition to it.
ISS has additionally referred to as for a no vote, saying it has “significant concerns regarding the structure of the award”, highlighting the very fact it has no efficiency standards connected.
“There is a general expectation that large off-cycle awards should be largely conditioned on the achievement of rigorous multi-year performance criteria in recognition of the additional pay opportunities they provide,” it added.
ISS and Glass Lewis, the 2 greatest proxy voting companies, have vital sway over passive investors and huge establishments, which frequently comply with their suggestions on which means to vote on objects at AGMs. The AIG pay vote is non-binding.
Zaffino’s total five-year award was recognised in his 2022 pay, taking his complete compensation for the 12 months to $75.3mn, up from $21.9mn the earlier 12 months.
ISS raised separate issues over AIG’s annual and long-term incentive plans for Zaffino, questioning the “rigour” of the metric for complete shareholder return.
Zaffino joined AIG in 2017 as international chief working officer and was appointed president in 2019 earlier than taking the extra position of chief govt two years later.
AIG has undergone vital change throughout his tenure, with strikes together with final 12 months’s initial public offering of its life insurance coverage and retirement enterprise, Corebridge.
In the insurer’s proxy assertion, the doc a US firm should present to investors forward of AGM votes, it mentioned a big theme that had emerged from discussions with shareholders was “the importance of [Zaffino’s] retention” and the “stability he provides”.
AIG has had a string of chief executives and a stop-start restructuring since its bailout within the 2008 monetary disaster.
John Rice, lead unbiased director on AIG’s board, mentioned the analyses supplied by ISS and Glass Lewis have been “deficient”, and didn’t recognise “shareholder-friendly provisions” in Zaffino’s pay settlement.
“The board believes that Peter’s mix of compensation appropriately balances pay-for-performance objectives with a view toward sustainable and profitable growth,” Rice mentioned.
“By securing his leadership for at least the next five years, Peter’s employment agreement will incentivise him to continue to drive long-term value creation for AIG and our shareholders.”