Carl Icahn complained in January that a tie between executive pay and credit-default-swap spreads would discourage management from splitting the company. (Photo: Bloomberg)

(Bloomberg) — American International Group Inc. abandoned the use of credit-default-swap spreads (CDS) as a measure of long-term performance for its chief executive officer — a partial victory for activist investor Carl Icahn, who said the arrangement created the wrong incentives.

A long-term incentive starting this year will probably be based entirely on AIG’s total shareholder return relative to peers, the New York-based insurer said late Tuesday in a regulatory filing. Previously, CDS accounted for 25%.

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