UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement pursuant to Section 14(a)
of the Securities Exchange Act of 1934
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Filed by the Registrant |
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Filed by a Party other than the Registrant |
Check the appropriate box: |
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Preliminary Proxy Statement |
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Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) |
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Definitive Proxy Statement |
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Definitive Additional Materials |
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Soliciting Material pursuant to §240.14a-12 |
AMERICAN EXPRESS COMPANY
(Name of Registrant as Specified in its Charter)
(Name of Person(s) Filing Proxy Statement, if other than Registrant)
Payment of Filing Fee (Check the appropriate box): |
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No fee required. |
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Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. |
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Title of each class of securities to which transaction applies: |
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Aggregate number of securities to which transaction applies: |
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Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11
(set forth the amount on which the filing fee is calculated and state how it was determined): |
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Proposed maximum aggregate value of transaction: |
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Total fee paid: |
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Fee paid previously with preliminary materials. |
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Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number or the Form or Schedule and the date of its filing. |
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Amount previously paid: |
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Form, Schedule or Registration Statement No.: |
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Filing party: |
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Date filed: |
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OUR
VALUES |
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Our
Blue Box Values reflect who we are and what we stand for as a company. |
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Customer
Commitment |
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We develop relationships that make a positive difference
in our customers’ lives. |
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Quality |
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We
provide outstanding products and unsurpassed service that together, deliver premium value to our customers. |
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Integrity |
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We
uphold the highest standards of integrity in all our actions. |
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Teamwork |
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We
work together, across boundaries, to meet the needs of our customers and to help the company win. |
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Respect
for People |
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We
value our people, encourage their development and reward their performance. |
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Good
Citizenship |
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We
are good citizens in communities in which we live and work. |
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A
Will to Win |
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exhibit a strong will to win in the marketplace and in every aspect of our business. |
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Personal
Accountability |
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We
are personally accountable for delivering on our commitments. |
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In 2014 American Express
produced solid earnings in a challenging economic and competitive environment. Results reflected higher spending by our Card
Members, increased loan balances and tight controls on costs, as well as a strong balance sheet and continued investments
in growth opportunities. |
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American
Express Company
200 Vesey Street
New York, New York 10285 |
Notice
of Annual Meeting of Shareholders
Monday, May 11, 2015
9:00 a.m. Eastern Time
American Express Company, 200 Vesey Street,
26th Floor, New York, New York 10285
ITEMS OF BUSINESS
To vote on the following proposals:
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1. |
Election of directors proposed by the Company’s
Board of Directors for a term of one year, as set forth in this proxy statement |
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2. |
Ratification of appointment of PricewaterhouseCoopers
LLP as our independent registered public accounting firm for 2015 |
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3. |
Advisory resolution to approve executive
compensation |
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Five shareholder proposals if properly presented
at the annual meeting |
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Such other business that may properly come
before the annual meeting |
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RECORD
DATE
Close of business on March 13, 2015
March 30, 2015
Carol
V. Schwartz
Secretary
2015
Proxy Statement 1
2015 Proxy Statement 2
2015
Proxy Statement 3
GENERAL
INFORMATION
We are providing this proxy statement to
you in connection with the solicitation of proxies by the Board of Directors of American Express Company for the 2015 Annual Meeting
of Shareholders and for any adjournment or postponement of the meeting. We expect to mail our notice of internet availability
of the proxy materials and to begin mailing our proxy materials on or about March 30, 2015.
Annual
Meeting Information
Date, Time
and Place: May 11, 2015, at 9:00 a.m. Eastern Time at 200 Vesey Street, New York, New York 10285.
Admission: We do not require tickets for admission to the meeting but do limit attendance to shareholders on the record date or
their proxy holders. Please bring proof of your common share ownership, such as a current brokerage statement, and photo identification.
Only shareholders or their valid proxy holders may address the meeting. Please note that cameras, camcorders, videotaping equipment,
and other recording devices, and large packages, banners, placards and signs will not be permitted in the meeting.
Street Name Holders: If your shares are held in a bank, brokerage or other institutional account you are a beneficial owner of
these shares but not the record holder. This is known as holding shares in “street name.” If you wish to vote these
shares in person at the meeting, you must obtain a proxy from your bank, broker or other intermediary and bring it with you to
hand in with your ballot.
Webcast:
You can access a live audio webcast and a replay of the meeting on our investor website at http://ir.americanexpress.com.*
How
to View Proxy Materials Online
Important
notice regarding the availability of proxy materials for the 2015 shareholder meeting:
Our proxy
statement and 2014 Annual Report to Shareholders are available online at http://ir.americanexpress.com.
We will
mail to certain shareholders a notice of internet availability of proxy materials. This notice contains instructions on how to
access our proxy statement and 2014 Annual Report to Shareholders and vote online.
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HOW
TO CAST YOUR VOTE
You may vote common shares that you owned
as of the close of business on March 13, 2015, which is the record date for the meeting.
We encourage you to vote as soon as possible,
even if you plan to attend the meeting in person. Please follow the instructions on your proxy card, voting instruction form or
on the notice of internet availability of proxy materials that you received. If you submit your vote prior to the meeting, you
may still attend and vote at the meeting.
You may vote in the following ways:
BY
TELEPHONE |
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BY
INTERNET |
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BY
MAIL |
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IN
PERSON |
You
can vote by calling the number on your proxy card or voting instruction form or provided on the website listed on your notice.
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You
can vote online at
www.proxyvote.com. |
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If
you received written materials, you can vote by mail by marking, dating and signing your proxy card or voting instruction
form and returning it in the envelope provided. |
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You
can vote in person at the annual meeting. If you hold your shares in street name, you must obtain a proxy from the record
holder to vote in person. |
For telephone and Internet voting, you will need the 16-digit
control number included on your notice, on your proxy card or in the voting instructions that accompanied your proxy materials.
Telephone and online voting are available through 3:00 p.m. Eastern
Time on Wednesday, May 6, 2015, for shares held in employee plans, and through 11:59 p.m. Eastern Time on Sunday, May 10, 2015,
for all other shares.
* Weblinks throughout this document are provided for convenience
only. Information from the American Express website and any other website referred to in this proxy statement is not incorporated
by reference into this proxy statement.
2015
Proxy Statement 4
VOTE
CONFIRMATION
You may confirm your vote was cast in
accordance with your instructions. Beginning April 28, 2015, and for up to two months after the annual meeting, you may
confirm your vote beginning 24 hours after your vote is received, whether it was cast by proxy card, electronically or
telephonically. To obtain vote confirmation, log onto www.proxyvote.com using your
control number (included on your notice, on your proxy card, or in the instructions that accompanied your proxy materials)
and receive confirmation on how your vote was cast. If you hold your shares through a bank or brokerage account, the ability
to confirm your vote may be affected by the rules of your bank or broker, and the confirmation will not confirm whether your
bank or broker allocated the correct number of shares to you.
2015
Proxy Statement 5
PROXY SUMMARY
We present below a summary of certain information in this proxy
statement. Please review the complete proxy statement and 2014 Annual Report to Shareholders before you vote.
2014 PERFORMANCE HIGHLIGHTS
The company produced solid earnings in 2014 reflecting higher
spending by our Card Members, growth in average Card Member loans, excellent credit quality and control over operating expenses.
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We earned a record $5.9 billion in net income for 2014, up 10 percent from last year. |
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Our earnings per share (EPS) were $5.56, an increase of 14 percent from 2013. |
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Our total revenues net of interest expense rose 4 percent (5 percent on an adjusted basis1) to $34.3 billion. |
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Our return on average equity (ROE) was 29.1 percent, compared with 27.8 percent in 2013. |
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We achieved $1.02 trillion in worldwide billed business (including cards issued by third parties), an increase of 7 percent (9 percent on an FX-adjusted basis2) over last year. |
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Our credit performance outpaced the industry, and write-off rates remained at or near historic lows. |
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Our total shareholder return (TSR) for the year trailed the S&P 500 and the S&P 500 Financials indices, but our three-and five-year returns were better than both of these indices. |
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While maintaining tight control of our operating expenses, we continued to invest in key areas to support our moderate-and long-term growth. |
Further information on our 2014 performance can be found on pages 23
and 24.
On Average, Over Time Financial Targets
We have set long-term targets that we
think would generate sustainable value for our shareholders. We manage the company for the moderate to long-term and do not
make decisions simply to achieve results on a short-term basis.
Since 2010, our annual EPS growth has
averaged 14 percent. Our revenue growth rate was 6 percent over the same period.
During this time, we delivered high returns
on capital, with an average ROE of 27 percent.
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ON AVERAGE, OVER TIME FINANCIAL TARGETS |
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EPS growth: 12-15% |
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Revenue growth: at least 8% |
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ROE: 25% or more |
EXECUTIVE COMPENSATION PROGRAM
Our executive compensation program is designed
to reward our leadership team for delivering results and building sustainable shareholder value. Several important features of
our executive compensation program are:
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About 92 percent of the total direct compensation delivered to our CEO for 2014 was variable and tied to performance. About 74 percent is in the form of restricted stock units, stock options and a portfolio grant, the value of which will depend on the company’s future share price, financial, and other performance. |
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Our Compensation and Benefits Committee assesses performance using a framework that reviews results relative to our goals and to our competitors, progress against strategic initiatives, and risk/control and compliance goals. |
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Our long-term incentive awards include (1) performance-vested restricted stock units whose value is based on achievement of return on average equity targets, (2) stock options, and (3) portfolio grant awards whose value is based on the achievement of financial, stock price, and strategic goals over a three-year performance period. |
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We require our executive officers to have significant outright ownership of company shares. |
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We made a number of changes to our compensation program in recent years to further strengthen the link between pay and performance. For example, we added performance vesting to our annual restricted stock unit grants and added a clawback feature to the cash bonus paid to the CEO. |
Our Compensation Discussion and Analysis
is on pages 23-39 and our Summary Compensation Table, other tables and narrative discussion are on pages 40-52.
1
The growth rate of adjusted total revenues net of interest expense, a non-GAAP measure, excludes business travel revenues
for Q3-Q4 ’13, due to the deconsolidation of our global business travel operations as a result of the joint venture
transaction that closed June 30, 2014, the gain on the Q4 ’14 sale of the company’s investment in Concur
Technologies, Inc. and the impact of changes in foreign exchange rates. Refer to Annex A for a reconciliation and footnote 2
for an explanation of foreign currency adjusted (FX-adjusted) information.
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FX-adjusted information assumes a constant exchange rate between the periods being compared for purposes of
currency translation into U.S. dollars, making it easier to compare performance in one period to another period without
the variability caused by fluctuations in currency exchange rates.
2015 Proxy Statement 6
SUMMARY OF VOTING MATTERS AND BOARD RECOMMENDATIONS
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Board Voting |
Page Reference |
Proposal |
Recommendation |
for More Detail |
Item
1—Election of Directors for a Term of One Year |
FOR |
53-61 |
Item
2—Ratification of Appointment of PricewaterhouseCoopers
LLP for 2015 |
FOR |
62-63 |
Item
3—Advisory Resolution to Approve Executive Compensation
(Say on Pay) |
FOR |
64 |
Items
4-8—Five Shareholder Proposals, if properly presented |
AGAINST |
65-72 |
The voting standard for all these items is a majority of votes cast.
OUR DIRECTOR NOMINEES
You are being asked to elect 12 directors.
Each of our current directors other than Mr. Reinemund is standing for reelection. The board has also nominated Michael O. Leavitt
to stand for election. Each of the nominees is standing for election to hold office until the next annual meeting of shareholders
and until his or her successor is duly elected and qualified. Detailed information about each nominee’s background, skills
and expertise can be found in Proposal 1—Election of Directors for a Term of One Year on page 53.
INFORMATION ABOUT OUR DIRECTOR NOMINEES
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Director |
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Other |
Name |
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Age |
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Since |
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Current Occupation |
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Independent |
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Public Boards |
Charlene Barshefsky |
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64 |
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2001 |
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Senior International Partner, WilmerHale |
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Ursula M. Burns |
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56 |
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2004 |
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Chairman and CEO, Xerox Corporation |
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Kenneth I. Chenault |
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63 |
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1997 |
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Chairman and CEO, American Express Company |
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Peter Chernin |
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63 |
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2006 |
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Founder and Chairman, Chernin Entertainment, Inc. |
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Anne L. Lauvergeon |
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55 |
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2013 |
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Chairman and Chief Executive Officer, A.L.P. SAS |
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Michael O. Leavitt |
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64 |
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Founder and Chairman, Leavitt Partners, LLC |
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Theodore J. Leonsis |
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59 |
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2010 |
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Chairman and CEO, Monumental Sports & Entertainment, LLC |
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Richard C. Levin |
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67 |
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2007 |
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Chief Executive Officer, Coursera |
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Samuel J. Palmisano |
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63 |
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2013 |
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Former Chairman, President and CEO, IBM |
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Daniel L. Vasella |
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61 |
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2012 |
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Honorary Chairman and Former Chairman and CEO, Novartis AG |
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Robert D. Walter* |
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69 |
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2002 |
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Founder and Former Chairman and CEO, Cardinal Health, Inc. |
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2 |
Ronald A. Williams |
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65 |
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2007 |
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Former Chairman and CEO, Aetna, Inc. |
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*
Lead Independent Director
2015 Proxy Statement 7
BOARD AND GOVERNANCE HIGHLIGHTS
INFORMATION ABOUT OUR CURRENT BOARD COMMITTEE MEMBERSHIP AND 2014
COMMITTEE MEETINGS
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Audit and |
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Compensation |
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Innovation |
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Nominating |
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Public |
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Compliance |
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and Benefits |
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and Technology |
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and Governance |
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Responsibility |
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Risk |
Charlene Barshefsky |
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Ursula M. Burns |
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Kenneth I. Chenault |
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Peter Chernin |
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Anne L. Lauvergeon |
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Theodore J. Leonsis |
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Richard C. Levin |
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Samuel J. Palmisano |
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Steven S Reinemund |
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Daniel L. Vasella |
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Robert D. Walter |
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Ronald A. Williams |
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TOTAL MEETINGS HELD |
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11 |
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7 |
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3 |
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6 |
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10 |
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Chair |
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Member |
Director Attendance: All directors
attended over 75 percent or more of the meetings of the board and board committees on which they served in 2014.
BOARD CHARACTERISTICS
Upon election of the board’s nominees at the annual meeting,
the board will have the following characteristics:
BOARD EXPERTISE AND SKILLS
2015 Proxy Statement 8
AMERICAN EXPRESS CORPORATE GOVERNANCE
Board Independence |
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9 out of 12 of our director nominees are independent. |
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Our CEO is the only member of management who serves as a director. |
Board Refreshment and Diversity |
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We seek a board that as a whole possesses a mix of diverse skills, backgrounds and experience, including with respect to gender and race. |
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We have a mix of relatively newer and longer tenured directors to make sure the board has fresh perspectives and the benefit of experience. Upon election of the board’s nominees, the average tenure of our non-management directors will be under 7 years. |
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We
added three new directors since 2012, including one woman and two directors from outside the United States, and we are
nominating a new director for election in 2015. |
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Directors may not stand for reelection after age 72. |
Board Committees |
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We have six board committees—Audit and Compliance, Compensation and Benefits, Innovation and Technology, Nominating and Governance, Public Responsibility, and Risk. |
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Our Audit and Compliance, Compensation and Benefits, Nominating and Governance, and Risk committees are composed entirely of independent directors. |
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Committee chairs shape the agenda and information presented to their committees to respond to evolving business and regulatory developments. |
Lead Independent Director |
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Our independent directors annually elect a lead independent director. Mr. Walter has been our lead independent director since 2011. |
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In addition to his other duties, Mr. Walter chairs regular executive sessions of the board, at which non-management directors discuss matters such as senior executive performance and compensation, succession planning, board information needs, future agenda items and board priorities. |
Board Oversight of |
Oversight of business strategy and risk taking are primary functions of the board. |
Strategy and Risks |
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Our board oversees and advises management on development and execution of business strategy through an in-depth review at an annual two-day strategy off site, followed by frequent updates. |
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Enterprise-wide risk management is overseen by our Risk Committee. Importantly, this committee has overlapping membership with the Audit and Compliance and the Compensation and Benefits committees. |
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Our Audit and Compliance Committee oversees the integrity of our financial reporting process and financial statements and legal and regulatory compliance. |
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Our Compensation and Benefits Committee reviews compensation practices so that they do not encourage imprudent risk taking. |
Accountability to |
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All directors are elected annually. |
Shareholders |
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In uncontested director elections, our directors are elected by a majority of votes cast. |
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Each common share is entitled to one vote. |
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25% of shareholders can call special meetings. |
Shareholder Engagement |
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We have regular outreach and engagement with shareholders so we are aware of and can address the issues that matter most to our investors. |
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Shareholders may also raise concerns directly to our directors or to our corporate ombudsperson. |
Director
Stock Ownership |
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Non-management directors are required to acquire a personal holding of shares (directly or through share equivalent units) with a value of $1 million within five years of joining our board. |
Board Effectiveness |
Our board has a continuous improvement mindset. Following are some of the processes in place to promote board effectiveness: |
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Regularly scheduled board meetings generally start with a directors’ only session at which the condition of the company’s business is discussed. At the conclusion of the meeting, the board generally meets again in a second directors’ only session, followed by an executive session of non-management directors led by the lead independent director. |
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The Nominating and Governance Committee leads an annual self-evaluation of the board. The board critically evaluates its performance including assessing its agendas, informational needs, composition, processes, and dynamics. Each committee follows a similar process. At the end of the process, any improvements that are identified are implemented. |
Director Access |
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Senior leaders present regularly to directors to enable the board to hear directly from the leaders responsible for particular areas. All directors have access to individual members of management and to other employees on a confidential basis. |
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Directors are authorized to conduct independent investigations and to hire outside consultants or experts at the company’s expense. |
2015 Proxy Statement 9
CORPORATE GOVERNANCE AT AMERICAN EXPRESS
Our Corporate Governance Framework
Our corporate governance framework is designed
to support the company’s brand attributes of trust, security and integrity, and to promote achievement of our financial targets
through responsible development and execution of corporate strategy. Our directors understand that they serve you as shareholders
in carrying out their responsibility to oversee the operations and strategic direction of our company. To do so effectively, our
board along with management regularly reviews our corporate governance principles and our practices to assure that they are appropriate
and reflect high standards.
Our governance framework enables independent
and skilled directors to provide oversight, advice, and counsel to promote the interests of American Express and its shareholders.
Key governance policies and processes include our corporate governance principles, our employee code of conduct and our code of
business conduct for directors, our whistleblower policy, our comprehensive enterprise-wide risk management program, our commitment
to transparent financial reporting, and our systems of internal checks and balances. Comprehensive management policies, many of
which are approved at the board level, guide the company’s operations.
Corporate Governance—Integrity and
Trust
At American Express, we seek to achieve strong
results for our shareholders. We do this through a commitment to high standards of ethical behavior and integrity, sound governance
and risk management practices, a strong ethos of customer service, and a commitment to giving back to the communities in which
we work and operate.
Leaders are responsible to demonstrate the
highest standards of integrity in all dealings with fellow employees, customers, suppliers, and the community at large.
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You may view the following documents at
our investor relations website, located at http://ir.americanexpress.com:
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Corporate Governance Principles |
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Charters for each of our Board Committees |
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Code of Conduct for Employees |
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Code of Business Conduct for Directors |
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Whistleblower Policy |
CORPORATE GOVERNANCE PRINCIPLES AND PRACTICES
Board Independence
Our governance principles provide that a
substantial majority of our directors will meet the criteria for independence required by the NYSE. Currently, 75 percent of our
board meets our criteria for independence. |
A director is considered independent if the
board determines that he or she does not have a material relationship with the company. In making its annual independence determinations,
the board considers transactions between each director nominee and the company. Our board has established guidelines to assist
it in determining director independence. These guidelines can be found within our corporate governance principles and cover, among
other things, employment and compensatory relationships, relationships with our auditors, customer and business relationships,
and contributions to nonprofit organizations.
Based on our guidelines, the board determined
in February and March 2015 that 9 of the board’s 12 director nominees are independent: Mses. Burns and Lauvergeon, and
Messrs. Chernin, Leavitt, Levin, Palmisano, Vasella, Walter and Williams. Amb. Barshefsky, Mr. Chenault and Mr. Leonsis
are not independent under these guidelines. Messrs. McGinn and Reinemund, who are not standing for reelection, were also determined
to be independent during their board service.
Our director independence guidelines provide
that a material relationship with the company will be deemed to exist if a director is a partner of, or of counsel to, a law firm
that performs substantial legal services for the company on a regular basis. Amb. Barshefsky is a partner of the law firm of WilmerHale,
which firm provided legal services to us in 2014 at customary rates. Mr. Leonsis provided consulting services to the company
in 2012 and is not independent under our guidelines which require a three year look back for consulting arrangements.
2015 Proxy Statement 10
Board Leadership
Board leadership is provided through the
combination of a unified chairman and CEO, a clearly defined and significant lead independent director role, active committee chairs,
and independent-minded, skilled and committed directors. The board believes this structure provides an appropriate framework for
effective board challenge and best serves the interests of our shareholders at this time. Our current lead independent director,
Mr. Robert Walter, was reelected lead director in February 2015 by the independent directors upon the recommendation of the
Nominating and Governance Committee. Significant considerations are provided below. |
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The Company’s CEO, Mr. Chenault, has been able to draw on his knowledge of the company’s operations, industry and competitive developments, key customers and business partners to provide leadership in setting the agenda and focusing board discussions. |
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Mr. Chenault’s combined role has ensured that the company presents its message and strategy to shareholders, employees and customers with a unified voice, and provides unambiguous accountability. |
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The board’s lead independent director, Mr. Robert Walter, has accumulated a deep knowledge of the company’s business, history and organization, which enables him to provide strong and effective leadership to the independent directors. The board believes that it has in place processes that enable Mr. Walter to provide this leadership, including chairing executive sessions after every regular board meeting and providing feedback to Mr. Chenault. |
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Board meetings include healthy debate and exchange of viewpoints from all directors, and the Nominating and Governance Committee believes that board meetings evidence open and transparent board dynamics. |
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In addition to a strong lead independent director with clearly delineated and comprehensive duties, the board’s leadership structure includes experienced, independent-minded and involved committee chairs. |
Duties and Powers of Our Lead Independent Director:
Preside at all meetings of the board at which
the chairman is not present, including the executive sessions of the non-management and independent directors; and apprise the
chairman of the issues considered and decisions reached.
Call additional meetings of independent directors.
Facilitate communication
and serve as a liaison between the chairman and the independent directors.
Advise the chairman of the board’s
informational needs, and review and approve the types of information sent to the board and board meeting agendas.
Review and approve the schedule of board
meetings to ensure there is sufficient time for discussion of all agenda items.
If requested by major shareholders, be available
as appropriate for consultation and direct communication.
Perform such other duties as the independent
directors may from time to time designate.
|
Non-Management Director Executive Sessions
Executive sessions of non-management directors
are led by the lead independent director and are an important governance practice because they enable the board to discuss matters,
such as strategy, CEO and senior management performance and compensation, succession planning and board effectiveness without management
present. |
Our non-management directors generally meet
in executive session at each regularly scheduled board meeting, including at least one executive session of independent directors
only. Any director may request additional executive sessions of non-management or independent directors. Additional meetings of
the independent directors may also be called at any time by the lead independent director. During 2014, our non-management directors
met in executive session at 8 meetings, one of which sessions included independent directors only.
Board Accountability
|
The company’s governance practices provide board accountability
to shareholders through: |
|
|
|
• |
Majority voting for directors |
|
|
|
|
• |
Annual election of the entire board |
|
|
|
|
• |
Special meeting by-law provisions |
|
|
|
|
• |
One vote per common share |
2015 Proxy Statement 11
MAJORITY VOTING FOR DIRECTORS
Our by-laws
provide that directors will be elected by a majority of “for” votes cast in a non-contested election (where the
number of nominees is the same as the number of directors to be elected). If a director receives a greater number of votes
“against” than votes “for” his or her election, the director is required to immediately submit his or
her resignation to the board. Our board of directors, excluding such individual, will decide whether or not to accept such
resignation and will promptly disclose and explain its decision in a Form 8-K filed with the Securities and Exchange
Commission (SEC) within 90 days after the results of the election are certified.
In a contested election, the director nominees
who receive the plurality of votes cast are elected as directors. Under the plurality standard, the number of persons equal to
the number of vacancies to be filled who receive more votes than other nominees are elected to the board, regardless of whether
they receive a majority of votes cast. An election is considered contested under our certificate of incorporation if there are
more nominees than positions on the board to be filled at the meeting of shareholders as of the 14th day prior to the
date on which we file our definitive proxy statement with the SEC.
CALLING OF SPECIAL SHAREHOLDER MEETINGS
Our by-laws allow holders of 25 percent or
more of our common shares to call a special meeting of shareholders in accordance with specified procedures. Our board adopted
this by-law amendment in 2011 in response to input from our shareholders.
Management Succession Planning
One of our board’s primary responsibilities
is to ensure that we have the appropriate management talent to successfully pursue our strategies.
Management succession is regularly discussed
by the directors with the CEO as well as without management present in executive sessions of the board. Our board annually conducts
a detailed review of the company’s talent strategies, leadership pipeline and succession plans for key executive positions.
Directors become familiar with potential successors for key management positions through various means, including the comprehensive
annual talent review, informal meetings, board dinners and presentations to the board. |
Oversight of the management succession process
is the responsibility of the Nominating and Governance Committee. Our board believes that the directors and the CEO should collaborate
on succession planning and that the entire board should be involved in the critical aspects of the CEO succession planning process,
including establishing selection criteria that reflect our business strategies, identifying and evaluating potential internal candidates
and making key management succession decisions.
Shareholder Engagement
We engage with our shareholders to ensure
that both management and the board are aware of and can address the issues that matter most to our investors on a timely basis.
We engage regularly with our largest shareholders to hear their views on governance matters generally and specifically with respect
to the company, including discussion of executive compensation, emerging governance developments and our practices. |
2015 Proxy Statement 12
COMMUNICATING WITH DIRECTORS
You may communicate with our board or an
individual director by letter, email or telephone, directed in care of the company’s Secretary, who will forward your communication
to the intended recipients. However, in the discretion of the Secretary, unsolicited advertisements or invitations to conferences
or promotional material may not be forwarded to the directors. If you wish to communicate a concern about our financial statements,
accounting practices or internal controls, the concern should be directed to the chair of the Audit and Compliance Committee. If
the concern relates to the company’s governance practices, business ethics or corporate conduct, the concern should be directed
to the chair of the Nominating and Governance Committee or the lead independent director. Matters relating to executive compensation
may be directed to the chair of the Compensation and Benefits Committee. If you are unsure of the category your concern relates
to, you may communicate it to any one of the independent directors or to the lead independent director.
Please direct such communications as follows:
Carol V. Schwartz
Secretary and Corporate Governance Officer
American Express Company
200 Vesey Street
New York, NY 10285
(212) 640-2000
corporatesecretarysoffice@aexp.com
In addition, you may raise a shareholder
concern to our board in a confidential or anonymous manner, by contacting the Office of the Ombudspersons at the company’s
headquarters or by telephone to 1-800-297-1010. An ombudsperson will refer the concern to the chair of the Audit and Compliance
Committee, who will see that the matter is properly investigated.
Board Evaluation Process
The board and each committee annually evaluate
their performance to identify areas for improvements. The areas covered in the evaluation include agendas, informational needs,
composition, processes and structure, dynamics, performance and effectiveness, and access to resources and senior management. The
table below summarizes the process followed.
Component |
Description |
Corporate
Governance Review |
Our Nominating
and Governance Committee reviews our corporate governance principles in light of general corporate governance developments
and practices suggested by governance organizations and investors, recommends to the board changes that it believes are appropriate
to maintain high standards of governance, and determines and oversees the process for the upcoming annual board and committee
evaluations. |
Annual
Board and Committee Self-Evaluations |
Currently,
the evaluations have been conducted through a tailored questionnaire for the board and each committee, followed by discussion
in executive session. The questionnaires evaluate progress against specific areas and elicit discussion through open-ended
questions. |
Summary
of the Written Questionnaires |
The corporate
secretary summarizes the responses, showing trends since the prior year and written comments, which are shared with the board
and committee members. |
Executive
Sessions |
The chair of
the Nominating and Governance Committee and each committee chair leads an executive session of the non-management directors
and their committee to discuss the results of the evaluation, without management present. Committee chairs report on their
evaluations to the full board. |
Actions |
Improvements that are identified in response to this process are implemented. |
2015 Proxy Statement 13
Board Meetings and Board Committees
DIRECTOR ATTENDANCE
Attendance at Board Meetings
During 2014, our board met nine times. All
directors attended 75 percent or more of the meetings of the board and board committees on which they served in 2014.
Attendance at Annual Meetings
In 2014, all of our directors other than
Mr. Leonsis were present at the Annual Meeting of Shareholders. Our board encourages all its members to attend the annual meetings
but understands there may be situations that prevent such attendance.
Committee Membership and Meetings Held in
2014
Please see Board and Governance Highlights
on page 8 for information about our current committee memberships and committee meetings held in 2014.
BOARD COMMITTEE RESPONSIBILITIES
Audit and Compliance Committee
Members:
Anne Lauvergeon, Steven S Reinemund, Daniel L. Vasella (Chair)
and Ronald A. Williams |
RESPONSIBILITIES: Assist the board in its
oversight of the integrity of the company’s financial statements and financial reporting processes, internal and external
auditing, including the qualifications and the independence of the independent registered public accounting firm and the performance
of the company’s internal audit services function, the integrity of the company’s systems of internal control over
financial reporting, and legal and regulatory compliance. The committee has established procedures for the receipt, retention and
treatment, on a confidential basis, of complaints received by the company regarding accounting, internal accounting controls or
auditing matters and the confidential, anonymous submission by employees of the company of concerns regarding questionable accounting
or auditing matters. The committee also receives and discusses reports from management regarding significant reported ethics violations
under the company’s Code of Conduct and other corporate governance policies. The committee meets regularly in executive session
with management, the company’s General Auditor, the company’s independent registered public accounting firm, and the
company’s Chief Compliance & Ethics Officer. The duties of the committee with respect to oversight of the company’s
financial reporting process are described in the report of the committee on page 17 under Report of the Audit and Compliance
Committee.
Independence:
Our board has determined that each member of the committee is independent and meets the additional independence
requirements under the listing standards of the NYSE and our governance principles for service on the committee. Our board
has also determined that Mr. Williams meets the requirements for being an “audit committee financial expert”
as defined by SEC rules.
|
Compensation and Benefits Committee
Members:
Ursula M. Burns, Peter Chernin, Samuel J. Palmisano, Robert D. Walter (Chair) and Ronald A. Williams |
RESPONSIBILITIES: Oversight
responsibility for the compensation of executive officers and designated key employees of the company, including the applicable
compensation plans and arrangements, as well as the company’s employee benefit plans. The Compensation and Benefits Committee
may delegate certain of its responsibilities to one or more committee members or to designated senior executives or committees
in accordance with applicable laws, regulations and plan requirements. As part of this oversight responsibility, among other duties,
the committee is responsible for approving an overall compensation philosophy and strategy for the company and its executive officers,
including the selection of performance measures aligned with the company’s business strategy, and for reviewing the company’s
compensation practices so that they do not encourage imprudent risk taking. The committee is also responsible for evaluating potential
conflicts of interest with respect to its advisors. The processes and procedures by which the committee considers and determines
Named Executive Officer compensation are described in the Compensation Discussion and Analysis included in this proxy statement.
Independence:
Our board has determined that each member of the committee is independent and meets the additional independence
requirements under the listing standards of the NYSE and our governance principles for service on the committee.
Compensation
and Benefits Committee Interlocks and Insider Participation: None of the current members of the committee
is a former or current officer or employee of the company or any of its subsidiaries. None of them has any relationship
required to be disclosed under this caption under the rules of the SEC.
|
2015 Proxy Statement 14
Innovation and Technology Committee
Members:
Charlene Barshefsky, Theodore J. Leonsis (Chair), and Robert
D. Walter |
The Innovation and Technology Committee was
established by the board to assist the board in its oversight of strategic innovation and technology.
RESPONSIBILITIES: Reviews and makes
recommendations to the board on major strategies and plans developed by management relating to technological and commercial innovation;
the innovation and technology acquisition process to assure ongoing business growth; and the measurement and tracking systems
in place to achieve successful innovation. |
Nominating and Governance Committee
Members:
Peter Chernin (Chair), Samuel J. Palmisano, Steven S Reinemund and Robert D. Walter |
RESPONSIBILITIES: Considers
and recommends candidates for election to the board; advises the board on director compensation; oversees the annual performance
evaluations of the board and board committees; advises the board on corporate governance and board leadership; administers the
company’s Related Person Transaction Policy and oversees the company’s management succession process.
Independence:
All members of the committee are independent directors as required by the listing standards of the NYSE and
our governance principles. |
Public Responsibility Committee
Members:
Charlene Barshefsky (Chair), Anne Lauvergeon, Theodore J. Leonsis, Richard C. Levin and Daniel L. Vasella |
The board established the
Public Responsibility Committee in recognition of the importance of issues that affect the communities in which we work, or the
public interest in general.
RESPONSIBILITIES: Reviews legislation and
regulation affecting American Express, our philanthropic programs, our political action committee and corporate political contributions,
our government relations activities, other policies affecting the communities in which we operate and our environmental programs.
Political
Contributions Activities: We communicate with policymakers on public policy issues important to the
company. In addition to our advocacy efforts, we participate in the political process through the American Express Political
Action Committee (AXP PAC), funded solely by voluntary employee contributions. The AXP PAC does not contribute to presidential
campaigns. We maintain comprehensive compliance procedures to ensure that our activities are conducted in accordance with
all relevant laws, and management regularly reports to the Public Responsibility Committee regarding its engagement in
the public policy arena and its political contributions. Information regarding our company’s political activities,
including U.S. political contributions, may be found at http://about.americanexpress.com/news/pap.aspx. |
Risk Committee
Members:
Ursula M. Burns, Richard C. Levin, Daniel L. Vasella and Ronald
A. Williams (Chair) |
RESPONSIBILITIES: Assists the board in its
oversight of: the company’s enterprise-wide risk management framework; the policies and procedures established by management
to identify, assess, measure and manage the risks facing the company; management’s execution of capital management; and liquidity
planning. The committee meets regularly in executive session with the company’s Chief Risk Officer. The charter of the committee
provides that the Chief Risk Officer has express authority to communicate directly at any time with the chair of the committee
about any significant risk matter involving the company. Please see “Risk Oversight and the Board’s Role in Risk Oversight”
below for a fuller description of the activities of the committee.
Independence:
All members of the committee are independent directors under the listing standards of the NYSE and our governance
principles. |
2015 Proxy Statement 15
Risk Oversight and the Board’s Role in Risk
Oversight
We use our comprehensive Enterprise-wide
Risk Management (ERM) program to identify, aggregate, monitor and manage risks. The program also defines the company’s risk
appetite, governance, culture and capabilities. The implementation and execution of the ERM program is headed by our Chief Risk
Officer.
Risk management is
overseen by our board through three committees: the Risk, Audit and Compliance, and Compensation and Benefits committees.
Each of these committees consists entirely of independent directors and provides regular reports to the board regarding
matters reviewed at the committee level. In addition to the risks under the purview of a particular committee, the board
monitors the “tone at the top” and risk culture of the company, oversees strategic risk, and reviews specific and
aggregate risks the company faces from time to time. These board committees meet regularly in private sessions with our Chief
Risk Officer, Chief Compliance & Ethics Officer, General Auditor and other senior management with regard to the
company’s risk management processes, controls and capabilities.
The Risk Committee provides risk
oversight on risk policies and risk management performance. The Risk Committee approves key risk management policies and monitors
risk culture, talent, capabilities and outcomes. In particular, the Risk Committee approves our ERM policy along with its sub-policies
governing individual credit risk, institutional credit risk, market risk, liquidity risk, operational risk, reputational risk and
asset/liability risk, as well as policies governing the launch of new products and services, third-party management and resolution
planning. The ERM policy defines the company’s risk appetite as well as governance over risk taking and risk oversight processes.
Risk appetite defines the levels and types of risks the company is willing to assume to achieve its business plans while controlling
risk exposures well within the company’s risk capacity. In addition, it establishes principles for risk taking in the aggregate
and for each risk type, and is supported by a comprehensive system of risk limits, escalation triggers and control programs.
The Risk Committee reviews and
concurs in the appointment, replacement, performance and compensation of the Company’s Chief Risk Officer. The Risk Committee
receives regular updates from the global risk oversight teams that report to the Chief Risk Officer on key risks, transactions
and exposures.
The Risk Committee reviews
the company’s credit risk profile as well as credit risk performance, trends and risk management capabilities. The Risk
Committee also reviews enterprise-wide operational risk trends, events and capabilities, with an emphasis on compliance,
fraud, legal, process or control failures, information security, and privacy, as well as trends in market, funding, liquidity
and reputational risks. The Risk Committee also provides oversight of the company’s compliance with Basel capital and
liquidity standards and its Internal Capital Adequacy Assessment Process, including its Comprehensive Capital and Review
(CCAR) submissions, and resolution planning.
The Audit and Compliance Committee
approves our compliance policies and risk tolerance and reinforces the importance of compliance risk management at the company.
In addition, the Audit and Compliance Committee reviews the effectiveness of our Corporate-wide Compliance Risk Management Program.
More broadly, the committee is responsible for assisting the board of directors in its oversight responsibilities relating to the
integrity of the company’s financial statements and financial reporting process; internal and external auditing, including
the qualifications and independence of our independent registered public accounting firm and the performance of the Company’s
internal audit services function; and the integrity of our systems of internal accounting and financial controls.
The Audit and Compliance Committee
provides oversight of the Company’s internal audit group. The Audit and Compliance Committee reviews and concurs in the appointment,
replacement, performance and compensation of the Company’s General Auditor and approves internal audit’s annual audit
plan, charter, policies and budget. The Audit and Compliance Committee also receives regular updates on the audit plan’s
status and results including significant reports issued by internal audit and the status of management’s corrective actions.
The Compensation and Benefits
Committee works with the Chief Risk Officer to ensure the compensation programs covering the company overall, its business units
and risk-taking employees, appropriately balance risk with incentives such that business performance is achieved without taking
imprudent or uneconomic risks. Our Chief Risk Officer is actively involved in setting goals for the company and its business units.
The Chief Risk Officer also reviews the current and forward-looking risk profiles of each business unit and provides input into
performance evaluation. The Chief Risk Officer meets with the Compensation and Benefits Committee and attests whether performance
goals and results have been achieved without taking imprudent risks. The Compensation and Benefits Committee uses a risk-balanced
incentive compensation framework to decide on the company’s bonus pools and the compensation of senior executives.
There are several internal management
committees, including the Enterprise-wide Risk Management Committee (ERMC), chaired by our Chief Risk Officer, which oversee risks.
The ERMC is responsible for risk governance and oversight. It maintains the enterprise-wide risk appetite framework and monitors
compliance with limits and escalations defined in it. The ERMC oversees implementation of risk policies across the company with
approval by the appropriate board committee. The ERMC reviews key risk exposures, trends, and concentrations, significant compliance
matters, economic capital and Basel capital trends, and provides guidance on the steps to monitor, control and report major risks.
As defined in the ERM
policy, we follow the “three lines of defense” approach to risk management. The first line of defense comprises
functions and management committees directly initiating risk
2015 Proxy Statement 16
taking. Business unit presidents, our
Chief Credit Officer, Chief Operational Risk Officer, Chief Market Risk Officer and Functional Risk Officer are part of the
first line of defense. The second line comprises independent functions overseeing risk taking activities of the first line.
The Global Risk Oversight Officer and Market Risk Oversight Officer, the Chief Compliance & Ethics Officer, the Corporate
Comptroller and certain control groups, both at the enterprise level and within regulated entities, are part of the second
line of defense. The global risk oversight teams oversee the policies, strategies, frameworks, processes and capabilities
deployed by the first line teams and act as a check to the first line of defense in managing risks. The Internal Audit Group
constitutes the third line of defense, and provides independent assessments and effective challenge of the first and second
lines of defense.
In addition, the Asset-Liability
Committee (ALCO), chaired by the company’s Chief Financial Officer, is responsible for managing market, liquidity, asset/liability
risk and capital.
Report of the Audit and Compliance Committee
A role of the Audit and Compliance
Committee is to assist the board in its oversight of the company’s financial reporting process. Management has the primary
responsibility for the financial statements and the reporting process, including the system of internal control over financial
reporting. The company’s independent registered public accounting firm is responsible for auditing the company’s financial
statements and its internal control over financial reporting, in accordance with the standards of the Public Company Accounting
Oversight Board (PCAOB), and expressing opinions as to the conformity of the financial statements with accounting principles generally
accepted in the United States and the effectiveness of internal control over financial reporting.
In the performance of its oversight
function, the Audit and Compliance Committee has reviewed and discussed with management and the independent registered public accounting
firm the company’s audited financial statements. The Audit and Compliance Committee also has discussed with the independent
registered public accounting firm the matters required to be discussed by Auditing Standard No. 16, as adopted by the PCAOB, relating
to communications with audit committees. In addition, the Audit and Compliance Committee has received from the independent registered
public accounting firm the written disclosures and letter required by applicable requirements of the PCAOB regarding the firm’s
communications with the audit committee concerning independence, has discussed with the independent registered public accounting
firm their independence from the company and its management, and has considered whether the independent registered public accounting
firm’s provision of non-audit services to the company is compatible with maintaining the firm’s independence.
The Audit and Compliance
Committee discussed with the company’s General Auditor and independent registered public accounting firm the
overall scope and plan for their respective audits. Internal Audit is responsible for preparing an annual audit plan and
conducting internal audits under the direction of the company’s General Auditor, who is accountable to the Audit and
Compliance Committee. The Audit and Compliance Committee met with the General Auditor and independent registered public
accounting firm, with and without management present, to discuss the results of their examinations, their evaluations of the
company’s internal controls, and the overall quality of the company’s financial reporting. In addition, the Audit
and Compliance Committee met with the Chief Executive Officer and Chief Financial Officer of the company to discuss the
processes that they have undertaken to evaluate the accuracy and fair presentation of the company’s financial
statements and the effectiveness of the company’s systems of disclosure controls and procedures and internal control
over financial reporting.
Based on the reviews and discussions
referred to above, the Audit and Compliance Committee recommended to the board of directors, and the board has approved, that the
company’s audited financial statements be included in the company’s 2014 Annual Report to Shareholders and Annual Report
on Form 10-K for the year ended December 31, 2014 for filing with the SEC.
AUDIT AND COMPLIANCE COMMITTEE
Daniel L. Vasella, Chairman
Anne Lauvergeon
Steven S Reinemund
Ronald A. Williams
2015 Proxy Statement 17
CORPORATE CITIZENSHIP AT AMERICAN EXPRESS
Community
At American Express, we
believe that serving our communities is not only integral to running a business successfully; it is part of our
responsibilities as citizens of the world. The mission of our corporate social responsibility program is to bring to life
the American Express value of good corporate citizenship by supporting communities in ways that enhance the company’s
reputation with employees, customers, business partners and other stakeholders. We do this by supporting visionary nonprofit
organizations that are:
• |
Preserving and sustaining unique historic places for the future; |
|
|
• |
Developing new nonprofit leaders for tomorrow; and |
|
|
• |
Encouraging community service where our employees and customers live and work. |
We realize the importance of
preserving cultural assets around the world and, over the years, American Express has contributed more than $50 million to historical
preservation-related projects. This support has helped preserve iconic historic sites including the Rijks Museum in Amsterdam,
the Frida Kahlo Museum in Mexico City, the National Theatre in London, the Schomburg Center in New York City and the Lockkeeper’s
House on the National Mall in Washington, D.C.
Recognizing the difference that
effective leadership can make, we also support programs that help nonprofit groups develop talent within their organizations so
they are better prepared to tackle the important issues of today and tomorrow. Over 15,000 emerging nonprofit leaders worldwide
have received professional development training through these programs in the past eight years.
By helping nonprofits
increase their capacity to engage the public and our employees as volunteers, we have mobilized hundreds of thousands of
volunteers across the globe. These projects address a wide range of causes including environmental stewardship, access to
education, health and wellness, youth mentoring and efforts to supply basic needs in underserved communities. Included in
these efforts are the company’s programs that engage our employees in charitable giving and community service.
In 2014, our volunteer
program—Serve2Gether—engaged employees in more than 150,000 hours of company-sponsored volunteer service, and
our employee giving campaign—Give2Gether—resulted in
over $9 million in support of over 6,000 charitable organizations in the United States, Canada and India. Through our Serve2Gether
consulting program, which engages our employees in short-term pro bono consulting projects, we delivered over 9,000 hours of consulting
services to nonprofit organizations and social entrepreneurs around the world.
We also have a long history of
helping people in times of trouble. American Express and its employees have provided humanitarian relief to victims of numerous
disasters—including wildfires, floods, earthquakes, tsunamis and other disasters. In the last decade, American Express has
provided assistance for over 50 disasters in more than 35 countries, including Japan, Haiti, the Philippines and Superstorm Sandy
in the northeastern United States.
Environment
In keeping with our longstanding
commitment to community service and corporate citizenship, we recognize our responsibility to help ensure the health of the environment
and its well-being for generations to come. In the past few years, we have taken measurable actions to reduce our global carbon
footprint, optimize the efficiency and sustainability of our workplace, support our customers in reducing their own environmental
footprints, and encourage our suppliers and employees to act in more sustainable ways. Major goals and programs include:
• |
Reducing our carbon footprint by 10 percent by 2017 over 2011 levels. |
|
|
• |
Improving the environmental profile of our buildings. Seven of our largest facilities have
been recognized by the U.S. Green Building Council and other international standards for environmental best practices. |
|
|
• |
Increasing the use of renewable energy. About 35 percent of the electricity used in the United
States. is carbon-free, using a mix of wind, biogas, biomass and solar energy. |
|
|
• |
Reducing paper usage in our business processes and sourcing environmentally preferable paper,
electronics and other commodities. |
|
|
• |
Engaging employees in our environmental responsibility programs. |
We have also been recognized for our progress in this
journey.
• |
American Express ranked in the top 10 in the Financials category in the 2014 Newsweek Green
Ranking. |
|
|
• |
The Environmental Protection Agency recognized American Express as a top user of sustainable
energy, naming us number 50 on its annual National Top 100 list of the largest green power users in the United States. |
Learn More About Corporate Responsibility at
American Express. You may visit our corporate website at http://about.americanexpress.com/csr to
learn how we, together with our Card Members and shareholders, are making a difference in our communities. |
2015 Proxy Statement 18
OWNERSHIP OF OUR COMMON SHARES
The table below shows how many American
Express Company common shares certain individuals and entities beneficially owned on February 27, 2015. These individuals and
entities include: (1) owners of more than 5 percent of our outstanding common shares; (2) our current directors and nominees;
(3) the executive officers named in the Summary Compensation Table on page 40; and (4) all current directors, nominees
and executive officers as a group. A person has beneficial ownership of shares if the person has voting or investment power
over the shares or the right to acquire such power within 60 days. Investment power means the power to direct the sale or
other disposition of the shares. Each person has sole voting and investment power over the shares, except as we describe
below. This table does not include restricted stock units granted to executive officers or stock equivalent units owned by
directors, since they are not beneficially owned under SEC rules. The stock equivalent units credited to the directors’
accounts as of December 31, 2014 are set forth in footnote 5 below.
| |
Number of Shares Owned | | |
Right to Acquire | | |
Percent of Class |
Name | |
(4)
(5) | | |
(6 | ) | |
(%) |
Warren Buffett | |
| | |
| | |
| |
Berkshire Hathaway Inc. | |
| | |
| | |
| |
and subsidiaries | |
| | |
| | |
| |
3555 Farnam Street | |
| | |
| | |
| |
Omaha, NE 68131 | |
151,610,700 | (1) | |
— | | |
14.9 | % |
Capital World Investors | |
| | |
| | |
| |
333 South Hope Street | |
| | |
| | |
| |
Los Angeles, CA 90071 | |
56,629,860 | (2) | |
— | | |
5.6 | % |
BlackRock, Inc. | |
| | |
| | |
| |
55 East 52nd Street | |
| | |
| | |
| |
New York, NY 10022 | |
55,471,621 | (3) | |
— | | |
5.5 | % |
Charlene Barshefsky | |
20,134 | | |
— | | |
| * |
Douglas E. Buckminster | |
46,980 | | |
378,386 | | |
| * |
Ursula M. Burns | |
20,000 | | |
— | | |
| * |
Jeffrey C. Campbell | |
25,000 | | |
— | | |
| * |
Kenneth I. Chenault(7) | |
965,624 | | |
3,701,566 | | |
| * |
Peter Chernin | |
18,300 | | |
— | | |
| * |
Edward P. Gilligan | |
174,644 | | |
931,006 | | |
| * |
Anne L. Lauvergeon | |
— | | |
— | | |
| * |
Michael O. Leavitt | |
— | | |
— | | |
| * |
Theodore J. Leonsis | |
20,000 | | |
— | | |
| * |
Richard C. Levin | |
2,000 | | |
— | | |
| * |
Samuel J. Palmisano | |
550 | | |
— | | |
| * |
Steven S Reinemund | |
20,208 | | |
— | | |
| * |
Stephen J. Squeri | |
140,681 | | |
795,070 | | |
| * |
Daniel L. Vasella | |
— | | |
— | | |
| * |
Robert D. Walter | |
230,300 | | |
— | | |
| * |
Ronald A. Williams | |
27,500 | | |
— | | |
| * |
All current directors, nominees and executive officers (28 individuals)(8) | |
2,155,593 | | |
7,576,576 | | |
.96 | % |
* |
Less than 1%. |
|
|
(1) |
Based on information contained in a report on Form 13F that Berkshire
Hathaway Inc. (Berkshire) filed with the SEC, which contained information as of December
31, 2014, and information provided by Berkshire. Of the shares listed in the table, National Indemnity Co. and its subsidiaries
beneficially owned 120,141,879 shares. National Indemnity Co. is a subsidiary of Berkshire.
Mr. Buffett, Berkshire, and certain subsidiaries of Berkshire share voting and investment
power over these shares. Based on information provided to the company, Mr. Buffett owned 33.9 percent of the aggregate voting
power of the outstanding shares of Berkshire’s Class A Common Stock and Class B
Common Stock. As a result of this ownership position in Berkshire, Mr. Buffett may be considered
the beneficial owner of the shares that Berkshire beneficially owns. |
2015 Proxy Statement 19
|
In 1995, we signed an agreement with Berkshire designed
to ensure that Berkshire’s investment in our company will be passive. The agreement remains in effect as long as Berkshire
owns 10 percent or more of our voting securities. Berkshire made similar commitments to the Board of Governors of the Federal
Reserve System (Federal Reserve). Berkshire and its subsidiaries have also agreed to follow our board’s recommendations
in voting company common shares they own as long as Mr. Chenault is our chief executive officer and Berkshire owns 5 percent
or more of our voting securities. With certain exceptions, Berkshire and its subsidiaries may not sell company common shares
to any person who owns more than 5 percent of our voting securities or who attempts to change the control of the company. |
|
|
(2) |
Based on information contained in a report on Schedule 13G that Capital World Investors filed
with the SEC, which contained information as of December 31, 2014. |
|
|
(3) |
Based on information contained
in a report on Schedule 13G that BlackRock, Inc. filed with the SEC, which contained information as of December 31, 2014.
The shares listed in the table are held by BlackRock (Luxembourg) S.A., BlackRock (Netherlands) B.V., BlackRock Advisors
(UK) Limited, BlackRock Advisors, LLC, BlackRock Asset Management Canada Limited, BlackRock Asset Management Deutschland
AG, BlackRock Asset Management Ireland Limited, Blackrock Asset Management North Asia Limited, BlackRock Capital
Management, BlackRock Financial Management, Inc., BlackRock Fund Advisors, BlackRock Fund Managers Ltd., BlackRock
Institutional Trust Company, N.A., BlackRock International Limited, BlackRock Investment Management (Australia)
Limited, BlackRock Investment Management (UK) Ltd., BlackRock Investment Management, LLC, BlackRock Japan Co.
Ltd., and BlackRock Life Limited. |
|
|
(4) |
This column includes shares held in Retirement Savings Plan (RSP) accounts on February 27,
2015, as follows: |
|
|
Name | |
Number
of Shares in Plan Accounts | |
|
K.I. Chenault | |
23,735 | |
|
J.C. Campbell | |
0 | |
|
E.P. Gilligan | |
1,655 | |
|
S.J. Squeri | |
113 | |
|
D.E. Buckminster | |
12,375 | |
|
All current executive officers | |
50,245 | |
(5) |
Does not include directors’ stock
equivalent units (SEUs), which are counted toward satisfying the director stock ownership guidelines discussed on page
9. The balance in directors’ SEU accounts at December 31, 2014 is set forth below. |
|
Name | |
Number
of SEUs | |
|
C. Barshefsky | |
50,892 | |
|
U.M. Burns | |
56,981 | |
|
P. Chernin | |
28,566 | |
|
A.L. Lauvergeon | |
5,491 | |
|
T.J. Leonsis | |
13,139 | |
|
R.C. Levin | |
24,687 | |
|
S.J. Palmisano | |
6,632 | |
|
S.S Reinemund | |
24,687 | |
|
D.L. Vasella | |
8,375 | |
|
R.D. Walter | |
44,340 | |
|
R.A. Williams | |
44,424 | |
(6) |
These are shares that the named individuals have the right to acquire
within 60 days upon the exercise of stock options or the vesting of restricted stock units they hold. |
|
|
(7) |
Includes 126,690 shares held in family trusts in respect of which Mr. Chenault shares
voting and investment power with a directed trustee. |
|
|
(8) |
On February 27, 2015, the current directors, nominees and executive officers beneficially
owned 9,732,169 shares, or about 0.96 percent of our outstanding shares. No current director, nominee or executive officer
beneficially owned more than 1 percent of our outstanding shares. |
2015 Proxy Statement 20
COMPENSATION OF DIRECTORS
The Nominating and Governance Committee
reviews director compensation. Our objectives are to compensate our directors in a manner that attracts and retains highly
qualified directors and aligns the interests of our directors with those of our long-term shareholders. In 2014, the
committee engaged an independent compensation advisory firm, Semler Brossy Consulting Group, to assist the committee in its
review of the competitiveness and structure of the company’s non-management director compensation. The committee
recommended an increase in director compensation, effective January 1, 2015, described below. The committee did not change
the form of director compensation.
The following table provides information on the 2014
compensation of non-management directors who served for all or a part of 2014. We also reimburse directors for reasonable out-of-pocket
expenses attendant to their board service.
| |
Fees Earned or | | |
| | |
All Other | | |
| |
| |
Paid in Cash | | |
Stock Awards | | |
Compensation | | |
Total | |
Name | |
($)(1) | | |
($)(2) | | |
($)(3) | | |
($) | |
Charlene Barshefsky | |
$ | 110,000 | | |
$ | 155,000 | | |
$ | 48,768 | | |
$ | 313,768 | |
Ursula M. Burns | |
$ | 120,000 | | |
$ | 155,000 | | |
$ | 53,919 | | |
$ | 328,919 | |
Peter Chernin | |
$ | 115,000 | | |
$ | 155,000 | | |
$ | 27,038 | | |
$ | 297,038 | |
Anne L. Lauvergeon | |
$ | 115,000 | | |
$ | 155,000 | | |
$ | 4,207 | | |
$ | 274,207 | |
Theodore J. Leonsis | |
$ | 110,000 | | |
$ | 155,000 | | |
$ | 19,667 | | |
$ | 284,667 | |
Richard C. Levin | |
$ | 115,000 | | |
$ | 155,000 | | |
$ | 23,262 | | |
$ | 293,262 | |
Richard A. McGinn | |
$ | 98,750 | | |
$ | 155,000 | | |
$ | 34,061 | | |
$ | 287,811 | |
Samuel J. Palmisano | |
$ | 105,000 | | |
$ | 155,000 | | |
$ | 5,011 | | |
$ | 265,011 | |
Steven S Reinemund | |
$ | 115,000 | | |
$ | 155,000 | | |
$ | 23,262 | | |
$ | 293,262 | |
Daniel L. Vasella | |
$ | 155,000 | | |
$ | 155,000 | | |
$ | 11,384 | | |
$ | 321,384 | |
Robert D. Walter | |
$ | 150,000 | | |
$ | 155,000 | | |
$ | 66,841 | | |
$ | 371,841 | |
Ronald A. Williams | |
$ | 160,000 | | |
$ | 155,000 | | |
$ | 49,439 | | |
$ | 364,439 | |
(1) |
Annual Retainers. For service
in 2014, we paid non-management directors an annual retainer of $90,000 for board service and an additional annual retainer
of $20,000 to members (including the chairs) of the Audit and Compliance and Risk Committees, $10,000 to members (including
the chair) of the Compensation and Benefits Committee, and $5,000 to members (including the chairs) of the Innovation and
Technology, Nominating and Governance, and Public Responsibility Committees. We also paid an annual retainer to the chair
of each of the board committees as follows: Audit and Compliance, Compensation and Benefits, and Risk, $20,000; Innovation
and Technology, Nominating and Governance, and Public Responsibility, $10,000. We pay no fees for attending meetings, but
the annual retainer for board service of $90,000 is reduced by $20,000 if a director does not attend at least 75 percent of
our board meetings and meetings of any committee on which he or she serves. Our lead independent director also receives an
annual retainer of $20,000 (provided that if he or she is also the chair of the Nominating and Governance Committee, the lead
independent director will not receive the annual retainer for service as chair of that committee). |
|
All the non-management
directors, except for Messrs. McGinn and Reinemund, deferred all or a portion of their 2014 retainers into a cash account,
a share equivalent unit account, or both, under the deferred compensation plan described below in footnote 2. |
|
For service
in 2015, the annual retainer for non-management directors will be $95,000; the annual retainer to the chair of the Nominating
and Governance Committee will be $20,000; and the annual retainer to the lead director will be $25,000 (provided that if he
or she is also the chair of the Nominating and Governance Committee, the lead director will not receive the annual retainer
for service as chair of that committee). |
|
Mr. McGinn retired from board service effective December 31, 2014. |
|
|
(2) |
Share Equivalent Unit Plan. To align our non-management
directors’ annual compensation with shareholder interests, each non-management director is credited with common share
equivalent units (SEUs) upon election or reelection at each annual meeting of shareholders. Each SEU reflects the value of
one common share. Directors receive additional SEUs as dividend equivalents on the units in their accounts. SEUs do not carry
voting rights and must be held at least until a director ends his or her service. Each SEU is payable in cash equal to the
then value of one common share at the time of distribution to the director. On May 12, 2014, the date of last year’s
annual meeting, each non-management director elected to the board was credited with SEUs having a value of $155,000, which
consisted of 1,778 SEUs, based on the market price of company common shares for the 15 trading days immediately preceding
such date. We report in this column the aggregate grant date fair value of these SEUs in accordance with Financial Accounting
Standards Board Accounting Standards Codification Topic 718, Compensation – Stock Compensation. For service in 2015,
non-management directors will be granted SEUs having a value of $165,000. |
|
|
|
Deferred Compensation Plan for Directors. Non-management directors may defer the receipt
of up to 100 percent of their annual cash retainer fees into either: (1) a cash account in which amounts deferred will be
credited at the rate of 120 percent of the applicable federal long-term rate for December of the prior year, and/or (2) their
SEU account. Under either alternative, directors will receive cash payments and will not receive shares upon payout of their
deferrals. |
2015 Proxy Statement 21
|
The balance in directors’ SEU accounts at December
31, 2014 is set forth in the table below. These amounts represent the aggregate number of SEUs granted under the Share Equivalent
Unit Plan for all years of service as a director, additional units credited as a result of the reinvestment of dividend equivalents,
and, for directors who participated in the SEU option under our deferred compensation plan for directors, retainer amounts deferred
into their SEU account and dividend equivalents thereon. |
Name | |
Number of SEUs | |
C. Barshefsky | |
50,892 | |
U.M. Burns | |
56,981 | |
P. Chernin | |
28,566 | |
A.L. Lauvergeon | |
5,491 | |
T.J. Leonsis | |
13,139 | |
R.C. Levin | |
24,687 | |
R.A. McGinn | |
35,781 | |
S.J. Palmisano | |
6,632 | |
S.S Reinemund | |
24,687 | |
D.L. Vasella | |
8,375 | |
R.D. Walter | |
44,340 | |
R.A. Williams | |
44,424 | |
(3)
|
Insurance. We provide
our non-management directors with group term life insurance coverage of $50,000. The group life insurance policy is
provided to the directors on a basis generally available to all company employees. This column includes the premium paid
for such coverage. |
|
|
|
Dividend Equivalents.
Dividend equivalents are reinvested in additional units for all directors based upon total SEUs held at the time of
company quarterly dividend payment dates. This column includes the fair market value of the dividend equivalents received
by the directors during 2014 in these amounts: Amb. Barshefsky $48,719; Ms. Burns $53,871; Mr. Chernin $26,989; Ms.
Lauvergeon $4,158; Mr. Leonsis $11,618; Mr. Levin $23,213; Mr. McGinn $34,012; Mr. Palmisano $4,962; Mr. Reinemund
$23,213; Dr. Vasella $6,336; Mr. Walter $42,343; and Mr. Williams $41,390. |
|
|
|
Directors’ Charitable Award Program. We maintain a Directors’ Charitable
Award Program for directors elected prior to July 1, 2004. To fund this program, we purchased joint life insurance on the
lives of participating directors, including Mr. Chenault. The death benefit of $500,000 funds a donation to a charitable organization
that the director recommends. In 2014, the company paid premiums for policies as follows: Mr.Walter, $16,450. |
|
|
|
Matching Gift Program. Directors are eligible to participate in the company’s
Matching Gift Program on the same basis as company employees. Under this program, the American Express Foundation matches
gifts to approved charitable organizations up to $8,000 per calendar year. This column includes the amounts matched for 2014. |
2015 Proxy Statement 22
EXECUTIVE COMPENSATION
Compensation Discussion and Analysis
EXECUTIVE SUMMARY
Our executive compensation program is designed
to reward our leadership team not just for delivering short-term results but also for driving sustainable growth, which is how
we create value for our shareholders. We believe our program’s structure aligns the interests of our shareholders and senior
executives by tying pay outcomes to performance over the short-, medium-, and long-term. Awards are made using a mix of some fixed
and mostly variable pay components with different time horizons and payout forms (cash and stock) to reward annual and sustained
performance over the longer-term. Our program is also structured to discourage imprudent risk taking.
2014 Performance
We earned $5.9 billion in net income in 2014
in a challenging and competitive environment, up 10 percent from 2013. Our earnings per share rose 14 percent as our strong balance
sheet allowed us to return a substantial amount of capital to shareholders though dividends and share repurchases. We delivered
solid earnings while increasing spending on investments to help position our company for the long-term. Our revenues rose by 4
percent, lower than our long-term target of 8 percent, in part due to weaker than expected macroeconomic growth and a strengthening
U.S. dollar. In addition, our return on average equity was 29.1 percent, compared with last year’s 27.8 percent. 2014 was
another year of record spending on our network — an increase of 7 percent to a total of $1.02 trillion in 2014.
During 2014, we grew our worldwide loans
by 5 percent and the credit quality of our portfolio remained industry-leading. We used gains from the business travel joint venture
transaction and the sale of our investment in Concur to continue to invest in our business (e.g., marketing and promotion up by
9 percent), while controlling our operating expense levels.
Our 2014 stock performance trailed the S&P
500 and the S&P 500 Financials indices, but our three-and five-year returns were better than both of these indices. We maintained
our commitment to customers and remained committed to our control, compliance, and risk management goals.
ON AVERAGE, OVER TIME FINANCIAL TARGETS
We seek to achieve three financial targets, on
average and over time:
•
EPS growth: 12-15%
•
Revenue growth: at least 8%
• ROE:
25% or more |
2014 Results Against Targets
3 The growth rate of
adjusted revenues is a non-GAAP measure. See footnote 1 on page 6.
2015 Proxy Statement 23
Our Total Shareholder Return
American Express shares delivered a total
return of 4%, 104%, and 145% over a period of one-, three-, and five-years, respectively. Over a five-year period, American Express
shares substantially outperformed both the S&P 500 and the S&P 500 Financials indices.
TOTAL SHAREHOLDER RETURN
Total Shareholder Return is the total return
on common shares over a specified period, expressed as a percentage (calculated based on the change in stock price over the relevant
measurement period and assuming reinvestment of dividends). Source: Bloomberg (returns compounded annually).
CEO 2014 Pay At-A-Glance
In January 2015, the Compensation and
Benefits Committee (Compensation Committee) awarded Mr. Chenault Total Direct Compensation (TDC) of $25,100,000 for
performance year 2014, 3 percent higher than his 2013 compensation. A significant portion (about 74 percent) of Mr.
Chenault’s total compensation is deferred (some until one year after retirement) and is in the form of restricted stock
units, stock options and a portfolio grant, the value of which will depend on the company’s future share price, as well
as achievement of financial and other performance targets. In determining Mr. Chenault’s TDC, the Compensation
Committee followed the process set out on page 30. In accordance with the process, the Compensation Committee considered
multiple performance factors (see pages 31-32), including:
• |
EPS of $5.56 against 2014 target range of $5.36 to $5.56; 14 percent higher than 2013 EPS |
|
|
• |
Total revenues net of interest expense rose 4 percent (5 percent on an adjusted basis4) to $34.3 billion, compared to 2014 target of 6-7 percent |
|
|
• |
ROE of 29.1 percent against 2014 target of 25 percent or more; 130 basis point improvement over 2013 ROE |
|
|
• |
Mr. Chenault’s overall leadership contributions to the success of American Express |
Mr. Chenault’s TDC comprises the following:
Compensation Element |
|
|
Amount |
|
Comment |
Base Salary |
|
$ |
2,000,000 |
|
Unchanged since 2010 |
Annual Incentive Award (AIA) |
|
|
|
|
Cash |
|
$ |
4,500,000 |
|
|
Restricted Stock Units (RSUs) |
|
$ |
3,600,000 |
|
RSUs vest after one year and 50% of net shares
are subject to retention until one year after retirement |
Stock Options (SO) |
|
$ |
2,563,000 |
|
Stock Options vest after three years |
Performance-based RSUs |
|
$ |
7,312,000 |
|
RSUs vest based on 2015-17 ROE performance (see
page 27 for more information) |
Portfolio Grant (PG) |
|
$ |
5,125,000 |
|
Final payout based on 2015-17 performance (see
page 27 for more information) |
Total Direct Compensation |
|
$ |
25,100,000 |
|
|
About 74% of total pay is deferred and
subject to future company performance.
Further details are provided on page 27. |
4 The growth rate of
adjusted revenues is a non-GAAP measure. See footnote 1 on page 6.
2015 Proxy Statement 24
Our Pay and Performance Alignment
Our performance assessment framework
and pay program are designed to link pay and performance. About 89 percent of the TDC delivered to our CEO and other Named
Executive Officers (NEOs) for performance year 2014 is variable (i.e., all compensation other than base salary).*
This directly ties their pay to our company’s performance, including financial results, strategic initiatives, and
stock performance. Compensation is delivered in the form of base salary, AIA, PG awards, and Long-Term Incentive Awards
(LTIAs, which include SOs and Performance RSUs). A full description of our forms of compensation is on page 27.
Key Compensation Practices
Key executive compensation practices are
summarized below. We believe these practices promote good governance and serve the interests of our shareholders:
|
Directly link pay outcomes to company and share performance |
|
|
|
Defer a significant portion of our NEOs’ total pay, so that it is subject to future company performance |
|
|
|
Use a structured approach for CEO compensation decisions |
|
|
|
Maintain ongoing dialogue with shareholders and incorporate feedback in our compensation programs |
|
|
|
Apply sizable stock ownership guidelines for NEOs, including a requirement that the CEO hold a portion of his shares through one year after retirement |
|
|
|
Discourage imprudent risk taking, including Chief Risk Officer review of goals and results to certify that actual results were achieved without taking imprudent risks |
|
|
|
Prohibit executive officers from hedging their company stock, which includes entering into any derivative transaction on AXP shares (e.g., short sale, forward, option, collar) |
|
|
|
Prohibit executive officers from pledging shares subject to stock ownership guidelines, and limit the number of other shares they may pledge |
|
|
|
In-depth review of CEO’s and NEOs’ goals and performance by an independent Compensation Committee with support from its independent compensation consultant |
|
|
|
Grant Compensation Committee discretion to clawback the cash portion of the CEO’s AIA if the company does not achieve acceptable performance in the following year |
|
|
|
Subject cash incentives and equity awards to recoupment and forfeiture provisions |
|
|
|
Evaluate management succession and leadership development efforts |
|
|
|
Maintain a cap on CEO incentive compensation payments (125 percent of target) |
|
|
|
Require termination of employment in addition to a change in control for accelerated equity vesting (known as “double trigger”) |
|
|
|
Include criteria in incentive compensation plans to support tax deductibility for the company |
|
|
|
No employment contracts with NEOs |
|
|
|
No payment of dividends or dividend equivalents on RSUs until they vest |
|
|
|
No excise tax gross-ups upon a change in control |
|
|
|
No repricing of underwater stock options without shareholder approval |
|
|
|
No individual change in control arrangements |
* The proportions of each pay element shown for performance
year 2014 may change in the future based on performance or other considerations.
2015 Proxy Statement 25
EXECUTIVE COMPENSATION PROGRAM STRUCTURE
Overview of Philosophy, Design and Provisions
Our pay program is designed to recognize
and reward outstanding achievement and to attract, retain and motivate our leaders in a competitive environment. We seek input
from our investors as we want our program to be aligned with shareholder interests.
Following is an overview of key aspects of our pay philosophy.
|
|
|
Overall Objectives |
|
Motivate our executives to: |
|
|
|
|
|
• Achieve day-to-day operational excellence |
|
|
|
|
|
• Meet short-term goals and strategic milestones while delivering on our longer-term
business strategies, so we can continue to build shareholder value |
|
|
|
|
|
• Support “Service Profit Chain” goals: engaged employees delivering superior customer service leads to satisfied customers, which in turn produces superior financial results for shareholders
|
|
|
|
Pay Mix Principles |
|
Provide competitive opportunities for pay commensurate with job scope, required competencies
and performance by: |
|
|
|
|
|
• Using a mix of some fixed and mostly variable pay components with different time
horizons and payout forms (cash and stock) to reward annual and sustained performance over the longer-term |
|
|
|
|
|
• Deferring a majority of incentive compensation for three or
more years |
|
|
|
|
|
• Requiring executive officers to have significant outright
ownership of company shares |
|
|
|
|
|
|
Pay for Performance |
|
Provide a strong link between pay and performance by: |
|
|
|
|
|
• Reviewing performance from both a financial and a strategic perspective, through the
use of performance measures that are tied to financial performance and our strategic initiatives, including risk/control and
compliance measures |
|
|
|
|
|
• Encouraging balanced performance and discouraging imprudent risk taking by avoiding
too much emphasis on any one metric or short-term performance |
|
|
|
|
|
• Using judgment when making pay decisions, taking into account both what was
accomplished and how it was accomplished |
|
|
|
Shareholder Feedback/Consideration of 2014
Advisory Vote on Executive Compensation
We have benefited from shareholder
feedback about executive compensation through our Say on Pay votes for the past six years. Our Say on Pay proposal received 97.7
percent support in 2014. At the direction of our Compensation Committee, every year we also reach out to our largest shareholders
to discuss our executive compensation program, proxy disclosure and corporate governance, and we bring their feedback to the Compensation
Committee and the Nominating and Governance Committee. This feedback has influenced a number of changes to our program in prior
years, including the addition of performance vesting to our annual restricted stock unit grant, requiring the CEO to retain a portion
of shares granted until after retirement, changes to our peer group, enhancements to the process the Compensation Committee uses
to determine CEO compensation, and specifying the CEO’s target and maximum incentive opportunities. The Compensation Committee
will continue to consider the outcome of Say on Pay votes and other shareholder input in making future decisions regarding executive
compensation.
2015 Proxy Statement 26
Overview of Year-End 2014 Total Direct
Compensation Design
|
|
Pay Element |
|
What It Does |
|
Performance Measures |
|
|
Base Salary |
|
• Provides competitive fixed pay
• Balances risk-taking concerns with pay for performance
|
|
• Job scope and experience, market pay |
Short Term (Annual) |
|
Annual Incentive Award |
|
• Provides a competitive annual incentive opportunity
• Aligns with individual, business unit and company performance
|
|
The goals established in the first quarter of 2014 include
(see pages 31-32):
• Annual Service Profit Chain goals (shareholder, customer,
employee), including EPS, revenue, ROE and billed business growth
• Strategic and transformational goals
• Customer
satisfaction and employee goals
• Relative performance review
• Risk/control and compliance goals
• Individual
leadership assessment
Payouts consider outcomes against these goals but without a specific matrix, which allows exercise of Compensation
Committee judgment
|
|
|
Portfolio Grant Award |
|
• Provides cash incentive, earned based on achievement
of specific performance metrics
• 3-year performance period (2015–2017)
|
|
• Financial metrics (e.g.,
EPS growth)–20% weighting*
• Stock performance (e.g., TSR relative to S&P 500
Index**) –30% weighting
• Strategic milestones–50% weighting
• Payout range is 0–125% of target
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Medium Term (3 years) |
|
Performance Restricted Stock Unit Award |
|
• Aligns payout with share price
• Ties payout to our publicly stated ROE target of 25%
|
|
• 3-year average ROE (2015–2017),
with target based on publicly disclosed on average, over time target of 25%***
• Payout range is 0–125% as follows:
|
|
|
|
|
|
|
|
Long Term (10 years) |
|
Stock Option Award |
|
• Aligns payout with share price growth |
|
• Vests 3 years after grant; subject
to forfeiture in the event of significant financial losses impacting the financial stability of the company |
* The company discloses the specific performance metric goals
as well as the performance outcomes of each PG award at the end of the performance period so that shareholders can assess the appropriateness
thereof. Page 36 discusses the goals and final results for the PG2012-14 award granted in 2012. The company does not disclose the
goals at the time of the grant because of competitive sensitivity.
** We use the S&P 500 Index as a benchmark to review our relative
stock price performance. The S&P 500 Index is a market-cap weighted index, which we believe provides a reasonable basis to
review our performance because while we compete both with networks and issuers, our “closed-loop” network and “spend-centric”
business model are unique among our direct competitors.
*** We use the 25 percent ROE as a performance measure to track
progress against our publicly disclosed on average and over time financial target of 25 percent or more. Other measures (e.g.,
EPS) are also used under the company’s programs to provide a balanced view of performance.
2015 Proxy Statement 27
Assessing Competitive Practice
Our pay program is designed to reward achievement
of financial and strategic goals and to attract, retain and motivate our leaders in an increasingly competitive talent market.
The Compensation Committee periodically examines pay practices and pay data for a group of 20 companies as a source of benchmarking
data to better understand the competitiveness of our total compensation and its various elements. The benchmarking data is used
to assess the competitiveness of compensation but is not used to make specific pay decisions. We do not target a specific percentile
or make pay decisions based on market data alone. As a result, performance is the primary driver of pay levels as opposed to market
data.
How We Select the Company Peers
The Compensation Committee periodically reviews
the composition of our peers in response to shareholder feedback as well as changes to our business model. In selecting the current
peer group, the Compensation Committee identified prominent S&P 500 companies, generally with revenue similar in size to ours,
which fell into one or more of the following categories:
• |
Financial institutions |
• |
Iconic global consumer brands |
• |
Other credit card businesses |
• |
Technology companies with an emphasis on payments or network systems |
The actual number of companies in each category
varies, taking into account factors such as revenue size and direct business and talent competitors. No changes were made to our
peers in 2014 because the Compensation Committee believes that the companies below continue to be a reasonable group to benchmark
competitive practices.
COMPENSATION GOVERNANCE, PROCESS AND DECISIONS
The Decision Makers
The Compensation Committee,
composed solely of independent directors, is responsible for our executive officer compensation decisions. The Compensation Committee
works very closely with its independent consultant and management to examine pay and performance matters throughout the year.
The Compensation Committee held seven meetings over the course of 2014, six of which either ended or started with executive sessions
without management present. The Compensation Committee’s charter may be accessed through the “Corporate Governance”
link found on our website at http://ir.americanexpress.com.
Compensation Committee’s Independent
Compensation Consultant
The Compensation Committee retained Semler
Brossy Consulting Group (Semler Brossy) as its independent compensation consultant. During 2014, the compensation consultant attended
Compensation Committee meetings, met with the Compensation Committee in executive sessions, reviewed and provided recommendations
on the components of the company’s executive compensation program and provided compensation advice independent of the company’s
management.
In 2014, Semler Brossy also provided outside
director compensation advice to the Nominating and Governance Committee. The Compensation Committee assessed the independence of
Semler Brossy pursuant to SEC rules and concluded that their work for the Compensation Committee did not raise any conflicts of
interest.
Making Decisions
The Compensation Committee uses the performance
assessment framework described on page 30 as the basis for TDC decisions for the CEO.
For both the CEO and the other NEOs, the
Compensation Committee conducts an in-depth review of performance against goals and then applies its judgment to make compensation
decisions. While the Compensation Committee does not rely on a formula or specific matrix for making pay decisions, the Compensation
Committee believes its process provides accountability for performance against goals and enables the Compensation Committee to
effectively assess the quality of the performance and leadership demonstrated by the management team. Importantly, the process
also differentiates among each individual’s performance and motivates short-term and long-term results as well as innovation
and business transformation.
2015 Proxy Statement 28
The Compensation Committee’s Process
The Compensation Committee follows the process outlined below
to determine NEO compensation:
|
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|
Q1 | ending 3/31/2014 |
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|
• |
Set the metrics and goals for the CEO performance assessment framework |
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• |
Set the other NEOs’ performance objectives |
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|
GOAL SETTING
In Q1, the Compensation Committee reviews and approves the metrics and goals in the CEO performance assessment framework and the other NEOs’ performance objectives. Performance objectives are set for each business unit and staff group for which an NEO is responsible and input is obtained from each of our General Auditor, Chief Risk Officer, and Chief Compliance & Ethics Officer.
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2014 |
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Q3 | ending 9/30/2014 & Q4 | ending 12/31/2014 |
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• |
Review the company’s performance |
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• |
Assess progress toward NEO objectives |
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• |
Discuss program changes in light of feedback from shareholders, regulatory guidance, and external trends |
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REVIEW OF PROGRESS AGAINST GOALS
The Compensation Committee reviews corporate performance in the third and fourth quarters, and assesses progress against each of the NEOs’ objectives and incentive plan goals.
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Q1 | ending 3/31/2015 |
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• |
Evaluate NEO performance |
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• |
Determine TDC for the NEOs |
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• |
Approve any changes to the executive compensation program for the coming year |
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2015 |
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DETERMINE TDC FOR THE NEOs
In January, the Compensation Committee determines TDC amounts for the CEO and each of the other NEOs based on:
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|
• |
Goal and Leadership
Ratings: The Compensation Committee uses the performance assessment framework on page 30 to make CEO compensation decisions.
For the other NEOs, the Compensation Committee, based on input from the CEO, reviews (1) business unit/staff group performance
against the objectives set in Q1 of the previous year, and (2) each NEO’s Leadership Assessment based on individual performance
including feedback from peers and direct reports, as appropriate, with regard to key leadership attributes. Performance assessments
are graded on a three-point scale to differentiate performance and pay.
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• |
Risk-Balancing
and Performance: The Compensation Committee determines the amount of each TDC pay component based on company pay mix guidelines
and individual performance. In evaluating the performance of the NEOs, the Compensation Committee seeks to understand what was
accomplished relative to established objectives, how it was accomplished, the quality of financial results and the company’s
strategic positioning for future competitive advantage. As part of this process, the Compensation Committee meets with the Chief
Financial Officer and the Chief Risk Officer to discuss financial results and risk/control and compliance assessment results. |
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• |
Market Practices:
The Compensation Committee evaluates each NEO’s relative compensation and changes in responsibilities, and considers
current pay practices for comparable positions at companies that are talent competitors.
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• |
Independent Consultant
Recommendation: The Compensation Committee receives input from its independent compensation consultant.
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• |
Other Factors:
For the other NEOs, the Compensation Committee also considers the CEO’s recommendations, succession planning and retention.
Finally, before making pay decisions, the Compensation Committee reviews the pay mix to ensure that at least 50 percent of TDC
is deferred and performance-based.
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In addition, the Compensation Committee:
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• |
Reviews and approves
the payouts for each LTIA grant with a performance period completed at the end of the prior year.
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• |
Approves any design
changes to the executive compensation program for the coming year.
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2015 Proxy Statement 29
2014 CEO PERFORMANCE REVIEW PROCESS AND TDC DECISION
CEO Pay – Process and Decisions
In 2013, the Compensation Committee enhanced
the framework used to determine the CEO’s TDC. The same framework was used to evaluate 2014 performance and determine the
CEO’s compensation. Under this framework, the Compensation Committee evaluated the CEO’s performance based on the achievement
of pre-determined goals, strategic and transformational initiatives, performance relative to our competitors and financial markets,
and a risk/control and compliance assessment. The framework uses both qualitative and quantitative factors and is designed to provide
a broad and balanced view of performance.
CEO Performance Assessment Framework
The following discussion provides a summary
of the Compensation Committee’s determination of Mr. Chenault’s TDC using the above framework.
Phase 1—Set CEO Goals
The Compensation Committee approves financial,
strategic and operational goals related to three key Service Profit Chain constituencies: shareholders, employees, and customers.
Goals are determined to reflect our rigorous on average and over time financial targets, incorporate significant business metrics,
address the importance of employee engagement, diversity and customer service in creating sustainable value, and drive our future
growth.
Shareholder Goals |
|
Employee Goals |
|
Customer/Strategic and
Transformational Goals |
Specific Measurements:
• Profit/return (EPS, ROE);
• Growth (revenue growth,
billed business growth); and
• Cost containment (operating
expense growth and lending write-off rates)
See page 31.
|
|
• Succession planning for
key roles
• Improved workplace culture
• Improved workplace diversity
• Validation of program efficacy
through external recognition
|
|
• Revenue diversity (e.g.,
obtaining new sources of revenue)
• International expansion
(e.g., billed business growth and net income contribution from outside the United States)
• Customer service as well
as customer segment expansion, including creating value propositions for new groups of customers as well as customers who are underserved
by other service providers
• Expansion of our commerce-related
and digital businesses (e.g., expansion of digital and mobile offerings such as Pay with Points)
|
These goals are evaluated considering our relative performance
as compared to the performance of our peers as well as our risk goals:
Relative Performance |
|
Risk/Control and Compliance Goals |
As compared to companies listed on page 28:
• Financial measures (e.g.,
EPS, revenue growth, ROE)
• Stock price performance
• Also review specific performance
measures (such as write-off rates and fraud rates) against industry peers (e.g., large U.S. issuers)
|
|
• We believe it is crucial
to embed compliance and risk management in all our business processes, including goal setting and performance evaluation
• The framework adopted by
the Compensation Committee considers compliance and risk management goals (acceptable return on economic capital, credit and fraud
write-off rates, the promotion of error-free products and processes, and our risk/ control and compliance environment) in evaluating
performance
• The Compensation Committee
meets with the Chief Risk Officer to consider risk results when reviewing performance
|
2015 Proxy Statement 30
Phase 2—Determine Target AIA and LTIA and Payout Range
The Compensation Committee did not make any
changes to Mr. Chenault’s target compensation, which remained at the 2013 level. The Compensation Committee considered Mr.
Chenault’s prior years’ compensation as well as market data as reference points to determine the following target AIA
and LTIA:
Compensation Element | |
Target | |
AIA | |
$ | 6,625,000 | |
Portfolio Grant Award | |
$ | 5,125,000 | |
Equity (Performance RSUs and Stock Options) | |
$ | 8,250,000 | |
Phase 3 below provides information on steps
taken by the Compensation Committee to determine AIA and LTIA for performance year 2014 for Mr. Chenault.
Mr. Chenault’s base salary was fixed
at $2 million (unchanged since 2010).
The Compensation Committee could grant 0
percent to 125 percent of the target amounts, depending on the company’s financial results as well as the Compensation
Committee’s assessment of the CEO’s performance against goals. Further, the Compensation Committee framework allows
the Committee to adjust the final performance score downwards or upwards (but not exceeding the 125 percent maximum) by 5-10 percent
to specifically reflect any risk/control and compliance assessments.
Phase 3—Score CEO Performance and
Set Final TDC
In January 2015, the Compensation Committee
awarded Mr. Chenault TDC of $25,100,000 for performance year 2014, 3 percent higher than his prior year’s compensation. The
Compensation Committee considered solid performance against specific goals as well as Mr. Chenault’s overall leadership contributions
to the success of American Express in determining his TDC. Mr. Chenault’s final TDC was determined using the following steps:
Step 1 – Determine AIA
TARGET
AIA
($6.625 MILLION) |
X |
PERFORMANCE /
SCORE 0-125% |
+/- |
MODIFIERS
+/-5-10%
CONSIDERING RISK
ASSESSMENT |
= |
FINAL AIA DECISION
(MAX 125%) |
In January 2015, the Compensation Committee
reviewed performance against the CEO goals (see below) and decided to provide an AIA award of $8.1 million (about 120 percent of
target).
Goal |
2014 Performance |
|
|
Actual |
Target |
Comments |
Shareholder
(50% overall
weighting)
|
EPS |
$5.56 |
$5.36-$5.56 |
Actual EPS was at the upper end of 2014 target range;
2013 EPS was $4.88 |
Adjusted Revenue
Growth5 |
5% |
6% to 7% |
Adjusted revenue growth outpaced many large issuing peers. |
ROE |
29.1% |
25.0% or more |
2013 ROE was 27.8% |
Billed Business Growth |
8.6%
(FX-adjusted6) |
10% |
Below target |
Adjusted
Operating
Expense Growth7 |
0% |
Less than 3% |
Above target |
Write-Off Rate |
1.5% |
1.9% |
Above target |
Other:
• Customer Service exceeded
target (as measured by the “Recommend to a Friend” score)
• Renewed several key co-brand relationships with broad ties to American Express programs
• One-year TSR lagged the
S&P 500 and S&P 500 Financials indices, but we outperformed both indices over the last three- and five-year periods
• Successfully executed the
business travel joint venture transaction resulting in a net gain of $626 million (pretax). This gain along with a $719 million
gain (pretax) from the sale of our investment in Concur allowed us to make additional investments to gain momentum for the moderate
to long-term
|
5 |
The growth rate of adjusted revenues is a non-GAAP measure. See footnote 1 on page 6. |
6 |
See
footnote 2 on page 6. |
7 |
The
growth rate of adjusted total operating expenses, a non-GAAP measure, excludes Q3-Q4 ’13 global business
travel operating expenses, Q2 ’14 global business travel joint venture gain and
transaction related costs, Q2 ’14 American Express Foundation contribution and Q2 ’14 and Q4
’14 restructuring charges from total operating expenses. Reported operating expense was lower by
6 percent year-over-year. Refer to Annex A for reconciliation of the adjusted growth rate and its
components. |
2015 Proxy Statement 31
Goal |
2014 Performance |
Employee
(25% overall
weighting)
|
• Succession planning for
key roles aligned with board expectations; incorporated 360º feedback reviews for senior executives
• Diversity targets and talent
measures were above target
• We continued to be recognized
as a global Employer of Choice. Recognized on 11 U.S. surveys as an employer of choice, including Working Mother and Fortune;
internationally recognized in four countries as a top employer
|
Customer/
Strategic and
Transformational
(25% overall weighting)
|
• Initiated or expanded initiatives,
such as Amex EveryDay, Loyalty Partner, American Express Serve, and international card products
• Maintained our ongoing
focus to increase revenues from new businesses, such as e-commerce and performance marketing including Loyalty Partner and our
Enterprise Growth Group
• Grew or maintained market
share in a number of international markets
• Successfully launched Amex
EveryDay to continue our customer segment expansion through our proprietary products
• Made significant progress
toward new merchant acquisition, including launching OptBlue and signing several perception changing merchants (e.g., Dollar General)
• Enterprise Growth Group
introduced new tools to the customer bases of both American Express Serve and Bluebird; also, expanded the availability of American
Express Serve and the Serve cash reload network over the past year
• Continued progress toward
goal of becoming a facilitator of commerce by connecting buyers and sellers in creative ways, while providing exceptional value
to both. For example, eligible U.S. Card Members can now use points at McDonald’s and Uber, we entered into a partnership
with Intuit to deliver ReceiptMatch with QuickBooks, and launched the Walmart Savings Catcher program with the Bluebird product
|
The Compensation Committee also reviewed the following relative
performance against our major competitors:
• |
Our revenue growth outperformed a number of our large U.S issuer peers, but lagged the networks and our share of U.S. credit network volumes declined slightly |
|
|
• |
Our write-off rate remained exceptional and we led our major competitors by a wide margin |
|
|
• |
We continued to have the best-in-industry fraud rates |
|
|
• |
Our U.S. card segment’s income growth rate in 2014 was better than many of our large U.S. issuer peers |
|
|
• |
Our U.S. loan growth rate outperformed the industry growth rate |
|
|
• |
Our U.S. billed business growth rate was 8.0 percent as compared to a weighted-average growth rate of 8.4 percent (estimated) for our large U.S. issuer peers |
|
|
• |
Our one-year stock price lagged the S&P 500 and S&P 500 Financials indices, but we outperformed both indices over the last three and five years |
|
|
• |
As compared to the peers identified by the Compensation Committee and available performance data, our financial performance (EPS, revenue growth, ROE) was above median over the last one- and three-year periods, while our stock performance was below median |
The Compensation Committee approved a total
AIA of $8,100,000 (about 120 percent of target) payable in a combination of cash and restricted shares. The cash payment is subject
to clawback considering 2015 performance and the CEO is required to retain a portion of restricted shares until one year after
retirement. The Compensation Committee considered the above mentioned Shareholder, Employee, and Customer/Transformation results
as well as the company’s relative performance against our major competitors. In doing so, the Compensation Committee reviewed
the risk assessment and certification performed by the Chief Risk Officer that the company’s 2014 results were achieved by
taking economic and controlled risk, without taking imprudent risks.
Step 2 – Determine LTIA
Based on the company’s 2014 performance
(as assessed in Step 1 above), the Compensation Committee awarded Mr. Chenault Portfolio Grant awards of $5,125,000 (equal to 100
percent of target), and equity awards of $9,875,000 (equal to 120 percent of target). Actual payouts under these awards will be
based on future performance (2015-2017) and shareholder outcomes. See page 27 for how these awards work.
Step 3 – Review TDC and Pay
Mix
After taking into
account the company’s financial performance and evaluating Mr. Chenault’s performance against goals as well as
his leadership contributions, the Compensation Committee determined the CEO’s TDC of $25.1 million—an increase of
3 percent from his 2013 performance year TDC. Further, to provide more emphasis on the company’s stock
performance, the Compensation Committee determined that $3.6 million of Mr. Chenault’s AIA should be paid in RSUs
instead of cash and a portion of these RSUs are subject to retention until one year after retirement. Overall, about 74
percent of the CEO’s TDC is subject to future performance of the company, including stock price performance.
2015 Proxy Statement 32
The following chart provides more information
on Mr. Chenault’s TDC for 2014 performance and compares it with his 2013 TDC.
CEO Total Direct Compensation
Note Regarding 2014
TDC Decisions and Summary Compensation Table |
|
It is important to
recognize that the way the Compensation Committee presents TDC in the charts that follow is different from the SEC-required disclosure
in the Summary Compensation Table (SCT) and is not a substitute for the information in that table (shown on page 40). The Compensation
Committee makes compensation decisions every January for the just completed performance year using the most recent performance
information. For example, in January 2015, the Compensation Committee evaluated 2014 performance and made compensation decisions
for 2014. These decisions are shown below. |
|
There are two principal
differences between the SCT and the charts below: |
| |
• | First,
the SCT shows equity awards granted in January 2014 for 2013 performance as 2014 compensation,
whereas the chart below shows January 2015 equity awards as 2014 compensation. |
| |
• | Second,
the SCT shows RSUs granted in January 2014 as part of Mr. Chenault’s AIA for 2013
performance as 2014 compensation, whereas the chart below shows the AIA awards granted
in January 2015 for 2014 performance as 2014 compensation, regardless of payout form
and timing. |
| |
In summary, it is essential to understand that the main difference between
the SCT and the chart below is the timing of disclosure related to equity and cash awards. |
CEO Total Direct Compensation ($ Millions)
Mr. Chenault’s TDC for 2014 performance
was $25.1 million — a 3 percent increase from his 2013 TDC. About 74 percent of TDC is subject to future performance of the
company, including stock price performance.
In addition to performance against specific
goals, the Compensation Committee also considered Mr. Chenault’s overall leadership contributions in determining his TDC.
These contributions included Mr. Chenault’s leadership in defining and executing strategies to:
• |
Deliver consistent, sustainable growth and value for shareholders |
|
|
• |
Drive business growth in an uneven economy |
|
|
• |
Contain operating expenses |
|
|
• |
Allocate investment to grow the core business and expand into new sectors |
|
|
• |
Drive product and digital innovation |
|
|
• |
Strengthen the company’s risk management governance and enhance its risk management culture |
|
|
• |
Create a workplace culture that attracts and retains the best talent |
|
|
• |
Build confidence in the American Express brand and help shape public policies that affect the overall payments industry |
2015 Proxy Statement 33
OTHER
NAMED EXECUTIVE OFFICERS’ TDC
The CEO’s recommendations for the other
NEOs were based on his review of performance and our pay mix guidelines.
The following information provides highlights
of specific individual and business performance considered in the pay recommendations for the other NEOs. When approving pay decisions
for the other NEOs, the Compensation Committee also considered the overall performance of the company. Included below are the Compensation
Committee’s TDC decisions for each NEO for performance year 2014.
EDWARD P. GILLIGAN, PRESIDENT
Mr. Gilligan has served as the head of the
Global Consumer and Small Business Card Issuing, Global Merchant Services, Network and Global Banking businesses at American Express
Company since October 2009. His 2014 achievements included:
• |
Drove year-over-year growth and continued best in class credit performance across his businesses in support of the company’s overall financial results |
|
|
• |
Served new customer and merchant segments through the launch of new card products and issuing partnerships, new approaches to merchant acquisition and the continued expansion of Loyalty Partner |
|
|
• |
Re-signed several major co-brand relationships |
|
|
• |
Facilitated digital commerce through the launch of multiple new capabilities and partnerships |
|
|
• |
Continued to strengthen our Global Banking capabilities in support of our compliance and regulatory objectives |
STEPHEN J. SQUERI, GROUP PRESIDENT, GLOBAL
CORPORATE SERVICES
Mr. Squeri has
served as the Group President for Global Corporate Services since November 2011. He is responsible for Global Commercial
Services, which consists of the Global Corporate Payments organization and our global business travel joint venture, as well
as Global Services, our shared services organization consisting of World Service, Global Business Services, Technology,
Global Credit Administration and Global Security. His 2014 achievements included:
• |
Led the successful execution of the global business travel joint venture to accelerate the growth and transformation of the corporate travel business which led to a $626 million (pretax) gain for the company |
|
|
• |
Delivered solid financial results including robust year-over-year earnings growth in our Global Corporate Payments business as well as continued strong expense management |
|
|
• |
Delivered superior customer service, as evidenced by improved customer satisfaction metrics |
|
|
• |
Enabled multiple capabilities across the company that yielded significant progress against our business objectives |
|
|
• |
Improved operational efficiency and effectiveness through continued globalization and consolidation of key processes and functions |
JEFFREY C. CAMPBELL, EXECUTIVE VICE PRESIDENT
AND CHIEF FINANCIAL OFFICER
Mr. Campbell has served as Executive Vice
President and Chief Financial Officer since August 2013. He is responsible for leading the company’s Finance and Corporate
Development organizations and representing American Express to the financial community. His 2014 achievements included:
• |
Effectively communicated the company’s business and financial information to regulatory bodies and the financial community |
|
|
• |
Assisted in achieving operational cost targets aligned with the company’s risk-balanced plan |
|
|
• |
Ensured a strong financial and regulatory reporting control environment |
|
|
• |
Continued to enhance planning processes consistent with regulatory requirements and managed the company’s CCAR and Basel processes to achieve the company’s capital, funding and liquidity plans |
|
|
• |
Exhibited leadership that impacted the company’s strategic and financial decisions |
DOUGLAS E. BUCKMINSTER, PRESIDENT, GLOBAL
NETWORK AND INTERNATIONAL CARD SERVICES
Mr. Buckminster has served as the President,
Global Network and International Card Services since February 2012. His 2014 achievements included:
• |
Delivered solid financial results with significant progress in the proprietary issuing, network and coalition loyalty businesses across international markets |
|
|
• |
Implemented effective business transformation initiatives and drove significant efficiencies |
|
|
• |
Allocated strategic investments in digital capabilities and emerging businesses that will be instrumental to future growth of the franchise |
|
|
• |
Continued Global Network Services growth through the launch of new partnerships and products, including US Bank and Wells Fargo in the U.S., and Barclaycard in the UK |
|
|
• |
Led growth in the coalition loyalty business (Loyalty Partner) with strong year-over-year increases in revenue and total collectors, launch of new co-brand products and expansion into Italy |
2015 Proxy Statement 34
NEOs TDC Decisions ($000s)
The Compensation Committee’s TDC decisions
for performance year 2014 are reflected in the table below. Overall, January 2015 TDC was higher than January 2014 TDC as a result
of the company’s financial results and the NEOs’ performance.
| |
E.P. Gilligan | |
S.J. Squeri | |
J.C. Campbell | |
D.E. Buckminster |
Base Salary | |
$ | 1,450 | |
$ | 1,250 | |
$ | 1,000 | |
$ | 600 |
AIA | |
$ | 4,525 | |
$ | 4,150 | |
$ | 4,150 | |
$ | 2,150 |
Equity—RSUs* | |
$ | 3,276 | |
$ | 3,564 | |
$ | 2,147 | |
$ | 1,092 |
Equity—SOs* | |
$ | 1,149 | |
$ | 811 | |
$ | 753 | |
$ | 383 |
PG (target value) | |
$ | 1,600 | |
$ | 1,325 | |
$ | 1,500 | |
$ | 900 |
TDC | |
$ | 12,000 | |
$ | 11,100 | |
$ | 9,550 | |
$ | 5,125 |
| |
(up 6% from | |
(up 13% from | |
(N/A**) | |
(up 5% from |
| |
January 2014) | |
January 2014) | |
| | |
January 2014) |
* Similar to the CEO’s equity awards, other NEOs received
RSUs that are earned based on three-year average (2015-2017) ROE performance. For the total equity awards, an equal number of shares
were delivered in the form of performance-vested RSUs and stock options. Mr. Squeri’s RSU grant includes a special award
($1,250,000) for his extraordinary results on executing the global business travel joint venture that resulted in a pretax gain
of $626 million, American Express delivering superior customer service, as evidenced by improved customer satisfaction metrics,
the technology transformation, and expense management. This special award vests after two years based on positive cumulative company
net income (2015-2016).
** Mr. Campbell joined the company in July 2013.
A significant portion (about 89%) of these
four NEOs total compensation is deferred and subject to
future performance of the company, including stock price performance.
Offer Letter – Mr. Campbell
In connection
with his employment offer letter with the company entered into in June 2013, Mr. Campbell is entitled to a sign-on cash award
of $4,000,000 payable over a period of two years (2014 and 2015) to replace a portion of long-term incentives he forfeited at
his prior employer as a result of joining the company. Additional information on his sign-on cash award is provided on page
50 in the Potential Payments Upon Termination of Employment/CIC table.
2015 Proxy Statement 35
DETERMINATION OF LTIA PAYOUTS FOR AWARDS MADE IN PRIOR YEARS
Portfolio Grants Awarded in January 2012 – Payout Based
on 2012-2014 Performance
Portfolio Grant
awards provide a cash incentive based on achievement of certain performance metrics over a three-year performance period.
Portfolio Grants were awarded in January 2012 for the three-year performance period ending December 2014 (PG2012-14). In
January 2015, the Compensation Committee determined the final payout for these Portfolio Grant awards at 105.9 percent of
target. The performance metrics for PG2012-14 are shown below along with the results achieved during the period:
2012-14 Performance |
|
|
|
|
|
|
|
Payout |
|
Metric And Weighting |
|
Performance Goals* |
|
|
|
|
|
Contribution |
|
Cumulative EPS (20%) |
|
|
|
18.4% |
|
TSR vs. S&P 500 (30%) |
|
|
|
37.5% |
|
Strategic Milestones (50%) |
|
|
|
|
|
|
|
50% |
|
Consumer, Small Business, Merchant, and |
|
|
|
|
|
|
|
|
|
Network Services Businesses |
|
|
|
|
|
|
|
|
|
•
International Net Income (cumulative) |
|
$5.2 billion |
|
|
|
|
|
|
|
•
Global online spend growth |
|
10% or above |
|
|
|
Overall,
at or above target based on financial performance and Compensation Committee evaluation |
|
|
|
Global Services |
|
|
|
|
|
|
|
|
•
Deliver superior service (measured by Global “Recommend to a Friend” score) |
|
4.5 percentage point improvement |
|
|
|
|
|
|
over 2011 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Enterprise Growth |
|
|
|
|
|
|
|
|
|
•
Average annual growth of Global Payment Options revenue |
|
At market growth rate |
|
|
|
•
Attract new and diverse customers |
|
Compensation Committee judgment |
|
|
|
Final Payout |
|
|
|
|
|
|
|
105.9% |
|
The NEOs’ PG2012-14 grants resulted in the following
payouts:
| |
PG2012-14 | | |
PG2012-14 | |
Executive | |
Grant
Amount | | |
(Q1
2015) Payout | |
K.I. Chenault | |
$ | 5,125,000 | | |
$ | 5,427,375 | ** |
E.P. Gilligan | |
$ | 1,500,000 | | |
$ | 1,588,500 | |
S.J. Squeri | |
$ | 1,150,000 | | |
$ | 1,217,850 | |
J.C. Campbell | |
$ | 3,000,000 | | |
$ | 3,177,000 | |
D.E.
Buckminster | |
$ | 900,000 | | |
$ | 953,100 | |
The grant amounts of PG2012-14 were
included in the Grants of Plan-Based Awards table in the 2013 proxy statement. The cash payouts made in February 2015 are
included in the Summary Compensation Table on page 40 (non-equity incentive plan compensation for 2014). For Mr.
Chenault, the 2015 payout was made solely in the form of RSUs that vest one year after the grant. Accordingly, the grant
amount of these RSUs will be included in the Summary Compensation Table next year in the stock awards column.
* Participants receive 0 percent of the award at threshold level,
100 percent of the award at target level, and 125 percent of the award at maximum level. Payout range for strategic milestones
is 0-125 percent and actual payout is based on actual performance against goals as well as at the discretion of the Compensation
Committee.
** Mr. Chenault’s payment was in the form of RSUs granted in January 2015 that vest one year from the grant date;
one half of RSUs are payable in shares (which must be held until one year after retirement) and the other half are payable in
cash.
2015 Proxy Statement 36
RSUs Awarded in January 2012 – Vesting Based on 2012-2014
Performance
Performance RSUs provide an opportunity for employees to receive
common shares based on the company’s three-year average ROE (as shown in the following chart). Performance RSUs were awarded
in January 2012 for the three-year performance period ending December 2014.
Given that average ROE for years 2012 to 2014 was above target
at 26.7 percent (23.1 percent for 2012, 27.8 percent for 2013, and 29.1 percent for 2014), the Compensation Committee awarded
a payout of 102.8 percent of target. This resulted in the vesting of the following number of shares for the NEOs:
| |
Target Number of | | |
| |
Executive | |
Shares | | |
Shares
Vested* | |
K.I. Chenault | |
| 123,706 | | |
| 127,169 | |
E.P. Gilligan | |
| 53,231 | | |
| 54,721 | |
S.J. Squeri | |
| 37,486 | | |
| 38,535 | |
D.E.
Buckminster | |
| 19,493 | | |
| 20,038 | |
* In addition to these amounts, deferred
dividends were paid on the target number of shares in the first quarter of 2015. Mr. Campbell joined the company in July 2013
and did not receive a January 2012 performance-based RSU.
HOW WE DISCOURAGE IMPRUDENT RISK TAKING
Our executive compensation program is structured to provide a
balance of cash and stock; annual, medium-term, and long-term incentives; and financial, strategic, and stock performance measures
over various time periods. It is designed to encourage the proper level of risk taking consistent with our business model and
strategies. Our business and risk profile is different from other financial services firms; for example, we do not trade securities,
derivatives, mortgages or other financial instruments. Our executive compensation program is designed to be consistent with the
Federal Reserve Board’s principles for safety and soundness.
The following policies and procedures help discourage imprudent
risk taking:
• | Annual risk goals: Our Chief Risk Officer sets annual
risk goals for all business units and staff groups at the beginning of each year. |
• | Monitoring of risk: We monitor return on economic
capital and credit risk performance, and we assign control and compliance ratings to each business unit and staff group as part
of our annual assessment of performance. |
• | Adjustment of compensation: At year end, our Chief
Risk Officer certifies to the Compensation Committee that actual results were achieved without taking imprudent risks. Larger
losses are analyzed as part of the year-end process, and the Chief Risk Officer issues a year-end memorandum describing changes
in the risk profile of the company. If deemed necessary, risk adjustments are made to company and business unit annual
incentive funding levels as well as to individual incentive awards. |
• | Cross-section of metrics: We assess performance
against a cross-section of key metrics over multiple time frames to discourage undue focus on short-term results or on any one
metric, and to reinforce risk balancing in performance measurement. Our incentive plans are not overly leveraged (i.e., there
is a cap on the maximum payout). |
• | Deferred incentive compensation: At least 50 percent
of incentive compensation for executive officers is deferred for at least three years with performance-based vesting. |
• | Clawback policies: We maintain clawback policies
that include a requirement that our CEO’s cash AIA is subject to clawback at the discretion of the Compensation Committee
if the company does not achieve acceptable performance the next year. |
• | Performance-based vesting: Performance RSUs are
used in place of time-based RSUs for the company’s most senior employees. |
• |
Stock ownership and holding requirements: We have
robust stock ownership requirements for our CEO and other NEOs (as described on page 38), including the retention of a portion
of net shares for one year after stock option exercises and RSU vestings. |
2015 Proxy Statement 37
OTHER POLICIES AND GUIDELINES
Award Timing
Consistent with past practice, annual cycle LTIA awards were
granted to NEOs in January after the regularly scheduled January Compensation Committee meeting following the company’s
public announcement of its financial results for the prior fiscal year. Our off-cycle LTIA awards (for new hires, mid-year promotions,
etc.) are granted on pre-established grant dates.
Tax Treatment
Tax rules generally limit the deductibility of compensation paid
to our NEOs to $1 million during any fiscal year unless such compensation is “performance-based.” In general, the
company intends to structure its incentive compensation arrangements in a manner that would comply with these tax rules. However,
the Compensation Committee maintains the flexibility to pay non-deductible incentive compensation.
Perquisites
We provide limited perquisites to support our objective to attract
and retain talent for key positions, as well as to address security concerns. We provide a flexible cash perquisite allowance
of $35,000, which executives can use for items such as financial and tax planning, and life and disability insurance.
Clawback Policies
We seek to recover, to the extent practicable, performance-based
compensation from any executive officer and certain other members of senior management in those circumstances when:
• | The payment of such compensation was based on the achievement
of financial results that were subsequently the subject of a restatement; and |
• |
In the board’s view, the employee engaged in fraud
or misconduct that caused or partially caused the need for the restatement, and a smaller amount would have been paid to the employee
based upon the restated financial results. |
In addition, the cash portion of the CEO’s AIA is subject
to clawback at the discretion of the Compensation Committee if the company does not achieve acceptable performance in the following
year.
Further, the Dodd-Frank legislation mandates regulation to add
additional clawback requirements. Once the legislation is proposed, the company will take appropriate steps to implement the final
requirements under this legislation.
American Express also maintains a “detrimental conduct”
policy covering approximately 600 employees globally, including the NEOs. Each executive is required to sign an agreement that
requires the executive to forfeit unvested awards, and to repay the proceeds from some or all of his or her compensation issued
under our incentive compensation program in the event the executive engages in conduct that is detrimental to the company. This
compensation includes Equity and Portfolio Grant awards and, in the case of our executive officers, AIA that was received up to
two years prior to employment termination. Detrimental conduct includes, but is not limited to, termination of employment for
misconduct, working for certain competitors, soliciting company customers or employees for a period of time after termination,
or disclosing confidential information. Pursuant to our policy, the company recovered over $14 million (including related taxes)
from the former Group President of Enterprise Growth Group when he left the company to join a competitor in 2014.
Stock Ownership Guidelines
Our stock ownership guidelines require NEOs to own and maintain
a substantial stake in the company. Our NEOs are required to accumulate a target number of shares (i.e., shares owned outright,
not including unvested/unearned shares and unexercised stock options), and to retain a portion of the net after-tax shares received
upon vesting or exercise of their equity awards as follows:
| |
| | |
Holding Requirement |
NEO | Target Number of Shares | | |
Before Target Met | |
After Target Met |
K.I. Chenault* | |
| 500,000 | | |
| |
|
E.P. Gilligan | |
| 75,000 | | |
75% of net shares until | |
50% of net shares for |
S.J. Squeri | |
| 75,000 | | |
target number of shares | |
one year |
J.C. Campbell | |
| 75,000 | | |
is met | |
|
D.E. Buckminster | |
| 25,000 | | |
| |
|
* | In addition to these requirements, Mr. Chenault is required
to hold, one year beyond his retirement from the company, a significant portion of his 2010-2014 year-end AIA and Portfolio Grant payouts delivered
in RSUs. |
With the exception of Mr. Campbell, who was hired in 2013, all
our NEOs own more than the target number of shares. Mr. Chenault beneficially owned 881,980 shares as of December 31, 2014 with
estimated value of $82,059,419 using the company’s closing stock price on the same day.
2015 Proxy Statement 38
Hedging and Pledging Restrictions
Our NEOs are not permitted to hedge their ownership of company
securities, which includes entering into any derivative transaction on AXP shares (e.g., short sale, forward, option, collar).
In addition, the company does not permit executive officers to pledge shares subject to stock ownership guidelines, including
holding requirements, and has placed limitations on their ability to pledge other shares they may own.
|
Post-Employment Compensation
Retirement Benefits
NEOs receive retirement benefits through the following plans:
• |
Retirement Savings Plan (RSP): A qualified 401(k)
savings plan available to all eligible employees. |
• |
Retirement Restoration Plan (RRP): A nonqualified
savings plan that makes up 401(k) benefits that would otherwise be lost as a result of U.S. tax limits. |
As part of NEOs’ planning for retirement and other long-term
financial needs, we have provided them an annual opportunity under a nonqualified deferred compensation plan to defer a portion
of their base salary and AIA payout. The total annual deferral is limited to one times the base salary.
NEOs (except Mr. Campbell) also continue to earn interest on
outstanding account balances under the American Express Retirement Plan, which was closed to new entrants and frozen for additional
accruals in 2007. All retirement benefits are more fully described under Retirement Plan Benefits on page 47 and under
Nonqualified Deferred Compensation on page 48.
Severance: Senior Executive Severance Policy
The company has an executive severance
policy instead of individual severance or employment agreements. Under the Senior Executive Severance Policy, NEOs who are
terminated involuntarily (except in cases of misconduct) receive cash severance benefits equal to two years of base salary
and AIA and also receive a pro rata AIA payment for the year of termination. Severance payments are made in installments,
except in certain terminations following a change in control, when payment is made in a lump sum, and the pro rata AIA is
paid at the same time as all other employees. LTIAs continue to vest during the severance period, unless the executive begins
full-time, outside employment. NEOs may continue to be covered under certain of our compensation and benefit plans during the
severance period. U.S.-based NEOs who are age 65 or older are not eligible for severance unless the Compensation Committee
specifically approves severance for such an executive.
To protect shareholders and our business model, executives are
required to comply with non-compete, non-solicitation, confidentiality, and non-denigration provisions during the period of time
they are receiving severance. Our uniform severance policy helps to avoid individual treatment and provides an important enforcement
mechanism for these protections. The Compensation Committee must pre-approve severance for an executive officer.
Change in Control Benefits
The company provides change in control (CIC) benefits to encourage
executives to consider the best interests of shareholders by stabilizing any concerns about their own personal financial well-being
in the face of a potential CIC of the company. Some key CIC provisions were implemented in 2011 based on shareholder input and
changing market trends:
• |
All LTIAs granted after December 31, 2010 require employment
termination (“double trigger”) following a CIC before these awards will vest. |
• | We no longer provide excise tax reimbursements and gross-up
payments in the case of a CIC (in the case of LTIAs, applies to grants after December 31, 2010). |
In the event of certain employment terminations in connection
with a CIC, executives also receive cash severance described above under Severance and other benefits. Detailed information is
provided under Potential Payments Upon Termination or Change in Control (CIC) on page 49.
Report of the Compensation and Benefits Committee
The Compensation and Benefits Committee has reviewed and discussed
the Compensation Discussion and Analysis with management. Based on such review and discussions, the Compensation and Benefits
Committee recommended to the board of directors, and the board of directors approved, that the Compensation Discussion and Analysis
be included in this proxy statement.
Compensation and Benefits Committee
Robert D. Walter, Chairman
Ursula M. Burns
Peter Chernin
Samuel
J. Palmisano
Ronald A. Williams
2015 Proxy Statement 39
EXECUTIVE COMPENSATION TABLES
Summary Compensation Table
The
following Summary Compensation Table (SCT) summarizes the compensation of our NEOs for the year ended December 31,
2014, using the SEC-required disclosure rules. It is important to recognize that 2014 TDC determined by the Compensation
Committee is different than amounts disclosed below using the SEC-required disclosure rules. See page 33
for key differences between the SCT and TDC awarded by the Compensation Committee for 2014.
| |
| |
| |
| |
| |
| |
| |
Change in | |
| |
|
| |
| |
| |
| |
| |
| |
| |
Pension | |
| |
|
| |
| |
| |
| |
| |
| |
| |
Value and | |
| |
|
| |
| |
| |
| |
| |
| |
| |
Nonqualified | |
| |
|
| |
| |
| |
| |
| |
| |
Non-equity | |
Deferred | |
| |
|
| |
| |
| |
| |
Stock | |
Option | |
Incentive Plan |
|
Compensation | |
All Other | |
|
| |
| |
Salary | |
Bonus | |
Awards | |
Awards | |
Compensation | |
Earnings | |
Compensation | |
Total |
Name | |
Year | |
($) | |
($) (1) | |
($) (2) | |
($) (2) | |
($) (3) | |
($) (4) | |
($) (5) | |
($) |
K.I. Chenault | |
| 2014 | |
$ | 2,000,000 | |
$ | 4,500,000 | |
$ | 12,429,114 | |
$ | 2,535,762 | |
$ | 0 | |
$ | 417,925 | |
$ | 913,282 | |
$ | 22,796,083 |
Chairman and | | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| |
Chief Executive Officer | 2013 | |
$ | 2,000,000 | |
$ | 6,000,000 | |
$ | 10,486,267 | |
$ | 2,079,871 | |
$ | 0 | |
$ | 125,658 | |
$ | 1,145,624 | |
$ | 21,837,420 |
| |
| 2012 | |
$ | 2,000,000 | |
$ | 4,000,000 | |
$ | 18,864,985 | |
$ | 2,159,907 | |
$ | 0 | |
$ | 478,945 | |
$ | 987,897 | |
$ | 28,491,734 |
E.P. Gilligan | |
| 2014 | |
$ | 1,450,000 | |
$ | 4,525,000 | |
$ | 2,730,200 | |
$ | 1,019,728 | |
$ | 1,588,500 | |
$ | 224,252 | |
$ | 495,668 | |
$ | 12,033,348 |
President | |
| 2013 | |
$ | 1,450,000 | |
$ | 4,525,000 | |
$ | 2,418,842 | |
$ | 731,099 | |
$ | 1,080,000 | |
$ | 0 | |
$ | 539,971 | |
$ | 10,744,912 |
| |
| 2012 | |
$ | 1,450,000 | |
$ | 4,350,000 | |
$ | 2,620,562 | |
$ | 929,413 | |
$ | 495,000 | |
$ | 266,338 | |
$ | 564,823 | |
$ | 10,676,136 |
S.J. Squeri | |
| 2014 | |
$ | 1,250,000 | |
$ | 4,150,000 | |
$ | 2,275,166 | |
$ | 849,774 | |
$ | 1,217,850 | |
$ | 86,630 | |
$ | 376,972 | |
$ | 10,206,392 |
Group President Global | | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| |
Corporate Services | 2013 | |
$ | 1,250,000 | |
$ | 4,150,000 | |
$ | 2,500,586 | |
$ | 674,386 | |
$ | 720,000 | |
$ | 0 | |
$ | 379,355 | |
$ | 9,674,327 |
| |
| 2012 | |
$ | 1,201,923 | |
$ | 3,775,000 | |
$ | 1,845,436 | |
$ | 654,506 | |
$ | 330,000 | |
$ | 103,185 | |
$ | 351,948 | |
$ | 8,261,998 |
J.C. Campbell* | |
| 2014 | |
$ | 1,000,000 | |
$ | 6,150,000 | |
$ | 1,820,133 | |
$ | 679,819 | |
$ | 3,177,000 | |
$ | 0 | |
$ | 240,215 | |
$ | 13,067,167 |
Executive Vice President and Chief Financial Officer | 2013 | |
$ | 461,538 | |
$ | 1,600,000 | |
$ | 5,508,922 | |
$ | 1,990,889 | |
$ | 0 | |
$ | 0 | |
$ | 907,771 | |
$ | 10,469,120 |
| |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| |
D.E. Buckminster | |
| 2014 | |
$ | 600,000 | |
$ | 2,150,000 | |
$ | 982,844 | |
$ | 367,092 | |
$ | 953,100 | |
$ | 66,847 | |
$ | 2,883,175 | |
$ | 8,003,058 |
President, Global Network and International Card Services | | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| |
* |
For Mr. Campbell, 2013 amounts in the table above reflect partial year
compensation as he was hired in July 2013. |
|
|
(1) |
The amounts in this column reflect AIA cash payments made for annual performance.
For Mr. Chenault, $3,600,000 out of $8,100,000 of his 2014 AIA is paid in the form of RSUs granted in January 2015 that vest
one year from the grant date. One half of these RSUs are payable in cash and the other half are payable in shares (which must
be held until one year after retirement). For Mr. Campbell, this amount also includes a $2,000,000 sign-on cash payment made
in accordance with his employment offer letter to replace a portion of long-term incentives he forfeited at his prior employer
as a result of joining the company. |
(2) |
Represents the aggregate grant date fair value of the awards pursuant to FASB ASC Topic 718. Additional details on accounting
for stock-based compensation can be found in Note 11 “Stock Plans” to our Consolidated Financial Statements contained
in our 2014 Annual Report to Shareholders. |
|
|
A significant portion of Mr. Chenault’s total direct compensation
is delivered in the form of equity that is deferred. The table below provides detail on the RSUs included in the stock awards
column: |
|
|
| |
2014 | | |
2013 | | |
2012 | |
Annual RSU award granted in January for performance in the prior year* | |
$ | 6,789,197 | | |
$ | 6,170,078 | | |
$ | 6,090,046 | |
Portion of AIA awarded in RSUs in January for performance in the prior year* | |
$ | 1,949,920 | | |
$ | 2,624,955 | | |
$ | 6,624,980 | |
Payment of PG award in the form of RSUs. Amount in column reflects the RSUs granted in | |
$ | 3,689,997 | | |
$ | 1,691,234 | | |
$ | 6,149,959 | |
January with respect to PG awards whose performance periods ended the prior year | |
| | | |
| | | |
| | |
TOTAL | |
$ | 12,429,114 | | |
$ | 10,486,267 | | |
$ | 18,864,985 | |
* | For example, 2014 amount shows RSUs awarded in January
2014 for 2013 performance. |
2015 Proxy Statement 40
| With respect to the RSU awards, for Mr. Chenault the amount in
the Summary Compensation Table reflects the aggregate value of all the awards set forth in the immediately preceding table, including
the target value of his annual RSU award assuming that target performance is achieved against the average ROE target during the
three-year performance period ($6,789,197). For all other executives, the amount in the Summary Compensation Table reflects only
the target value of their annual RSU awards assuming that target performance is achieved against the average ROE target during
the three-year performance period. |
| |
| For each executive’s annual RSU award, the maximum value
as of the grant date assuming the highest level of performance will be achieved, is as follows: Messrs. Chenault ($8,486,475),
Gilligan ($3,412,750), Squeri ($2,843,958), Campbell ($2,275,166) and Buckminster ($1,228,555). |
| |
(3) | For 2014, the amounts in this column reflect the cash payment
made to the NEO in respect of payment toward the PG2012-14 awards granted in 2012, in accordance with award terms. For Mr. Chenault,
the 2014 amount excludes payment of $5,427,375, which was made in the form of RSUs granted in January 2015 that vest one year
from the grant date. One-half of these RSUs are payable in cash and the other half are payable in shares (which must be held until
one year after retirement). |
(4) | The amounts in this column reflect the actuarial increase
or decrease in the present value of the NEOs’ benefits under all defined benefit pension plans established by the company.
Over 90 percent of this amount includes the impact of change in interest rates and the NEO’s change in age during the year,
which is used to measure the present value. When interest rates fall, as they did during 2014, the present value of this benefit
will increase, but this increase does not represent any additional benefit to the executive. |
(5) | See the All Other Compensation Table below for additional
information |
ALL OTHER COMPENSATION TABLE
| |
| |
| |
| |
Company | |
| |
| |
|
| |
| |
Perquisites and | |
| |
Contributions to | |
| |
Dividends | |
|
| |
| |
Other Personal | |
Tax Payments/ | |
Defined | |
Executive Life | |
and Dividend | |
|
| |
| |
Benefits | |
Reimbursements | |
Contribution Plans | |
Insurance | |
Equivalents | |
Total |
Name | |
| Year | |
| ($)
(1) | |
| ($)
(2) | |
| ($)
(3) | |
| ($)
(4) | |
| ($)
(5) | |
| ($) |
K.I. Chenault | |
| 2014 | |
$ | 344,795 | |
$ | 0 | |
$ | 560,000 | |
$ | 5,393 | |
$ | 3,094 | |
$ | 913,282 |
| |
| 2013 | |
$ | 358,956 | |
$ | 0 | |
$ | 560,000 | |
$ | 4,813 | |
$ | 221,855 | |
$ | 1,145,624 |
| |
| 2012 | |
$ | 368,647 | |
$ | 0 | |
$ | 442,500 | |
$ | 4,340 | |
$ | 172,410 | |
$ | 987,897 |
E.P. Gilligan | |
| 2014 | |
$ | 86,151 | |
$ | 0 | |
$ | 406,000 | |
$ | 2,423 | |
$ | 1,094 | |
$ | 495,668 |
| |
| 2013 | |
$ | 105,251 | |
$ | 0 | |
$ | 406,000 | |
$ | 2,258 | |
$ | 26,462 | |
$ | 539,971 |
| |
| 2012 | |
$ | 89,040 | |
$ | 0 | |
$ | 384,250 | |
$ | 2,100 | |
$ | 89,433 | |
$ | 564,823 |
S.J. Squeri | |
| 2014 | |
$ | 79,989 | |
$ | 0 | |
$ | 293,750 | |
$ | 2,478 | |
$ | 755 | |
$ | 376,972 |
| |
| 2013 | |
$ | 79,814 | |
$ | 0 | |
$ | 293,750 | |
$ | 2,313 | |
$ | 3,478 | |
$ | 379,355 |
| |
| 2012 | |
$ | 79,489 | |
$ | 0 | |
$ | 242,212 | |
$ | 2,150 | |
$ | 28,097 | |
$ | 351,948 |
J.C. Campbell | |
| 2014 | |
$ | 82,229 | |
$ | 0 | |
$ | 153,846 | |
$ | 4,140 | |
$ | 0 | |
$ | 240,215 |
| |
| 2013 | |
$ | 433,441 | |
$ | 472,606 | |
$ | 0 | |
$ | 1,724 | |
$ | 0 | |
$ | 907,771 |
| |
| | |
| | |
| | |
| | |
| | |
| | |
| |
D.E. Buckminster |
| 2014 | |
$ | 789,328 | |
$ | 1,950,150 | |
$ | 141,000 | |
$ | 2,244 | |
$ | 453 | |
$ | 2,883,175 |
| |
| | |
| | |
| | |
| | |
| | |
| | |
| |
| |
| | |
| | |
| | |
| | |
| | |
| | |
| |
(1) | See the Perquisites and Other Personal Benefits table below
for additional information regarding the components of this column. |
(2) | For Mr. Buckminster, the amount shown in this column includes
tax equalization payments and/or reimbursements that have been made to him in connection with his international assignment in
London, which ended in June 2014. These payments and reimbursements are made under a policy that applies to all employees on international
assignment and is designed to facilitate these assignments by covering taxes over and above taxes that these employees would have
incurred had they remained in their home countries. The payments or reimbursements included in the amount shown that were paid
or received in British Pound Sterling were converted to U.S. dollars based on the conversion rate as of the date paid, received
or allocated. The amounts shown have been reduced to reflect the company’s retention of certain amounts related to home
country taxes from Mr. Buckminster’s compensation. There are trailing payments and/or reimbursements made after the end
of the period of assignment to address any foreign tax obligations relating to income received, awarded, or earned during the
assignment. For Mr. Campbell, the 2013 amount is for tax payments made directly to applicable U.S. federal, state and local authorities
for taxable relocation reimbursement and payments made to or on Mr. Campbell’s behalf, which the Internal Revenue Service
deems taxable based on the relocation program. The relocation program was provided in connection with Mr. Campbell’s employment
with American Express, which required him to relocate his residence from California to New York. The tax-payments received by
Mr. Campbell are available to all employees under the company’s relocation program. |
(3) | This column reports company contributions to the NEOs’
accounts under the company’s Retirement Savings Plan (RSP) and the RRP-RSP Related Account. See pages 47-49 for a further
description of the RSP and the RRP-RSP Related Account. |
(4) | This column reports imputed income to the NEO under the
company’s executive life insurance program. |
(5) | For 2014, this column reports dividend equivalents received
while RSUs were still unvested. Beginning with awards granted in 2011, dividend equivalents on unvested RSUs granted to executive
officers will be paid only if and when the underlying shares vest. As per the disclosure requirements, the 2014 amount excludes
dividend equivalents paid to Messrs. Chenault ($392,330), Gilligan ($115,196), Squeri ($79,446) and Buckminster ($47,667) on RSUs
vested in 2014 since these dividends were factored in the grant date fair value of the award included in the Summary Compensation
Table in the year of grant. |
2015 Proxy Statement 41
PERQUISITES AND OTHER PERSONAL BENEFITS
| |
| |
Local | |
Personal | |
| |
| |
Security | |
| |
| |
| |
| |
|
| |
| |
and Other | |
Use of | |
Flexible | |
Home | |
During | |
| |
| |
| |
| |
|
| |
| |
Travel | |
Company | |
Perquisite | |
Security | |
Personal | |
International | |
Filing Fee | |
Relocation | |
Other | |
|
| |
| |
Benefits | |
Aircraft | |
Allowance | |
System | |
Trips | |
Assignment | |
Reimbursement | |
Expenses | |
Benefits | |
Total |
Name | |
Year | |
($) (1) | |
($) (2) | |
($) (3) | |
($) (3) | |
($) (3) | |
($) (4) | |
($) (5) | |
($) (6) | |
($) (7) | |
($) |
K.I. Chenault | |
| 2014 | |
$ | 23,377 | |
$ | 181,638 | |
$ | 35,000 | |
$ | 45,373 | |
$ | 19,952 | |
| N/A | |
| N/A | |
| N/A | |
$ | 39,455 | |
$ | 344,795 |
| |
| 2013 | |
$ | 19,852 | |
$ | 193,676 | |
$ | 35,000 | |
$ | 32,601 | |
$ | 18,841 | |
| N/A | |
$ | 45,000 | |
| N/A | |
$ | 13,986 | |
$ | 358,956 |
| |
| 2012 | |
$ | 16,623 | |
$ | 195,536 | |
$ | 35,000 | |
$ | 34,283 | |
$ | 76,241 | |
| N/A | |
| N/A | |
| N/A | |
$ | 10,964 | |
$ | 368,647 |
E.P. Gilligan | |
| 2014 | |
$ | 30,000 | |
$ | 0 | |
$ | 35,000 | |
| N/A | |
| N/A | |
$ | 19,387 | |
| N/A | |
| N/A | |
$ | 1,764 | |
$ | 86,151 |
| |
| 2013 | |
$ | 30,000 | |
$ | 11,277 | |
$ | 35,000 | |
| N/A | |
| N/A | |
$ | 28,234 | |
| N/A | |
| N/A | |
$ | 740 | |
$ | 105,251 |
| |
| 2012 | |
$ | 30,000 | |
$ | 7,115 | |
$ | 35,000 | |
| N/A | |
| N/A | |
$ | 14,715 | |
| N/A | |
| N/A | |
$ | 2,210 | |
$ | 89,040 |
S.J. Squeri | |
| 2014 | |
$ | 30,000 | |
$ | 0 | |
$ | 35,000 | |
| N/A | |
| N/A | |
| N/A | |
| N/A | |
| N/A | |
$ | 14,989 | |
$ | 79,989 |
| |
| 2013 | |
$ | 30,000 | |
$ | 0 | |
$ | 35,000 | |
| N/A | |
| N/A | |
| N/A | |
| N/A | |
| N/A | |
$ | 14,814 | |
$ | 79,814 |
| |
| 2012 | |
$ | 30,000 | |
$ | 0 | |
$ | 35,000 | |
| N/A | |
| N/A | |
| N/A | |
| N/A | |
| N/A | |
$ | 14,489 | |
$ | 79,489 |
J.C. Campbell | |
| 2014 | |
$ | 30,000 | |
$ | 3,091 | |
$ | 35,000 | |
| N/A | |
| N/A | |
| N/A | |
| N/A | |
| N/A | |
$ | 14,138 | |
$ | 82,229 |
| |
| 2013 | |
$ | 15,000 | |
$ | 0 | |
$ | 17,500 | |
| N/A | |
| N/A | |
| N/A | |
| N/A | |
$ | 377,055 | |
$ | 23,886 | |
$ | 433,441 |
| |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| |
D.E. Buckminster | |
| 2014 | |
$ | 0 | |
$ | 0 | |
$ | 35,000 | |
| N/A | |
| N/A | |
$ | 752,358 | |
| N/A | |
| N/A | |
$ | 1,970 | |
$ | 789,328 |
| |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| |
| |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| |
(1) | For 2014, local and other travel benefits include local
travel allowance for NEOs other than Mr. Chenault. For Mr. Chenault, the company’s security policy adopted by the Audit
and Compliance Committee of the board requires him to use for all travel purposes, to the maximum extent practicable, the automobiles
and aircraft provided by the company to executives for business travel. The calculation of incremental cost for personal use of
company-owned automobiles and aircraft is based on the variable cost to the company of operating the automobiles and aircraft
and includes, among other things, fuel costs, maintenance costs, and, in the case of aircraft, the cost of trip-related crew hotels
and meals, and landing and ground handling fees. The calculation does not include fixed costs that would have been incurred regardless
of whether there was any personal use of the automobiles or aircraft (e.g., purchase costs and depreciation, driver and flight
crew fixed salaries and benefits, insurance costs, etc.). |
(2) | Effective January 1, 2010, the company requires reimbursement
by Mr. Chenault for incremental cost in excess of $200,000 per year for travel on company aircraft that is deemed by the SEC to
be personal use, including use to travel to outside board meetings. Mr. Campbell’s 2014 amounts are in connection with personal
travel to attend a business meeting in accordance with appropriate approvals. |
(3) | The amount in these columns reflect the perquisite allowance
paid to the NEOs and home security and security during personal trips for Mr. Chenault. |
(4) | The amount shown includes expatriate services and allowances
in connection with Messrs. Gilligan and Buckminster’s repatriation to the United States, due to their international assignments.
The services received by Messrs. Gilligan and Buckminster apply to all employees on international assignment. Services and allowances
included in the amounts shown that were paid or received in British Pound Sterling were converted to U.S. dollars based on the
conversion rate as of the date paid, received or allocated. |
(5) | This column reflects reimbursement by the company of the
fee paid by Mr. Chenault in connection with a governmental filing required to be made as a result of his being an executive officer
and the level of his equity holdings in the company. |
(6) | The amount shown includes taxable relocation reimbursements
and payments, excluding tax payments. These payments were made in connection with Mr. Campbell’s employment with American
Express, which required that he relocate his residence from California to New York. The reimbursements and payments received by
Mr. Campbell are available to all employees under the company’s relocation program. |
(7) | This column reports the total amount of other perquisites
and personal benefits provided, none of which individually exceeded the greater of $25,000 or 10 percent of the total amount
of all perquisites and other personal benefits reported for the NEO. These other benefits consist of office parking, reimbursement
for certain information technology, cost of certain meals from the company’s dining facilities and premiums for Director’s
Charitable Award Program life insurance (for Mr. Chenault only). In addition to the perquisites and other benefits described in
the table and footnotes above, our NEOs also receive occasional secretarial support with respect to personal matters and may,
on occasion, use the company’s tickets for sporting and entertainment events for personal rather than business purposes.
We incur no incremental cost for the provision of such additional benefits. |
2015 Proxy Statement 42
Grants of Plan-Based Awards
The following table provides information on SO, RSU and PG awards
granted to each of our NEOs in 2014 under the 2007 Plan.
| |
| |
| |
| |
Estimated Future Payouts under | |
Estimated Future Payouts under | |
| |
Grant Date |
| |
| |
| |
| |
Non-Equity Incentive Plan Awards (2) | |
Equity Incentive Plan Awards (2) | |
Exercise Price or | |
Fair Value |
| |
| |
| |
| |
| | |
| | |
| |
| | |
| | |
| |
Base Price of | |
of Stock and |
| |
| |
Grant | |
Approval | |
Threshold | | |
Target | | |
Maximum | |
Threshold | | |
Target | | |
Maximum | |
Option Awards | |
Option Awards |
Name | |
Award Type (1) | |
Date | |
Date | |
| ($) | | |
| ($) | | |
| ($) | |
| (#) | | |
| (#) | | |
| (#) | |
| ($/sh) (3) | |
| ($)
(4) |
K.I. Chenault | |
PG2014-16 | |
1/28/14 | |
1/27/14 | |
$ | 0 | | |
$ | 5,125,000 | | |
$ | 6,406,250 | |
| | | |
| | | |
| | |
| | |
| |
| |
SO | |
1/28/14 | |
1/27/14 | |
| | | |
| | | |
| | |
| | | |
| 78,361 | | |
| | |
$ | 86.64 | |
$ | 2,535,762 |
| |
RSU | |
1/28/14 | |
1/27/14 | |
| | | |
| | | |
| | |
| 0 | | |
| 78,361 | | |
| 97,951 | |
| | |
$ | 6,789,197 |
| |
RSU | |
1/28/14 | |
1/27/14 | |
| | | |
| | | |
| | |
| | | |
| 65,096 | | |
| | |
| | |
$ | 5,639,917 |
E.P. Gilligan | |
PG2014-16 | |
1/28/14 | |
1/27/14 | |
$ | 0 | | |
$ | 1,600,000 | | |
$ | 2,000,000 | |
| | | |
| | | |
| | |
| | |
| |
| |
SO | |
1/28/14 | |
1/27/14 | |
| | | |
| | | |
| | |
| | | |
| 31,512 | | |
| | |
$ | 86.64 | |
$ | 1,019,728 |
| |
RSU | |
1/28/14 | |
1/27/14 | |
| | | |
| | | |
| | |
| 0 | | |
| 31,512 | | |
| 39,390 | |
| | |
$ | 2,730,200 |
S.J. Squeri | |
PG2014-16 | |
1/28/14 | |
1/27/14 | |
$ | 0 | | |
$ | 1,325,000 | | |
$ | 1,656,250 | |
| | | |
| | | |
| | |
| | |
| |
| |
SO | |
1/28/14 | |
1/27/14 | |
| | | |
| | | |
| | |
| | | |
| 26,260 | | |
| | |
$ | 86.64 | |
$ | 849,774 |
| |
RSU | |
1/28/14 | |
1/27/14 | |
| | | |
| | | |
| | |
| 0 | | |
| 26,260 | | |
| 32,825 | |
| | |
$ | 2,275,166 |
J.C. Campbell | |
PG2014-16 | |
1/28/14 | |
1/27/14 | |
$ | 0 | | |
$ | 1,500,000 | | |
$ | 1,875,000 | |
| | | |
| | | |
| | |
| | |
| |
| |
SO | |
1/28/14 | |
1/27/14 | |
| | | |
| | | |
| | |
| | | |
| 21,008 | | |
| | |
$ | 86.64 | |
$ | 679,819 |
| |
RSU | |
1/28/14 | |
1/27/14 | |
| | | |
| | | |
| | |
| 0 | | |
| 21,008 | | |
| 26,260 | |
| | |
$ | 1,820,133 |
D.E. Buckminster | |
PG2014-16 | |
1/28/14 | |
1/27/14 | |
$ | 0 | | |
$ | 900,000 | | |
$ | 1,125,000 | |
| | | |
| | | |
| | |
| | |
| |
| |
SO | |
1/28/14 | |
1/27/14 | |
| | | |
| | | |
| | |
| | | |
| 11,344 | | |
| | |
$ | 86.64 | |
$ | 367,092 |
| |
RSU | |
1/28/14 | |
1/27/14 | |
| | | |
| | | |
| | |
| 0 | | |
| 11,344 | | |
| 14,180 | |
| | |
$ | 982,844 |
(1) | PG Awards. These awards link compensation to our
financial and strategic performance over a three-year performance period. The goals for the performance period are based 50 percent
on financial and stock performance metrics and 50 percent on strategic milestones. The company discloses the specific performance
metric goals as well as the performance outcomes of each PG award at the end of the performance period so that shareholders can
assess the appropriateness thereof. The company does not disclose the goals at the time of grant because of competitive sensitivity.
The potential award payout is determined based on a table of possible performance and earned payout levels, including a cap on
the overall earned payout level. The actual payout could be higher or lower than the notional target value based on actual performance. |
| |
| Restricted Stock Units. Except
as specified otherwise, RSU awards will vest on the third anniversary of the grant date in an amount determined by performance
against the average ROE target during the three-year performance period. |
| |
| 65,096 RSUs granted to Mr. Chenault are in connection with his
2013 AIA and the final payout of PG2011-13 and will vest on the first anniversary of the grant date subject to the performance
hurdle of positive Net Income over the vesting period. One half of these RSUs is payable in cash and the other half is payable
in shares (which must be held until one year after retirement). Dividend equivalents on RSUs will accrue but will not be paid
unless and until the underlying shares vest. |
| |
| Stock Options. The SOs have
a ten-year term and 100 percent of these shares become exercisable on the third anniversary of the grant date, subject to the
company achieving positive Cumulative Net Income over the vesting period. |
| |
| All awards are subject to continuous employment with the company
(except where specified otherwise), except that all awards may vest upon death, disability termination, retirement or, in certain
circumstances, in connection with a change in control of the company, as described on pages 49-52. |
| |
(2) | The amounts shown under these
columns represent potential aggregate threshold, target and maximum payouts for achievement of threshold, target and maximum
performance levels for awards granted. The threshold payout is zero, since it represents the level of performance for which
no award would be earned. The “target” payout is equal to 100 percent of the NEO’s grant value and
represents the amount that may be paid for achieving the target level of performance across all performance goals.
The “maximum” payout represents the amount that may be paid for achieving the maximum level of performance
across all performance
goals, subject to an overall cap on the payout amount. |
| |
(3) | The exercise price of the SOs is the closing price of the
company’s common shares on the NYSE on the grant date. |
| |
(4) | Represents the aggregate grant date fair value of the awards
pursuant to FASB ASC Topic 718. Additional details on accounting assumptions for stock-based compensation are described in the
Summary Compensation Table. |
2015 Proxy Statement 43
Outstanding Equity Awards at Fiscal Year-End
2014
The following table shows the number of shares
covered by exercisable and unexercisable SOs and unvested RSUs granted under the 1998 Plan or the 2007 Plan held by our NEOs on
December 31, 2014.
| |
| Option
Awards | |
Stock
Awards |
Name | |
Grant Date | |
Number of Securities Underlying Unexercised Options (#) Exercisable | | |
Number of Securities Underlying Unexercised Options (#) Unexercisable | | |
Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options
(#) | | |
Option Exercise Price
($) | | |
Option Expiration Date | |
Number of Shares or Units of Stock that have Not Vested (#) | |
Market Value of Shares or Units
of Stock that have Not Vested ($) (a) | |
Equity Incentive Plan Awards: Number of Unearned Shares, Units, or other Rights that have not Vested
(#) | | |
Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units, or other Rights that have not Vested ($) (a) |
K.I. Chenault | |
1/28/2014 | |
| | | |
| | | |
| 78,361 | (1) | |
$ | 86.640 | | |
1/28/2024 | |
| |
| |
| 97,951 | (b) | |
$ | 9,113,361 |
| |
1/28/2014 | |
| | | |
| | | |
| | | |
| | | |
| |
| |
| |
| 65,096 | (e) | |
$ | 6,056,532 |
| |
1/29/2013 | |
| | | |
| | | |
| 103,786 | (1) | |
$ | 59.450 | | |
1/29/2023 | |
| |
| |
| 129,732 | (b) | |
$ | 12,070,265 |
| |
1/24/2012 | |
| 61,853 | (2) | |
| 61,853 | | |
| | | |
$ | 49.230 | | |
1/24/2022 | |
| |
| |
| 129,891 | (c) | |
$ | 12,085,059 |
| |
1/27/2011 | |
| 101,985 | (2) | |
| 33,996 | | |
| | | |
$ | 44.540 | | |
1/27/2021 | |
| |
| |
| | | |
| |
| |
1/26/2010 | |
| 650,918 | (2) | |
| 0 | | |
| | | |
$ | 38.100 | | |
1/26/2020 | |
| |
| |
| | | |
| |
| |
1/29/2009 | |
| 1,196,888 | (2) | |
| 0 | | |
| | | |
$ | 16.710 | | |
1/29/2019 | |
| |
| |
| | | |
| |
| |
1/31/2008 | |
| 625,000 | (2) | |
| 0 | | |
| | | |
$ | 49.130 | | |
1/30/2018 | |
| |
| |
| | | |
| |
| |
1/31/2008 | |
| 343,750 | (4) | |
| 0 | | |
| | | |
$ | 49.130 | | |
1/30/2018 | |
| |
| |
| | | |
| |
| |
11/30/2007 | |
| 343,750 | (4) | |
| 0 | | |
| | | |
$ | 58.980 | | |
11/30/2017 | |
| |
| |
| | | |
| |
| |
1/25/2007 | |
| 312,500 | (2) | |
| 0 | | |
| | | |
$ | 57.770 | | |
1/25/2017 | |
| |
| |
| | | |
| |
E.P. Gilligan | |
1/28/2014 | |
| | | |
| | | |
| 31,512 | (1) | |
$ | 86.640 | | |
1/28/2024 | |
| |
| |
| 39,390 | (b) | |
$ | 3,664,846 |
| |
1/29/2013 | |
| | | |
| | | |
| 36,482 | (1) | |
$ | 59.450 | | |
1/29/2023 | |
| |
| |
| 45,602 | (b) | |
$ | 4,242,810 |
| |
1/29/2013 | |
| | | |
| | | |
| | | |
| | | |
| |
| |
| |
| 4,205 | (d) | |
$ | 391,233 |
| |
1/24/2012 | |
| 26,615 | (2) | |
| 26,616 | | |
| | | |
$ | 49.230 | | |
1/24/2022 | |
| |
| |
| 55,892 | (c) | |
$ | 5,200,192 |
| |
1/27/2011 | |
| 35,849 | (2) | |
| 11,950 | | |
| | | |
$ | 44.540 | | |
1/27/2021 | |
| |
| |
| | | |
| |
| |
1/26/2010 | |
| 228,346 | (2) | |
| 0 | | |
| | | |
$ | 38.100 | | |
1/26/2020 | |
| |
| |
| | | |
| |
| |
10/30/2009 | |
| 114,810 | (5) | |
| 0 | | |
| | | |
$ | 34.840 | | |
10/30/2019 | |
| |
| |
| | | |
| |
| |
1/29/2009 | |
| 85,128 | (2) | |
| 0 | | |
| | | |
$ | 16.710 | | |
1/29/2019 | |
| |
| |
| | | |
| |
| |
1/31/2008 | |
| 190,000 | (2) | |
| 0 | | |
| | | |
$ | 49.130 | | |
1/30/2018 | |
| |
| |
| | | |
| |
| |
7/31/2007 | |
| 225,000 | (3) | |
| 0 | | |
| | | |
$ | 58.540 | | |
7/31/2017 | |
| |
| |
| | | |
| |
S.J. Squeri | |
1/28/2014 | |
| | | |
| | | |
| 26,260 | (1) | |
$ | 86.640 | | |
1/28/2024 | |
| |
| |
| 32,825 | (b) | |
$ | 3,054,038 |
| |
1/29/2013 | |
| | | |
| | | |
| 33,652 | (1) | |
$ | 59.450 | | |
1/29/2023 | |
| |
| |
| 42,065 | (b) | |
$ | 3,913,728 |
| |
1/29/2013 | |
| | | |
| | | |
| | | |
| | | |
| |
| |
| |
| 8,410 | (d) | |
$ | 782,466 |
| |
1/24/2012 | |
| 18,743 | (2) | |
| 18,743 | | |
| | | |
$ | 49.230 | | |
1/24/2022 | |
| |
| |
| 39,360 | (c) | |
$ | 3,662,054 |
| |
1/27/2011 | |
| 24,723 | (2) | |
| 8,242 | | |
| | | |
$ | 44.540 | | |
1/27/2021 | |
| |
| |
| | | |
| |
| |
1/26/2010 | |
| 39,370 | (2) | |
| 0 | | |
| | | |
$ | 38.100 | | |
1/26/2020 | |
| |
| |
| | | |
| |
| |
10/30/2009 | |
| 229,621 | (5) | |
| 0 | | |
| | | |
$ | 34.840 | | |
10/30/2019 | |
| |
| |
| | | |
| |
| |
1/31/2008 | |
| 65,000 | (2) | |
| 0 | | |
| | | |
$ | 49.130 | | |
1/30/2018 | |
| |
| |
| | | |
| |
| |
1/25/2007 | |
| 400,000 | (2) | |
| 0 | | |
| | | |
$ | 57.770 | | |
1/25/2017 | |
| |
| |
| | | |
| |
2015 Proxy Statement 44
| |
| Option
Awards | |
Stock
Awards |
Name | |
Grant Date | |
Number of Securities Underlying Unexercised Options (#) Exercisable | | |
Number of Securities Underlying Unexercised Options (#) Unexercisable | | |
Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options
(#) | | |
Option Exercise Price
($) | | |
Option Expiration Date | |
Number of Shares or Units of Stock that have Not Vested (#) | |
Market Value of Shares or Units
of Stock that have Not Vested ($) (a) | |
Equity Incentive Plan Awards: Number of Unearned Shares, Units, or other Rights that have not Vested
(#) | | |
Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units, or other Rights that have not Vested ($) (a) |
J.C. Campbell | |
1/28/2014 | |
| | | |
| | | |
| 21,008 | (1) | |
$ | 86.640 | | |
1/28/2024 | |
| |
| |
| 26,260 | (b) | |
$ | 2,443,230 |
| |
7/31/2013 | |
| | | |
| | | |
| 24,892 | (6) | |
$ | 73.770 | | |
7/31/2023 | |
| |
| |
| 31,115 | (b) | |
$ | 2,894,940 |
| |
7/31/2013 | |
| | | |
| | | |
| 49,785 | (1) | |
$ | 73.770 | | |
7/31/2023 | |
| |
| |
| 62,231 | (b) | |
$ | 5,789,972 |
D.E. Buckminster |
1/28/2014 | |
| | | |
| | | |
| 11,344 | (1) | |
$ | 86.640 | | |
1/28/2024 | |
| |
| |
| 14,180 | (b) | |
$ | 1,319,307 |
| |
1/29/2013 | |
| | | |
| | | |
| 16,354 | (1) | |
$ | 59.450 | | |
1/29/2023 | |
| |
| |
| 20,442 | (b) | |
$ | 1,901,924 |
| |
1/24/2012 | |
| 9,746 | (2) | |
| 9,747 | | |
| | | |
$ | 49.230 | | |
1/24/2022 | |
| |
| |
| 20,467 | (c) | |
$ | 1,904,250 |
| |
1/27/2011 | |
| 14,834 | (2) | |
| 4,945 | | |
| | | |
$ | 44.540 | | |
1/27/2021 | |
| |
| |
| | | |
| |
| |
1/26/2010 | |
| 94,488 | (2) | |
| 0 | | |
| | | |
$ | 38.100 | | |
1/26/2020 | |
| |
| |
| | | |
| |
| |
1/31/2008 | |
| 100,000 | (2) | |
| 0 | | |
| | | |
$ | 49.130 | | |
1/30/2018 | |
| |
| |
| | | |
| |
| |
7/31/2007 | |
| 50,000 | (2) | |
| 0 | | |
| | | |
$ | 58.540 | | |
7/30/2017 | |
| |
| |
| | | |
| |
| |
1/25/2007 | |
| 50,000 | (2) | |
| 0 | | |
| | | |
$ | 57.770 | | |
1/24/2017 | |
| |
| |
| | | |
| |
| |
1/23/2006 | |
| 49,500 | (2) | |
| 0 | | |
| | | |
$ | 51.865 | | |
1/22/2016 | |
| |
| |
| | | |
| |
Except as otherwise indicated,
exercisability of option awards and vesting of stock awards is subject to continuous employment by the company, except that unvested
awards may vest upon death, disability termination, retirement or change in control of the company (or for awards granted after
December 2010, certain terminations in connection with a change in control), as described on pages 49-52.
Notes Relating to Option Awards
(1) |
These SOs vest 100 percent on the third anniversary of the grant date,
subject to positive Cumulative Net Income performance during the three-year performance period starting with the year of grant. |
|
|
(2) |
These SOs vest 25 percent on the first, second, third and fourth anniversaries
of the grant date. |
|
|
(3) |
These SOs vest 25 percent on the third and fourth anniversaries of the
grant date, and 50 percent on the fifth anniversary of the grant date. |
|
|
(4) |
These SOs constitute 25 percent of a Special Grant that became exercisable
in January 2014 given the company’s TSR performance against the S&P 500 Index during the six-year performance period
from January 1, 2008 through December 31, 2013. The remaining SOs under the Special Grant were forfeited. |
|
|
(5) |
These SOs vest 100 percent on the fourth anniversary of the grant date. |
|
|
(6) |
These SOs vest on January 29, 2016, subject to positive Cumulative Net
Income performance during the three-year performance period starting the year of grant. |
Notes Relating to Stock Awards
(a) |
The market value of the stock awards is based on the closing price per
share of our stock as of December 31, 2014, which was $93.04. |
|
|
(b) |
These awards vest on the third anniversary of the grant date, subject
to our achieving average annual ROE of 23-27 percent or more for the 2014 awards and average annual ROE of 25 percent or more
for the 2013 awards over the vesting period. The number of awards above reflects the assumption that ROE is at 30 percent
and a payout at 125 percent is made based upon the trend in performance as of December 31, 2014. Mr. Campbell’s July
31, 2013 award of 31,115 RSUs will vest on January 29, 2016. |
|
|
(c) |
These awards vest on the third anniversary of the grant date, subject
to our achieving average annual ROE of 25 percent or more over the vesting period. The number of awards above reflects the
assumption that ROE is at 28 percent and a payout at 105 percent is made based upon the trend in performance as of December
31, 2014. |
|
|
(d) |
For Mr. Gilligan and Mr. Squeri, these awards were granted in connection
with their 2012 AIA payout and vest on the third anniversary of the grant date subject to positive Cumulative Net Income performance
but not subject to continued employment. |
|
|
(e) |
These awards vest on the first anniversary of the grant date subject
to positive Cumulative Net Income performance and a portion of these awards will be settled in cash. |
2015 Proxy Statement 45
Option Exercises and Stock Vested in 2014
The following table contains information about
exercises of SOs by the NEOs and shares acquired by the NEOs upon the vesting of RSUs, in each case during 2014.
| |
Option Awards | | |
Stock Awards |
| |
Number of Shares | | |
Value Realized on | | |
Number of Shares | | |
Value Realized on |
| |
Acquired on Exercise | | |
Exercise | | |
Acquired on Vesting | | |
Vesting |
Name | |
(#) | | |
($)(1) | | |
(#) | | |
($)(2) |
K.I. Chenault | |
| 737,500 | | |
$ | 26,056,451 | | |
| 224,754 | | |
$ | 19,253,571 |
E.P. Gilligan | |
| 375,000 | | |
$ | 10,503,713 | | |
| 53,511 | | |
$ | 4,586,963 |
S.J. Squeri | |
| - | | |
| - | | |
| 36,905 | | |
$ | 3,163,497 |
J.C. Campbell | |
| - | | |
| - | | |
| - | | |
| - |
D.E. Buckminster | |
| - | | |
| - | | |
| 22,143 | | |
$ | 1,898,098 |
(1) |
Amounts reflect the difference between the exercise price of the SO
and the market price of our common stock at the time of exercise. |
|
|
(2) |
Amounts reflect the market value of our common stock on the day on which
the RSUs vested. |
2015 Proxy Statement 46
Retirement Plan Benefits
The table below shows the present value of accumulated
benefits payable to each of the NEOs under the American Express Retirement Plan and the American Express Retirement Restoration
Plan (RRP), a nonqualified plan, except for Mr. Campbell who is not eligible to participate in these plans.
PENSION BENEFITS 2014
| |
| |
Number of Years | | |
Present Value of | | |
Payments During |
| |
| |
Credited Service | | |
Accumulated Benefits | | |
Last Fiscal Year |
Name | |
Plan Name | |
(#) | | |
($) (1) | | |
($) |
K.I. Chenault | |
Retirement Plan | |
| 33 | | |
$ | 663,347 | | |
$ | 0 |
| |
RRP-Retirement Plan | |
| | | |
$ | 8,025,562 | | |
$ | 0 |
| |
Total | |
| | | |
$ | 8,688,909 | | |
$ | 0 |
E.P. Gilligan | |
Retirement Plan | |
| 34 | | |
$ | 446,167 | | |
$ | 0 |
| |
RRP-Retirement Plan | |
| | | |
$ | 1,926,154 | | |
$ | 0 |
| |
Total | |
| | | |
$ | 2,372,321 | | |
$ | 0 |
S.J. Squeri | |
Retirement Plan | |
| 29 | | |
$ | 321,770 | | |
$ | 0 |
| |
RRP-Retirement Plan | |
| | | |
$ | 601,732 | | |
$ | 0 |
| |
Total | |
| | | |
$ | 923,502 | | |
$ | 0 |
D.E. Buckminster | |
Retirement Plan | |
| 28 | | |
$ | 292,349 | | |
$ | 0 |
| |
RRP-Retirement Plan | |
| | | |
$ | 379,726 | | |
$ | 0 |
| |
Total | |
| | | |
$ | 672,075 | | |
$ | 0 |
(1) |
Present
Value of Accumulated Benefits (PVAB) was determined using the same measurement date (December 31, 2014) and assumptions as
used for financial reporting purposes: |
|
• |
Discount rate equal
to 3.50 percent |
|
|
|
|
• |
RP-2014 Mortality Table
projected with MP-2014 longevity improvements |
|
|
|
|
• |
Retirement age is assumed
to be the normal retirement age as defined in the plan (age 65) |
|
|
|
|
• |
Form of payment is the
value of the cash balance account payable as a lump-sum distribution upon retirement |
|
|
|
|
• |
PVAB includes the value
of the MetLife benefit described below, if applicable |
Retirement Plan. The
NEOs (except for Mr. Campbell) participate in the Retirement Plan, which is a defined benefit cash balance retirement plan. As
a result of amendments made to the Retirement Plan in 2007, we discontinued benefit accruals, although the Retirement Plan continues
to credit participants with interest on their outstanding account balances. The Retirement Plan sets the interest rate each year
based on the average of the interest rates for certain five-year U.S. Treasury Notes, with a minimum interest rate of 5 percent.
The maximum interest rate is the lower of 10 percent or the applicable interest rate specified in the Retirement Plan. For 2014
and 2015, the interest rate is 5 percent. In addition, benefits from the prior retirement plan, which was terminated in 1985, are
payable through an insurance contract with Metropolitan Life Insurance Company and are included in the table above.
RRP-Retirement
Plan. Each RRP participant who participated in the Retirement Plan has a Retirement Plan related account for benefits
that could not be provided under the Retirement Plan as a result of IRS limitations on tax-qualified plans. Compensation for
RRP-Retirement Plan account purposes included the same components of compensation as for the Retirement Plan. RRP-Retirement
Plan benefits accrue and vest in a similar manner to benefits under the Retirement Plan. Participants may elect to receive
payment of their RRP-Retirement Plan benefits in either a lump sum or annual installments over a period of five, ten, or 15
consecutive years. Lump-sum payments are made on or about the January 1 or July 1 that is at least six months following the
participant’s separation from service and installment payments commence on or about the July 1 of the calendar year
following the year in which the participant separates from service.
As a result of amendments
made to the Retirement Plan and RRP in 2007, we discontinued benefit accruals, although the RRP-Retirement Plan continues to credit
participants with interest on their outstanding account balances in accordance with the Retirement Plan as described above.
2015 Proxy Statement 47
Nonqualified Deferred Compensation
The following table shows the executive or company
contributions, earnings, withdrawals and account balances for the NEOs in our RRP-RSP accounts and our deferred compensation programs.
These programs are unfunded, unsecured deferred compensation programs.
NONQUALIFIED DEFERRED COMPENSATION 2014
| |
| |
Executive | | |
Company | | |
Aggregate | | |
Aggregate | | |
Aggregate |
| |
| |
Contributions in Last | | |
Contributions in Last | | |
Earnings in Last | | |
Withdrawals/ | | |
Balance at |
| |
| |
FY | | |
FY | | |
FY | | |
Distributions | | |
Last FYE |
Name | |
Plan Name | |
($) | | |
($) (1) | | |
($) (2) | | |
($) | | |
($)
(3) |
K.I. Chenault | |
RRP-RSP | |
| N/A | | |
$ | 525,500 | | |
$ | 64,946 | | |
$ | 0 | | |
$ | 5,455,573 |
| |
Deferral Plan | |
$ | 392,308 | | |
| N/A | | |
$ | 1,067,691 | | |
$ | 0 | | |
$ | 28,421,796 |
| |
Total | |
$ | 392,308 | | |
$ | 525,500 | | |
$ | 1,132,637 | | |
$ | 0 | | |
$ | 33,877,369 |
E.P. Gilligan | |
RRP-RSP | |
| N/A | | |
$ | 397,500 | | |
$ | 210,924 | | |
$ | 0 | | |
$ | 3,542,616 |
| |
Deferral Plan | |
$ | 525,000 | | |
| N/A | | |
$ | 202,934 | | |
$ | 234,908 | | |
$ | 4,742,291 |
| |
Total | |
$ | 525,000 | | |
$ | 397,500 | | |
$ | 413,858 | | |
$ | 234,908 | | |
$ | 8,284,907 |
S.J. Squeri | |
RRP-RSP | |
| N/A | | |
$ | 285,250 | | |
$ | 45,166 | | |
$ | 0 | | |
$ | 2,220,787 |
| |
Deferral Plan | |
$ | 257,000 | | |
| N/A | | |
$ | 248,296 | | |
$ | 905,472 | | |
$ | 5,167,396 |
| |
Total | |
$ | 257,000 | | |
$ | 285,250 | | |
$ | 293,462 | | |
$ | 905,472 | | |
$ | 7,388,183 |
J.C. Campbell | |
RRP-RSP | |
| N/A | | |
$ | 133,046 | | |
$ | 1,561 | | |
$ | 0 | | |
$ | 134,607 |
| |
Deferral Plan | |
$ | 117,000 | | |
| N/A | | |
$ | 1,537 | | |
$ | 0 | | |
$ | 129,064 |
| |
Total | |
$ | 117,000 | | |
$ | 133,046 | | |
$ | 3,098 | | |
$ | 0 | | |
$ | 263,671 |
D.E. Buckminster | |
RRP-RSP | |
| N/A | | |
$ | 110,450 | | |
$ | 24,363 | | |
$ | 0 | | |
$ | 883,449 |
| |
Deferral Plan | |
$ | 600,000 | | |
| N/A | | |
$ | 189,891 | | |
$ | 0 | | |
$ | 6,567,794 |
| |
Total | |
$ | 600,000 | | |
$ | 110,450 | | |
$ | 214,254 | | |
$ | 0 | | |
$ | 7,451,243 |
(1) |
The amounts in this column are also included in the Summary
Compensation Table on page 40 under “All Other Compensation.” |
|
|
(2) |
Earnings on RRP-RSP and Deferral Plan balances are determined
based on hypothetical investment of those account balances at the direction of the participant in the funds available under
the RSP (other than the Self-Directed Brokerage Account). In addition to the investment funds in the RSP, a Market Interest
Rate option is available for pre-2011 Deferral Plan balances only. The Market Interest Rate option earns a rate of return
based on the SEC defined market rate for deferred compensation for the year, which is 120 percent of the long-term Applicable
Federal Rate for December of the preceding year. |
|
|
(3) |
Of the total amounts shown in this column, the following
amounts have been reported as “Salary,” “Bonus” or “Non-Equity Incentive Plan Compensation”
in the Summary Compensation Table in this proxy statement and prior years’ proxy statements: for Mr. Chenault, $9,797,098;
for Mr. Campbell, $127,327; for Mr. Gilligan, $3,397,500; for Mr. Squeri, $2,225,692; and for Mr. Buckminster, $600,000. The
amounts in the preceding sentence do not include: 1) amounts deferred by each executive before becoming an NEO; and 2) amounts
reported in prior years’ proxy statements as above-market earnings on deferred compensation. |
Retirement Savings Plan. Effective
January 2010, all active participants, including the NEOs, were immediately 100 percent vested in the company matching
contribution, which is generally up to 5 percent of total pay (base pay and eligible incentive pay capped at one times base
pay). We may also contribute an annual discretionary profit sharing amount (ranging from 0-5 percent) for eligible employees
based on our annual performance. As a result of our 2014 performance, the Board approved a profit sharing contribution of 3
percent of total pay for eligible employees (including NEOs). Company profit sharing contributions generally vest on the
third anniversary of an employee’s service with the company.
For our employees who commenced their employment
prior to April 1, 2007, we generally also contribute an additional conversion contribution of up to 8 percent of total pay. The
percentage varies by individual based on their projected age and service as of December 31, 2008. The conversion contributions
for the NEOs are as follows: Messrs. Chenault and Gilligan: 6.0 percent and Messrs. Squeri and Buckminster: 3.75 percent. Mr. Campbell
commenced employment after April 1, 2007 and is not eligible for conversion contributions.
RRP-RSP. Each RRP participant has a RRP-RSP
account for benefits that cannot be provided under the Retirement Savings Plan as a result of IRS limitations on tax-qualified
plans. The RRP was amended effective January 1, 2011, such that the company matches employee contributions in the RRP-RSP account
up to a maximum of 5 percent of total pay in excess of IRS compensation limits, only to the extent the employee voluntarily defers
compensation under the company’s nonqualified Deferral Plan. All other company contributions to the RRP-RSP were not impacted
by this amendment. Compensation for RRP-RSP account purposes includes the same components of compensation as for the Retirement
Savings Plan, as well as the value of base pay and annual cash incentive amounts deferred by a participant under the nonqualified
Deferral Plan. Participants may elect to receive payment of their RRP-RSP benefits in either a lump sum or annual installments
over a period of five, ten, or 15 consecutive years. New participants will have a default lump-sum election for contributions attributable
to the first year.
2015 Proxy Statement 48
Deferral Plan. As
part of planning for retirement or other long-term financial needs, we provide the NEOs and certain other senior-level employees
with an annual opportunity to defer receipt of a portion of their base salary or annual cash incentive award up to one times their
base salary.
Under the Deferral Plan,
participants may elect for payment to commence upon separation from service or a specified date at least five years after deferral,
but not later than separation from service, and to receive payment in either a lump sum or annual installments over a period of
five, ten or 15 consecutive years. For 2007 and prior years, participants were able to defer receipt until termination of employment
or a specified date at least five years after deferral, but not later than ten years after termination of employment.
Deferral Plan Earnings.
Starting January 1, 2011, earnings for NEOs on deferral balances are based on investment options similar to those offered under
the Retirement Savings Plan (other than the Company Stock Fund and the Self Directed Brokerage Account). Furthermore, for participants,
including NEOs, with pre-2011 balances, the Deferral Plan was amended to allow for an additional investment option that provides
a market interest rate based on 120 percent of the long-term Applicable Federal Rate for December of the preceding year. Interest
crediting on deferrals was previously based on ROE-linked interest crediting schedules.
Potential Payments Upon Termination or Change
in Control (CIC)
The tables below show
certain potential payments that would have been made to an NEO if the NEO’s employment had terminated on December 31,
2014, under various scenarios, including a Change in Control. The tables do not include the pension benefits or nonqualified
deferred compensation that would be paid to an NEO, which are set forth in the Pension Benefits 2014 and Nonqualified
Deferred Compensation 2014 tables above, except to the extent that the NEO is entitled to an additional benefit as a result
of the termination. In addition, the tables do not include the value of vested but unexercised SOs as of December 31, 2014
and cash AIA and PG awards for performance cycles ending on December 31, 2014. The footnotes to the tables describe the
assumptions used in estimating the amounts shown in the tables.
Because the payments to be
made to an NEO depend on several factors, the actual amounts to be paid out upon an NEO’s termination of employment can only
be determined at the time of an executive’s separation from the company.
POTENTIAL PAYMENTS UPON TERMINATION OF EMPLOYMENT/CIC
AS OF 12/31/14
K. I. Chenault
| |
| | |
| | |
| | |
Termination w/o | | |
Termination w/o Cause |
| |
| | |
| | |
| | |
Cause not | | |
or Constructive Term. |
| |
| | |
| | |
| | |
in Connection | | |
in Connection |
| |
Death | | |
Disability | | |
Retirement | | |
with CIC | | |
with CIC |
| |
(a) | | |
(a) | | |
(b) | | |
(c) | | |
(d) |
Incremental Benefits Due to Termination Event (1) | |
| | | |
| | | |
| | | |
| | | |
| |
Severance | |
$ | 0 | | |
$ | 0 | | |
$ | 0 | | |
$ | 19,900,000 | | |
$ | 19,900,000 |
Pro-Rata Bonus | |
| N/A | | |
| N/A | | |
| N/A | | |
| N/A | | |
| N/A |
Value of Accelerated LTIA (2) | |
$ | 0 | | |
$ | 0 | | |
$ | 56,080,206 | | |
$ | 0 | | |
$ | 0 |
Deferred Compensation | |
$ | 0 | | |
$ | 0 | | |
$ | 0 | | |
$ | 943,405 | | |
$ | 943,405 |
Retirement Savings Plan | |
$ | 0 | | |
$ | 56,921 | | |
$ | 0 | | |
$ | 0 | | |
$ | 0 |
Other Benefits | |
$ | 0 | | |
$ | 0 | | |
$ | 702,469 | | |
$ | 284,455 | | |
$ | 126,693 |
TOTAL VALUE OF INCREMENTAL BENEFITS | |
$ | 0 | | |
$ | 56,921 | | |
$ | 56,782,675 | | |
$ | 21,127,860 | | |
$ | 20,970,098 |
2015 Proxy Statement 49
E. P. Gilligan
| |
| | |
| | |
| | |
Termination w/o | | |
Termination w/o Cause |
| |
| | |
| | |
| | |
Cause not | | |
or Constructive Term. |
| |
| | |
| | |
| | |
in Connection | | |
in Connection |
| |
Death | | |
Disability | | |
Retirement | | |
with CIC | | |
with CIC |
| |
(a) | | |
(a) | | |
(b) | | |
(c) | | |
(d) |
Incremental Benefits Due to Termination Event (1) | |
| | | |
| | | |
| | | |
| | | |
| |
Severance | |
$ | 0 | | |
$ | 0 | | |
$ | 0 | | |
$ | 11,950,000 | | |
$ | 11,950,000 |
Pro-Rata Bonus | |
| N/A | | |
| N/A | | |
| N/A | | |
| N/A | | |
| N/A |
Value
of Accelerated LTIA (2) | |
$ | 5,606,364 | | |
$ | 5,606,364 | | |
$ | 11,945,139 | | |
$ | 5,606,364 | | |
$ | 4,606,364 |
Deferred Compensation | |
$ | 0 | | |
$ | 0 | | |
$ | 0 | | |
$ | 0 | | |
$ | 0 |
Retirement Savings Plan | |
$ | 0 | | |
$ | 406,728 | | |
$ | 0 | | |
$ | 0 | | |
$ | 0 |
Other Benefits | |
$ | 0 | | |
$ | 0 | | |
$ | 286,284 | | |
$ | 302,591 | | |
$ | 128,725 |
TOTAL VALUE OF INCREMENTAL BENEFITS | |
$ | 5,606,364 | | |
$ | 6,013,092 | | |
$ | 12,231,423 | | |
$ | 17,858,955 | | |
$ | 16,685,089 |
| |
| | |
| | |
| | |
| | |
|
S. J. Squeri | |
| | |
| | |
| | |
| | |
|
| |
| | |
| | |
| | |
| | |
|
| |
| | |
| | |
| | |
Termination w/o | | |
Termination w/o Cause |
| |
| | |
| | |
| | |
Cause not | | |
or Constructive Term. |
| |
| | |
| | |
| | |
in Connection | | |
in Connection |
| |
Death | | |
Disability | | |
Retirement | | |
with CIC | | |
with CIC |
| |
(a) | | |
(a) | | |
(b) | | |
(c) | | |
(d) |
Incremental Benefits Due to Termination Event (1) | |
| | | |
| | | |
| | | |
| | | |
| |
Severance | |
$ | 0 | | |
$ | 0 | | |
$ | 0 | | |
$ | 10,800,000 | | |
$ | 10,800,000 |
Pro-Rata Bonus | |
| N/A | | |
| N/A | | |
| N/A | | |
| N/A | | |
| N/A |
Value of Accelerated LTIA (2) | |
$ | 4,546,750 | | |
$ | 4,546,750 | | |
$ | 9,684,462 | | |
$ | 4,546,750 | | |
$ | 3,718,625 |
Deferred Compensation | |
$ | 0 | | |
$ | 0 | | |
$ | 0 | | |
$ | 28,091 | | |
$ | 28,091 |
Retirement Savings Plan | |
$ | 0 | | |
$ | 331,596 | | |
$ | 0 | | |
$ | 0 | | |
$ | 0 |
Other Benefits | |
$ | 0 | | |
$ | 0 | | |
$ | 187,145 | | |
$ | 248,662 | | |
$ | 120,507 |
TOTAL VALUE OF INCREMENTAL BENEFITS | |
$ | 4,546,750 | | |
$ | 4,878,346 | | |
$ | 9,871,607 | | |
$ | 15,623,503 | | |
$ | 14,667,223 |
| |
| | |
| | |
| | |
| | |
|
J. C. Campbell | |
| | |
| | |
| | |
| | |
|
| |
| | |
| | |
| | |
| | |
|
| |
| | |
| | |
| | |
Termination w/o | | |
Termination w/o Cause |
| |
| | |
| | |
| | |
Cause not | | |
or Constructive Term. |
| |
| | |
| | |
Voluntary | | |
in Connection | | |
in Connection |
| |
Death | | |
Disability | | |
Resignation | | |
with CIC | | |
with CIC |
| |
(a) | | |
(a) | | |
(b) | | |
(c) | | |
(d) |
Incremental Benefits Due to Termination Event (1) | |
| | | |
| | | |
| | | |
| | | |
| |
Severance | |
$ | 0 | | |
$ | 0 | | |
$ | 0 | | |
$ | 9,000,000 | | |
$ | 9,000,000 |
Pro-Rata Bonus | |
| N/A | | |
| N/A | | |
| N/A | | |
| N/A | | |
| N/A |
Value of Accelerated LTIA (2) | |
$ | 15,476,009 | | |
$ | 15,476,009 | | |
$ | 0 | | |
$ | 13,386,974 | | |
$ | 14,163,509 |
Deferred Compensation | |
| N/A | | |
| N/A | | |
| N/A | | |
| N/A | | |
| N/A |
Retirement Savings Plan | |
$ | 57,692 | | |
$ | 318,132 | | |
$ | 0 | | |
$ | 0 | | |
$ | 0 |
Other Benefits | |
$ | 0 | | |
$ | 0 | | |
$ | 0 | | |
$ | 165,638 | | |
$ | 130,638 |
TOTAL VALUE OF INCREMENTAL BENEFITS | |
$ | 15,533,701 | | |
$ | 15,794,141 | | |
$ | 0 | | |
$ | 22,552,612 | | |
$ | 23,294,147 |
2015 Proxy Statement 50
D. E. Buckminster
| |
| | |
| | |
| | |
Termination w/o | | |
Termination w/o Cause |
| |
| | |
| | |
| | |
Cause not | | |
or Constructive Term. |
| |
| | |
| | |
Voluntary | | |
in Connection | | |
in Connection |
| |
Death | | |
Disability | | |
resignation | | |
with CIC | | |
with CIC |
| |
(a) | | |
(a) | | |
(b) | | |
(c) | | |
(d) |
Incremental Benefits Due to Termination Event | |
| | | |
| | | |
| | | |
| | | |
| |
Severance | |
$ | 0 | | |
$ | 0 | | |
$ | 0 | | |
$ | 5,300,000 | | |
$ | 5,300,000 |
Pro-Rata Bonus | |
| N/A | | |
| N/A | | |
| N/A | | |
| N/A | | |
| N/A |
Value of Accelerated LTIA (2) | |
$ | 7,479,432 | | |
$ | 7,479,432 | | |
$ | 0 | | |
$ | 7,479,432 | | |
$ | 6,691,932 |
Deferred Compensation | |
$ | 0 | | |
$ | 0 | | |
$ | 0 | | |
$ | 21,402 | | |
$ | 21,402 |
Retirement Savings Plan | |
$ | 0 | | |
$ | 384,949 | | |
$ | 0 | | |
$ | 0 | | |
$ | 0 |
Other Benefits | |
$ | 0 | | |
$ | 0 | | |
$ | 0 | | |
$ | 367,480 | | |
$ | 271,959 |
TOTAL VALUE OF INCREMENTAL BENEFITS | |
$ | 7,479,432 | | |
$ | 7,864,381 | | |
$ | 0 | | |
$ | 13,168,314 | | |
$ | 12,285,293 |
(1) |
NEO
is “retirement eligible” if he is at least age 55 with ten or more actual or deemed years of service to the company
prior to termination of service. With respect to LTIA granted prior to 2013, once retirement eligible, the treatment of specific
awards will vary based upon age and years of service at the time of retirement, subject to applicable performance, with all
awards vesting in full after age 62 with ten or more actual or deemed years of service, subject to applicable performance.
With respect to LTIA granted in 2013 or after, once retirement eligible, all LTIA outstanding for more than one year will
vest in full upon retirement up until the NEO is at least age 62 with ten or more actual or deemed years of service to the
company, at which time all outstanding LTIA will vest in full upon retirement, subject to applicable performance. |
|
For
Messrs. Chenault, Gilligan and Squeri the scenarios shown that are noted with (a), (c) and (d) include the incremental benefit
that they would receive under these scenarios over and above what they would otherwise receive upon retirement. |
|
For
Mr. Campbell, the amounts in each column except Voluntary Resignation include a sign-on cash payment of $2,000,000 that will
be made to him in each scenario in accordance with his employment offer letter to replace a portion of the long-term incentives
he forfeited at his prior employer as a result of joining the company. In the event of Voluntary Resignation, the portion
of the sign-on cash payment ($2,000,000) that has already been paid to him is required to be repaid to the company. |
(2) |
Value
of Accelerated LTIA. RSU and SO values are based on $93.04, the closing price per share of our stock as of December 31,
2014. For SOs, the value reflects the “in the money” value of SOs that vest upon termination of employment or
CIC. With respect to PGs, the value reflects the PG’s target value adjusted by the applicable payout percentage. For
Mr. Gilligan and Mr. Squeri, a portion of their 2012 AIA was awarded in RSUs which will vest three years after the grant date
and are not subject to continuous employment. This value is excluded from the table. |
(a) |
Death
and Disability. An NEO or his designated beneficiary or estate would receive: |
|
(i) |
Pro
Rata Bonus: A pro rata AIA for the year of termination; subject to Compensation Committee discretion. |
|
(ii) |
Value
of Accelerated LTIA: Vesting of 100 percent of outstanding SOs, RSUs and PG awards starting with PG2013-15 |
|
(iii) |
Retirement
Savings Plan (RSP) and RRP-RSP: Immediate vesting of any unvested account balances related to company contributions. Upon
disability, future employer contributions in the RSP through age 65. |
(b) |
Retirement/Voluntary
Resignation. For non-retirement eligible NEOs, 100 percent of AIA bonus and 100 percent of unvested LTIA will be forfeited.
Since Mr. Chenault, Mr. Gilligan and Mr. Squeri are retirement eligible, they would receive: |
|
(i) |
Pro
Rata Bonus: A pro rata AIA for the year of termination; subject to Compensation Committee discretion. |
|
(ii) |
Value
of Accelerated LTIA: |
|
• |
Stock
options: For Mr. Chenault, all unvested SOs outstanding will vest; for Mr. Gilligan and Mr. Squeri, a portion of the unvested
SOs outstanding for more than one year continue to vest for grants prior to 2013 and for grants post 2013 all unvested SOs
outstanding for more than one year continue to vest, subject to performance. |
|
• |
PG
Awards: For Mr. Chenault, 100 percent of the grants vest in full; for Mr. Gilligan and Mr. Squeri, 100 percent of the
grants vest in full if outstanding more than one year, subject to performance. |
|
• |
RSUs:
For Mr. Chenault, all unvested RSUs will continue to vest; for Mr. Gilligan and Mr. Squeri, all unvested RSUs outstanding
for more than one year continue to vest subject to performance. The amount for Mr. Chenault also includes the full value of
2014 AIA and PG awards (PG2012-14) that were granted in the form of 108,370 RSUs in January 2015, but does not include the
value of 2013 AIA and PG awards (PG2011-13 final payment) that were granted in the form of 65,096 RSUs in January 2014 as
these were included in the table last year and vested fully in January 2015. |
|
(iii) |
Other
Benefits: For retirement eligible NEOs, the cash surrender value of the life insurance under our Key Executive Life Insurance
Plan. |
2015 Proxy Statement 51
(c) |
Termination
without Cause Not in Connection with a Change in Control. In the event of termination without cause not in connection
with a CIC, an NEO would receive: |
|
(i) |
Severance:
Two years’ annual compensation, which includes two times base salary and two times the amount of the last AIA paid. |
|
(ii) |
Pro
Rata Bonus: A pro rata portion of the AIA for the year of termination is paid out at the end of the performance period, subject
to CBC negative discretion. |
|
(iii) |
Value
of Accelerated LTIA: |
|
• |
For
non-retirement eligible employees: LTIA continues to vest and stock options remain exercisable during the severance period
and are canceled on the earlier of their expiration date (for SOs only), the end of the severance period or the commencement
of full-time outside employment. PG awards that remain outstanding at the end of the NEO’s severance period are canceled. |
|
• |
Retirement
eligible employees and employees who become retirement eligible prior to end of severance period: LTIA will vest as described
in footnote (1) above. As a result for Mr. Chenault, all PG, SO and RSU awards will vest in full and Messrs. Gilligan, Squeri
and Buckminster will vest partially in unvested LTIAs. |
|
(iv) |
Deferred
Compensation: Reflects two years of additional interest crediting (using the prior year’s interest rate assuming 3.29
percent for 1994–2004 programs) on the grandfathered amounts (amounts that were earned and vested prior to December
31, 2004). |
|
• |
Non-retirement
eligible: Account balance is paid in a lump sum—grandfathered amounts are paid at the end of the two-year severance
period and all other amounts are paid on a date at least six months following the date of termination. |
|
• |
Retirement
eligible: Amounts are paid at the time and in the form (lump sum or installments) elected by the NEO; otherwise the NEO’s
account balance is paid in a lump sum—grandfathered amounts are paid at the end of the two-year severance period and
all other amounts are paid on a date at least six months following the date of termination. |
|
(v) |
Other
Benefits:Two years of contributions to U.S. medical, dental, health savings accounts and premiums, if applicable, under the
basic and Key Executive Life Insurance Plans; perquisite allowance for the year of termination ($35,000 for all NEOs); and
outplacement services ($100,000 for all NEOs). |
(d) |
Termination
without Cause or Constructive Termination in Connection with a Change in Control. In the event of termination without
cause or constructive termination in connection with a CIC, an NEO would receive: |
|
(i) |
Severance:
Two years’ annual compensation, which includes two times base salary and two times the amount of the last AIA paid. |
|
(ii) |
Pro
Rata Bonus: A pro rata portion of the AIA for the year of termination is paid out at the end of the performance period, subject
to CBC negative discretion. |
|
(iii) |
Value
of Accelerated LTIA: For awards granted after December 2010, upon employment termination (“double trigger”), 100
percent vesting of SOs and RSUs upon CIC and a pro rata portion of outstanding PG awards based on the average of the payout
percentages for the last two PG programs paid out before the CIC. For awards granted before January 2011, the same treatments
apply, except employment termination is not required (“single trigger”) for equity award vesting. |
|
(iv) |
Deferred
Compensation: Reflects two years of interest crediting (using the prior year’s interest rate assuming 3.29 percent for
1994–2004 programs) on the grandfathered amounts (amounts that were earned and vested prior to December 31, 2004). Grandfathered
amounts are paid in a lump sum on a date that is at least six months following the date of termination. If the NEO is retirement
eligible, all other account balances are paid at the time and in the form (lump sum or installments) elected by the NEO. If
the NEO is not retirement eligible, all other account balances are paid in a lump sum on a date that is at least six months
following the date of termination. |
|
(v) |
Other
Benefits: Two years of contribution to U.S. medical, dental and health savings accounts, premiums toward basic life
insurance, outplacement services ($100,000 for all NEOs); and, if applicable, the cash surrender value of the life
insurance under our Key Executive Life Insurance Plan. |
|
(vi) |
Excise
Tax Reimbursement and Tax Gross-Up: Effective January 2011, we no longer provide excise tax reimbursements and tax gross-up
payments in the case of a CIC, as a result the table above does not reflect any value. |
EQUITY COMPENSATION PLANS
The following table provides
summary information with respect to the company’s equity compensation plans under which the company’s common shares
may be issued to employees or non-employees (such as consultants or advisors) as of December 31, 2014, each of which was approved
by shareholders. Information relating to employee stock purchase plans and employee savings plans (such as 401(k) plans) is not
included. Information is provided in the aggregate for the company’s equity compensation plans which have been approved by
the company’s shareholders. There are no plans that have not been approved by shareholders.
EQUITY COMPENSATION PLAN INFORMATION
| |
|
(A) | |
|
|
| |
|
|
(C) |
| Number of Securities to be | |
|
|
(B) | |
Number of Securities Remaining |
| Issued Upon Exercise of | |
Weighted-Average Exercise | |
Available for Future Issuance Under |
| Outstanding Options, | |
Price of Outstanding Options, | |
Equity Compensation Plans (Excluding |
Plan
Category | Warrants and Rights | |
Warrants and Rights | |
Securities Reflected in Column (A)) |
Equity compensation plans approved by shareholders | |
13,416,090 | |
|
$44.89 | |
|
34,946,876 |
Equity compensation plans not approved by shareholders | |
0 | |
|
0 | |
|
0 |
|
TOTAL | |
13,416,090 | |
|
$44.89 | |
|
34,946,876 |
2015 Proxy Statement 52
ITEM 1— |
ELECTION OF
DIRECTORS FOR A TERM OF ONE YEAR |
Board Membership Criteria
and Diversity
Our board, acting through
the Nominating and Governance Committee, seeks a board of directors that, as a whole, possesses the mix of experiences, skills,
expertise and qualifications appropriate to support the success of the company and function effectively in light of the company’s
current and evolving business circumstances.
Our Corporate Governance
Principles provide that directors should be people who have achieved prominence in their fields and who possess significant experience
in areas of importance to us as a large, global public company. The minimum personal characteristics that must be met by a nominee
include integrity, independence, energy, forthrightness, strong analytical skills, and the commitment to devote the necessary time
and attention to the company’s affairs.
Candidates are assessed based
on their history of achievement, background, specific skills, expertise or experience, and personal attributes.
The committee looks for directors
who have established records of significant accomplishment in leading large, complex organizations and global businesses and in
areas relevant to our success and our strategy, financial expertise, and experience on one or more boards of significant public
or nonprofit organizations.
Board Diversity
While we do not have a specific
policy on diversity of the board, our governance principles provide that the board should be diverse, engaged and independent.
The Nominating and Governance Committee considers diversity of the board, including gender and racial diversity. We believe the
composition of our board reflects a diversity of skills, professional and personal backgrounds and experience.
|
The committee also seeks
candidates who have demonstrated they have the ability to challenge and stimulate management and to exercise sound judgment. Candidates
must also demonstrate a willingness to work as part of a team in an atmosphere of trust and a commitment to represent the interests
of all shareholders rather than those of a specific constituency.
Our governance principles
provide that while the board need not adhere to a fixed number of directors, generally a board composed of 12-14 directors offers
a sufficiently large and diverse group to address the important issues facing the company while being small enough to encourage
personal involvement and discussion.
DIRECTOR NOMINATION PROCESS
The Nominating and Governance
Committee considers and recommends the annual slate of director nominees. In determining the slate of nominees and whether to
seek one or more new candidates, the committee reviews the size of the board, the tenure of our directors, their skills, backgrounds,
life experiences, and contributions, as well as the diversity of the board. The committee also assesses the knowledge, skills,
and experiences of the board as a whole in relation to the strategic vision and business circumstances of the company to determine
if there is particular knowledge, skills or expertise that it should seek to add to the board. Each member of the committee participates
in the review and discussion of director candidates. Where appropriate, directors who are not on the committee are encouraged
to meet with and evaluate the suitability of potential candidates.
The committee is authorized
to and has engaged a professional search firm to assist it to identify, evaluate and conduct due diligence on potential director
candidates. Mr. Leavitt, who is being proposed for election to the board, was identified as a potential candidate by the search
firm. The committee also considers all shareholder recommendations for director candidates and applies the same standards in considering
candidates submitted by shareholders as it does in evaluating other candidates. Shareholders can recommend candidates by writing
to the Nominating and Governance Committee in care of the Corporate Secretary, whose contact information is on page 13.
Shareholders who wish to
submit nominees for election at an annual or special meeting of shareholders should follow the procedure described on page 75.
2015 Proxy Statement 53
OUR DIRECTORS’ QUALIFICATIONS
AND EXPERIENCE
The experiences of the board’s
slate of director candidates enable our directors to represent shareholder interests by providing sound judgment, critical viewpoints
and guidance on the issues, opportunities and challenges facing American Express in today’s environment, and by evaluating
the company’s performance. Our company is a global services company that provides customers with access to products, insights
and experiences that enrich lives and build business success. We provide innovative payment solutions for individuals and businesses
of all sizes around the world. We have a highly valued brand, we are regulated in many jurisdictions, and we operate in a rapidly
evolving, technology-dependent and highly competitive environment. We are transforming our existing businesses and creating new
products and services for the digital marketplace as we seek to enhance our customers’ digital experiences and develop platforms
for online and mobile commerce.
Our directors have held senior
positions as leaders of various large, complex organizations and in government, demonstrating their ability to develop and execute
significant and complex policy and operational objectives at the highest levels. Many of our directors have been chief executives
or chief operating officers of large, global businesses through which they have developed expertise and experience in core business
skills such as strategy and business development, responding to rapidly evolving business environments, fostering innovation and
business transformation, operations, talent management and leadership development, and compliance, controls and risk management.
Our directors’ skills,
expertise, backgrounds and experience collectively encompass the following areas:
Skill and expertise | |
Relevance to American Express |
Leadership experience and core business skills | |
which are relevant as we pursue our growth and business transformation strategies and our control and compliance objectives |
Digital, social media, mobile and technology experience | |
which are relevant as we evolve our traditional businesses for an increasingly digital world |
Government, legal and public policy experience | |
which are relevant to the oversight of our legal and regulatory compliance, government and regulatory relations, and social and public responsibility |
Brand management and marketing experience | |
which are relevant as we fulfill our vision to be the world’s most respected service brand |
Global business experience | |
which are relevant as we grow our business in international and emerging markets |
Financial and risk management expertise | |
which is relevant to advising on and overseeing our capital structure, financing and capital markets strategies, investments, financial reporting and internal controls and risk management |
Financial, investment and mergers and acquisitions expertise | |
which are relevant to advising on our business development, acquisition and joint venture strategies and to evaluating potential business partners and business plans |
Public company board and committee experience | |
which are relevant to providing guidance and insights relating to company and board governance, board operations and effectiveness, oversight of financial reporting, compliance, controls and risk management, assessment of management performance, and oversight of our corporate citizenship philosophy and programs |
2015 Proxy Statement 54
Our Director Nominees
Our board of directors currently
has 12 members. Each current director other than Mr. Reinemund is standing for reelection. Our board is also nominating Michael
O. Leavitt for election as a director. Each nominee is standing for election to hold office until the next annual meeting of shareholders
and until his or her successor is duly elected and qualified. Our board has appointed Jeffrey Campbell, Laureen Seeger, Carol Schwartz
and Richard Starr as proxies who will vote your shares on your behalf. These individuals intend to vote for the election of each
of the 12 candidates nominated by the board unless you indicate on the proxy or voting instruction form that you would like to
abstain from voting for, or vote against, any or all of the nominees. The telephone and Internet voting procedures will include
instructions on how to vote. Each of the candidates nominated by the board has consented to being named in this proxy statement
and, if elected, serving as a director. However, if any nominee is not able to serve, the board can either nominate a different
person or reduce the size of the board of directors. If the board nominates another individual, the persons named as proxies may
vote for such person.
ITEM 1 RECOMMENDATION: Our board of directors
recommends a vote FOR the election of the following nominees as directors.
We indicate below the principal
occupation of each nominee. We also indicate other information about the backgrounds and experiences of the nominees including
specific qualifications, experience, skills and expertise considered by the Nominating and Governance Committee as relevant to
each of the nominee’s candidacy as a director.
Charlene Barshefsky
|
|
Director since 2001
Age 64
Specific qualifications, experience, skills
and expertise:
• Senior
leadership and government experience
• Government,
legal and public policy expertise
• Global
experience
• Public
company director and committee experience
|
Senior International
Partner, WilmerHale, multinational law firm,
Washington, D.C., since 2001, practicing in areas including international business transactions, government relations, market access,
and regulation of business and investment. Prior to joining WilmerHale, Ambassador Barshefsky was the United States Trade Representative
(USTR) and a member of the President’s Cabinet from 1997 to 2001, and Acting and Deputy USTR from 1993 to 1996. As the USTR,
she served as chief trade negotiator and principal trade policymaker for the United States and, in both roles, negotiated complex
market access, regulatory, and investment agreements with virtually every major country in the world. Ambassador Barshefsky is
a director of The Estée Lauder Companies Inc., Starwood Hotels & Resorts Worldwide, Inc., and Intel Corporation. She
is a trustee of the Howard Hughes Medical Institute and a member of the Council on Foreign Relations.
Ambassador Barshefsky brings
to the board a combination of high-level U.S. government service, experience as a strategic advisor to numerous U.S. and international
companies with respect to their international businesses, experience with foreign governments, and broad legal and public policy
expertise, as well as her public company director experience. Through her government and private experience, Ambassador Barshefsky
also has substantial experience relating to conducting business in China and other emerging markets.
2015 Proxy Statement 55
Ursula M. Burns
|
|
Director since 2004 Age 56
Specific qualifications, experience, skills and expertise:
• Operating and senior management experience, including as CEO of Xerox
• Core business, management and leadership skills
• Global business experience and technology expertise
• Public company director and committee experience
|
Chairman
and Chief Executive Officer, Xerox Corporation, a
global company engaged in business processes and document management, since May 2010; Chief Executive Officer and director since
July 2009; President and director, April 2007-July 2009; and Senior Vice President and President, Business Group Operations, January
2003-April 2007. Ms. Burns is a director of Exxon Mobil Corporation. She is a trustee of the Ford Foundation and of the Massachusetts
Institute of Technology and serves as director of FIRST (For Inspiration and Recognition of Science and Technology), National Academy
Foundation, and the U.S. Olympic Committee. In March 2010, President Barack Obama appointed Ms. Burns Vice Chair of the President’s
Export Council.
Ms. Burns has extensive senior
management, operating, and leadership experience through her business career at Xerox. Ms. Burns brings to the board her core business
and leadership skills, her perspective as a current CEO of a technology-driven global company, her experience in driving innovation,
technology development, and business expansion, as well as her public company director and public policy experience.
Kenneth I. Chenault
|
|
Director since 1997 Age 63
Specific qualifications, experience, skills
and expertise:
• Company CEO’s unique perspective and insights, including in respect of the company’s businesses, relationships, competitive and financial positioning, senior leadership, strategic opportunities and challenges, and innovation and digital transformation
• Operating, business, and senior management experience as chief executive officer of a global business
• Expertise in payments, network, brand management, mobile commerce, and technology and digital innovation
• Core business, management and leadership skills
• Public company director and committee experience
|
Chairman
and Chief Executive Officer, American Express Company, April
2001-present. Mr. Chenault joined American Express in 1981 and was named President of the U.S. division of American Express Travel
Related Services Company, Inc. in 1993,Vice Chairman of American Express Company in 1995, President and Chief Operating Officer
in 1997 and Chief Executive Officer in January 2001. Mr. Chenault serves as a director of International Business Machines Corporation
(IBM) and The Procter & Gamble Company. Mr. Chenault is a member of The World Trade Center Memorial Foundation and a trustee
of the NYU Langone Medical Center.
Mr. Chenault brings the unique
perspective of the company’s Chief Executive Officer, his expertise in the payments, network, and travel businesses, his
relationships in the United States and internationally with the company’s customers, suppliers, and business partners, his
deep knowledge of the company’s industry, competitive developments, and executive talent, and his ability to lead the company
in a rapidly changing digital economy, as well as his public company director experience, to his leadership of the board.
2015 Proxy Statement 56
Peter Chernin
|
|
Director since 2006 Age 63
Specific qualifications, experience, skills
and expertise:
• Operating and senior management experience, including as former President and COO of News Corporation
• Core business, management and leadership skills
• Expertise in online and digital markets, media, social networking and other new technologies
• Public company director and committee experience
|
Founder and
Chairman, Chernin Entertainment, Inc., a film
and television production company, and The Chernin Group, which is involved in strategic opportunities in media, technology and
entertainment, June 2009-present. Mr. Chernin was President, Chief Operating Officer, and a director of News Corporation from October
1996 to June 2009, and was Chairman and Chief Executive Officer of the Fox Group, where he oversaw the global operations of the
company’s film, television, satellite cable and digital media businesses. At News Corporation, Mr. Chernin led the company’s
expansion into the broadband and mobile markets, through the creation of Fox Interactive Media, Hulu, Jamba and other digital properties.
He is a director of Pandora Media, Inc. and Twitter, Inc. Mr. Chernin is a Chairman and Co-Founder of Malaria No More and a director
of the Harvard AIDS Initiative. Mr. Chernin is a former director of News Corporation, DirecTV, Inc. and Gemstar/T.V. Guide International.
Mr. Chernin brings to the
board his extensive senior leadership, financial and management experience, and his experience in building industry-leading businesses,
developing innovative and forward-thinking approaches, and expanding traditional businesses in online and digital markets, as well
as his core business skills and public company director experience.
Anne Lauvergeon
|
|
Director since 2013 Age 55
Specific qualifications, experience, skills
and expertise:
• Operating and senior management experience, including as former CEO of AREVA Group
• Core business, management and leadership skills
• Global perspective and international business experience
• Public company director and committee experience
|
Chairman
and Chief Executive Officer, A.L.P. SAS, a French
advisory company. Chairman of Sigfox, a French start-up that operates a cellular network dedicated exclusively to small messages,
since April 2014. Former Partner and Managing Director, Efficiency Capital, an advisory firm dedicated to funding technology and
natural resources, from 2012 to April 2014; Former Chief Executive Officer of AREVA Group, the leading French energy company, from
July 2001 to June 2011; former Chairman and Chief Executive Officer of AREVA NC (formerly Cogema) from June 1999 to June 2011.
Ms. Lauvergeon started her professional career in 1983 in the steel industry and in 1990 she was named Advisor for Economic International
Affairs at the French Presidency and Deputy Chief of Staff in 1991. In 1995 she became a Partner of Lazard Frères &
Cie, subsequently joining Alcatel Telecom as Senior Executive Vice President in 1997. Ms. Lauvergeon is a director of Rio Tinto
Plc, Total S.A. and Airbus Group. She is a former director of Vodafone Group Plc, GDF Suez S.A., Suez S.A., and Safran S.A. Ms.
Lauvergeon has been a member of the United Nations Global Compact Board, has been an executive committee member of the World Business
Council for Sustainable Development, and serves in various not for profit organizations in France.
Ms. Lauvergeon has a diverse
and internationally focused background, including in government and business. She has extensive senior management, operating and
leadership experience through her business career including as CEO of AREVA. Ms. Lauvergeon brings to the board her core business,
strategy development and leadership skills, her global and European perspective, her large international network, her experience
leading in a highly regulated, transforming industry, as well as her public company director experience.
2015 Proxy Statement 57
Michael O. Leavitt
|
|
Director Nominee Age 64
Specific qualifications, experience, skills
and expertise:
• Extensive senior executive and government experience, including as former Governor of Utah
• Core business, management and leadership skills
• Government and public policy expertise
• Public company director and committee experience
|
Founder and
Chairman, Leavitt Partners, LLC, a health care
consulting firm, since 2009. Chairman of Leavitt Equity Partners, a private equity fund, formed in 2014. Prior to that Governor
Leavitt was the United States Secretary of Health and Human Services from 2005 to 2009; Administrator of the Environmental Protection
Agency from 2003 to 2005; and Governor of Utah from 1993 to 2003. Governor Leavitt is a director of HealthEquity, Inc. and Medtronic,
Inc.
Governor Leavitt brings to
the board his extensive management and leadership experience, including serving as the Governor of Utah, a large state with a diverse
body of constituents, appointments to positions with the U.S. government, where he oversaw and advised on issues of national concern,
and overseeing Leavitt Partners’ work advising clients and making investments in the health care sector. Mr. Leavitt
has decades of leadership experience with valuable knowledge of the governmental regulatory environment and corporate governance.
Theodore J. Leonsis
|
|
Director since 2010 Age 59
Specific qualifications, experience, skills
and expertise:
• CEO, operating and senior management experience currently as CEO of Monumental Sports & Entertainment and formerly as a senior AOL executive
• Internet pioneer and entrepreneur
• Expertise in identifying business opportunities and driving new strategies based on changing technologies, social media, digital marketing and the Internet
• Brand management and marketing skills
|
Chairman
and Chief Executive Officer, Monumental Sports & Entertainment, LLC, a
sports and entertainment company that owns the NBA’s Washington Wizards, NHL’s Washington Capitals, WNBA’s Washington
Mystics, and the Verizon Center in Washington, D.C., since 1999. Mr. Leonsis is also a Vice Chairman Emeritus of AOL LLC, a leading
global ad-supported Web company, since December 2006. Mr. Leonsis held a number of executive positions with AOL from September
1994 to December 2006, most recently as Vice Chairman and President, AOL Audience Business. Mr. Leonsis is Chairman of the Board
of Groupon, Inc. He is also a filmmaker, an author, and a director of several private Internet and technologies companies and educational
institutions. Mr. Leonsis was Chairman of Revolution Money, Inc., which American Express acquired in January 2010. In November
2011, Mr. Leonsis co-founded Revolution Growth II, LP, a “speed-up capital” fund to invest in technology-enabled businesses.
Mr. Leonsis is an acknowledged
innovator and Internet entrepreneur. He brings to the board his experience in digital businesses, his innovative approaches, and
his experiences identifying business opportunities and driving new strategies based on changing technologies, social media and
the Internet.
2015 Proxy Statement 58
Richard C. Levin
|
|
Director since 2007 Age 67
Specific qualifications, experience, skills
and expertise:
• Recognized leader of American higher education
• Distinguished economist, with expertise in economic theory, statistical analysis, modeling and analyzing economic trends
• Leader in U.S.-China cooperation through his development of extensive relationships between Yale University and China
|
Chief Executive
Officer, Coursera, an educational platform that
partners with top universities and organizations worldwide to offer courses online, since April 2014. President Emeritus, Yale
University, a private, independent university. President of Yale from July 1993-August 2013. Frederick William Beinecke Professor
of Economics. Former Chair of Yale’s Economics Department and Dean of Yale’s Graduate School of Arts and Science. Mr.
Levin is a trustee of the William and Flora Hewlett Foundation, one of the largest philanthropic organizations in the United States.
He is a fellow of the American Academy of Arts and Sciences and the American Philosophical Society. He is a director of C-3, an
energy resource management company, and a former director of Satmetrix Systems, Inc. and Lucent Technologies. Mr. Levin has served
on a number of Presidential Commissions and was appointed by President Barack Obama to serve on the President’s Council of
Advisors for Science and Technology.
Mr. Levin brings to the board
his experience and vision in leading Yale University, one of the world’s most prestigious institutions of higher education,
his involvement in a wide range of international initiatives at Yale University, his expertise in economics, statistics, and analysis,
his experiences as CEO of Coursera, and his public company director and public policy experience.
Samuel J. Palmisano
|
|
Director since 2013 Age 63
Specific qualifications, experience, skills
and expertise:
• Operating and senior management experience, including as former CEO of IBM
• Core business, management and leadership skills
• Experience driving transformation of a global, complex technologies business
• Public company director and committee experience
|
Former Chairman,
President and Chief Executive Officer, IBM, a
company that provides business and information technology products and services. Mr. Palmisano joined IBM in 1973. He was elected
Senior Vice President and Group Executive of the Personal Systems Group in 1997, Senior Vice President and Group Executive of IBM
Global Services in 1998, Senior Vice President and Group Executive of Enterprise Systems in 1999, President and Chief Operating
Officer in 2000, Chief Executive Officer in 2002 and Chairman of the Board in 2003. Mr. Palmisano was President and Chief Executive
Officer through 2011, Chairman through September 2012, and senior adviser to IBM through December 2012. Mr. Palmisano is a director
of Exxon Mobil Corporation and Chairman of the Center For Global Enterprises.
Mr. Palmisano has extensive
senior management, operating and leadership experience through his business career at IBM. Mr. Palmisano brings to the board his
experience and skills in driving change and innovation, business transformation, developing leaders, strategy development and other
core business and leadership skills, as well as his public company director experience.
2015 Proxy Statement 59
Daniel L. Vasella
|
|
Director since 2012 Age 61
Specific qualifications, experience, skills
and expertise:
• Operating and senior management experience, including as former CEO of Novartis
• Core business, management and leadership skills
• Global perspective and experience in developing and executing business strategy in rapidly changing markets
• Public company director and committee experience
|
Honorary
Chairman and Former Chairman and Chief Executive Officer, Novartis AG, a
company that engages in the research, development, manufacture and marketing of health care products worldwide. Dr. Vasella served
as Chairman of Novartis from 1999 to February 2013 and as Chief Executive Officer from 1996 to January 2010. From 1992 to 1996,
Dr. Vasella held the positions of Chief Executive Officer, Chief Operating Officer, Senior Vice President and Head of Worldwide
Development and Head of Corporate Marketing at Sandoz Pharma Ltd. Dr. Vasella is a director of PepsiCo, Inc., a member of the International
Business Leaders Advisory Council for the Mayor of Shanghai, a foreign honorary member of the Academy of Arts and Sciences, a trustee
of the Carnegie Endowment for International Peace and a member of several industry associations and educational institutions.
Dr. Vasella has extensive
senior management, operating and leadership experience through his business career at Novartis. Dr. Vasella brings to the board
his core business and leadership skills, his global marketing experience, and his experience leading a highly regulated, global
business in rapidly changing markets, as well as his public company director experience.
Robert D. Walter
|
|
Director since 2002 Age 69
Specific qualifications, experience, skills and expertise:
• Operating and management experience, including as former CEO of Cardinal Health
• Core business, management and leadership skills
• Expertise in finance, business development and business integrations
• Public company director and committee experience
|
Founder and
Former Chairman and Chief Executive Officer, Cardinal Health, Inc., a
company that provides products and services supporting the health care industry. Mr. Walter retired from Cardinal Health in June
2008. Prior to his retirement, he served as Executive Director, November 2007-June 2008; Executive Chairman of the Board, April
2006-November 2007; and Chairman and Chief Executive Officer, 1979-April 2006. Mr. Walter is a director of Nordstrom, Inc. and
YUM! Brands, Inc. Mr. Walter is a former director of Cardinal Health and Battelle Memorial Institute.
Mr. Walter brings to the
board his business acumen and financial, investment, core business and leadership skills developed as the founder and chief executive
officer of a global Fortune 100 company, a successful entrepreneur and investor, as well as his public company director experience.
2015 Proxy Statement 60
Ronald A. Williams
|
|
Director since 2007 Age 65
Specific qualifications, experience, skills and expertise:
• Operating and senior management experience, including as former CEO of Aetna
• Core business, management and leadership skills
• Financial and risk management expertise and experience in creating innovation through information technology
• Public company director and committee experience
|
Former Chairman
and Chief Executive Officer, Aetna Inc., a leading
diversified health care benefits company; Chairman, from October 2006 to April 2011; Chief Executive Officer, February 2006 to
November 2010; President, May 2002 to July 2007. Mr. Williams is a director of The Boeing Company and Johnson & Johnson, and
is lead director of Envision Healthcare. He serves as an operating advisor to Clayton, Dubilier & Rice, LLC. He is a member
of The Business Council and a trustee of the Massachusetts Institute of Technology where he is also a member of the Dean’s
Advisory Council and Alfred P. Sloan Management Society. He is also a trustee of the Committee for Economic Development. He is
a former director of Lucent Technologies. Prior to joining Aetna, Mr. Williams co-founded several businesses and served in senior
management positions at a number of other companies.
Mr. Williams brings to the
board his extensive management, operations, and business experience leading in a rapidly changing and highly regulated industry,
his focus on innovation through information technology, his leadership, financial, risk management and core business skills, and
his public company director experience.
2015 Proxy Statement 61
ITEM 2— |
RATIFICATION OF APPOINTMENT OF INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM |
The Audit and Compliance Committee has
sole authority to appoint and replace the company’s independent registered public accounting firm, which shall report directly
to the committee, and is directly responsible for the compensation and oversight of the work of the independent registered public
accounting firm.
Each year the Audit and Compliance Committee
reviews our accounting firm’s qualifications, performance and independence in accordance with regulatory requirements and
guidelines. This includes a review of the firm’s internal quality control procedures, results of its most recent quality
control reviews and steps taken to enhance the quality of its audits, and issues raised by recent governmental investigations.
The committee reviews auditor independence matters, the firm’s audit strategy for the company, terms of the audit engagement,
and the firm’s capabilities and communications to the committee. In February 2015, the committee reappointed PricewaterhouseCoopers
LLP (PwC) as our independent registered public accounting firm for the year beginning January 1, 2015. Further, in conjunction
with the mandated rotation of the audit firm’s lead engagement partner, the Chairman of the Audit and Compliance Committee
was directly involved in the selection of PwC’s lead engagement partner.
PwC
has been our independent auditor since 2005. Our Audit and Compliance Committee charter requires a detailed review at least
every ten years of the company’s independent auditor, including a comparison of resources available in other audit firms.
The committee conducted such a review in 2014, which included an assessment of the firm’s professional expertise, audit
engagement team performance, independence, communications and fees. |
We are asking shareholders to ratify
the appointment of PwC for 2015. If shareholders fail to ratify the appointment, the Audit and Compliance Committee will consider
it a direction to consider other accounting firms for the subsequent year. One or more representatives of PwC will be present
at the meeting, will be given the opportunity to make a statement if he or she desires to do so and will be available to respond
to appropriate questions. The members of the Audit and Compliance Committee believe that the continued retention of PwC to serve
as the company’s independent auditor for 2015 is in the best interest of the company and its shareholders.
PricewaterhouseCoopers LLP Fees and
Services
FEES FOR FISCAL 2014 AND FISCAL 2013
The following table sets forth the aggregate
fees billed or to be billed by PwC for each of the last two fiscal years (in thousands):
Types of Fees | |
Fiscal 2014 | | |
Fiscal 2013 | |
Audit Fees | |
| $21,256 | | |
| $20,695 | |
Audit-Related Fees(1) | |
| 4,553 | | |
| 3,933 | |
Tax Fees | |
| 137 | | |
| 119 | |
Other Fees | |
| 65 | | |
| 74 | |
TOTAL | |
| $26,011 | | |
| $24,821 | |
(1)
|
PwC performs the
audit of the company’s pension plans for Switzerland and Hong Kong where the fees are paid by the respective plan and
not by the company. These fees are not included in Audit-Related Fees since they were not paid by the company. The total fees
in 2014 for these two audits were $35K. |
In the table
above, in accordance with the SEC’s rules, “Audit Fees” consist of fees for professional services rendered
for the integrated audit of our financial statements, review of the interim consolidated financial statements included in
quarterly reports, and services provided in connection with statutory and regulatory filings or engagements and other
attest services. “Audit-Related Fees” consist of fees for assurance and related services that were reasonably
related to the performance of the audit or review of our financial statements. The services included employee benefit plan
audits, internal control reviews, attest services not required by statute or regulation, and consultations on financial
accounting and reporting matters not classified as audit. “Tax Fees” consist of fees for professional services
rendered for tax compliance and tax consulting services. “Other Fees” are fees for any services not included in
the first three categories.
2015 Proxy Statement 62
POLICY ON PRE-APPROVAL OF SERVICES PROVIDED
BY PRICEWATERHOUSECOOPERS LLP
The terms of our engagement of PwC
are subject to the pre-approval of the Audit and Compliance Committee. All audit and permitted non-audit services require
pre-approval by the committee in accordance with pre-approval procedures established by the committee. In accordance with SEC
rules, the committee’s pre-approval procedures have two different approaches to pre-approving audit and permitted
non-audit services performed by PwC. Proposed services may be pre-approved pursuant to procedures established by the
committee that are detailed as to a particular class of service without consideration by the committee of the specific
case-by-case services to be performed if the relevant services are predictable and recurring. We refer to this pre-approval
method as “general pre-approval.” If a class of service has not received general pre-approval, the service will
require specific pre-approval by the committee before such service is provided by PwC. All services provided by our
independent registered public accounting firm have been pre-approved in accordance with these procedures. The procedures
require all proposed engagements of PwC for services of any kind to be directed to the company’s comptroller and then
submitted for approval to the committee (or, should a time-sensitive need arise, to its chairman) prior to the beginning of
any services.
OTHER TRANSACTIONS WITH PRICEWATERHOUSECOOPERS
LLP
We have a number of business relationships
with individual member firms of the worldwide PricewaterhouseCoopers organization. Our subsidiaries provide card services to some
of these firms and these firms pay fees to our subsidiaries. These services are in the normal course of business, and we provide
them pursuant to arrangements that we offer to other similar clients.
ITEM 2 RECOMMENDATION: Our board
of directors recommends that you vote FOR the following resolution:
RESOLVED that the appointment by
the Audit and Compliance Committee of the company’s board of directors of PricewaterhouseCoopers LLP as independent registered
public accounting firm for the company, to audit the accounts of the company and its subsidiaries for 2015, is ratified and approved.
2015 Proxy Statement 63
ITEM 3— |
ADVISORY RESOLUTION TO APPROVE EXECUTIVE
COMPENSATION (SAY ON PAY) |
As part of our commitment to high
standards of governance and pursuant to regulations under Section 14A of the Securities Exchange Act of 1934, we seek your
advisory vote on our executive compensation as described in the Compensation Discussion and Analysis and the tabular
(and accompanying narrative) disclosure provided on pages 23-39. This proposal, known as a “say on pay” vote,
gives you the opportunity to express your view on our fiscal 2014 executive compensation programs and policies for the NEOs
in this proxy statement. While the vote does not address any specific item of compensation and is not binding on the board,
the Compensation and Benefits Committee will review the voting results and consider the outcome of the vote when making
future executive compensation decisions.
We recognize the interest our shareholders have in the company’s executive compensation program. As such, we currently hold an annual “say on pay” vote. While the vote is advisory, the Compensation and Benefits Committee will review the results and consider the outcome in making future decisions about our executive compensation programs. Our next such advisory vote will occur at the 2016 annual meeting. |
Our board believes that the compensation
of our executive officers is aligned with performance, is sensitive to our share price, appropriately motivates and retains our
executives, and is a competitive advantage in attracting and retaining the high caliber of executive talent necessary to drive
our business forward and build sustainable value for our shareholders. We believe the program delivers pay which is strongly linked
to company performance over time.
ITEM 3 RECOMMENDATION: Our board
of directors recommends that you vote FOR the following advisory resolution:
RESOLVED that the compensation paid
to the company’s Named Executive Officers, as disclosed pursuant to Item 402 of Regulation S-K, including the Compensation
Discussion and Analysis, compensation tables and narrative discussion, is approved.
2015 Proxy Statement 64
ITEM 4— |
SHAREHOLDER PROPOSAL RELATING TO ANNUAL
DISCLOSURE OF EEO-1 DATA |
The New York City Comptroller, the custodian
and/or trustee of the New York City Employees’ Retirement System, the New York City Fire Department Pension Fund, the New
York City Teachers’ Retirement System, the New York City Police Pension Fund, and the New York City Board of Education Retirement
System (the “Systems”), has advised that the Systems are the beneficial owner of 4,074,803 common shares and that
they intend to introduce the resolution below. This resolution is co-sponsored by the State Universities Retirement System of
Illinois which has advised that it is the beneficial owner of 180,576 common shares. Addresses for each of the proponents will be
supplied promptly upon oral or written request to our Secretary.
RESOLVED: Shareholders request that
the Board of Directors adopt and enforce a policy requiring American Express Company (the “Company”) to disclose annually
its EEO-1 data—a comprehensive breakdown of its workforce by race and gender according to 10 employment categories—in
its corporate responsibility report, beginning in 2015.
Supporting Statement
The financial services industry, of
which the Company is a part, is characterized by the persistent and pervasive underrepresentation of minorities and women, particularly
in senior positions.
Overall, the number of minorities and
women holding management-level jobs in the financial sector did not substantially change over the 18 years from 1993-2011, according
to May 2010 and April 2013 reports by the U.S. Government Accountability Office (GAO). (See http://www.gao.gov/assets/660/653814.pdf;
http://www.gao.gov/new.items/d10736t.pdf). In 2011, minority men and women together held only 10 percent of senior positions at
financial firms, with African-Americans holding 2.7 percent, Hispanics 3.3 percent, and Asians 4.1 percent. Additionally, in 2008,
the most recent such data provided by the GAO, white men held 64 percent of senior jobs, more than twice as many as white women,
who held only 27 percent.
Citing data from the 2010 GAO report,
SEC Commissioner Luis A. Aguilar observed in a 2011 speech that “the lack of diversity in the securities industry is particularly
acute. …Clearly, the industry must do substantially better.”
Commissioner
Aguilar’s concerns are borne out by numerous studies suggesting that companies with comprehensive diversity
policies and programs, and strong leadership commitment to implementation, enhance their long-term value. These companies
reduce potential legal and reputational risks associated with workplace discrimination and build reputations as fair
employers. Equally important, the varied perspectives of a diverse workforce can provide a competitive advantage in terms of
creativity and innovation, while eliminating the limitations of ”groupthink.” Diversity can also spur increased
productivity and lift employee morale.
Many financial firms say they are
making serious efforts to recruit, retain and promote minorities and women. But without quantitative disclosure, shareholders
have no way to evaluate and benchmark the effectiveness of their efforts.
Federal law requires companies with
100 or more employees to annually submit an EEO-1 Report to the Equal Employment Opportunity Commission. The report profiles a
company’s workforce by race and gender according to 10 job categories, including senior management.
Disclosure of the Company’s EEO-1
data would allow shareholders to evaluate the effectiveness of its efforts to increase the diversity of its workforce throughout
its ranks, and at minimal cost. In addition, we believe full disclosure of the Company’s EEO-1 data would drive management
and the Board to pursue continuous improvements in the Company’s diversity programs, fully integrate diversity into its
culture and practices, and strengthen its reputation and accountability to shareholders.
Most of the financial firms the Company
identifies as its peers –including Bank of New York Mellon, Citigroup, Goldman Sachs, JPMorgan, Morgan Stanley and US Bancorp–annually
disclose workforce profiles based on EEO-1 data, including for senior management.
We urge shareholders to vote FOR the
proposal.
Board of Directors Statement in Opposition
The board recommends a vote AGAINST
this proposal because:
• |
We have a strong
commitment to diversity and a long track record of success and results. |
• |
Disclosure of
the EEO-1 data would not provide an appropriate platform to have a discussion about diversity and would not enhance our commitment
to diversity. |
Our Long-Standing Commitment to Diversity
American Express is widely recognized
as a leader in diversity and inclusion. Our commitment, which began nearly three decades ago, is to create an employee base that
reflects the diverse customers and communities we serve and enables innovation that drives business growth. Equally critical to
our success is building an inclusive culture where all employees have a voice and are enabled to reach their full potential. This
continued commitment to diversity is apparent in our metrics:
• |
Women represent
nearly 60 percent of our U.S. workforce and 41 percent of U.S. employees at the Vice-President-and-above level |
|
|
• |
Minorities comprise 38 percent
of our U.S. workforce |
|
|
• |
In 2014, women made up 50
percent of U.S. Senior Vice President and above hires |
|
|
• |
Women comprise 25 percent
of our Board of Directors |
|
|
• |
25 percent of our Board of
Directors is ethnically diverse |
2015 Proxy Statement 65
Our Diversity and Inclusion Initiatives
Our diversity and inclusion strategy
encompasses several key initiatives:
• |
Employee Networks:
These employee-formed groups bring together people with shared backgrounds and interests to engage with and learn from each
other. With 16 networks and close to 100 chapters globally, 44 percent of U.S. employees participate in a network. Our Employee
Networks, including BEN (Black Employee Network), WIN (Women’s Interest Network) and HOLA (Hispanic Origin & Latin
American), foster a sense of community among our diverse employee base and help educate the broader employee population about
diversity and inclusion. |
|
|
• |
Women’s Leadership:
American Express continues to focus advancing women into leadership positions through a series of initiatives, such as Pathways
to Sponsorship (PTS). Launched in 2012, PTS is a development program aimed at building a strong pipeline of women leaders.
The program provides targeted skill building, coaching and exposure. Since our initial PTS program, 30 percent of global participants
have been promoted and 60 percent have taken strategic lateral moves. |
|
|
• |
Executive BEN Forum: This
year, American Express will bring together Vice President-and-above black employees for our third Executive BEN Global Forum,
a multi-day career development and community-building experience. From industry-leading keynote speakers to impactful working
sessions designed to build leadership awareness and skills, the Forum inspires, informs, and supports our black senior leaders. |
|
|
• |
Senior Leadership Accountability:
American Express senior executives must support and drive AXP’s diversity efforts and their performance on this dimension
is measured annually and is tied to compensation. |
Our Recognition as a Leader in Diversity
and Inclusion
We have been consistently recognized
as a leader in diversity through rankings on surveys such as: Working Mother’s 100 Best Companies, Fortune’s
Great Place to Work and the Human Rights Campaign’s Corporate Equality Index. Our diversity initiatives are often cited
as best in class by leading publications, and we have shared information on our programs publicly.
Recent recognitions include:
• |
Black Enterprise:
40 Best Companies for Diversity |
|
|
• |
Fortune: Great Place to Work,
World’s Best Multinational Workplaces |
|
|
• |
Fortune: World’s Most
Admired Companies; ranked #1 in the category of “Consumer Credit Card and Related Services” |
|
|
• |
Fortune: 100 Best Companies
to Work For (Great Place to Work) |
|
|
• |
Hispanic Network Magazine:
Top Employers for Hispanics |
|
|
• |
Human Rights Campaign: Corporate
Equality Index: 100 out of 100 since 2004 |
|
|
• |
NAFE: Top Companies for Executive
Women |
|
|
• |
Working Mother Multicultural:
Top Companies for Multicultural Women |
|
|
• |
Working Mother: 100 Best
Companies |
EEO-1 Data Not Reflective of American
Express’ Diversity
Form EEO-1 requires us to categorize
our workforce by gender and race according to certain EEOC-mandated job categories that do not account for any company or industry-specific
factors. It is designed to yield generalized data across all categories of private employers, rather than information specific
to any one company. For this reason, the EEO-1 data is neither informative nor a reliable measure of our commitment to equal opportunity
employment. We do not believe that EEO-1 data is reflective of American Express’ diversity or that disclosing this data
will enhance our commitment to an inclusive culture or meaningfully further our goal of workplace diversity.
ITEM 4 RECOMMENDATION: Our board
of directors recommends that you vote AGAINST this proposal.
2015 Proxy Statement 66
ITEM 5— |
SHAREHOLDER PROPOSAL
RELATING TO REPORT ON PRIVACY, DATA SECURITY AND GOVERNMENT REQUESTS |
Arjuna Capital/Baldwin Brothers Inc.,
204 Spring Street, Marion, MA 02738, has advised us that it intends to introduce the following resolution on behalf of its client,
Steven Matthew Schewel, owner of 60 common shares:
Report on Privacy, Data Security and
Government Requests for Consumer Information
Whereas,
Customer trust is critical for American
Express, which routinely gathers massive amounts of personal financial data concerning and affecting the lives of millions of
people; breaches of privacy and data security are a growing threat which can result from company negligence, external attacks,
and government surveillance.
The Wall Street Journal reported
that the U.S. National Security Agency (NSA) has obtained customer data from credit card issuers. Businessweek reported
that an NSA program, “Follow the Money,” tracks records of international payments and credit-card transactions
and their database contained 180 million records in 2011- 84 percent were credit-card transactions. TIME reported that
credit card networks “are most likely giving the government ‘metadata.’ That is, the credit card issuers
could provide the NSA details such as an account or card number, where or when a purchase was made, and for how
much,”
Controversy over U.S. government surveillance
has spurred massive global press coverage, hearings in the U.S. and Europe, and widespread calls for reform.
Responding to growing public
concern, Internet companies including Google, Apple, Microsoft, LinkedIn, Twitter, and Facebook and telecommunications
companies Verizon and AT&T now regularly publish “Transparency Reports,” detailing government requests for
confidential customer data. While privacy is critical to the success of AXP’s business, AXP has not disclosed
information regarding the extent and nature of requests for customer data made by government agencies.
Unauthorized collection, disclosure,
or misuse of personal information can cause great harm to individuals and society—including discrimination, identity theft,
financial loss, loss of business or employment opportunities, humiliation, reputational damage, questionable government surveillance,
or physical harm.
We believe AXP’s Board has a fiduciary
and social duty to protect company assets, including the personal information of customers. Risks include privacy breaches, consumer
profiling controversies, litigation, and a loss in brand value.
Privacy is fundamental to democracy
and free expression. While AXP must comply with legal obligations, failure to persuade customers of a genuine long-term commitment
to privacy could present AXP with serious financial, legal and reputational risks.
Resolved, shareholders request
that the Company publish an annual report explaining how the Board is overseeing privacy and data security risks, providing metrics
and discussion, subject to existing laws and regulation, regarding requests for customer information by U.S. and foreign governments,
at reasonable cost and omitting proprietary information.
Supporting Statement: In preparing
these reports, the Company may omit information on routine requests under individualized warrants. The reports should consider
existing Transparency (or Law Enforcement Request) Reports published by major internet companies, and where applicable, include
(1) how often AXP has shared information with U.S. or foreign government entities; (2) type of customer information shared; (3)
number of customers affected; (4) type of government requests; and (5) discussion of Company efforts to protect customer privacy
and data.
Board of Directors Statement in Opposition
The board recommends a vote AGAINST
this proposal because:
• |
We have a strong
and long-standing commitment to privacy and data security. |
|
|
• |
As a regulated financial
institution, we are subject to and comply with extensive privacy and data protection laws and regulations and are subject
to regulatory examination in and outside the United States. |
|
|
• |
We have a rigorous framework
and devote significant resources to our privacy and cybersecurity programs. |
Our History of a Commitment to Privacy
and Data Security
American Express recognizes the
importance of maintaining consumer trust and has a strong, long-standing commitment to privacy and data security. In the
1970s, we participated in Privacy Commission hearings in Washington, D.C. and adopted a Privacy Code of Conduct, applicable
to customers and employees alike. We were one of the first companies in the United States to give customers the option of not
receiving direct mail. In the 1980s, we were one of the first U.S. companies to endorse the Organization for Economic
Cooperation and Development’s Guidelines Governing the Protection of Privacy and Transborder Flows of Personal
Data. In the 1990s, we introduced Customer Privacy Principles and posted our Internet Privacy Statement. Most recently,
we were one of the first financial services firms to begin using Binding Corporate Rules, a set of privacy principles that
comply with European Union (EU) data protection legislation and approved by the U.K. Information Commissioner’s Office.
The company’s data protection and privacy principles are available online at: https://www.americanexpress.com/
us/content/customer-privacy-principles.html.
2015 Proxy Statement 67
American Express has been ranked #1
in the Financial Services category in the Ponemon Institute’s annual “Most Trusted Companies for Privacy” study,
and in the top two overall for all industries and companies, since the study started in 2006.
As a regulated financial institution,
we are subject to and comply with extensive privacy and data protection laws and regulations in the United States and elsewhere.
Banking and other data protection laws restrict the disclosure of non-public personal information and require administrative,
technical and physical safeguards to ensure the security of customer information. Our privacy and data security practices are
regularly audited by bank examiners and other regulatory authorities.
Our Framework and Processes for Managing
These Risks
American Express has a dedicated
Chief Privacy Officer and teams of privacy professionals throughout the business. The company’s Privacy Risk Management
Policy and Global Privacy Program provide the framework for the collection, processing and sharing of personal information.
The company has a dedicated Privacy Risk Management subcommittee of its Operational Risk Management Committee, as well as
established governance and escalation paths so that privacy issues can be raised to senior management and/or board levels.
This rigorous framework helps to ensure an ongoing focus on privacy matters and that customer concerns are reflected in the
company’s privacy-related decisions and activity. American Express also has a Chief Privacy Counsel, Chief Technology
Counsel and a team of in-house counsel to advise regarding issues related to privacy and data security issues.
We also devote significant resources
to cybersecurity and risk management processes to adapt to the changing cybersecurity landscape and respond to emerging threats
in a timely and effective manner. This includes taking steps to reduce the potential for identity theft, fraud and service disruptions.
We restrict access to customer and employee data by our employees, partners and service providers. The company maintains a dedicated
Chief Information Security Officer, an Information Security Risk Management subcommittee of its Operational Risk Management Committee
and staff focused on, among other matters, cyber intelligence, information security assurance, information security incident management,
identity and access management, and information security strategy, architecture, policies and analytics.
Our board is updated on privacy matters
and receives regular reports on governance systems to address cybersecurity risk, strategies to assess, manage and monitor cybersecuity
risks, and on implementation of cybersecurity strategies.
In view of the company’s strong
commitment to privacy and data protection, the board does not believe that adopting this proposal would add any additional value.
ITEM 5 RECOMMENDATION: Our board
of directors recommends that you vote AGAINST this proposal.
2015 Proxy Statement 68
ITEM 6— |
SHAREHOLDER PROPOSAL RELATING TO ACTION
BY WRITTEN CONSENT |
Myra K. Young, 9295 Yorkship Court,
Elk Grove, CA 95758, has advised that she is the owner of 50 common shares and that she intends to introduce the following resolution:
Proposal 6—Right to Act by
Written Consent
Resolved, Shareholders request
that our board of directors undertake such steps as may be necessary to permit written consent by shareholders entitled to
cast the minimum number of votes that would be necessary to authorize the action at a meeting at which all shareholders
entitled to vote thereon were present and voting. This written consent is to be consistent with applicable law and consistent
with giving shareholders the fullest power to act by written consent consistent with applicable law. This includes
shareholder ability to initiate any topic for written consent consistent with applicable law.
A shareholder right to act by written
consent and to call a special meeting are 2 complimentary ways to bring an important matter to the attention of both management
and shareholders outside the annual meeting cycle. A shareholder right to act by written consent is one method to equalize our
limited provisions for shareholders to call a special meeting. For instance, it takes 25% of American Express shares outstanding,
net long, to call a special meeting. New York law would allow 10% of shares outstanding to call a special meeting without mandating
a net long requirement.
With a net long requirement a significant
percentage of American Express shares outstanding could be disenfranchised from having any voice whatsoever on calling a special
meeting.
Wet Seal (WTSLA) shareholders successfully
used written consent to replace certain underperforming directors in 2012. This proposal topic also won majority shareholder support
at 13 major companies in a single year. This includes 67% support at both Allstate and Sprint. Hundreds of major companies enable
shareholders to act by written consent.
Please vote to protect shareholder value.
Right to Act by Written Consent—Proposal
6
Board of Directors Statement in Opposition
The board recommends a vote AGAINST
this proposal because:
• |
Our shareholders
may effect change by calling a special meeting to raise matters for the review and approval of all shareholders. |
• |
Permitting action
at a meeting (whether the annual meeting or a special meeting) is a fairer process than the written consent process as it
provides all shareholders the opportunity to participate and vote. |
The board believes that implementation
of this proposal is unnecessary given the ability of shareholders to call special meetings. The company’s by-laws currently
provide that shareholders holding 25 percent or more of the company’s outstanding common shares may call a special meeting.
Thus, shareholders may propose any proper matter for a vote either through a special meeting or at our annual meeting. Implementation
of this proposal, however, could permit fundamental corporate changes to occur outside of a meeting and without notice to other
shareholders or time for thoughtful consideration.
The board believes that permitting action
at a meeting (whether the annual meeting or a special meeting) is a fairer process as it provides all shareholders the opportunity
to participate and vote. Meetings are held at a time, date and venue announced publicly in advance, and all shareholders receive
prior notice of the meeting and are invited to attend the meeting and make their views known.
To the contrary, the shareholder proposal
could allow shareholders owning slightly over 50 percent of the outstanding shares to act on a significant matter potentially
without prior notice of the meeting to all shareholders and without affording all shareholders the opportunity to present their
views. This would disenfranchise shareholders who are not given the chance to participate.
In summary, the board believes the proposal
is not in the best interests of stockholders or the company and is unnecessary, given the ability of shareholders to call special
meetings.
ITEM 6 RECOMMENDATION: Our board
of directors recommends that you vote AGAINST this proposal.
2015 Proxy Statement 69
ITEM 7— |
SHAREHOLDER PROPOSAL RELATING TO LOBBYING
DISCLOSURE |
Walden Asset Management and Trillium
Asset Management have each advised that it is the owner of more than $2,000 in common shares and that they intend to introduce
the resolution below. This resolution is co-sponsored by the Benedictine Sisters of Virginia who has advised that it is the beneficial
owner of 1000 common shares and the Benedictine Sisters of Baltimore who has advised that it is the beneficial owner of 300 common
shares. Addresses for each of the proponents will be supplied promptly upon oral or written request to our Secretary.
Proposal 7—Lobbying Disclosure
Whereas, we believe it is important
that American Express’s lobbying positions, and processes to influence public policy, are transparent. Public opinion is
skeptical of corporate influence on Congress and public policy and controversial lobbying activity may pose risks to our company’s
reputation.
American Express does disclose political
spending contributions but in contrast, lobbying disclosure is limited. American Express spent over $9 million between 2010 and
2014 on federal lobbying, according to Senate reports. But this figure may not include grassroots lobbying to influence legislation
by mobilizing public support or opposition to a specific bill and does not include lobbying expenditures to influence legislation
in states or indirect spending through third-parties.
Resolved, the shareholders of American
Express (“Amex”) request the Board authorize the preparation of a report, updated annually, and disclosing:
1. |
Company policy
and procedures governing lobbying, both direct and indirect, and grassroots lobbying communications. |
|
|
2. |
Payments by Amex used for
(a) direct or indirect lobbying or (b) grassroots lobbying communications, in each case including the amount of the payment
and the recipient. |
|
|
3. |
Amex’s membership in
and payments to any tax-exempt organization that writes and endorses model legislation. |
|
|
4. |
Description of the decision
making process and oversight by management and the Board for making payments described in sections 2 and 3 above. |
For purposes of this proposal, a “grassroots
lobbying communication” is a communication directed to the general public that (a) refers to specific legislation or regulation,
(b) reflects a view on the legislation or regulation and (c) encourages the recipient of the communication to take action with
respect to the legislation or regulation. “Indirect lobbying” is lobbying engaged in by a trade association or other
organization of which Amex is a member.
Both “direct and indirect lobbying”
and “grassroots lobbying communications” include efforts at the local, state and federal levels.
The report should be presented to the
Audit and/or Governance Committee and posted on Amex’s website.
Supporting Statement
We encourage transparency about the
ways corporate funds influence legislation and regulation, directly and indirectly.
At present Amex does not disclose its
payments to trade associations or the percentage they used for lobbying. Amex does disclose its non-deductible trade association
payments under Section 162(e)(1)(B) of the Internal Revenue Code which applies to political contributions. But our company is
not fully disclosing payments used for lobbying (which are non-deductible under Section 162(e)(1)(A)). This leaves a serious disclosure
gap, as trade associations generally spend far more on lobbying than on political contributions.
For example, the Chamber of Commerce
spent over $1 billion in lobbying since 1998, yet Amex’s level of funding of the Chamber is secret.
The Chamber has also sued the EPA for
its policies and regulations combating climate change. In contrast, Amex has a strong commitment to protecting the environment.
In summary, we urge Amex to provide
comprehensive disclosure of its lobbying activities.
Board of Directors Statement in Opposition
The board recommends a vote AGAINST
this proposal because we already have a comprehensive system to report our political activities:
• |
We believe that
active engagement in the public policy arena is an important part of responsible corporate citizenship and important to support
our short and long-term business goals. In order to promote transparency and accountability, we post our policy on political
activities together with a list of our political contributions on our website. We update this report semi-annually. |
|
|
• |
We do not spend corporate
funds directly on electioneering communications and we publicly disclose any contributions to another organization that are
used in connection with a political campaign. |
|
|
• |
We regularly file reports
with the Secretary of the U.S. Senate and the Clerk of the U.S. House of Representatives detailing our lobbying activities.
We file all lobbying reports required by state statutes. |
Why We Engage
We believe that active engagement in
the public policy arena is not only an important part of responsible corporate citizenship but also a significant means of supporting
our short- and long-term business goals. Our business is subject to legislative and regulatory requirements at the international,
federal and state levels and changes to such rules can have a significant impact on our business, customers, employees and the
communities in which we operate. Accordingly, our government affairs office engages with policymakers and lobbies on policy issues
that
2015 Proxy Statement 70
are important to the company, including,
but not limited to, consumer financial laws and regulations, merchant pricing, privacy/data security, taxation and other issues
identified in our Lobbying Disclosure Act filings. We also work with trade and industry associations in support of our public
policy initiatives.
How We Engage
In addition to our advocacy efforts,
American Express participates in the political process through the American Express Company Political Action Committee (AXP PAC),
which is funded solely by voluntary contributions from employees, and through corporate political contributions in those jurisdictions
where it is permissible to do so. We do not spend corporate funds directly on electioneering communications, and we publicly disclose
any contributions to another organization that are used in connection with a political campaign.
We participate in trade and industry
associations in the United States in support of our public policy initiatives. These associations offer a variety of benefits
including monitoring industry policies and trends, providing industry and market expertise, and advancing our public policy interests.
We evaluate our memberships in trade associations and we provide our view on public policy issues to them. However, our participation
in trade and industry associations does not mean and should not be taken to mean that we agree with every position a trade or
industry association takes on an issue.
Board and Management Oversight of
Our Political Activities
As set forth in the charter of the
Public Responsibility Committee, this board committee oversees the nature and amount of our political contributions and the
operations of the AXP PAC. This committee receives reports from management on the company’s public policy engagement,
key federal and state issues on which it lobbies, and its fundraising activities and political contributions. We maintain
comprehensive compliance procedures to ensure that our activities are conducted in accordance with our policies and with all
relevant laws governing political contributions and lobbying activities. Procedures include periodic reviews conducted by an
outside law firm and internal audit. We regularly file reports with the Secretary of the U.S. Senate and the Clerk of the
U.S. House of Representatives detailing our lobbying activities. We also file all lobbying reports required by state
statutes.
We request information
regarding political contributions from trade associations, entities organized under section 501(c) 4 of the Code, and other tax
exempt organizations of which American Express is a member that engage in non-deductible lobbying and political expenditures.
For any such organization that receives in excess of $50,000 during the calendar year from the company, we request that the organization
identify any portion of American Express’ payments used in connection with participation or intervention in a political
campaign on behalf of (or in opposition to) any ballot initiative or candidate for public office. We include any amounts reported
to us as used for such purposes in our Political Contributions Report which is available on our website at http://about.americanexpress.com/news/pap.aspx.
ITEM 7 RECOMMENDATION: Our board
of directors recommends that you vote AGAINST this proposal.
2015 Proxy Statement 71
ITEM 8— |
SHAREHOLDER PROPOSAL RELATING TO INDEPENDENT
BOARD CHAIRMAN |
Mr. Kenneth Steiner, 14 Stoner Ave.,
2M, Great Neck, NY 11021, has advised that he is the owner of no less than 500 common shares and that he intends to introduce
the following resolution:
Independent Board Chairman—Proposal
8
Resolved: Shareholders request that
the Board of Directors adopt a policy that the Chair of the Board of Directors shall be an independent director who is not a current
or former employee of the company, and whose only nontrivial professional, familial or financial connection to the company or
its CEO is the directorship. This policy should be implemented so as not to violate existing agreements and should allow for departure
under extraordinary circumstances such as the unexpected resignation of the chair.
When our CEO is our board chairman,
this arrangement can hinder our board’s ability to monitor our CEO’s performance. Many companies already have an independent
Chairman. An independent Chairman is the prevailing practice in the United Kingdom and many international markets. This proposal
topic won 50%-plus support at 5 major U.S. companies in 2013 including 73%-support at Netflix.
The Policy of the Council of Institutional
Investors, whose members invest over $3 trillion, states: “The Board should be chaired by an independent director.”
A 2012 report by GMI Ratings, The Costs of a Combined Chair/ CEO (See http://origin.library.constantcontact.com/download/get/file/1102561686275-208/GMIRatings_CEOChairComp_062012. pdf), found companies with an independent chair provide investors with-year
shareholder returns nearly 28% higher than those headed by a combined Chair/CEO. The study also found corporations with a combined
Chair/CEO are 86% more likely to register as “Aggressive” in their Accounting and Governance Risk (AGR®)
model.
Additionally our Lead Director, Robert
Walter, had 12-years long tenure. GMI Ratings, an independent investment research firm, said long-tenured directors can form relationships
that may compromise director independence and therefore hinder the ability to provide effective oversight.
Please vote to protect shareholder value:
Independent Board Chairman—Proposal
8
Board of Directors Statement in Opposition
The board recommends a vote AGAINST
this proposal because:
• |
Board leadership
is provided through the combination of a unified Chairman and CEO, a clearly defined and significant lead independent director
role, active committee chairs, and independent-minded, skilled and committed directors. |
• |
The board believes
this structure provides an appropriate framework for effective board challenge and best serves the interests of our shareholders
at this time. |
Our board believes that any decision
to separate the roles of Chairman and CEO should be based on the specific circumstances of a corporation, the independence and
capabilities of its directors, and the leadership provided by its CEO. Our board does not believe that separate roles for the
Chairman and CEO should be mandated or that such a separation would, by itself, deliver additional benefit for shareholders.
Our board believes that its current
structure and governance allow it to provide effective challenge and oversight of management:
• |
We have a lead independent
director with significant responsibilities that are described in detail on page 11 of this proxy statement. We believe
that Mr. Walter’s deep knowledge of our company, significant public company experience and ability to devote the
time required to serve in this role make him well qualified to serve as our lead independent director. |
|
|
• |
Our non-management directors
meet regularly in executive sessions that are chaired by our lead independent director with no members of management present.
Non-management directors use these executive sessions to discuss matters of concern as well as any matter they deem appropriate,
including evaluation of senior management, CEO and management succession, matters to be included on board agendas, board informational
needs, board priorities and board effectiveness. |
|
|
• |
The Chairs—and all
members—of the Audit and Compliance, Nominating and Governance, Compensation and Benefits, and Risk committees, are
independent directors. These board committee chairs shape the agenda and information presented to their committees. As a result,
oversight of critical issues within the purview of these committees is entrusted to independent directors. |
|
|
• |
All directors have full access
to all members of management and all employees on a confidential basis. |
Our board believes that Mr. Chenault’s
knowledge of the day-to-day operations of the company, perspective on competitive developments, understanding of shareholder interests,
and relationships with customers, business partners, and employees allow him to provide effective leadership in his role as Chairman
and CEO. Furthermore, a clearly defined and significant lead independent director role, independent key committee chairs, experienced
and committed directors, and frequent executive sessions provide a framework for effective direction and oversight by the board
of directors.
Our board believes that our leadership
structure has served our shareholders well and remains in our shareholders’ best interest.
ITEM 8 RECOMMENDATION: Our board
of directors recommends that you vote AGAINST this proposal.
2015 Proxy Statement 72
ADDITIONAL INFORMATION
Certain Relationships and Transactions
In the course of our ordinary business
activities, we engage in transactions, arrangements and relationships with many other entities, including financial institutions
and professional organizations. Some of our directors, director nominees, executive officers, greater than 5 percent shareholders,
and their immediate family members (each, a Related Person) may be directors, officers, partners, employees or shareholders of
these entities.
We carry out transactions with these
firms on customary terms, and, in many instances, these individuals may not have knowledge of them. To the company’s knowledge,
since January 1, 2014, no Related Person has had a material interest in any of our ongoing business transactions or relationships
except as described below.
OUR
RELATED PERSON TRANSACTION POLICY
Our written Related Person Transaction
Policy governs company transactions, arrangements and relationships involving more than $120,000 in which a Related Person has
a direct or indirect material interest (Related Person Transactions). Under the policy, Related Person Transactions must be approved
by the Nominating and Governance Committee. The committee will only approve a transaction if, after reviewing the relevant facts
and circumstances, it determines that the transaction is consistent with the best interests of the company. In the event we become
aware of a Related Person Transaction that was not pre-approved under the policy, the committee will consider the options available,
including ratification, revision or termination of the transaction. The policy does not supersede any other company policy or
procedure that may apply to any Related Person Transaction, including our governance principles and codes of conduct.
The company’s Secretary is responsible
for assisting the Nominating and Governance Committee in carrying out its responsibilities, and management is required to present
to the committee the material facts of any transaction that it believes may require review. In cases where it is impracticable
or undesirable to delay a decision on a proposed transaction until the next meeting of the committee, the chair of the committee
may review and approve the transaction and then report any approval to the full committee at its next regularly scheduled meeting.
If a matter before the committee involves a member of the committee, the member must recuse himself and may not participate in
deliberations or vote on the matter.
PRE-APPROVED CATEGORIES OF RELATED PERSON
TRANSACTIONS
The Nominating and Governance Committee
has pre-approved the following categories of transactions as being consistent with the best interests of the company. These categories,
which may constitute Related Person Transactions, are:
• |
Executive officer
compensation approved by the board or the Compensation and Benefits Committee |
|
|
• |
Non-employee director compensation
approved by the board or the Nominating and Governance Committee |
|
|
• |
Director and officer insurance
payments and indemnification payments made in accordance with the company’s certificate of incorporation or by-laws |
|
|
• |
Transactions in the ordinary
course of business with entities at which a Related Person is a director, executive officer, employee and/or a less than 10
percent beneficial owner, provided the amounts involved do not exceed the greater of $1 million or 1 percent of the other
entity’s annual revenues |
|
|
• |
Transactions with entities
at which a Related Person is a director, provided that if the entity is not a partnership, the Related Person, together with
all other Related Persons, holds a less than 10 percent equity interest in the entity; or if the entity is a partnership,
the Related Person is a limited partner without any other position in the partnership and, together with all other Related Persons, holds a less than 10 percent equity interest in the partnership |
|
|
• |
Transactions
in which the rates or charges are determined by competitive bids |
|
|
• |
Contributions by the company
or the American Express Foundation to a charitable organization at which a Related Person serves as a director, executive
officer and/or trustee, provided that the aggregate annual amount of such contributions, excluding contributions under the
company’s gift match program and contributions under the company’s Directors’ Charitable Award Program,
do not exceed the lesser of $1 million or 2 percent of the organization’s total annual revenues |
|
|
• |
Use of the company’s
products and services on terms and conditions similar to those available to other customers or employees generally and |
|
|
• |
Transactions in which all
shareholders receive the same benefits on a pro-rata basis |
2015 Proxy Statement 73
RELATED PARTY TRANSACTIONS
Our executive officers, directors and
director nominees may from time to time take out loans from certain of our subsidiaries on the same terms that these subsidiaries
offer to the general public. For example, our two U.S. card-issuing banks may extend credit to our directors, director nominees
and executive officers under our charge or lending products. All indebtedness from these transactions is in the ordinary course
of our business and is on the same terms, including interest rates, in effect for comparable transactions with other people. Such
indebtedness involves normal risks of collection and does not have features or terms that are unfavorable to our subsidiaries.
Our executive officers, directors and director nominees may also have transactions with us involving other goods and services,
such as travel services and investments in deposit products offered by subsidiaries of the company. These transactions are also
in the ordinary course of our business, and we provide them on terms that we offer to our customers generally. Occasionally, we
may have employees who are related to our executive officers, directors or director nominees. We compensate these individuals
in a manner consistent with our practices that apply to all employees. The adult son of Mr. John Hayes, our Executive Vice President
and Chief Marketing Officer, is employed by the company in a non-executive position, and received compensation in 2014 of between
$135,000 and $155,000. The compensation and other terms of employment of Mr. Hayes’ son are determined on a basis consistent
with the company’s human resources policies.
Certain executive officers, directors
and director nominees are affiliated with companies with which the company has entered into ordinary course business relationships
from time to time, including ordinary course merchant relationships pursuant to which these companies accept our charge and credit
card products and pay us fees when customers use these cards. From time to time, we may enter into joint marketing or other relationships
with one or more of these companies in the ordinary course that encourage customers to apply for and use our cards. We also may
provide ordinary course commercial card, and bill payments services, or business insights to some of these companies for which
these companies pay fees to us. We may engage in other commercial transactions with these companies and pay or receive fees in
those transactions. We have a number of similar ordinary course relationships with Berkshire Hathaway Inc., its affiliates and
companies in which they have significant investments. We have also purchased insurance products from subsidiaries of Berkshire
Hathaway Inc. in the ordinary course of business and on arm’s length terms. We have a number of ordinary course relationships
with BlackRock, Inc. and its affiliates, which from time to time provide investment management services to us.
Section 16(a) Beneficial Ownership Reporting
Compliance
Section 16(a) of the Securities Exchange
Act of 1934 requires our directors and officers and beneficial owners of 10 percent or more of our common shares to file reports
with the SEC. Based on our records and other information, we believe that all reports that were required to be filed under Section
16(a) during 2014 were timely filed.
Director and Officer Liability Insurance
We have an insurance program in place
to provide coverage for director and officer liability and for fiduciary liability arising from employee benefit plans we sponsor.
The coverage for director and officer liability provides that, subject to the policy terms and conditions, the insurers will:
(i) reimburse us when we are legally permitted to indemnify our directors and officers; (ii) pay losses, including settlements,
judgments, and legal fees, on behalf of our directors and officers when we cannot indemnify them; and (iii) pay our losses resulting
from certain securities claims. The fiduciary liability portion of the program covers: us; our employee benefit plans; and the
directors, trustees, and employees who serve as fiduciaries for our employee benefit plans. Subject to the policy terms and conditions,
it covers losses from alleged breaches of fiduciary or administrative duties, as defined in the Employee Retirement Income Security
Act of 1974 or similar laws or regulations. A portion of the program is blended with certain other insurances covering the company.
Effective from
November 30, 2014 to November 30, 2015, this insurance is provided by a consortium of insurers. ACE American Insurance
Company is the lead insurer. XL Specialty Insurance Company, Illinois National Insurance Company, Allied World Assurance
Company Ltd., Freedom Specialty Insurance Company, Continental Casualty Company, Everest National Insurance Company, American
International Reinsurance Company Ltd., Markel Bermuda Ltd., Starr Indemnity and Liability Company, and National Liability
& Fire Insurance Company provide excess coverage. The program also includes supplemental layers dedicated exclusively to
providing coverage for directors and officers when we cannot indemnify them. The supplemental layers are provided by XL
Specialty Insurance Company, Zurich American Insurance Company, Federal Insurance Company, Freedom Specialty Insurance
Company, Continental Casualty Company, Everest National Insurance Company, U.S. Specialty Insurance Company, St. Paul Fire
& Marine Insurance Company, Starr Indemnity and Liability Company, Allied World Assurance Company Ltd., American
International Reinsurance Company Ltd., ACE Bermuda Insurance Ltd., and Lloyd’s of London. We expect to obtain similar
coverage upon expiration of the current program. The annual premium for the program is approximately $5.4 million.
2015 Proxy Statement 74
Other Matters
SOLICITATION OF PROXIES; EXPENSES
We will pay the expenses of soliciting
proxies on behalf of the board of directors. Our directors, officers or employees may solicit proxies for us in person, or by
mail, telephone, facsimile or electronic transmission. We have hired Morrow & Co., LLC, 470 West Ave., Stamford, CT 06902,
to help us distribute and solicit proxies. We will pay them $19,000 plus expenses for these services.
NOTICE OF BUSINESS TO COME BEFORE THE
MEETING
Our board of directors and the company’s
management have not received notice of, and are not aware of, any business to come before the annual meeting other than the agenda
items referred to in this proxy statement. If any other matter comes before the meeting, the named proxies will use their best
judgment in voting the proxies.
2016 Annual Meeting of Shareholders
Information
SHAREHOLDER PROPOSALS FOR INCLUSION
IN NEXT YEAR’S PROXY STATEMENT
To be considered for inclusion in next
year’s proxy statement, any shareholder proposals submitted in accordance with SEC Rule 14a-8 must be received by our Secretary
at our principal executive offices no later than December 1, 2015. Any such proposals must comply with all of the requirements
of SEC Rule 14a-8.
OTHER SHAREHOLDER PROPOSALS FOR PRESENTATION
AT NEXT YEAR’S ANNUAL MEETING
Under our by-laws, shareholders must
follow certain advance notice procedures to nominate a person for election as a director at an annual or special meeting, or to
introduce an item of business at an annual meeting. Under these advance notice procedures, shareholders must submit the proposed
nominee or item of business by delivering a notice to the Secretary at our principal executive offices. We must receive notice
as follows:
• |
We must receive
notice of a shareholder’s intention to introduce a nomination or proposed item of business for an annual meeting not
less than 90 days nor more than 120 days before the first anniversary of the prior year’s meeting. Assuming that the
2015 Annual Meeting of Shareholders is held on schedule, we must receive notice pertaining to the 2016 Annual Meeting of Shareholders
no earlier than January 12, 2016 and no later than February 11, 2016. |
|
|
• |
However, if we hold the 2015
Annual Meeting of Shareholders on a date that is not within 25 days before or after such anniversary date, we must receive
the notice no later than ten days after the earlier of the date we first provide notice of the meeting to shareholders or
announce it publicly. |
|
|
• |
If we hold a special meeting
to elect directors, we must receive a shareholder’s notice of intention to introduce a nomination no later than ten
days after the earlier of the date we first provide notice of the meeting to shareholders or announce it publicly. |
Our by-laws provide that notice of a
proposed nomination must include certain information about the shareholder and the nominee, as well as a written consent of the
proposed nominee to serve if elected. A notice of a proposed item of business must include a description of and the reasons for
bringing the proposed business to the meeting, any material interest of the shareholder in the business, and certain other information
about the shareholder. Any notice (other than a proposal pursuant to Rule 14a-8) that is received outside of the window specified
above for proposed items of business will be considered untimely under Rule 14a-4(c) under the Securities Exchange Act of 1934.
The persons named in the proxy for the meeting may exercise their discretionary voting power with respect to all such matters,
including voting against them. All director nominations and shareholder proposals, other than shareholder proposals made pursuant
to Rule 14a-8 under the Securities Exchange Act of 1934, must comply with the requirements of the company’s by-laws. You
may obtain a copy of the company’s by-laws at no cost from the company’s Secretary. The contact information for the
company’s Secretary is on page 13.
2015 Proxy Statement 75
ADDITIONAL VOTING INFORMATION
Voting at the Annual Meeting
Shares represented by valid proxies
or voting instruction forms that are received on time will be voted as specified. If you sign and return your proxy card or
voting instruction form but do not indicate specific choices, your shares will be voted as our board recommends. The way you
vote your shares prior to the meeting will not limit your right to change your vote at the meeting if you attend in person and
vote by ballot.
STREET NAME HOLDERS
If you hold shares in street name and
you want to vote in person at the meeting, you must obtain a proxy from the record holder of your shares at the close of business
on the record date indicating that you were a beneficial owner of shares, as well as the number of shares of which you were the
beneficial owner on the record date, and appointing you as the record holder’s proxy to vote these shares. You should contact
your bank, broker or other intermediary through which you hold your shares for instructions on how to obtain a proxy.
RECORD DATE
You may vote all common shares that
you owned as of the close of business on March 13, 2015, which is the record date for the meeting. On the record date, we had
1,015,650,732 common shares outstanding and entitled to vote. Each common share is entitled to one vote on each matter properly
brought before the meeting.
OWNERSHIP OF SHARES
You may own common shares in one or
more of the following ways:
• |
Directly in your
name as the shareholder of record, including shares purchased through our transfer agent’s Computershare Investment
Plan stock purchase plan or restricted stock awards issued to employees under our long-term incentive plans |
|
|
• |
Indirectly through a broker,
bank or other intermediary in “street name” |
|
|
• |
Indirectly through the American
Express Company Stock Fund of our Retirement Savings Plan (RSP) or the Employee Stock Ownership Plan of Amex Canada, Inc. |
If your shares are registered directly
in your name, you are the holder of record of these shares and we are sending proxy materials directly to you. As the holder of
record, you have the right to give your proxy directly to our tabulating agent. If you hold your shares in street name, your broker,
bank, or other intermediary is sending proxy materials to you and you may direct them how to vote on your behalf by completing
the voting instruction form that accompanies your proxy materials or following the instructions in the notice you received.
Shares Held Under Plans
If you participate in the Computershare
Investment Plan, which is the stock purchase plan administered by Computershare, the company’s transfer agent, your proxy
includes the number of shares enrolled in that plan as well as any shares you have acquired through dividend reinvestment. If
you participate in the RSP or the Employee Stock Ownership Plan of Amex Canada, Inc., your proxy includes shares that the relevant
plan has credited to your account.
To allow sufficient
time for the RSP and the Employee Stock Ownership Plan of Amex Canada, Inc. trustees to vote, the trustees must receive your
voting instructions by 3:00 p.m. Eastern Time on Wednesday, May 6, 2015. If the trustees for the RSP and the Employee Stock
Ownership Plan of Amex Canada, Inc. do not receive your instructions by that date, the trustees will not vote your shares. |
CONFIDENTIAL VOTING
We maintain the confidentiality of the
votes of individual shareholders. Your vote will not be disclosed unless the law requires disclosure, you authorize disclosure,
or your vote is cast in a contested election. If you write comments on your proxy card or ballot, management may learn how you
voted in reviewing your comments. In addition, the Inspectors of Election and selected employees of our independent tabulating
agent may have access to individual votes in the normal course of counting and verifying the vote.
2015 Proxy Statement 76
EFFECT OF NOT CASTING YOUR VOTE
If you hold your shares in street name,
you must instruct your bank, broker, or other nominee how to vote your shares. Under NYSE rules, brokers are permitted to exercise
discretionary voting authority on “routine” matters when voting instructions are not received from a beneficial owner
ten days prior to the shareholder meeting. The only “routine” item on this year’s annual meeting agenda is Item
2 (Ratification of the company’s independent registered public accounting firm).
If you hold your shares in street name, and you wish to have your shares voted on all items in this proxy statement, please return your voting instruction form or cast your instructions by telephone or the Internet. Otherwise, your shares will not be voted on any items with the exception that your broker may vote in its discretion on Item 2. If you are a shareholder of record and you do not cast your vote, your shares will not be voted on any of the items of business at the annual meeting. |
REVOCATION OF PROXIES
You can revoke your proxy at any time
before your shares are voted if you:
• |
Submit a written revocation to our
Secretary |
|
|
• |
Submit a later-dated proxy |
|
|
• |
Provide subsequent telephone or online voting
instructions, or |
|
|
• |
Vote in person at the meeting |
If you hold your shares in street name,
please follow the directions provided to you by your bank, broker or other intermediary to change or revoke any voting instructions
you have already provided.
QUORUM AND REQUIRED VOTE
We will have a quorum and will be able
to conduct the business of the annual meeting if the holders of a majority of the votes that shareholders are entitled to cast
are present at the meeting, either in person or by proxy. For the 2015 annual meeting, to elect directors and adopt the other
proposals, the following votes are required under our governing documents and New York State law:
Item | |
Vote Required | |
Do abstentions count as votes cast? | |
Is broker discretionary voting allowed?* |
Election of directors | |
Approval of the majority of the votes cast | |
No | |
No |
Ratification of appointment of independent registered public accounting firm | |
Approval of the majority of the votes cast | |
No | |
Yes |
Advisory resolution to approve executive compensation** | |
Approval of the majority of the votes cast | |
No | |
No |
Shareholder proposals** | |
Approval of the majority of the votes cast | |
No | |
No |
* |
A broker non-vote
occurs when a broker submits a proxy but does not vote for an item because it is not a “routine” item and the
broker has not received voting instructions from the beneficial owner. As described under Effect of Not Casting Your Vote,
your broker may vote in its discretion only on Item 2, Ratification of appointment of the company’s independent registered
public accounting firm. |
** |
Advisory/Non-binding |
There are no cumulative voting rights.
Abstentions and broker non-votes are not considered as votes cast and will have no effect on the outcome of the vote on any of
the proposals. If any other matter comes before the meeting, the named proxies will use their best judgment in voting the proxies.
2015 Proxy Statement 77
Multiple Shareholders Sharing the Same
Address
We are sending only one notice or one
proxy statement and annual report to the address of multiple shareholders unless we have received contrary instructions from any
shareholder at that address. This practice, known as “householding,” reduces duplicate mailings, saving paper and
reducing printing costs. If any shareholder residing at such an address wishes to receive an individual copy of the materials,
or if you are receiving multiple copies of our proxy statement and annual report and would like to enroll in this service, please
contact the company’s Secretary. The contact information for the company’s Secretary appears below.
Availability of Form 10-K
If you would like a paper copy of our
2014 Form 10-K, excluding certain exhibits, please contact Carol V. Schwartz, Secretary, American Express Company, 200 Vesey Street,
New York, New York 10285 or by telephone at 212-640-2000.
* * * *
You can find the travel directions to
our meeting on the inside back cover of this proxy statement. Whether or not you plan to attend, you can ensure that your shares
are represented at the meeting by voting by telephone or by Internet, or by completing, signing, dating, and returning your proxy
or voting instruction form in the enclosed envelope.
KENNETH I. CHENAULT
Chairman and Chief Executive Officer
2015 Proxy Statement 78
ANNEX A— |
INFORMATION REGARDING
NON-GAAP FINANCIAL MEASURES |
The tables below
provide further information on revenue net of interest adjusted for FX, Global Business Travel and Concur and adjusted total
operating expense growth for 2014. Operating expense represents salaries and employee benefits, professional services,
occupancy and equipment, communications and other expenses.
Revenue Net of Interest Adjusted for FX, Global Business Travel and Concur
($ In Millions) | |
2013 | | |
2014 | |
GAAP Revenue Net of Interest | |
$ | 32,974 | | |
$ | 34,292 | |
Global Business Travel Revenue Net of Interest* | |
$ | (801 | ) | |
| | |
Gain on Sale of Concur Investment | |
| | | |
$ | (719 | ) |
Revenue Net of Interest Excluding GBT and Concur | |
$ | 32,173 | | |
$ | 33,573 | |
FX** - Adjusted Revenue Net of Interest Excluding GBT and Concur | |
$ | 31,832 | | |
| | |
YoY% Increase/(Decrease) in GAAP Revenue Net of Interest | |
| | | |
| 4% | |
YoY% Increase/(Decrease) in Adjusted Revenue Net of Interest Excluding GBT and Concur | |
| | | |
| 4% | |
YoY% Increase/(Decrease) in FX-Adjusted Revenue Net of Interest Excluding GBT and Concur | |
| | | |
| 5% | |
| |
| | | |
| | |
Adjusted Total Operating Expense Growth ($ In Millions) | |
| 2013 | | |
| 2014 | |
GAAP Total Operating Expenses | |
$ | 12,987 | | |
$ | 12,184 | |
Restructuring Charges*** | |
| | | |
$ | (446 | ) |
Q2’14 Global Business Travel Transaction | |
| | | |
| | |
Q2’14 GBT
Transaction Gain | |
| | | |
$ | 626 | |
Q2’14 GBT Transaction-related Costs | |
| | | |
$ | (79 | ) |
AXP Foundation Contribution*** | |
| | | |
$ | (40 | ) |
GBT Operating Expenses**** | |
$ | (696 | ) | |
| | |
Adjusted Total Operating Expenses | |
$ | 12,291 | | |
$ | 12,245 | |
YoY% Increase/(Decrease) in GAAP Total Operating Expenses | |
| | | |
| (6% | ) |
YoY% Increase/(Decrease) in Adjusted Total Operating Expenses | |
| | | |
| 0% | |
* Represents operating performance of
Global Business Travel as reported in Q3’13 and Q4’13. Does not include other Global Business Travel-related items,
including equity earnings from the joint venture and impacts related to a transition services agreement that will phase out over
time.
** See footnote 2 on page 6 for an explanation
of FX-adjusted information.
*** To the extent comparable categories
of items were recognized in periods other than Q2’14 or Q4’14, they have not been excluded.
**** Represents operating performance
of Global Business Travel as reported in Q3’13 and Q4’13. Does not include other Global Business Travel-related items,
including transaction-related costs and impacts related to a transition services agreement that will phase out over time.
A-1
|
LOCATION OF THE 2015 ANNUAL MEETING |
|
Our world headquarters is
the site of the 2015 Annual Meeting of Shareholders. We are located at 200 Vesey Street on the west side of Lower Manhattan
in Brookfield Place (formerly known as the World Financial Center). |
|
By Subway |
|
Take any of these subway
lines: the A, C, E, R or the 1, 2, 3, 4 or 5 trains. All of these trains stop near Brookfield Place. Brookfield Place is located
across the Westside Highway (also known as West Street) on the Hudson River. Our building is on the north side of the Winter
Garden in Brookfield Place. |
|
By Car or Taxi |
|
Take the Westside Highway
in Lower Manhattan. Enter Brookfield Place by turning west on either Murray Street or Vesey Street. Go to the main entrance
of our building located at the corner of Vesey Street and the Westside Highway. |
|
If you need special assistance
at the annual meeting, please contact Carol V. Schwartz, our Secretary, by telephone at 212-640-2000, by email at corporatesecretarysoffice@aexp.com
or by writing to her at the company’s headquarters at 200 Vesey Street, New York, New York 10285. |
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