UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): November 22, 2004
AMERICAN EXPRESS COMPANY
(Exact name of registrant as specified in its charter)
New York 1-7657 13-4922250
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(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation Identification No.)
or organization)
200 Vesey Street, World Financial Center
New York, New York 10285
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (212) 640-2000
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(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of
the following provisions (see General Instruction A.2. below):
Written communications pursuant to Rule 425 under the Securities Act
--- (17 CFR 230.425)
Soliciting material pursuant to Rule 14a-12 under the Exchange Act
--- (17 CFR 240.14a-12)
Pre-commencement communications pursuant to Rule 14d-2(b) under the
--- Exchange Act (17 CFR 240.14d-2(b))
Pre-commencement communications pursuant to Rule 13e-4(c) under the
--- Exchange Act (17 CFR 240.13e-4(c))
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ITEM 1.01 ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT
On January 24, 2005, the Compensation and Benefits Committee (the
"Compensation Committee") of the Board of Directors of American Express
Company (the "Company") approved the annual base salaries (effective as of
such date) of the Company's executive officers after a review of performance
and competitive market data. The following table sets forth the annual base
salary levels of the Company's Named Executive Officers (which officers were
determined by reference to the Company's proxy statement, dated March 10,
2004) for 2005 and 2004:
NAME AND POSITION YEAR BASE SALARY
Kenneth I. Chenault 2005 $1,100,000
Chairman and Chief 2004 1,000,000
Executive Officer
James M. Cracchiolo 2005 475,000
Group President 2004 475,000
Global Financial Services
Gary L. Crittenden 2005 575,000
Executive Vice President 2004 500,000
and Chief Financial Officer
Edward P. Gilligan 2005 575,000
Group President 2004 460,000
Global Corporate Services
and International Payments
Alfred F. Kelly, Jr. 2005 575,000
Group President 2004 475,000
U.S. Consumer and Small
Business Services
Also, on January 24, 2005, the Compensation Committee authorized the
payment of annual incentive (i.e., bonus) awards to each of the Company's
executive officers in respect of the year ended December 31, 2004. The annual
incentive awards were made pursuant to the Company's 1998 Incentive
Compensation Plan, as amended (the "1998 Plan"). Consistent with past
practice, the Compensation Committee used three factors to set the guidelines
for these annual incentive awards: (1) competitive pay practices, (2) job
scope and responsibility and (3) the Company's need to attract, retain and
reward executive talent. The Compensation Committee retained external
compensation consultants, who, among other things, benchmarked pay practices
at companies that compete with the Company in its various businesses or for
executive talent and advised the Compensation Committee in establishing
compensation guidelines. The annual incentive awards were determined based on
the Company's and each executive's performance during 2004 as measured against
performance measures established early that year. The performance measures
included financial measures (shareholder return, earnings per share, return on
equity, revenue growth, reengineering, etc.), as well as employee survey
results, expansion and retention of the customer base, development of products
and services, retention of talented employees and other factors. In addition,
the Compensation Committee evaluated each executive's leadership by
considering a variety of factors, including, among others, developing winning
strategies, driving results and focusing on the customer and client. The
following table sets forth cash payments to the Named Executive Officers in
respect of their annual incentive awards for 2004 and 2003:
NAME YEAR ANNUAL INCENTIVE AWARD
Mr. Chenault 2004 $6,000,000 (1)
2003 3,500,000 (2)
Mr. Cracchiolo 2004 3,050,000 (1)
2003 1,010,000 (2)
Mr. Crittenden 2004 1,445,000
2003 910,000 (2)
Mr. Gilligan 2004 1,445,000
2003 895,000 (2)
Mr. Kelly 2004 1,795,000
2003 1,090,000 (2)
(1) In addition to the above cash payments, the Compensation Committee
authorized restricted stock awards of 17,213 shares to Mr. Chenault
and 19,125 shares to Mr. Cracchiolo in respect of their respective
2004 annual incentive awards.
(2) In addition to the above cash payments, the Compensation Committee
authorized the following restricted stock awards to the Named
Executive Officers in respect of their 2003 annual incentive awards:
17,416 shares to Mr. Chenault, 4,976 shares to Mr. Cracchiolo;
4,478 shares to Mr. Crittenden; 4,378 shares to Mr. Gilligan; and
5,473 shares to Mr. Kelly.
In addition to the establishment of base salaries in respect of 2005
and the determination of annual incentive awards in respect of 2004, on
January 24, 2005, the Compensation Committee authorized payments to the
Company's executive officers of long-term incentive awards, which were granted
in 2002. The values for these awards were based in part on the Company's
earnings per share growth, revenue growth and average return on equity over
the 2002 - 2004 period, and in part on the Company's total shareholder return
compared to that of the S&P Financial Index over the 2002 - 2004 period. The
following table sets forth the long term incentive payouts to be made to the
Company's Named Executive Officers in respect of the 2002 - 2004 performance
period (which are payable in February 2005), as well as the long term
incentive payouts made to the Named Executive Officers in respect of the 2001 -
2003 performance period (which were paid in February 2004):
NAME PERFORMANCE PERIOD LONG-TERM INCENTIVE PAYOUT
Mr. Chenault 2002 - 2004 $2,610,000 (1)
2001 - 2003 2,484,000
Mr. Cracchiolo 2002 - 2004 1,239,750
2001 - 2003 1,311,000
Mr. Crittenden 2002 - 2004 1,239,750
2001 - 2003 1,311,000
Mr. Gilligan 2002 - 2004 1,044,000
2001 - 2003 1,104,000
Mr. Kelly 2002 - 2004 1,239,750
2001 - 2003 1,311,000
(1) Mr. Chenault's award consists of $500,000 cash and a restricted
stock award of 40,355 shares of the Company's common stock (with a
value determined by reference to the average of the high and low
prices of the Company's common stock on January 24, 2005).
Also on January 24, 2005, the Compensation Committee approved grants
of ten-year non-qualified stock options and restricted stock awards to each of
the Named Executive Officers pursuant to the 1998 Plan. The following table
sets forth information regarding grants of stock options and restricted stock
awards to the Named Executive Officers made on January 24, 2005 and January
26, 2004:
Number of Exercise Price Number of Shares of
Name Year Stock Options (1) per Share Restricted Stock
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Mr. Chenault 2005 390,000 $52.285 76,693 (2)(3)
2004 486,000 50.24 17,416 (3)
Mr. Cracchiolo 2005 145,000 52.285 19,125 (2)(4)
2004 180,000 50.24 4,976 (5)
Mr. Crittenden 2005 145,000 52.285 8,606 (4)
2004 171,000 50.24 4,478 (5)
Mr. Gilligan 2005 145,000 52.285 8,606 (4)
2004 171,000 50.24 4,378 (5)
Mr. Kelly 2005 145,000 52.285 10,997 (4)
2004 180,000 50.24 5,473 (5)
(1) Options vest in four equal annual installments beginning on first
anniversary of date of grant, subject to continuous employment.
(2) Mr. Chenault's shares include 17,213 shares described above that were
awarded in connection with the payment of his annual incentive award
and 40,355 shares described above that were awarded in connection
with the payment in respect of his long-term incentive payout. Mr.
Cracchiolo's shares reflect 19,125 shares described above that were
awarded in connection with his annual incentive award.
(3) Of the shares awarded to Mr. Chenault in January 2005, (i) 36,338
shares will vest in four equal annual installments beginning on
January 24, 2006, subject to continuous employment and the Company's
achievement of certain financial performance requirements during the
vesting periods and (ii) 40,355 shares will vest on January 24, 2006,
subject to continuous employment. The shares awarded to Mr. Chenault
in January 2004 reflect the 17,416 shares described above that were
awarded in connection with the 2003 annual incentive award. Of those
shares approximately half vest in three equal annual installments
beginning January 26, 2005, subject to continuous employment and the
Company's achievement of certain financial performance requirements
during the vesting periods and approximately half vest in three equal
installments beginning January 26, 2005, subject to continuous
employment.
(4) Shares will vest in four equal annual installments beginning on
January 24, 2006, subject to continuous employment and the Company's
achievement of certain financial performance requirements during the
vesting periods.
(5) Reflects those shares described above that were awarded in connection
with the executive's 2003 annual incentive award. Shares vest in
three equal annual installments beginning January 26, 2005, subject
to continuous employment.
The Company intends to provide additional information regarding the
compensation awarded to the Named Executive Officers in respect of and during
the year ended December 1, 2004, in the proxy statement for the Company's 2005
annual meeting of stockholders, which is expected to be filed with the
Securities and Exchange Commission in March 2005.
In addition, on January 24, 2005, upon the recommendation of the
Nominating and Governance Committee of the Board, the Board approved the terms
of the compensation to be paid to each non-management director of the Board in
respect of his/her service on the Board. A summary describing the elements of
such compensation is filed as Exhibit 10.1 to this report and is hereby
incorporated by reference.
On November 22, 2004, the Compensation Committee approved certain
amendments to the Company's Pay-for-Performance Deferral Program primarily to
reduce the overall schedule of rates at which interest equivalents are
credited to deferred amounts and comply with the provisions of the American
Jobs Creation Act of 2004. A brief summary of the terms and conditions of the
Pay-for-Performance Deferral Program is filed as Exhibit 10.2 to this report
and is hereby incorporated by reference.
ITEM 5.03 AMENDMENTS TO ARTICLES OF INCORPORATION OR BYLAWS; CHANGE
IN FISCAL YEAR
On January 24, 2005, the Board of Directors of the Company approved
certain amendments to the By-Laws of Company to require the Company to (i)
indemnify any person for expenses incurred or other amounts paid in any
threatened, pending or completed civil, criminal, administrative, legislative
or investigative action, suit or proceeding by reason of the fact that such
person is a director, officer or other employee of the Company and (ii)
advance expenses incurred by directors and officers and other employees
incurred in connection with any such action, suit or proceeding. Prior to the
Board's adoption of the amendments, the right of employees of the Company
(other than its officers) to indemnification and the right of directors and
officers and other employees of the Company to advancement of expenses was
discretionary on the part of the Board. A copy of the By-Laws, as amended, of
the Company is filed as Exhibit 3.1 to this report.
ITEM 8.01 OTHER EVENTS
A copy of each of the Company's (i) Deferred Compensation Plan for
Directors and Advisors, as amended through July 28, 2003, and (ii) 1989
Long-Term Incentive Plan Master Agreement, dated February 27, 1995, is filed
as Exhibit 10.3 and Exhibit 10.4, respectively, to this report, and each is
hereby incorporated by reference.
ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS
(c) Exhibits
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3.1 By-Laws of American Express Company, as amended through January 24, 2005.
10.1 Description of Compensation Payable to Non-Management Directors.
10.2 Description of Pay-for-Performance Deferral Program.
10.3 Deferred Compensation Plan for Directors and Advisors, as amended
through July 28, 2003.
10.4 American Express Company 1989 Long-Term Incentive Plan Master Agreement,
date February 27, 1995.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
AMERICAN EXPRESS COMPANY
(REGISTRANT)
By: /s/ Stephen P. Norman
Name: Stephen P. Norman
Title: Secretary
DATE: January 28, 2005
EXHIBIT INDEX
Exhibit
No. Description
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3.1 By-Laws of American Express Company, as amended through
January 24, 2005.
10.1 Description of Compensation Payable to Non-Management Directors.
10.2 Description of Pay-for-Performance Deferral Program.
10.3 Deferred Compensation Plan for Directors and Advisors, as amended
through July 28, 2003.
10.4 American Express Company 1989 Long-Term Incentive Plan Master
Agreement, date February 27, 1995.