Summary
This 8-K filing by American Express Company (AXP) on January 27, 2006, details significant executive compensation decisions made by its Compensation Committee on January 23, 2006. The committee approved performance-based criteria for both the 2006 annual incentive awards and the Portfolio Grant XVII (PG-XVII) awards. These compensation plans are structured to be performance-based, aiming to align executive pay with company performance and ensure tax deductibility. The 2006 annual incentive awards will be based on the company's diluted Earnings Per Share (EPS) and Return on Equity (ROE) for the year, with specific payout ranges set for the CEO and other executive officers. PG-XVII awards, covering the three years ending December 31, 2008, have two components: a Financial Incentive Component (FIC) based on average annual diluted EPS, net revenue, and ROE, and a Stock Incentive Component (SIC) tied to total shareholder return relative to the S&P Financial Index. The filing also notes an increase in the base salary for Executive Vice President and General Counsel, Louise M. Parent, and the election of Peter Chernin as a new director.
Key Highlights
- 1American Express Company's Compensation Committee established performance-based criteria for 2006 annual incentive and PG-XVII awards.
- 22006 annual incentive awards will be tied to the company's diluted EPS and ROE for the year.
- 3PG-XVII awards, spanning 2006-2008, will be based on a combination of financial performance (EPS, net revenue, ROE) and relative total shareholder return (vs. S&P Financial Index).
- 4Specific maximum and threshold payout ranges were disclosed for the CEO and other executive officers for both award types.
- 5Compensation is structured to qualify as 'performance-based' for tax deductibility purposes.
- 6Louise M. Parent, EVP and General Counsel, received an increase in her annual base salary to $500,000, effective January 23, 2006.
- 7Peter Chernin was elected as a new director to the Board of Directors.