8-KLeadership ChangesExhibits & Filings

AMERICAN EXPRESS CO 8-K Report, Executive Changes (Nov 22, 2006)

Filed November 22, 2006For Securities:AXP

Summary

American Express Company (AXP) announced on November 21, 2006, the approval of its 2007 Pay-for-Performance Deferral Program by its Compensation and Benefits Committee. This program allows eligible senior-level employees to defer a portion of their 2007 base salary, cash bonus, or incentive awards. The program's key feature is its performance-based interest crediting mechanism. Deferred balances will earn interest equivalents tied to the company's annual Return on Equity (ROE) relative to a target range of 33%-36%. Specifically, ROE below 33% results in interest at the Moody's A Rate, ROE within the target range yields 9%, and ROE above 36% yields 11%. The Committee retains discretion to adjust these rates. Deferrals are subject to a minimum five-year commitment, with specific payout options available upon retirement or on a specified date, while early termination may result in payouts based on a less favorable rate.

Key Highlights

  • 1Approval of the 2007 Pay-for-Performance Deferral Program for senior-level employees.
  • 2Eligible compensation includes 2007 base salary, cash bonus, and certain incentive awards.
  • 3Maximum deferral amount is limited to one times base salary as of December 31, 2006.
  • 4Interest on deferred amounts is performance-based, linked to American Express's annual Return on Equity (ROE).
  • 5ROE performance tiers determine interest rates: below 33% (Moody's A Rate), 33%-36% (9%), and above 36% (11%).
  • 6Deferred compensation must be held for a minimum of five years.
  • 7Payout options include lump sum or installments, with specific provisions for termination, retirement, disability, and change in control.

Frequently Asked Questions

The program's main goal is to incentivize and retain senior-level employees by allowing them to defer a portion of their compensation, with the deferred amount's growth tied to the company's performance, specifically its Return on Equity (ROE).

Interest equivalents are credited based on American Express's annual ROE. If ROE is below 33%, the Moody's A Rate applies. If ROE is between 33% and 36%, a 9% rate is used. If ROE exceeds 36%, an 11% rate is applied. The Compensation Committee has discretion to adjust these rates.

Participants must defer compensation for at least five years. Payouts can be elected for a specified date after five years, upon retirement, or up to ten years following retirement, as a lump sum or installments. Termination of employment (other than for retirement, disability, or death) before the five-year period may result in a payout calculated at a less favorable rate. Accelerated payouts are possible upon a change in control.

Eligibility is limited to senior-level employees of American Express Company who are subject to U.S. income taxes.