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.