Summary
American Express Company (AXP) filed an 8-K on January 26, 2007, reporting significant changes in its Board of Directors and executive compensation structure. The filing announced the election of two new directors, Richard C. Levin and Ronald A. Williams. Additionally, the Compensation and Benefits Committee approved the 2007 annual base salaries for named executive officers, reflecting increases for most key positions. The report also detailed the performance-based criteria for the "Portfolio Grant 2007-2009" awards, which will be tied to key financial metrics such as diluted Earnings Per Share (EPS), net revenue, Return on Equity (ROE), and total shareholder return compared to the S&P 500 over a three-year period. These grants are designed to be performance-based for tax deductibility and offer a wide range of potential payouts, from threshold to maximum, depending on company performance. Furthermore, the filing outlined amendments to the Supplemental Retirement Plan (Amended SRP) and introduced a new voluntary compensation deferral program effective from 2008. Key changes to the Amended SRP include modifications to the definition of compensation for RSP-related accounts and the cessation of Company stock contributions to RSP-related accounts after July 1, 2007. The new voluntary deferral program allows senior-level employees to defer base salary, annual cash bonus, or portfolio grant payouts, with interest crediting rates tied to the Company's ROE performance, ranging from Moody's A Rate to 11% or 13% depending on performance relative to targets. The company also adjusted interest crediting rate schedules for prior pay-for-performance deferral programs (1994-2004 and 2005-2006).
Key Highlights
- 1Election of Richard C. Levin and Ronald A. Williams to the Board of Directors.
- 2Approval of 2007 annual base salaries for Named Executive Officers, showing increases for key positions like CEO and CFO.
- 3Details on the performance metrics for the "Portfolio Grant 2007-2009" awards, focusing on EPS, net revenue, ROE, and total shareholder return.
- 4Potential payouts for the "Portfolio Grant 2007-2009" awards range significantly, with the CEO having a maximum potential payout of $12,031,250.
- 5Amendments to the Supplemental Retirement Plan (Amended SRP) effective July 1, 2007, including changes to compensation definitions and stock contributions.
- 6Introduction of a new voluntary compensation deferral program within the Amended SRP for 2008 and later, with interest rates linked to ROE.
- 7Revised interest crediting rate schedules for existing 1994-2004 and 2005-2006 Pay-for-Performance Deferral Programs.