Summary
This 8-K filing from American Express Company (AXP) announces a material definitive agreement, specifically a Restated Letter Agreement with Berkshire Hathaway Inc. This agreement amends and restates prior agreements concerning Berkshire's holdings and voting of AXP shares. The key changes relate to Berkshire's ability to hold a larger percentage of AXP's outstanding voting securities and modifications to its voting commitments. These updates are primarily driven by AXP's share repurchase program, which has increased Berkshire's percentage ownership over time without an actual increase in shares held by Berkshire. For investors, this filing signifies a recalibration of the long-standing relationship between AXP and Berkshire Hathaway. The amendment allows Berkshire to retain a higher percentage of AXP shares (up to less than 25% compared to the previous 17% limit) due to AXP's share buybacks. It also clarifies voting obligations, requiring Berkshire to vote shares up to 17% ownership with the AXP Board's recommendation under specific CEO conditions, while providing flexibility for shares exceeding that threshold. This agreement provides clarity and structure to Berkshire's significant investment in AXP.
Key Highlights
- 1American Express Company (AXP) entered into a Restated Letter Agreement with Berkshire Hathaway Inc. on May 6, 2019.
- 2The agreement amends prior arrangements dating back to 1995 regarding Berkshire's voting and disposal of AXP securities.
- 3Berkshire's "Passivity Commitments" have been amended with the Federal Reserve, allowing them to retain AXP shares up to a percentage less than 25% of any class of voting securities.
- 4The increase in Berkshire's percentage ownership beyond the previous 17% limit is attributed to AXP's share repurchase program.
- 5Berkshire agrees to comply with the Amended Passivity Commitments as long as it beneficially owns 10% or more of AXP's outstanding voting securities.
- 6Berkshire will continue to vote its voting securities (up to 17% ownership) in accordance with the AXP Board's recommendation when Stephen Squeri is CEO, provided it owns 5% or more.
- 7The voting agreement for shares up to 17% does not apply to the portion of AXP securities owned by Berkshire that exceeds 17% of the outstanding amount.