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Section 1: DEF 14A (DEFINITIVE PROXY STATEMENT)


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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No. )

Filed by the Registrant Filed by a Party other than the Registrant      

CHECK THE APPROPRIATE BOX:
  Preliminary Proxy Statement
Confidential, For Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
Definitive Proxy Statement
  Definitive Additional Materials
Soliciting Material Under Rule 14a-12

AMERICAN EXPRESS COMPANY

(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)

PAYMENT OF FILING FEE (CHECK THE APPROPRIATE BOX):
  No fee required.
Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
Fee paid previously with preliminary materials:
Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the form or schedule and the date of its filing.
1) Amount previously paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:



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2017

AMERICAN EXPRESS COMPANY

 

 

 

 

 

 

PROXY STATEMENT

 

 

 



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American Express Company
200 Vesey Street
New York, New York 10285


NOTICE OF ANNUAL MEETING OF SHAREHOLDERS


WHEN
Monday, May 1, 2017
9:00 a.m. Eastern Time

WHERE
American Express Company
200 Vesey Street, 26th Floor
New York, New York 10285

RECORD DATE
March 3, 2017

       ITEMS OF BUSINESS
To vote on the following proposals:
1.     Election of directors proposed by our Board of Directors for a term of one year, as set forth in this proxy statement
2. Ratification of the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm for 2017
3. Advisory resolution to approve executive compensation
4. Advisory resolution to approve the frequency of future advisory votes on executive compensation
5. Two shareholder proposals if properly presented at the meeting
6. Such other business that may properly come before the meeting


Carol V. Schwartz
Secretary
March 20, 2017








Important notice regarding the availability of proxy materials for the 2017 annual meeting to be held on May 1, 2017

Our proxy statement and annual report are available online at http://ir.americanexpress.com.* We will mail to certain shareholders a notice of internet availability of proxy materials, which contains instructions on how to access these materials and vote online. We expect to mail this notice and to begin mailing our proxy materials on or about March 21, 2017.

*Web links throughout this document are provided for convenience only. Information from the American Express website is not incorporated by reference into this proxy statement.

    2017 PROXY STATEMENT | 03



Table of Contents

TABLE OF CONTENTS

3                   NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
5-9 PROXY SUMMARY AND VOTING ROADMAP
10-37 CORPORATE GOVERNANCE AT AMERICAN EXPRESS
10 ITEM 1 Election of Directors for a Term of One Year
10 Board Composition
14 Our Director Nominees
21 Our Board’s Independence
22 Our Corporate Governance Framework
23 Corporate Responsibility at American Express
24 Our Board’s Role and Responsibilities, Structure and Processes
29 Shareholder Engagement
30 Board Committees
32 Compensation of Directors
34 Director and Officer Liability Insurance
34 Certain Relationships and Transactions
38-41 AUDIT COMMITTEE MATTERS
38 ITEM 2 Ratification of Appointment of Independent Registered Public Accounting Firm
40 PricewaterhouseCoopers LLP Fees and Services
41 Report of the Audit and Compliance Committee
42-76 EXECUTIVE COMPENSATION
42 ITEM 3 Advisory Resolution to Approve Executive Compensation (Say On Pay)
43 Compensation Discussion and Analysis
60 Report of the Compensation and
Benefits Committee
63 Summary Compensation Table
66 Grants of Plan-Based Awards
67 Outstanding Equity Awards at Fiscal Year-End 2016
68 Option Exercises and Stock Vested in 2016
69 Retirement Plan Benefits
70 Nonqualified Deferred Compensation
72 Potential Payments Upon Termination
or Change in Control (CIC)
76 ITEM 4 Advisory Resolution to Approve the Frequency of Future Advisory Say on Pay Votes (Say on Frequency)
77-81 SHAREHOLDER PROPOSALS
77 ITEM 5 Shareholder Proposal Relating to Action By Written Consent
79 ITEM 6 Shareholder Proposal Relating to Gender Pay Equity Disclosure
82-83 STOCK OWNERSHIP INFORMATION
84-89 OTHER INFORMATION
90-91 ANNEX A—INFORMATION REGARDING NON-GAAP FINANCIAL MEASURES
92 LOCATION OF THE 2017 ANNUAL MEETING

04 | AMERICAN EXPRESS COMPANY  



Table of Contents

PROXY SUMMARY AND VOTING ROADMAP

We present below a summary of certain information in this proxy statement. Please review the complete proxy statement and annual report before you vote.

           
  ITEM 1

ELECTION OF DIRECTORS FOR A TERM OF ONE YEAR

✓ The Board recommends a vote FOR each of these director nominees

You are being asked to elect 14 directors. Each of our current directors is standing for election to hold office until the next annual meeting of shareholders or until his or her successor is duly elected and qualified. Detailed information about each nominee’s background, skills and expertise can be found starting on page 14.

 
 
 
 
  

Name          Age          Director
Since
         Other Public Boards
Charlene Barshefsky 66 2001 The Estée Lauder Companies Inc.
Senior International Partner, Intel Corporation
WilmerHale
John J. Brennan 62 2017 General Electric Company
Chairman Emeritus and Senior Advisor, LPL Financial Holdings, Inc.
The Vanguard Group  
Ursula M. Burns 58 2004 Exxon Mobil Corporation
Chairman, Xerox Corporation
Xerox Corporation
Kenneth I. Chenault 65 1997 International Business Machines
Chairman and CEO, Corporation (IBM)
American Express Company The Procter & Gamble Company
Peter Chernin 65 2006
Founder and CEO,
Chernin Entertainment, LLC
Ralph de la Vega 65 2016
Former Vice Chairman, AT&T Inc.
Anne L. Lauvergeon 57 2013 Rio Tinto Plc
Chairman and Chief Executive Officer, Suez
A.L.P. SAS Koç Holding
Michael O. Leavitt 66 2015 HealthEquity, Inc.
Founder and Chairman, Medtronic, Inc.
Leavitt Partners, LLC
Theodore J. Leonsis 61 2010 Groupon, Inc.
Chairman and CEO,
Monumental Sports & Entertainment, LLC
Richard C. Levin 69 2007
Chief Executive Officer,
Coursera
Samuel J. Palmisano 65 2013 Exxon Mobil Corporation
Former Chairman,
President and CEO, IBM
Daniel L. Vasella 63 2012 PepsiCo, Inc.
Honorary Chairman and Former XBiotech
Chairman and CEO, Novartis AG
Robert D. Walter, 71 2002 Nordstrom, Inc.
Lead Independent Director YUM! Brands, Inc.
Founder and Former Chairman and CEO,
Cardinal Health, Inc.
Ronald A. Williams 67 2007 The Boeing Company
Former Chairman and CEO, Johnson & Johnson
Aetna, Inc. Envision Healthcare

    2017 PROXY STATEMENT | 05



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PROXY SUMMARY AND VOTING ROADMAP
Election of Directors for a Term of One Year

Director Attendance

During 2016, our Board met 8 times and our committees in the aggregate met 38 times. All directors attended 75 percent or more of the meetings of the Board and Board committees on which they served in 2016.

Twelve of our thirteen directors in 2016 attended the 2016 annual meeting. Our Board encourages all of its directors to attend the annual meeting but understands there may be circumstances that prevent such attendance.

Board Highlights

Average Tenure
7.5
years


 

 

Average Age
64.2
years


Corporate Governance Highlights

Strong lead independent director

   

Diverse board

   

Regular board and committee refreshment and a mix of tenures

   

Non-management executive sessions led by lead independent director at each regular board meeting

   

Board agenda includes multi-day strategy sessions

   

Key management and rising talent reviewed at an annual talent review board meeting

   

Risk aware culture overseen by a separate Risk Committee of the Board

   

Annual election of all directors

   

Majority voting for directors

   

Proxy access

   

25 percent of shareholders can call special meetings

   

Active shareholder engagement

   

Significant share ownership requirements for senior executives and directors

   

Annual board and committee performance evaluations

   

Ongoing board succession planning

   

Director access to experts and advisors, both internal and external

   

13 out of 14 directors are independent


06 | AMERICAN EXPRESS COMPANY  



Table of Contents

PROXY SUMMARY AND VOTING ROADMAP
Ratification of Appointment of PricewaterhouseCoopers LLP for 2017

           
  ITEM 2

RATIFICATION OF APPOINTMENT OF
PRICEWATERHOUSECOOPERS LLP FOR 2017

✓ The Board recommends a vote FOR this item

The Audit and Compliance Committee reappointed PricewaterhouseCoopers LLP (PwC) as our independent registered public accounting firm for 2017. We are asking you to ratify this appointment. PwC has been our independent auditor since 2005. Additional information about the Committee’s appointment of PwC and PwC fees for 2016 and 2015 is found beginning on pages 40-41.

One or more representatives of PwC will be present at the meeting and available to respond to appropriate questions.

 
 
 
 
  

           
  ITEM 3

ADVISORY RESOLUTION TO APPROVE EXECUTIVE COMPENSATION (SAY ON PAY)

✓ The Board recommends a vote FOR this item

We are asking you to approve on an advisory basis the compensation of American Express’s named executive officers. We believe that the compensation of our executive officers is aligned with performance, correlates with our share price, appropriately motivates and retains our executives and delivers pay which is strongly linked to company performance over time.

 
 
 
 
  

2016 Performance

We entered 2016 with significant challenges, and we began to reposition the business for success going forward. We laid out three key priorities for 2016 and 2017:

Accelerating revenue growth

 

Optimizing investments

 

Resetting our cost base

We made significant progress in each of these areas in 2016. Despite persistent macro-economic issues and the evolving competitive and regulatory environment, we reached our 2016 goals through:

Healthy loan growth

 

Strong card acquisitions

 

Excellent credit performance

 

Disciplined operating expense control

 

Strong capital position

As a result, we were able to raise our earnings expectations over the course of the year while making a record level of business-building investments. For 2016 as a whole:

Net income was $5.4 billion, up 5% (including the gain from the sale of our Costco portfolio)

 

Diluted earnings per share (EPS) was $5.65, and our adjusted diluted EPS (excluding restructuring charges) was $5.931, exceeding the earnings guidance range provided at the beginning of the year

 

Return on Equity (ROE) was 26%


1 Adjusted diluted EPS, a non-GAAP measure, excludes $410 million in pre-tax restructuring charges ($266 million after-tax) for the year ended December 31, 2016. Management believes adjusted diluted EPS is useful in evaluating the ongoing operating performance of the Company and the Company’s performance against its 2016 EPS outlook originally provided in the Company’s Q4’15 earnings release on January 21, 2016, at which point restructuring charges and other contingencies were not estimable and thus not included. See Appendix A for reconciliation to diluted EPS on a GAAP basis.

    2017 PROXY STATEMENT | 07



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PROXY SUMMARY AND VOTING ROADMAP
Advisory Resolution to Approve Executive Compensation (Say on Pay)

We are pleased to have ended the year positively while continuing to strengthen our business. Our compensation to the CEO and the other Named Executive Officers (NEOs) reflects their strong leadership in navigating the Company through this important transition year and repositioning it for success. Further information on our 2016 performance can be found beginning on page 44.

Awarded Total Direct Compensation for our CEO for 2016 Performance

At the beginning of 2016, the Compensation and Benefits Committee set financial and strategic goals for our CEO and executive team, the attainment of which would be signposts of the Company’s successful repositioning. In January 2017, the Committee evaluated Mr. Chenault’s performance, noted his success against these goals, and awarded him target pay: total direct compensation (TDC)2 of $22,000,000 for performance year 2016. Because the Company’s repositioning is not yet complete, however, the Committee determined that Mr. Chenault would receive all of his compensation, except for base salary, in the form of deferred compensation linked to multi-year performance goals.

With most of Mr. Chenault’s compensation subject to multi-year performance goals, his realizable pay is tied closely to the success of our efforts and the long-term success of the Company. Our pay for performance linkage is illustrated on page 50, which shows that Mr. Chenault’s realizable compensation as of the end of 2016 was 8 percent lower than his awarded TDC for the previous three performance years.

CEO Awarded TDC Mix


Details regarding Mr. Chenault’s TDC can be found on page 49.

Our Compensation Discussion and Analysis is on pages 43-62 and our Summary Compensation Table and other related tables and narrative discussion are on pages 63-75.

2 Awarded TDC includes salary, the annual incentive award (AIA) earned for the prior year and long-term incentives granted that are tied to future performance.

08 | AMERICAN EXPRESS COMPANY  



Table of Contents

PROXY SUMMARY AND VOTING ROADMAP
Advisory Resolution to Approve the Frequency of Future Advisory Say on Pay Votes (Say on Frequency)

           
  ITEM 4

ADVISORY RESOLUTION TO APPROVE THE
FREQUENCY OF FUTURE ADVISORY SAY ON PAY
VOTES (SAY ON FREQUENCY)

The Board recommends continuing our current practice of holding an ANNUAL advisory vote on executive compensation

We are asking you to approve continuing to hold an annual advisory vote on executive compensation. In making this recommendation the Board considered shareholder feedback and that an annual say on pay vote enables our shareholders to provide us with timely input on executive compensation matters.

 
 
 
 
  

           
  ITEMS
5-6

TWO SHAREHOLDER PROPOSALS
(IF PROPERLY PRESENTED)

✕ The Board recommends a vote AGAINST each item

You will have the opportunity to vote on two shareholder proposals, if properly presented at the meeting. The text of these proposals, the proponents’ statements in support and our responses are set forth beginning on page 77.

 
 
 
 
  

    2017 PROXY STATEMENT | 09



Table of Contents

CORPORATE GOVERNANCE AT AMERICAN EXPRESS


           
  ITEM 1

ELECTION OF DIRECTORS FOR A TERM OF ONE YEAR

Our Board of Directors currently has 14 members. Each director is standing for election to hold office until the next annual meeting of shareholders or until his or her successor is duly elected and qualified. Our Board has appointed Jeffrey Campbell, Laureen Seeger, Carol Schwartz and Tangela Richter as proxies to vote your shares on your behalf. The proxies intend to vote for the election of each of the 14 candidates nominated by the Board unless you indicate otherwise on your proxy or voting instruction form or when you vote by telephone or online. Each candidate has consented to being named in this proxy statement and serving as a director if elected. However, if any nominee is not able to serve, the Board can either nominate a different person or reduce the size of the Board of Directors. If the Board nominates another individual, the persons named as proxies may vote for that nominee.

ITEM 1 RECOMMENDATION: Our Board of Directors recommends a vote FOR the election of the nominees listed on pages 14-21.

 
 
 
 
 
 
 
  

Board Composition

Ongoing Board Succession Planning

We seek to maintain a board that as a whole possesses the objectivity and the mix of diverse backgrounds, skills and experiences to provide effective oversight and guidance to management in the context of an evolving business environment and our long-term strategy. Ongoing board succession planning assures that the Board maintains an appropriate mix of skills and provides fresh perspectives while leveraging the institutional knowledge and historical perspective of our longer-tenured directors.

The Nominating and Governance Committee assesses potential candidates based on their history of achievement, the breadth of their business experiences, whether they also bring specific skills or expertise in areas that the Committee has identified and whether they possess personal attributes that will contribute to the effective functioning of the Board. The Committee also considers succession planning for board positions such as lead independent director and committee chair.

Attributes of Individual Nominees:

We look for individuals who have established records of significant accomplishment in leading global businesses and large, complex organizations.

 

Nominees should have achieved prominence in their fields and possess skills or significant experience in areas of importance to us.

 

The minimum personal attributes that must be met by a nominee include integrity, independence, energy, forthrightness, strong analytical skills and the commitment to devote the necessary time and attention to the Company’s affairs.

 

Candidates should demonstrate they have the ability to challenge and stimulate management and exercise sound judgment.

 

Candidates must demonstrate a willingness to work as part of a team in an atmosphere of trust and candor and a commitment to represent the interests of all shareholders rather than those of a specific constituency.


10 | AMERICAN EXPRESS COMPANY  



Table of Contents

CORPORATE GOVERNANCE AT AMERICAN EXPRESS
Item 1—Election of Directors for a Term of One Year

Identifying and Adding New Directors

The Nominating and Governance Committee identifies and adds new directors using the following process:

1

    

Collect Candidate Pool

   
 
Independent Directors
Independent Search Firms
Shareholders

2

 

Review Recommendations
Candidates meet with members of the Nominating and Governance Committee and with the Chairman. Committee members and the Chairman assess candidates on the basis of their skills and experience, their personal attributes and how they will add to the mix of competencies and diversity on the Board. Due diligence is conducted, and the Committee members and the Chairman solicit feedback on potential candidates from other directors and from persons outside the Company.

3

 

Make Recommendation to the Board
Qualified candidates are presented to the Board of Directors.

4

 

Outcome
Six new directors added since 2012:

 
Ethnic & gender diversity
Non-U.S. directors
Former CEOs
Former CFO
Digital, mobile, consumer, financial, investment, regulatory and M&A experience
Senior government experience
Global business leaders

The Committee uses a professional search firm to help identify, evaluate and conduct due diligence on potential director candidates. Mr. Brennan, who joined the Board in January 2017, was identified as a potential candidate by the search firm. Using a search firm allows the Committee to make sure it is conducting a broad search and looking at a diverse pool of potential candidates. The Committee also seeks to maintain an ongoing list of potential candidates.

The Committee considers all shareholder recommendations for director candidates and applies the same standards in considering candidates submitted by shareholders as it does in evaluating other candidates. Shareholders can recommend candidates by writing to the Committee in care of the Company’s Secretary, whose contact information is on page 30. Shareholders who wish to submit nominees for election at an annual or special meeting of shareholders should follow the procedure described on page 85.

Our governance principles provide that while the Board need not adhere to a fixed number of directors, generally a board composed of 12-14 directors offers a sufficiently large and diverse group to address the important issues facing the Company while being small enough to encourage personal involvement and discussion. All directors are elected annually under a majority voting standard.


    2017 PROXY STATEMENT | 11



Table of Contents

CORPORATE GOVERNANCE AT AMERICAN EXPRESS
Item 1—Election of Directors for a Term of One Year


Board Diversity

While we do not have a specific policy on board diversity, our governance principles provide that the Board should be diverse, engaged and independent. The Nominating and Governance Committee considers the diversity of the Board, including the dimensions of race, ethnicity and gender. We believe the composition of our Board appropriately reflects a diversity of skills, professional and personal backgrounds and experiences.

Our Board has the following characteristics:

●●●●●●●●●●●●●
3 of 14 female
●●●●●●●●●●●●●●
4 of 14 minorities
●●●●●●●●●●●●●●
2 of 14 reside outside of U.S.

Board Tenure

We have added 6 new directors since 2012. The average tenure of our non-management directors is 7.5 years. New directors add fresh perspectives and longer-serving directors provide continuity and institutional knowledge. We have a mandatory retirement age of 72 which provides for continued board refreshment in addition to turnover that occurs when directors leave board service prior to the mandatory retirement age.

12 | AMERICAN EXPRESS COMPANY  



Table of Contents

CORPORATE GOVERNANCE AT AMERICAN EXPRESS
Item 1—Election of Directors for a Term of One Year

Board Expertise and Skills

Experienced leaders with the right skills and business experience to provide sound judgment, critical
viewpoints and guidance in an evolving environment

Core Business and
Operating Expertise
Senior Management
and Leadership Skills
Digital, Mobile
and Technology
Experience
Government, Legal
and Public Policy
Experience
Financial
Literacy
               
Global Business
Experience
Financial, Investment
and M&A Experience
Public Company
Governance
Experience
Audit and Risk
Oversight Experience
Brand and Marketing
Expertise

Non-management Directors

 

American Express is a global services company that provides customers with access to products, insights and experiences that enrich lives and build business success. We provide innovative payment solutions for individuals and businesses of all sizes around the world. We have a highly valued brand, we are regulated in many jurisdictions, and we operate in a rapidly evolving, technology-dependent and highly competitive environment.

Our director nominees have held senior positions as leaders of various large, complex businesses and organizations and in government, demonstrating their ability to develop and execute significant and complex policy and operational objectives at the highest levels. Many of our nominees have been chief executives or chief operating officers of large, global businesses through which they have developed expertise in core business strategy and development, operations, finance, talent management and leadership development, compliance, controls and risk management as well as skills to respond to rapidly evolving business environments and foster innovation and business transformation.

In addition, our nominees’ experience serving on other boards brings valuable knowledge and expertise in the areas of governance, talent management and compensation, financial reporting, risk management and control and compliance. Detailed information about each nominee follows.

  2017 PROXY STATEMENT | 13



Table of Contents

CORPORATE GOVERNANCE AT AMERICAN EXPRESS
Our Director Nominees

Our Director Nominees

Individual Qualifications, Skills and Experiences

    

The following individuals have been recommended for election by the Nominating and Governance Committee and approved by the Board of Directors, considering, among other factors:

✓ The individual contributions of the director to the Board’s effectiveness

✓ The continued relevance of each of their skills, qualifications and experiences

✓ The mix of skills and backgrounds, and the tenure and diversity of the Board

✓ The Board’s effectiveness as a whole in exercising independence of thought and challenging and providing guidance to management


        
    CHARLENE BARSHEFSKY   Director since 2001   Age 66
Senior International Partner, WilmerHale      
Other Public
Directorships
The Estée Lauder Companies Inc.
Intel Corporation

Specific qualifications, experience, skills and expertise:

High-level government service
Expertise negotiating with foreign governments
Advisor to firms on doing business in emerging markets
Broad legal and public policy experience
Public company governance
 
Other
Directorships
in past five years
 
Starwood Hotels & Resorts Worldwide, Inc.
 
American
Express
Committees
Innovation and Technology
Public Responsibility, Chair

Since 2001, Ambassador Barshefsky has been a Senior International Partner of WilmerHale, a multinational law firm based in Washington, D.C. She advises U.S. and international companies on international business transactions, government relations, market access, and foreign government regulation of business and investment. Prior to joining WilmerHale, Ambassador Barshefsky was the United States Trade Representative (USTR) and a member of President Clinton’s Cabinet from 1997 to 2001, and Acting and Deputy USTR from 1993 to 1996. As the USTR, she served as chief trade negotiator and principal trade policymaker for the United States and, in both roles, negotiated complex market access and regulatory and investment agreements with virtually every major country in the world. Ambassador Barshefsky is a trustee of the Howard Hughes Medical Institute and a member of the Council on Foreign Relations.

14 | AMERICAN EXPRESS COMPANY  



Table of Contents

CORPORATE GOVERNANCE AT AMERICAN EXPRESS
Our Director Nominees

            
    JOHN J. BRENNAN   Director since 2017   Age 62
Chairman Emeritus and Senior Advisor,
The Vanguard Group
      
Other Public
Directorships
General Electric Company
LPL Financial Holdings, Inc.

Specific qualifications, experience, skills and expertise:

Core business, operations and management
CFO and financial accounting expertise
Finance and investment expertise
Financial industry regulation
Institutional investor perspective
Public company governance
 
Other
Directorships
in past five years
 
Guardian Life Insurance of America
Hanover Insurance Group Inc.
 
American
Express
Committees
Audit and Compliance
Risk

Mr. Brennan has been chairman emeritus and senior advisor of The Vanguard Group, Inc., a global investment management company, since 2010. Mr. Brennan joined Vanguard in July 1982, was elected Chief Financial Officer in 1985, and President in 1989. He was Chief Executive Officer from 1996 to 2008 and Chairman of the Board from 1998 to 2009. Mr. Brennan is Chairman of the Board of Governors of The Financial Industry Regulatory Authority (FINRA), a U.S. financial services industry regulator; Chairman of the Board of Trustees of the University of Notre Dame; Chairman of the Vanguard Charitable Endowment Program; and Founding Trustee of the King Abdullah University of Science and Technology. Mr. Brennan is a former Chairman of the Financial Accounting Foundation, an overseer of financial accounting and reporting standard-setting boards.

            
    URSULA M. BURNS   Director since 2004   Age 58
Chairman and Former Chief Executive Officer,
Xerox Corporation
      
Other Public
Directorships
Exxon Mobil Corporation
Xerox Corporation

Specific qualifications, experience, skills and expertise:

Core business, operations and management
Global business leader
Experience driving innovation through technology
Public company governance
Audit oversight experience
 
Other
Directorships
in past five years
 
 
 
American
Express
Committees
Compensation and Benefits
Risk

Ms. Burns has been Chairman of Xerox Corporation, a global document technology company, since May 2010. She was Chief Executive Officer from July 2009 to December 2016; President and director from April 2007 to July 2009; and Senior Vice President and President, Business Group Operations from January 2003 to April 2007. Ms. Burns is a trustee of the Ford Foundation and of the Massachusetts Institute of Technology and provides leadership as a director to community, educational and nonprofit organizations including FIRST (For Inspiration and Recognition of Science and Technology) and Change the Equation. From March 2010 through December 2016, Ms. Burns served as Vice Chair of President Obama’s Export Council.

  2017 PROXY STATEMENT | 15



Table of Contents

CORPORATE GOVERNANCE AT AMERICAN EXPRESS
Our Director Nominees

            
    KENNETH I. CHENAULT Director since 1997   Age 65
Chairman and Chief Executive Officer, American Express Company
Other Public
Directorships
     
IBM
The Procter & Gamble Company

Specific qualifications, experience, skills and expertise:

Unique perspective as company CEO
Core business, operations and management
Payments and network industry expertise
Expertise in digital and mobile innovation
Brand and marketing expertise
Public company governance
 
Other
Directorships
in past five years
 
 
American
Express
Committees
N/A

Mr. Chenault has been Chairman and Chief Executive Officer of American Express Company since April 2001. Mr. Chenault joined American Express in 1981 and was named President of the U.S. division of American Express Travel Related Services Company, Inc. in 1993; Vice Chairman of American Express Company in 1995; President and Chief Operating Officer in 1997; and Chief Executive Officer in January 2001. Mr. Chenault is Chairman of the National Museum of African American History and Culture, a member of The World Trade Center Memorial Foundation and a trustee of the NYU Langone Medical Center.

            
    PETER CHERNIN Director since 2006       Age 65
Founder and CEO, Chernin Entertainment
Other Public
Directorships
     
 
       

Specific qualifications, experience, skills and expertise:

Core business, operations and management
Experience building global media businesses
Digital business development
Brand and marketing expertise
Public company governance
 
Other
Directorships
in past five years
 
Pandora Media, Inc.
Twitter, Inc.
 
American
Express
Committees
Compensation and Benefits
Nominating and Governance, Chair

From June 2009 to the present, Mr. Chernin has served as Founder and CEO of Chernin Entertainment, LLC, a film and television production company, and The Chernin Group, LLC, which is involved in strategic opportunities in media, technology and entertainment. He is also co-founder of CA Media, L.P., which builds and manages media, technology and entertainment businesses throughout the Asia Pacific region. Mr. Chernin was President, Chief Operating Officer and a director of News Corporation from October 1996 to June 2009, and was Chairman and Chief Executive Officer of the Fox Group, where he oversaw the global operations of the company’s film, television, satellite cable and digital media businesses. At News Corporation, Mr. Chernin led the company’s expansion into the broadband and mobile markets through the creation of Fox Interactive Media, Hulu, Jamba and other digital properties. Mr. Chernin is a Chairman and Co-Founder of Malaria No More and a director of the Harvard AIDS Initiative.

16 | AMERICAN EXPRESS COMPANY  



Table of Contents

CORPORATE GOVERNANCE AT AMERICAN EXPRESS
Our Director Nominees

            
    RALPH DE LA VEGA Director since 2016       Age 65
Former Vice Chairman of AT&T Inc.
Other Public
Directorships
     
 
     

Specific qualifications, experience, skills and expertise:

Core business, operations and management
Global business leader
Deep experience in Latin America
Digital and mobile technology expertise
Governance and audit oversight
 
Other
Directorships
in past five years
 
New York Life Insurance Company
 
American
Express
Committees
Audit and Compliance
Innovation and Technology

Mr. de la Vega was Vice Chairman of AT&T Inc. and CEO of Business Solutions and International, AT&T from February 2016 through December 2016. In this role, Mr. de la Vega led AT&T’s Integrated Business Solutions group (both mobile and IP services), which served more than 3.5 million business customers in 200 countries and territories, and nearly all of the Fortune 1000 firms globally, and AT&T’s Mexican wireless business and DIRECTV Latin America, which was part of AT&T’s 2015 acquisition of DIRECTV. Mr. de la Vega was President and Chief Executive Officer, AT&T Mobile and Business Solutions, from August 2014 to February 2016; President and Chief Executive Officer of AT&T Mobility from 2007 to 2014; and prior thereto, the Chief Operating Officer of Cingular Wireless and President of BellSouth Latin America. Mr. de la Vega is a director of New York Life Insurance Company, where he is chair of the Audit Committee and a member of the Governance and Insurance & Operations Committees. He also serves on the boards of Junior Achievement Worldwide and the Boy Scouts of America.

            
    ANNE L. LAUVERGEON Director since 2013       Age 57
Chairman and Chief Executive Officer, A.L.P. SAS
Other Public
Directorships
     
Rio Tinto plc
Suez
Koç Holding
     

Specific qualifications, experience, skills and expertise:

Core business, operations and management
Deep business experience in Europe
Government experience
Public policy experience in sustainability
Public company governance
 
Other
Directorships
in past five years
 
Total S.A.
Vodafone Group Plc.
GDF Suez S.A.
Airbus Group
 
American
Express
Committees
Audit and Compliance
Public Responsibility

Ms. Lauvergeon is Chairman and Chief Executive Officer of A.L.P. SAS, a private French advisory company and, since 2014, has been Chairman of Sigfox, a French start-up that operates a cellular network dedicated exclusively to small messages. She is a former Partner and Managing Director of Efficiency Capital, an advisory firm dedicated to funding technology and natural resources investments, where she served from 2012 to April 2014; former Chief Executive Officer of AREVA Group, the leading French energy company, where she served from July 2001 to June 2011; and former Chairman and Chief Executive Officer of AREVA NC (formerly Cogema) where she served from June 1999 to June 2011. Ms. Lauvergeon started her professional career in 1983 in the steel industry and in 1990 she was named Advisor for Economic International Affairs at the French Presidency and Deputy Chief of Staff in 1991. In 1995 she became a Partner of Lazard Frères & Cie, subsequently joining Alcatel Telecom as Senior Executive Vice President in 1997. Ms. Lauvergeon has been a member of the United Nations Global Compact Board, an executive committee member of the World Business Council for Sustainable Development, and involved in various not for profit organizations in France. She is also Chair of the Commission Innovation 2030, launched by the President of France in 2013 to stimulate innovation in France.

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CORPORATE GOVERNANCE AT AMERICAN EXPRESS
Our Director Nominees

            
    MICHAEL O. LEAVITT Director since 2015       Age 66
Founder and Chairman, Leavitt Partners
Other Public
Directorships
     
HealthEquity, Inc.
Medtronic, Inc.
     

Specific qualifications, experience, skills and expertise:

Senior executive and administrative experience
Deep government experience
Public policy experience
Regulatory experience
Public company governance
 
Other
Directorships
in past five years
 
 
 
American
Express
Committees
Audit and Compliance
Innovation and Technology

Since 2009, Governor Leavitt has been Founder and Chairman of Leavitt Partners, LLC, a health care consulting firm, and since 2014, he has been Chairman of Leavitt Equity Partners, a private equity fund. Prior to that, Governor Leavitt was the United States Secretary of Health and Human Services from 2005 to 2009; Administrator of the Environmental Protection Agency from 2003 to 2005; and Governor of Utah from 1993 to 2003. Governor Leavitt has extensive board management and leadership experience, including serving as the Governor of Utah, a large state with a diverse body of constituents, appointments to positions with the U.S. government, where he oversaw and advised on issues of national concern, and overseeing Leavitt Partners’ work advising clients and making investments in the health care sector. Governor Leavitt has decades of leadership experience with valuable knowledge of the governmental and regulatory environment.

            
    THEODORE J. LEONSIS Director since 2010       Age 61
Chairman and Chief Executive Officer, Monumental
Sports & Entertainment
Other Public
Directorships
     
Groupon, Inc.
     

Specific qualifications, experience, skills and expertise:

Core business, operations and management
Successful innovator and entrepreneur
Expertise in social media and digital trends
Brand and marketing expertise
Public company governance
 
Other
Directorships
in past five years
 
Nutrisystem
Alcatel-Lucent
 
American
Express
Committees
Innovation and Technology, Chair
Public Responsibility

Since 2009, Mr. Leonsis has been Chairman and Chief Executive Officer of Monumental Sports & Entertainment, LLC, a sports, entertainment, media and technology company that owns the NBA’s Washington Wizards, NHL’s Washington Capitals, the WNBA’s Washington Mystics, the Verizon Center in Washington, D.C., Monumental Sports Network and two Arena Football League teams. Mr. Leonsis has also been Vice Chairman Emeritus of AOL LLC, a leading global ad-supported Web company, since December 2006. Mr. Leonsis held a number of executive positions with AOL from September 1994 to December 2006, most recently as Vice Chairman and President, AOL Audience Business. He is also a filmmaker, an author and a director of several private internet and technology companies and educational institutions. Mr. Leonsis was Chairman of Revolution Money, Inc., which American Express acquired in January 2010. In November 2011, Mr. Leonsis co-founded Revolution Growth II, LP, a “speedup capital” fund to invest in technology-enabled businesses. In 2015, Mr. Leonsis co-founded Revolution Growth III, LP, a similar fund to invest in and build innovative, high-growth businesses.

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CORPORATE GOVERNANCE AT AMERICAN EXPRESS
Our Director Nominees

            
    RICHARD C. LEVIN Director since 2007       Age 69
Chief Executive Officer, Coursera
Other Public
Directorships
     
 
     

Specific qualifications, experience, skills and expertise:

Thought leader in American higher education
Distinguished economist
Expertise in statistical analysis and modeling
Leader in U.S.-China cooperation at Yale
CEO of online education company
 
Other
Directorships
in past five years
 
C-3 Energy
 
American
Express
Committees
Public Responsibility
Risk

Mr. Levin has been Chief Executive Officer of Coursera, an educational platform that partners with top universities and organizations worldwide to offer courses online, since April 2014. Mr. Levin is also President Emeritus of Yale University, a private, independent university. He was President of Yale from July 1993 to August 2013; a Frederick William Beinecke Professor of Economics; and a former Chair of Yale’s Economics Department and Dean of Yale’s Graduate School of Arts and Science. Mr. Levin also is a trustee of the William and Flora Hewlett Foundation, one of the largest philanthropic organizations in the United States concerned with solving social and environmental problems. He is a fellow of the American Academy of Arts and Sciences and the American Philosophical Society. Mr. Levin has served on a number of Presidential Commissions and was appointed by President Obama to serve on the President’s Council of Advisors for Science and Technology.

            
    SAMUEL J. PALMISANO Director since 2013       Age 65
Former Chairman, President and Chief Executive Officer, IBM
Other Public
Directorships
     
Exxon Mobil Corporation
     

Specific qualifications, experience, skills and expertise:

Core business, operations and management
Business thought leader
Cybersecurity experience
Global business leader
Financial, investment and M&A expertise
Public company governance
 
Other
Directorships
in past five years
 
IBM
 
American
Express
Committees
Compensation and Benefits
Nominating and Governance

Mr. Palmisano is former Chairman, President and Chief Executive Officer of IBM, a company that provides business and information technology products and services. Mr. Palmisano joined IBM in 1973. He was elected Senior Vice President and Group Executive of the Personal Systems Group in 1997, Senior Vice President and Group Executive of IBM Global Services in 1998, Senior Vice President and Group Executive of Enterprise Systems in 1999, President and Chief Operating Officer in 2000, Chief Executive Officer in 2002 and Chairman of the Board in 2003. Mr. Palmisano was President and Chief Executive Officer through 2011, Chairman through September 2012 and senior adviser to IBM through December 2012. Mr. Palmisano is Chairman of the Center for Global Enterprises, a private, nonprofit research institution devoted to the study of contemporary corporations, globalization, economic trends and their impact on society. Mr. Palmisano was appointed by President Obama as Vice Chair of the Commission on Enhancing National Cybersecurity, a bipartisan government-industry panel that was charged with providing detailed recommendations to strengthen public and private sector cybersecurity defenses. Mr. Palmisano was also co-chair of an independent task force of the Council on Foreign Relations on cybersecurity.

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CORPORATE GOVERNANCE AT AMERICAN EXPRESS
Our Director Nominees

            
    DANIEL L. VASELLA Director since 2012       Age 63
Honorary Chairman and Former Chairman and
Chief Executive Officer, Novartis AG
Other Public
Directorships
     
PepsiCo, Inc.
XBiotech
     

Specific qualifications, experience, skills and expertise:

Core business, operations and management
Finance, investment and M&A experience
Global business leader
Led a highly regulated business
Brand and marketing expertise
Public company governance
 
Other
Directorships
in past five years
 
Novartis AG
 
American
Express
Committees
Audit and Compliance, Chair
Nominating and Governance
Risk

Dr. Vasella is Honorary Chairman and Former Chairman and Chief Executive Officer of Novartis AG, a company that engages in the research, development, manufacture and marketing of health care products worldwide. Dr. Vasella served as Chairman of Novartis from 1999 to February 2013 and as Chief Executive Officer from 1996 to January 2010. From 1992 to 1996, Dr. Vasella held the positions of Chief Executive Officer, Chief Operating Officer, Senior Vice President and Head of Worldwide Development and Head of Corporate Marketing at Sandoz Pharma Ltd. Dr. Vasella is currently working as a coach to senior executives. He is a member of the International Business Leaders Advisory Council for the Mayor of Shanghai, a foreign honorary member of the Academy of Arts and Sciences, a trustee of the Carnegie Endowment for International Peace and a member of several educational institutions.

            
    ROBERT D. WALTER Director since 2002       Age 71
Founder and Former Chairman and Chief Executive
Officer, Cardinal Health
Other Public
Directorships
     
Nordstrom, Inc.
YUM! Brands, Inc. (Non-executive chairman)
     

Specific qualifications, experience, skills and expertise:

Core business, operations and management
Founder of a global Fortune 100 company
Financial, investment and M&A expertise
Successful entrepreneur
Public company governance
 
Other
Directorships
in past five years
 
 
 
American
Express
Committees
Compensation and Benefits, Chair
Nominating and Governance

Mr. Walter is founder and former Chairman and Chief Executive Officer of Cardinal Health, Inc., a company that provides products and services supporting the health care industry. Mr. Walter retired from Cardinal Health in June 2008. Prior to his retirement, he served as Executive Director from November 2007 to June 2008; Executive Chairman of the Board from April 2006 to November 2007; and Chairman and Chief Executive Officer from 1979 to April 2006. As a founder of a global Fortune 100 company, Mr. Walter has deep expertise in finance, business development and business integrations.

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CORPORATE GOVERNANCE AT AMERICAN EXPRESS
Our Board's Independence

          
    RONALD A. WILLIAMS   Director since 2007       Age 67
Former Chairman and Chief Executive Officer, Aetna      
Other Public
Directorships
     
The Boeing Company
Johnson & Johnson
Envision Healthcare
     

Specific qualifications, experience, skills and expertise:

Core business, operations and management
Finance, risk management and investment expertise
Led a highly regulated business
Experience innovating through information technology
Digital, mobile and technology experience
Public company governance
 
Other
Directorships
in past five years
 
 
American
Express
Committees
Compensation and Benefits
Nominating and Governance
Risk, Chair

Mr. Williams is former Chairman and Chief Executive Officer of Aetna Inc., a leading diversified health care benefits company. He was Chairman from October 2006 to April 2011; Chief Executive Officer from February 2006 to November 2010; and President from May 2002 to July 2007. He serves as an operating advisor to Clayton, Dubilier & Rice, LLC. He is a trustee of the Massachusetts Institute of Technology where he is also a member of the Dean’s Advisory Council and Alfred P. Sloan Management Society. He is a trustee of the Committee for Economic Development and Vice Chair of the Board of Trustees of the Conference Board, a global, independent business membership and research association working in the public interest. Prior to joining Aetna, Mr. Williams co-founded several businesses and served in senior management positions at a number of other companies.

Our Board’s Independence

13 of our 14 director nominees are independent.

Our governance principles provide that a substantial majority of our directors will meet the criteria for independence required by the New York Stock Exchange (NYSE). A director is considered independent if the Board determines that he or she does not have a material relationship with the Company. In making its annual independence determinations, the Board considers transactions between each director nominee and the Company. Our Board has established guidelines to assist it in determining director independence. These guidelines can be found within our Corporate Governance Principles and cover, among other things, employment and compensatory relationships, relationships with our auditors, customer and business relationships, and contributions to nonprofit organizations.

Based on our guidelines, the Board determined in February 2017 that all of the Board’s director nominees other than Mr. Chenault are independent.

Ambassador Barshefsky is a partner at the law firm of WilmerHale, a multi-national law firm based in Washington, D.C. From time to time and in the ordinary course of its business, WilmerHale provides legal services to American Express. Ambassador Barshefsky does not provide any such legal services, and she does not receive any compensation from the firm that is generated by or related to our payments to WilmerHale for such services. The Nominating and Governance Committee determined, based on fees paid to the firm over the past three years, that WilmerHale does not perform substantial legal services for the Company on a regular basis. The fees and expenses paid to WilmerHale represented less than one percent of the firm’s annual revenue in each of the past three years and represented less than 0.1 percent of American Express’s revenues in each such year. Further, the Nominating and Governance Committee reviewed the nature of American Express’s engagement of WilmerHale and the services rendered, including the expertise and relevant experience of the firm and the specific partners engaged to work on the matters for which we have engaged the firm, and determined that Ambassador Barshefsky’s service on American Express’s Board should not impair American Express’s ability to engage WilmerHale when American Express determines such engagements to be appropriate. The

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CORPORATE GOVERNANCE AT AMERICAN EXPRESS
Our Corporate Governance Framework

Committee is satisfied that WilmerHale, when engaged for legal work, is chosen by American Express’s legal group on the basis of the directly relevant factors of experience, expertise and efficiency. After considering the foregoing, the Committee determined and recommended to the Board that American Express’s professional engagement of WilmerHale does not impair Ambassador Barshefsky’s independence.

Our Corporate Governance Framework

Corporate Governance Principles

Our corporate governance framework is designed to support the Company’s brand attributes of trust, security and integrity, and to promote achievement of our financial targets through responsible development and execution of our corporate strategy. Our directors understand that they serve you as shareholders in carrying out their responsibilities to oversee the operations and strategic direction of our Company. To do so effectively, our Board, along with management, regularly reviews our corporate governance principles and practices to ensure that they are appropriate and reflect high standards. In reviewing our governance principles and making recommendations, the Nominating and Governance Committee considers the views of shareholders expressed to us in meetings, as well as publicly available discourse on governance.

We have adopted a set of Corporate Governance Principles which, together with the charters of the six standing committees of the Board of Directors (Audit and Compliance, Compensation and Benefits, Innovation and Technology, Nominating and Governance, Public Responsibility, and Risk), our Code of Conduct (which constitutes our code of ethics) and the Code of Business Conduct for the Members of the Board of Directors, provide our governance framework. Key governance policies and processes also include our whistleblower policy, our comprehensive enterprise-wide risk management program, our commitment to transparent financial reporting and our systems of internal checks and balances. Comprehensive management policies, many of which are approved at the board level, guide the Company’s operations.

You may view the following documents by clicking on the “Corporate Governance” link found on our investor relations webpage at http://ir.americanexpress.com and then selecting “Governance Framework.” You may also access our Investor Relations webpage through our main website at www.americanexpress.com by clicking on the “About American Express” link, which is located at the bottom of the Company’s homepage. You may also obtain free copies of the following materials by writing to our Company's Secretary at our headquarters:

Corporate Governance Principles

Charters for each of the six standing Board committees

Code of Conduct for Employees (which constitutes our code of ethics)

Code of Business Conduct for Members of our Board

Whistleblower Policy


COMMITMENT TO INTEGRITY AND TRUST

We seek to achieve strong results for our shareholders through a commitment to high standards of ethical behavior and integrity, sound governance and risk management practices, a strong ethos of customer service and a commitment to giving back to the communities in which we work and operate.

Leaders are responsible to demonstrate the highest standards of integrity in all dealings with fellow employees, customers, suppliers and the community at large.


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CORPORATE GOVERNANCE AT AMERICAN EXPRESS
Corporate Responsibility at American Express

Director Stock Ownership

Our governance principles provide that non-management directors are required to obtain a personal holding of shares (directly or through share equivalent units) with a value of $1 million within five years of joining the Board.

Majority Voting Standard for Director Elections

In a non-contested election, directors are elected by a majority of “for” votes cast by shareholders. (A non-contested election is an election where the number of nominees is the same as the number of directors to be elected.) If a director receives a greater number of votes “against” than votes “for” his or her election, the director is required to immediately submit his or her resignation to the Board. The Board, excluding such individual, will decide whether or not to accept such resignation and will promptly disclose and explain its decision in a Form 8-K filed with the Securities and Exchange Commission (SEC).

In a contested election, the director nominees who receive the plurality of votes cast are elected as directors. Under the plurality standard, the number of persons equal to the number of vacancies to be filled who receive more votes than other nominees are elected to the Board, regardless of whether they receive a majority of votes cast. An election is considered contested under our certificate of incorporation if there are more nominees than positions on the Board to be filled at the meeting of shareholders as of the fourteenth day prior to the date on which we file our definitive proxy statement with the SEC.

Proxy Access

A shareholder or group of no more than 20 shareholders that has owned at least 3 percent of our common shares for at least 3 years may nominate directors to our Board and include the nominees in our proxy materials to be voted on at our annual shareholder meeting. The maximum number of shareholder nominees that will be included in our proxy materials with respect to any such annual meeting is the greater of (i) two or (ii) 20 percent of directors to be elected. A shareholder who seeks to nominate a director or directors to our Board must provide proper notice to the Company’s Secretary under the terms of our by-laws.

Corporate Responsibility at American Express

Community

At American Express, we believe that serving our communities is not only integral to running a business successfully; it is one of our responsibilities as citizens of the world. The mission of our corporate social responsibility program is to bring to life the American Express value of good corporate citizenship by supporting communities in ways that enhance the Company’s reputation with employees, customers, business partners and other stakeholders.

Environment

In the past few years, we have taken measurable actions to reduce our global carbon footprint, optimize the efficiency and sustainability of our workplace, support our customers in reducing their own environmental footprints and encourage our suppliers and employees to act in more sustainable ways. For example, we reduced our carbon emissions by 27.5 percent between 2007 and 2012. Building on this achievement, American Express committed to reducing absolute greenhouse gas emissions by 10 percent globally (vs. 2011 baseline) by the end of 2016. For additional information regarding Corporate Responsibility at American Express, please see pages 36-37.

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CORPORATE GOVERNANCE AT AMERICAN EXPRESS
Our Board's Role and Responsibilities, Structure and Processes

Our Board’s Role and Responsibilities,
Structure and Processes

How Our Board Engages in CEO and Key Executive Succession Planning

A primary board responsibility is to ensure that we have the appropriate management talent to pursue our strategies successfully. The Board plans for CEO succession and oversees management’s planning for succession of other key executive positions. Our board calendar includes at least one meeting each year at which the Board conducts a detailed review of the Company’s talent strategies, leadership pipeline and succession plans for key executive positions. As the market for top talent in our industry is highly competitive, the Compensation and Benefits Committee oversees how we retain key talent.

The entire Board of Directors is involved in the critical aspects of the CEO succession planning process, including establishing selection criteria that reflect our business strategies, identifying and evaluating potential internal candidates and making key management succession decisions. Succession is regularly discussed with the CEO as well as without the CEO present in executive sessions of the Board. The Board makes sure that it has adequate opportunities to meet with and assess development plans for potential CEO successors to address identified gaps in skills and attributes. This occurs through various means, including informal meetings, board dinners, presentations to the Board and committees, attendance at board meetings and the comprehensive annual talent review. In addition, the Board has developed an emergency CEO succession plan.

How We Manage Risk

We use our comprehensive Enterprise Risk Management (ERM) program to identify, aggregate, monitor and manage risks. The program also defines our risk appetite, governance, culture and capabilities. The implementation and execution of the ERM program is headed by our Chief Risk Officer.

There are several internal management committees, including the Enterprise-wide Risk Management Committee (ERMC), chaired by our Chief Risk Officer, which oversee risks. The ERMC is the highest-level management committee to oversee all firm-wide risks. It maintains the enterprise-wide risk appetite framework and monitors compliance with limits and escalations defined in it. The ERMC oversees implementation of risk policies across the Company with approval by the appropriate Board committee. The ERMC reviews key risk exposures, trends and concentrations, significant compliance matters, economic capital and Basel capital trends, and provides guidance on the steps to monitor, control and report major risks. The ERMC is responsible for risk governance, risk oversight and risk appetite for all risks, including individual credit risk, institutional credit risk, operational risk, compliance risk, reputational risk, market risk, asset liability management risk, liquidity risk, model risk and strategic and business risk.

How our Board Oversees Risk Management

Risk management is overseen by our Board of Directors through three Board committees: Risk, Audit and Compliance, and Compensation and Benefits. Each committee consists entirely of independent directors and provides regular reports to the Board regarding matters reviewed at their committee. The committees meet regularly in private sessions with our Chief Risk Officer, the Chief Compliance Officer, the General Auditor and other senior management with regard to our risk management processes, controls, talent and capabilities.

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CORPORATE GOVERNANCE AT AMERICAN EXPRESS
Our Board's Role and Responsibilities, Structure and Processes

The risk management roles and responsibilities of these committees are:

Risk Committee

Provides oversight of our enterprise-wide risk management framework, processes and methodologies. Approves our ERM policy, which covers risk governance, risk oversight and risk appetite, including individual credit risk, institutional credit risk, market risk, liquidity risk, operational risk, reputational risk, compliance risk, model risk, asset liability risk and strategic and business risk. Our ERM policy:
Defines the authorized risk limits to control exposures within our risk capacity and risk tolerance, including stressed forward-looking scenarios
Establishes principles for risk taking in the aggregate and for each risk type, and is supported by a comprehensive system for monitoring limits, escalation triggers and assessing control programs
Reviews and concurs in the appointment, replacement, performance and compensation of our Chief Risk Officer
Receives regular updates from the Chief Risk Officer on key risks, transactions and exposures
Reviews our risk profile against the tolerances specified in the Risk Appetite Framework, including significant risk exposures, risk trends in our portfolios and major risk concentrations
Provides oversight of our compliance with Basel capital and liquidity standards and our Internal Capital Adequacy Assessment Process, including the Comprehensive Capital Analysis and Review (CCAR) submissions and resolution planning
 

 
Audit and Compliance Committee

Assists the Board in its oversight responsibilities relating to the integrity of our financial statements and financial reporting process, internal and external auditing, including the qualifications and independence of the independent registered public accounting firm and the performance of our internal audit services function, and the integrity of our systems of internal accounting and financial controls
Provides oversight of our Internal Audit Group
Reviews and concurs in the appointment, replacement, performance and compensation of our General Auditor and approves Internal Audit’s annual audit plan, charter, policies and budget
Receives regular updates on the audit plan’s status and results including significant reports issued by Internal Audit and the status of our corrective actions
Reviews and approves our compliance policies, which includes our Compliance Risk Tolerance Statement
Reviews the effectiveness of our Corporate-wide Compliance Risk Management Program
Compensation and Benefits Committee

Works with the Chief Risk Officer to ensure our overall compensation programs, as well as those covering our business units and risk-taking employees, appropriately balance risk with business incentives and that business performance is achieved without taking imprudent or excessive risk
Our Chief Risk Officer is actively involved in setting goals, including for our business units
Our Chief Risk Officer also reviews the current and forward-looking risk profiles of each business unit and provides input into performance evaluations
Our Chief Risk Officer meets with the Committee and attests whether performance goals and results have been achieved without taking imprudent risks
Uses a risk-balanced incentive compensation framework to decide on our bonus pools and the compensation of senior executives

 

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CORPORATE GOVERNANCE AT AMERICAN EXPRESS
Our Board’s Role and Responsibilities, Structure and Processes

Our Board Leadership

Our Board is led by a combination of Mr. Chenault, Chairman and Chief Executive Officer, and Mr. Walter, our Lead Independent Director, supplemented by active committee chairs and independent-minded, skilled and committed directors. Our Board believes that this structure creates an environment in which the Board can work effectively and appropriately challenge management.

Our Nominating and Governance Committee evaluates the effectiveness of our Board as part of the annual board evaluation process. The Committee believes that Mr. Chenault’s leadership as Chairman (in particular, his knowledge of our business, his transparency, openness and responsiveness to feedback, and his ability to draw on the resources and expertise of the Board to make sure that all directors actively contribute to the discussion) has promoted board focus on the most impactful areas, effective board challenge and responsible decision-making. In addition, Mr. Walter’s role and responsibilities are robust, and he devotes significant time to his position. He has a deep knowledge of our Company and history and the trust and confidence of the Board that he will appropriately represent the directors’ views, present feedback to management and monitor that the feedback is appropriately addressed. Mr. Walter was reelected Lead Independent Director in February 2017 by the independent directors upon the recommendation of the Nominating and Governance Committee. He has served in this role since 2011.

Our Board Chairman        Our Lead Independent Director
Draws on his knowledge of our business, operations, industry and competitive developments, key customers and business partners in setting the agenda and focusing board discussions
 
Presents our message and strategy to shareholders, employees, regulators, customers and the public. Communicates feedback from these stakeholders to directors in a timely and open manner
 
Provides timely, open and transparent communication of significant matters to directors
 
Calls special meetings of directors when necessary and otherwise updates board members between meetings through one-on-one or group phone calls
 
  
Ensures that he is available to all directors between meetings
 
Leads meetings in a way that generates healthy debate and exchange of viewpoints from all directors so that board meetings are productive group discussions
 
Communicates to the entire organization the culture of integrity and ethical behavior that the Board expects
 
Meets regularly with the Lead Independent Director to receive feedback from the Board, set agendas and discuss board functioning
 
Engages with shareholders and analysts
 
Meets with key regulators
      
Evolves his role as circumstances change and devotes significant time to understanding our business and key developments and reaching out to the Chairman and other directors between meetings
 
Presides at all meetings of the Board at which the Chairman is not present. Leads non-management director executive sessions at every regular board meeting and sessions of the independent directors, presents feedback to the CEO and makes sure that feedback is appropriately addressed
 
Has the authority to call meetings of the independent directors
 
Serves as liaison between the Chairman and the independent directors. Works with the Chairman to make sure that all director viewpoints are considered and that decisions are appropriately made
 
Approves information sent to the Board
 
Approves meeting agendas for the Board
 
Approves meeting schedules to ensure that there is sufficient time for discussion of all agenda items 
 
Meets with directors between meetings
 
Engages with shareholders 
 
Performs such other duties as the independent directors may designate from time to time

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CORPORATE GOVERNANCE AT AMERICAN EXPRESS
Our Board's Role and Responsibilities, Structure and Processes

Our Non-Management Director Executive Sessions

Executive sessions of non-management directors, led by our Lead Independent Director, enable the Board to discuss matters such as strategy, CEO and senior management performance and compensation, succession planning and board effectiveness without management present. Our non-management directors meet in executive session at each regularly scheduled board meeting. Any director may request additional executive sessions of non-management or independent directors. During 2016, our independent directors met in executive session at 8 meetings.

Our Board Evaluation Process

Our Board continually seeks to improve its performance. Conducting a robust self-assessment presents the opportunity to examine the Board’s effectiveness and practices and identify areas for improvement.

Our Board evaluations cover the following areas:

Board effectiveness
 
Board and committee composition
 
Satisfaction with the performance of the Chairman
 
Satisfaction with the performance of the Lead Independent Director
 
Access to the Chief Executive Officer and other members of senior management
 
Quality of the board discussions and balance between presentations and discussion
 
Quality of materials presented to directors
 
Board and committee information needs
 
Satisfaction with board agendas and the frequency of meetings and time allocations
 
Areas where directors want to increase their focus
 
Board dynamics and culture
 
Director access to experts and advisors
 
Satisfaction with the format of the evaluation

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CORPORATE GOVERNANCE AT AMERICAN EXPRESS
Our Board's Role and Responsibilities, Structure and Processes

The table below summarizes our Board Evaluation process.

1 Corporate
Governance
Review
        2 Annual Board
and Committee
Evaluations
        3 Summary of
the Written
Evaluations
        4 Board and
Committee
Review
Our Nominating and Governance Committee reviews our Corporate Governance Principles in light of general corporate governance developments and practices suggested by governance organizations and investors, and recommends changes that it believes are appropriate to maintain high standards of governance.      

The format is reviewed by the Nominating and Governance Committee.

We currently use a questionnaire that is tailored to address the significant processes that drive board effectiveness.

The questionnaire elicits discussion through open-ended questions.

     

The Company’s Secretary summarizes the responses, showing trends since the prior year and written comments, which are shared with the Board and committee members. Responses are not attributed to specific individuals to promote candor.

     

The Chairman of the Nominating and Governance Committee and each committee chair leads discussions of the Board and each committee, using the questionnaire as a guide. Management is not present. Committee chairs report on their evaluations to the full Board.

As an outcome of the discussions, directors deliver feedback to the Chairman of the Board and suggest changes and areas for improvement.


5 Actions        
Examples of changes made in response to this process over the years have included:
Formed the Innovation and Technology Committee to enable a deeper focus in this area
Enhanced the information regularly provided to directors
Changed the format of board meetings to enable more time for director discussion with and without the CEO present
Changed the format of materials to combat “information overload” and to enable directors to focus on the key data
Increased informal meetings between directors and key executives
Provided director training on emerging risk areas
Added international board members and increased the diversity of the Board

 
 
     

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CORPORATE GOVERNANCE AT AMERICAN EXPRESS
Shareholder Engagement

Shareholder Engagement

Our Board’s Commitment to Shareholder Engagement

Why We Engage

We have embraced a robust shareholder engagement process for many years. Our directors and management recognize the benefits that come from this dialogue. We engage with shareholders throughout the year in order to:

Provide visibility and transparency into our business, our performance and our governance practices
 
Discuss with our shareholders the issues that are important to them, hear their expectations for us and share our views
 
Assess emerging issues that may affect our business, inform our decision making, enhance our corporate disclosures and help shape our practices

How We Engage

Investor Relations and Senior Management
We provide institutional investors with many opportunities to provide feedback to our Board and senior management. We participate in:
Formal events
One-on-one meetings
Group meetings throughout the year
To learn more about our engagement with institutional investors, you may visit our investor relations website at http://ir.americanexpress.com.
     

Outcomes from Investor Feedback
Shareholder feedback is thoughtfully considered and has led to modifications in our executive compensation program, governance practices and disclosures. Some of the actions we have taken in response to shareholder feedback over the last several years include:

Adopted proxy access
Added performance vesting criteria to our annual restricted stock unit grant
Required our CEO to retain a portion of shares granted until after retirement
Made changes to our executive compensation peer group
Enhanced the process our Compensation and Benefits Committee uses to determine CEO compensation and clarified the CEO’s target and maximum incentive opportunities
Enhanced our website disclosures on political contributions and diversity
Enhanced our proxy disclosures
Amended our Corporate Governance Principles to limit the number of public company boards on which our directors may serve
Designed our 2017 Incentive Compensation Plan to reflect evolving shareholder preferences
Updated our Corporate Social Responsibility Report and included it on our website
 
Secretary and Chief Governance Officer
We engage with governance representatives of our major shareholders through in-person meetings and conference calls that occur during and outside of the proxy season. Members of the corporate governance, investor relations and executive compensation groups discuss, among other matters, company performance, emerging governance practices generally and specifically with respect to our Company, the reasons behind a shareholder’s voting decisions at prior meetings, our executive compensation practices and our corporate social responsibility practices.
 
 

Board Involvement
We make our Lead Independent Director available for engagement with large shareholders, including participating in joint investor relations and corporate governance meetings. We deliver feedback to our directors regarding these shareholder meetings.


Since January 2016, we have engaged with investors representing over 53 percent of shares outstanding.

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CORPORATE GOVERNANCE AT AMERICAN EXPRESS
Board Committees

How To Communicate With Our Board

You may communicate with the Board or an individual director by letter, email or telephone, directed in care of the Company’s Secretary, who will forward your communication to the intended recipient. However, at the discretion of the Secretary, unsolicited advertisements or invitations to conferences or promotional material may not be forwarded.

If you wish to communicate a concern about our financial statements, accounting practices or internal controls, please direct your concern to the Chair of the Audit and Compliance Committee. If the concern relates to our governance practices, business ethics or corporate conduct, it should be directed to the Chair of the Nominating and Governance Committee or the Lead Independent Director. Matters relating to executive compensation may be directed to the Chair of the Compensation and Benefits Committee. If you are unsure of the category to which your concern relates, you may communicate it to any one of the independent directors, to the Lead Independent Director or to the Chairman.

Please direct such communications in care of the Secretary as follows:

Carol V. Schwartz
Secretary and Chief Governance Officer
American Express Company
200 Vesey Street
New York, NY 10285
(212) 640-2000
corporatesecretarysoffice@aexp.com

Board Committees

Board Committee Responsibilities

Audit and Compliance Committee

   

Members:
John J. Brennan
Ralph de la Vega
Anne L. Lauvergeon
Michael O. Leavitt
Daniel L. Vasella (Chair)

Independence:
Each member of the
Committee is independent
and financially literate

Audit Committee Financial
Expert:
Mr. Brennan meets
the requirements as defined
by SEC rules

Meetings in Fiscal Year
2016:
12

RESPONSIBILITIES:
Assists the Board in its oversight of the integrity of our financial statements and financial reporting processes, and internal and external auditing, including the qualifications and the independence of the independent registered public accounting firm, the performance of the Company’s internal audit services function, the integrity of our systems of internal control over financial reporting, and legal and regulatory compliance. See page 41 under Report of the Audit and Compliance Committee for additional information regarding the duties of the Committee with respect to oversight of our financial reporting process
 
Appoints, replaces, reviews and evaluates the qualifications of the Company’s independent registered public accounting firm
 
Oversees the process for the receipt, retention and treatment, on a confidential basis, of complaints we receive regarding accounting, internal accounting controls or auditing matters and the confidential, anonymous submission by our employees of concerns regarding questionable accounting or auditing matters
 
Reviews and discusses reports from management regarding significant reported ethics violations under our code of conduct and other corporate governance policies
 
Meets regularly in executive session with management, the Company’s General Auditor, the Company’s independent registered public accounting firm and the Company’s Chief Compliance Officer
 
 

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CORPORATE GOVERNANCE AT AMERICAN EXPRESS
Board Committees

Compensation and Benefits Committee

   

Members:
Ursula M. Burns
Peter Chernin
Samuel J. Palmisano
Robert D. Walter (Chair)
Ronald A. Williams

Independence:
Each member of the
Committee is independent

Meetings in Fiscal Year
2016:
4

RESPONSIBILITIES:
Oversees the compensation of our executive officers and designated key employees
 
Oversees our employee compensation plans and arrangements and employee benefit plans
 
Approves an overall compensation philosophy and strategy for the Company and its executive officers, including the selection of performance measures aligned with our business strategy, and the review of our compensation practices so that they do not encourage imprudent risk taking
 
Evaluates potential conflicts of interest with respect to its advisors

Compensation and Benefits Committee Interlocks and Insider Participation:
None of the current members of the Committee is a former or current officer or employee of the Company or any of its subsidiaries. None of them has any relationship required to be disclosed under this caption under the rules of the SEC.

 
 

Innovation and Technology Committee

   

Members:
Charlene Barshefsky
Ralph de la Vega
Michael O. Leavitt
Theodore J. Leonsis (Chair)

Meetings in Fiscal Year
2016:
4

RESPONSIBILITIES:
Assists the Board in its oversight of strategic innovation and technology initiatives
 
Reviews our digital and technology strategy, our transformation initiatives and our digital product innovations
 
Reviews metrics on innovation and digital and technology developments and technology progress
 
 

Nominating and Governance Committee

   

Members:
Peter Chernin (Chair)
Samuel J. Palmisano
Daniel L. Vasella
Robert D. Walter
Ronald A. Williams

Independence:
Each member of the
Committee is independent

Meetings in Fiscal Year
2016:
7

RESPONSIBILITIES:
Considers and recommends candidates for election to the Board
 
Advises the Board on director compensation
 
Oversees the annual performance evaluation process for the Board and Board committees
 
Advises the Board on corporate governance and board leadership
 
Discusses feedback from shareholders regarding governance practices and advises on shareholder engagement practices
 
Administers the Related Person Transaction Policy
 
Supports the Board with respect to management succession planning
 
 

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CORPORATE GOVERNANCE AT AMERICAN EXPRESS
Compensation of Directors

Public Responsibility Committee

   

Members:
Charlene Barshefsky (Chair)
Anne L. Lauvergeon
Theodore J. Leonsis
Richard C. Levin

Meetings in Fiscal Year
2016:
3
RESPONSIBILITIES:
Reviews legislation, regulations and policies affecting us, our philanthropic programs, our political action committee, our corporate political contributions and our government relations activities
 
Reviews legislation, regulations and policies affecting the communities in which we operate and our environmental and social programs and practices

Political Engagement Activities: We communicate with policymakers on public policy issues important to the Company. In addition to our advocacy efforts, we participate in the political process through the American Express Political Action Committee (AXP PAC) and through corporate political contributions in those jurisdictions where it is permissible to do so. AXP PAC is funded solely by voluntary employee contributions and does not contribute to presidential campaigns. We maintain comprehensive compliance procedures to ensure that our activities are conducted in accordance with all relevant laws, and management regularly reports to the Public Responsibility Committee regarding its engagement in the public policy arena and its political contributions. Information regarding our Company’s political activities, including U.S. political contributions, may be found at http://about.americanexpress.com/news/pap.aspx.

 
 

Risk Committee

   

Members:
John J. Brennan
Ursula M. Burns
Richard C. Levin
Daniel L. Vasella
Ronald A. Williams (Chair)

Independence:
Each member of the
Committee is independent

Meetings in Fiscal Year
2016:
8

RESPONSIBILITIES:
Assists the Board in its oversight of the Company’s enterprise-wide risk management framework and the policies and procedures established by management to identify, assess, measure and manage key risks facing the Company
 
Assists the Board in its oversight of management’s execution of capital management, liquidity planning and resolution planning
 
Meets regularly in executive session with the Company’s Chief Risk Officer.

Please see “How our Board Oversees Risk Management” on pages 24-25 for additional information regarding the activities of the Committee
 
 

Compensation of Directors

The Nominating and Governance Committee reviews director compensation. The Committee’s objectives are to compensate our directors in a manner that attracts and retains highly qualified directors and aligns the interests of our directors with those of our long-term shareholders. In 2016, the Committee engaged an independent compensation advisory firm, Semler Brossy Consulting Group, to assist the Committee in its review of the competitiveness and structure of the Company’s non-management director compensation.

This review included a benchmark of our director compensation against the 20 companies that our Compensation and Benefits Committee examines as a source of benchmarking data when examining the competitiveness of our executive compensation practices, as well as the S&P 100 and certain financial institutions. After completing its review, the Nominating and Governance Committee determined not to change the amount or form of director compensation.

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CORPORATE GOVERNANCE AT AMERICAN EXPRESS
Compensation of Directors

The following table provides information on the 2016 compensation of non-management directors who served for all or a part of 2016. We reimburse directors for reasonable out-of-pocket expenses attendant to their board service.

Name Fees Earned or
Paid in Cash
(1)
Stock Awards
(2)
All Other
Compensation
(3)
Total
Charlene Barshefsky       $ 115,000       $ 165,000       $ 74,062       $ 354,062
Ursula M. Burns $ 125,000 $ 165,000 $ 75,450 $ 365,450
Peter Chernin $ 130,000 $ 165,000 $ 38,917 $ 333,917
Ralph de la Vega $ 90,000 $ 165,000 $ 1,834 $ 256,834
Anne L. Lauvergeon $ 120,000 $ 165,000 $ 13,664 $ 298,664
Michael O. Leavitt $ 120,000 $ 165,000 $ 14,535 $ 299,535
Theodore J. Leonsis $ 115,000 $ 165,000 $ 22,846 $ 302,846
Richard C. Levin $ 120,000 $ 165,000 $ 42,200 $ 327,200
Samuel J. Palmisano $ 110,000 $ 165,000 $ 12,248 $ 287,248
Daniel L. Vasella $ 160,000 $ 165,000 $ 18,106 $ 343,106
Robert D. Walter $ 160,000 $ 165,000 $ 66,096 $ 391,096
Ronald A. Williams $  168,750 $  165,000 $  62,072 $  395,822

(1) Annual Retainers. For service in 2016, we paid non-management directors an annual retainer of $95,000 for board service and an additional annual retainer of $20,000 to members (including the Chairs) of the Audit and Compliance and Risk Committees, $10,000 to members (including the Chair) of the Compensation and Benefits Committee and $5,000 to members (including the Chairs) of the Innovation and Technology, Nominating and Governance, and Public Responsibility Committees. We also paid an annual retainer to the Chair of each of the Board committees as follows: Audit and Compliance, Compensation and Benefits, Nominating and Governance and Risk, $20,000; Innovation and Technology and Public Responsibility, $10,000. We pay no fees for attending meetings, but the annual retainer for board service of $95,000 is reduced by $20,000 if a director does not attend at least 75 percent of his or her aggregate board and committee meetings. Our Lead Independent Director also receives an annual retainer of $25,000 (provided that if he or she is also the Chair of the Nominating and Governance Committee, the Lead Independent Director will not receive the annual retainer for service as Chair of that Committee).
 
All the non-management directors, except for Ms. Burns, deferred all or a portion of their 2016 retainers into a cash account, a share equivalent unit account, or both, under the deferred compensation plan described below in footnote 2.
 
(2) Share Equivalent Unit Plan. To align our non-management directors’ annual compensation with shareholder interests, each non-management director is credited with common share equivalent units (SEUs) upon election or reelection at each annual meeting of shareholders. Each SEU reflects the value of one common share. Directors receive additional SEUs as dividend equivalents on the units in their accounts. SEUs do not carry voting rights and must be held at least until a director ends his or her service on the Board. Each SEU is payable in cash equal to the then value of one common share at the time of distribution to the director. On May 2, 2016, the date of last year’s annual meeting, each non-management director elected to the Board was credited with SEUs having a value of $165,000, which consisted of 2,580 SEUs, based on the market price of our common shares for the 15 trading days immediately preceding such date. We report in this column the aggregate grant date fair value of these SEUs in accordance with FASB ASC Topic 718, Compensation – Stock Compensation.
 
    Deferred Compensation Plan for Directors. Non-management directors may defer the receipt of up to 100 percent of their annual cash retainer fees into either: (1) a cash account in which amounts deferred will be credited at the rate of 120 percent of the applicable federal long-term rate for December of the prior year or (2) their SEU account. Under either alternative, directors will receive cash payments and will not receive shares upon payout of their deferrals.
 
The balances in directors’ SEU accounts at December 31, 2016 are set forth in the table below. These amounts represent the aggregate number of SEUs granted under the Share Equivalent Unit Plan for all years of service as a director, additional units credited as a result of the reinvestment of dividend equivalents and, for directors who participated in the SEU option under our deferred compensation plan for directors, retainer amounts deferred into their SEU account and dividend equivalents thereon.

    Name Number of SEUs
C. Barshefsky 57,370
U.M. Burns 65,349
  P. Chernin 34,299
R. de la Vega 3,289
A.L. Lauvergeon 13,944
M.O. Leavitt 7,885
T.J. Leonsis 21,702
R.C. Levin 30,290
S.J. Palmisano 11,633
D.L. Vasella 18,089
R.D. Walter 50,600
R.A. Williams 55,544

(3) Insurance. We provide our non-management directors with group term life insurance coverage of $50,000. The group life insurance policy is provided to the directors on a basis generally available to all company employees. This column includes the premium paid for such coverage.

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Director and Officer Liability Insurance

   

Dividend Equivalents. Dividend equivalents are reinvested in additional units for all directors based upon total SEUs held at the time of company quarterly dividend payment dates. This column includes the fair market value of the dividend equivalents received by the directors during 2016 in these amounts: Amb. Barshefsky $66,016; Ms. Burns $75,404; Mr. Chernin $38,871; Mr. de la Vega $1,803; Ms. Lauvergeon $13,618; Gov. Leavitt $6,489; Mr. Leonsis $22,800; Mr. Levin $34,154; Mr. Palmisano $12,202; Dr. Vasella $18,060; Mr. Walter $58,050; and Mr. Williams $62,026.

 

Directors’ Charitable Award Program. We maintain a Directors’ Charitable Award Program for directors elected prior to July 1, 2004. To fund this program, we purchased joint life insurance on the lives of participating directors, including Mr. Chenault. The death benefit of $500,000 funds a donation to a charitable organization that the director recommends. The Company paid no premiums in 2016.

 

Matching Gift Program. Directors are eligible to participate in the Company’s Matching Gift Program on the same basis as company employees. Under this program, the American Express Foundation matches gifts to approved charitable organizations up to $8,000 per calendar year. This column includes the amounts matched with respect to calendar year 2016.

Director and Officer Liability Insurance

We have an insurance program in place to provide coverage for director and officer liability and for fiduciary liability arising from employee benefit plans we sponsor. The coverage for director and officer liability provides that, subject to the policy terms and conditions, the insurers will: (i) reimburse us when we are legally permitted to indemnify our directors and officers; (ii) pay losses, including settlements, judgments and legal fees, on behalf of our directors and officers when we cannot indemnify them; and (iii) pay our losses resulting from certain securities claims. The fiduciary liability portion of the program covers: us, our employee benefit plans and the directors, trustees and employees who serve as fiduciaries for our employee benefit plans. Subject to the policy terms and conditions, it covers losses from alleged breaches of fiduciary or administrative duties, as defined in the Employee Retirement Income Security Act of 1974 or similar laws or regulations. A portion of the program is blended with certain other insurances covering the Company.

Effective from November 30, 2016 to November 30, 2017, this insurance is provided by a consortium of insurers. ACE American Insurance Company is the lead insurer. XL Specialty Insurance Company, Illinois National Insurance Company, Allied World Assurance Company Ltd., Freedom Specialty Insurance Company, Continental Casualty Company, Everest National Insurance Company, American International Reinsurance Company Ltd., Markel Bermuda Ltd., Starr Indemnity and Liability Company, National Liability & Fire Insurance Company and QBE Insurance Corporation provide excess coverage. The program also includes supplemental layers dedicated exclusively to providing coverage for directors and officers when we cannot indemnify them. The supplemental layers are provided by XL Specialty Insurance Company, Zurich American Insurance Company, Federal Insurance Company, Illinois National Insurance Company, Freedom Specialty Insurance Company, Continental Casualty Company, Everest National Insurance Company, U.S. Specialty Insurance Company, Travelers Casualty & Surety Company of America, Starr Indemnity and Liability Company, Allied World Assurance Company Ltd., American International Reinsurance Company Ltd., Chubb Bermuda Insurance Ltd. and certain Lloyd’s of London syndicates. We expect to obtain similar coverage upon expiration of the current program. The annual premium for the program is approximately $4.5 million.

Certain Relationships and Transactions

In the ordinary course of our business, we engage in transactions, arrangements and relationships with many other entities, including financial institutions and professional organizations. Some of our directors, director nominees, executive officers, greater than 5 percent shareholders, and their immediate family members (each, a Related Person) may be directors, officers, partners, employees or shareholders of these entities. We carry out transactions with these entities on customary terms and, in many instances, these Related Persons may not have knowledge of them. To the Company’s knowledge, since January 1, 2016, no Related Person has had a material interest in any of our ongoing business transactions or relationships except as described below.

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CORPORATE GOVERNANCE AT AMERICAN EXPRESS
Certain Relationships and Transactions

Our Related Person Transaction Policy

Our written Related Person Transaction Policy governs company transactions, arrangements and relationships involving more than $120,000 in which a Related Person has a direct or indirect material interest (Related Person Transactions). Under the policy, Related Person Transactions must be approved by the Nominating and Governance Committee. The Committee will only approve a transaction if, after reviewing the relevant facts and circumstances, it determines that the transaction is consistent with the best interests of the Company. In the event we become aware of a Related Person Transaction that was not pre-approved under the policy, the Committee will consider the options available, including ratification, revision or termination of the transaction. The policy does not supersede any other company policy or procedure that may apply to any Related Person Transaction, including our Corporate Governance Principles and codes of conduct.

The Company’s Secretary is responsible for assisting the Nominating and Governance Committee in carrying out its responsibilities, and management is required to present to the Committee the material facts of any transaction that it believes may require review. In cases where it is impracticable or undesirable to delay a decision on a proposed transaction until the next meeting of the Committee, the Chair of the Committee may review and approve the transaction and then report any approval to the full Committee at its next regularly scheduled meeting. If a matter before the Committee involves a member of the Committee, the member must be recused and may not participate in deliberations or vote on the matter.

Pre-Approved Categories of Related Person Transactions

The Nominating and Governance Committee has pre-approved the following categories of transactions as being consistent with the best interests of the Company. These categories, which may constitute Related Person Transactions, are:

Executive officer compensation arrangements approved by the Board or the Compensation and Benefits Committee
 

Non-employee director compensation approved by the Board or the Nominating and Governance Committee
 

Director and officer insurance payments and indemnification payments made in accordance with the Company’s charter or by-laws
 

Transactions in the ordinary course of business with entities at which a Related Person is a director, executive officer, employee and/or a less than 10 percent beneficial owner, provided the amounts involved do not exceed the greater of $1 million or 1 percent of the other entity’s annual revenues
 

Transactions in which the rates or charges are determined by competitive bids
 

Contributions by the Company or the American Express Foundation to a charitable organization at which a Related Person serves as a director, executive officer and/or trustee, provided that the aggregate annual amount of such contributions, excluding contributions under the Company’s gift match program and contributions under the Company’s Directors’ Charitable Award Program, do not exceed the lesser of $1 million or 2 percent of the organization’s total annual revenues
 

Use of the Company’s products and services on terms and conditions similar to those available to other customers or employees generally in similar circumstances or of like credit-worthiness and
 

Transactions in which all shareholders receive the same benefits on a pro-rata basis


Related Party Transactions

Our executive officers and directors may from time to time take out loans from certain of our subsidiaries on the same terms that these subsidiaries offer to the general public. For example, our two U.S. card-issuing banks may extend credit to our directors and executive officers under our charge or lending products. All indebtedness from these transactions is in the ordinary course of our business and is on the

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CORPORATE GOVERNANCE AT AMERICAN EXPRESS
Corporate Responsibility at American Express

same terms, including interest rates and collateral, in effect for comparable transactions with other people. Such indebtedness involves normal risks of collection and does not have features or terms that are unfavorable to our subsidiaries. Our executive officers and directors may also have transactions with us involving other goods and services, such as travel services and investments in deposit products offered by subsidiaries of the Company. These transactions are also in the ordinary course of our business, and we provide them on terms that we offer to our customers generally. Occasionally, we may have employees who are related to our executive officers, directors or director nominees. We compensate these individuals in a manner consistent with our practices that apply to all employees. The adult son of Mr. John Hayes, a former executive officer, is employed by the Company in a non-executive position and received compensation in 2016 of between $143,000 and $211,000. The compensation and other terms of employment of Mr. Hayes’ son are determined on a basis consistent with the Company’s human resources policies.

Certain executive officers, directors and members of their immediate families are directors, employees or have equity interests in companies with whom the Company has entered into ordinary course business relationships from time to time and with whom the Company may enter into additional ordinary course business relationships. These may include ordinary course merchant acceptance relationships pursuant to which these companies accept our charge and credit card products and pay us fees when their customers use these cards, as well as use of the Company’s cards and financial and other products and services, including extensions of credit, on terms and conditions similar to those available to other customers generally. From time to time, we may enter into joint marketing or other relationships with one or more of these companies in the ordinary course that encourage customers to apply for and use our cards. We also may provide ordinary course commercial card and bill payments services or business insights to some of these companies, for which these companies pay fees to us. We may engage in other commercial transactions with these companies, and pay or receive fees in those transactions. We have a number of similar ordinary course relationships with Berkshire Hathaway Inc. and its subsidiaries. We have also purchased insurance and other products from subsidiaries of Berkshire Hathaway Inc. in the ordinary course of business and on arm’s-length terms.

Corporate Responsibility at American Express

Community

At American Express, we believe that serving our communities is not only integral to running a business successfully, it is one of our responsibilities as citizens of the world. The mission of our corporate social responsibility program is to bring to life the American Express value of good corporate citizenship by supporting communities in ways that enhance the Company’s reputation with employees, customers, business partners and other stakeholders. We do this by supporting visionary nonprofit organizations that are: 

Preserving and sustaining unique historic places for the future
Developing new nonprofit leaders for tomorrow
Encouraging community service where our employees and customers live and work

We realize the importance of preserving cultural assets around the world and, over the years, American Express has contributed more than $65 million to historical preservation-related projects. To commemorate the 100th Anniversary of the National Park Service, we partnered with the National

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CORPORATE GOVERNANCE AT AMERICAN EXPRESS
Corporate Responsibility at American Express

Trust for Historic Preservation and National Geographic Society on a unique public awareness campaign, Partners in Preservation: National Parks, which engaged 1.1 million community participants. Through this campaign, American Express provided financial support to preserve historic sites at several National Parks, including Yellowstone, the Grand Canyon, the Smoky Mountains and Yosemite, to name a few.

Recognizing the difference that effective leadership can make, we also support programs that help nonprofit groups develop talent within their organizations so they are better prepared to tackle the important issues of today and tomorrow. In 2016, American Express supported the training of nearly 6,000 emerging nonprofit leaders through grants to over 100 nonprofit organizations worldwide totaling over $8 million. Additionally, in an effort to scale leadership development, we reached over 78,000 leaders through online programs. By helping nonprofits increase their capacity to engage the public and our employees as volunteers, we have mobilized hundreds of thousands of volunteers across the globe. These projects address a wide range of causes including environmental stewardship, access to education, health and wellness, youth mentoring and efforts to supply basic needs in underserved communities. Included in these efforts are the Company’s programs that engage our employees in charitable giving and community service.

In 2016, our volunteer program — Serve2Gether — engaged over 16,000 volunteer employees resulting in over $4 million in donated time and talent. Our employee giving campaign — Give2Gether — resulted in over $9 million in support to over 6,000 charitable organizations in the United States, Canada and India. Through Serve2Gether Consulting, which engages our employees in short-term pro bono consulting projects, we delivered over 11,000 hours of consulting service valued at over $1.7 million to nonprofit organizations and social entrepreneurs worldwide.

We also have a long history of helping people in times of trouble. American Express and its employees have provided humanitarian relief to victims of disasters — including wildfires, floods, earthquakes, tsunamis and other disasters. In the last decade, American Express has provided assistance for over 50 disasters in more than 35 countries, including Japan, Haiti, the Philippines and the northeastern United States following Superstorm Sandy.

Environment

In the past few years, we have taken measurable actions to reduce our global carbon footprint, optimize the efficiency and sustainability of our workplace, support our customers in reducing their own environmental footprints and encourage our suppliers and employees to act in more sustainable ways. For example, we reduced our carbon emissions by 27.5 percent between 2007 and 2012. Building on this achievement, American Express committed to reducing absolute greenhouse gas emissions by 10 percent globally (vs. 2011 baseline) by the end of 2016. We will be publishing the results of that effort later this year. Other programs and achievements in 2016 include:

Improving the efficiency and environmental profile of our buildings: more than 50 percent of our global real estate portfolio is green-building certified

Investing in renewable energy: we purchased more than 150,000 million kilowatt hours of green power and 100 percent of the electricity powering our Data Centers was carbon-free

Reducing paper usage in our business processes and sourcing environmentally preferable paper, electronics and other commodities

Engaging employees in our environmental responsibility programs

We have also been recognized for our progress in this sustainability journey:

American Express ranked 63rd among the top U.S. green companies in the 2016 Newsweek Green Ranking

The Environmental Protection Agency has recognized American Express as a top user of sustainable energy in the United States since 2014


Learn More About Corporate Responsibility at American Express.
You may visit our corporate website at http://about.americanexpress.com/csr to learn how we, together with our Card Members and shareholders, are making a difference in our communities.

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AUDIT COMMITTEE MATTERS


           
  ITEM 2

RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Audit and Compliance Committee has sole authority to appoint and replace the Company’s independent registered public accounting firm, which shall report directly to the Committee, and is directly responsible for its compensation and oversight of its work. In February 2017, the Committee reappointed PricewaterhouseCoopers LLP (PwC) as our independent registered public accounting firm for 2017.

We are asking you to ratify this appointment. If shareholders fail to ratify the appointment, the Committee will consider it a direction to consider other accounting firms for the subsequent year. One or more representatives of PwC will be present at the meeting, will be given the opportunity to make a statement if he or she desires to do so and will be available to respond to appropriate questions.

ITEM 2 RECOMMENDATION: Our Board of Directors recommends that you vote FOR the following resolution:

RESOLVED, that the appointment by the Audit and Compliance Committee of the Company’s Board of Directors of PricewaterhouseCoopers LLP, as independent registered public accounting firm for the Company, to audit the accounts of the Company and its subsidiaries for 2017, is ratified and approved.

 
 
 
 







  
 

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AUDIT COMMITTEE MATTERS
Item 2 — Ratification of Appointment of Independent Registered Public Accounting Firm

Actions Taken by the Committee to Support its Recommendation

AREAS OF FOCUS ACTIONS

Committee charter
requires a detailed
review of the
independent audit firm
including as compared
to other firms at least
every 10 years

PwC has been our independent auditor since 2005. This review, conducted in 2014, assessed PwC’s performance across the following criteria: professional expertise, audit engagement team performance, communications, independence and objectivity, and fees. A wide range of internal stakeholders were surveyed and asked to comment generally, identify areas for recognition and improvement, and indicate how PwC’s performance was trending over time. PwC’s audit fees were benchmarked against other firms based on publicly available data. The positive results of the review resulted in the decision to continue to engage PwC and also identified several areas with opportunity for improvement that were discussed with PwC.

PwC’s objectivity
and independence

Reviews relationships between PwC and American Express that may reasonably be thought to bear on independence and reviews PwC’s annual affirmation of independence. Recognizing that independence and objectivity can be compromised by an auditor’s provision of non-audit services, the Committee has approved a management policy that limits PwC’s provision of services other than audit and audit-related services except when there is a compelling rationale.

Quality of PwC’s
auditing practices and
PwC’s commitment to
quality, efficiency and
adding value

Reviews issues raised by the Public Company Accounting Oversight Board (PCAOB) reports on PwC, PwC’s internal quality control procedures and results of PwC’s most recent quality control reviews, as well as issues raised by recent governmental investigations. Discusses PwC’s quality initiatives and the steps PwC is taking to enhance the quality and efficiency of its audits with the lead engagement partner and with the PwC senior relationship partner assigned to American Express.

PwC’s performance
as auditor

Discusses and comments on PwC’s audit plan and strategy for the audit, including the objectives, overall scope and structure, the resources provided and available at the firm, and the Committee’s expectations. Receives periodic updates from the lead engagement partner on the status of the audit and areas of focus by PwC.

Performance of lead
engagement partner

Committee chair is directly involved in selecting the lead engagement partner. During the year, the Committee chair meets one-on-one with the lead engagement partner to promote a candid dialogue and the Committee meets in executive session with the lead engagement partner to discuss the progress of the audit and any audit issues, deliver Committee feedback and discuss any other relevant matters.

PwC’s communications
with the Committee

Committee gives feedback to the lead engagement partner on the clarity, thoroughness and timeliness of PwC’s communications to the Committee.

Terms of the
engagement and
audit fees

Committee reviews the engagement letter and approves PwC’s audit and non-audit fees.


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AUDIT COMMITTEE MATTERS
PricewaterhouseCoopers LLP Fees and Services

PricewaterhouseCoopers LLP Fees and Services

Fees for 2016 and 2015

The following table sets forth the aggregate fees billed or to be billed by PwC for each of the last two fiscal years (in thousands):

Types of Fees       Fiscal 2016       Fiscal 2015
Audit Fees $22,885 $21,844
Audit-Related Fees(1) 3,829 3,454
Tax Fees 8 8
All Other Fees 110 50
Total $26,832 $25,356

(1) PwC performs the audit of the Company’s pension plans for Switzerland and Hong Kong where the fees are paid by the respective plan. These fees are not included in Audit-Related Fees since they were not paid by the Company. The total fees for these two audits in each of 2016 and 2015 were $31K for each year.

In the table above, in accordance with SEC rules, “Audit Fees” consist of fees for professional services rendered for the integrated audit of our financial statements, review of the interim consolidated financial statements included in quarterly reports, and services provided in connection with statutory and regulatory filings or engagements and other attest services. “Audit-Related Fees” consist of fees for assurance and related services that were reasonably related to the performance of the audit or review of our financial statements. The services included employee benefit plan audits, internal control reviews, attest services not required by statute or regulation, and consultations on financial accounting and reporting matters not classified as audit. “Tax Fees” consist of fees for professional services rendered for tax compliance and tax consulting services. “All Other Fees” are fees for any services not included in the first three categories.

Policy on Pre-Approval of Services Provided by PricewaterhouseCoopers LLP

The terms of our engagement of PwC are subject to the pre-approval of the Audit and Compliance Committee. All audit and permitted non-audit services require pre-approval by the Committee in accordance with pre-approval procedures established by the Committee. In accordance with SEC rules, the Committee’s pre-approval procedures have two different approaches to pre-approving audit and permitted non-audit services performed by PwC. Proposed services may be pre-approved pursuant to procedures established by the Committee that are detailed as to a particular class of service without consideration by the Committee of the specific case-by-case services to be performed if the relevant services are predictable and recurring.

We refer to this pre-approval method as “general pre-approval.” If a class of service has not received general pre-approval, the service will require specific pre-approval by the Committee before such service is provided by PwC. All services provided by our independent registered public accounting firm have been pre-approved in accordance with these procedures. The procedures require all proposed engagements of PwC for services of any kind to be directed to the Company’s Controller and then submitted for approval to the Committee (or, should a time-sensitive need arise, to its Chair) prior to the beginning of any services.

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Table of Contents

AUDIT COMMITTEE MATTERS
Report of the Audit and Compliance Committee

Other Transactions with PricewaterhouseCoopers LLP

We have a number of business relationships with individual member firms of the worldwide PwC organization. Our subsidiaries provide card services to some of these firms and these firms pay fees to our subsidiaries. These services are in the normal course of business, and we provide them pursuant to arrangements that we offer to other similar clients.

Report of the Audit and Compliance Committee

A role of the Audit and Compliance Committee is to assist the Board in its oversight of the Company’s financial reporting process. Management has the primary responsibility for the financial statements and the reporting process, including the system of internal control over financial reporting. PwC is responsible for auditing the Company’s financial statements and its internal control over financial reporting, in accordance with the standards of the PCAOB, and expressing opinions as to the conformity of the financial statements with accounting principles generally accepted in the United States and the effectiveness of internal control over financial reporting.

In the performance of its oversight function, the Audit and Compliance Committee has reviewed and discussed with management and PwC the Company’s audited financial statements. The Audit and Compliance Committee also has discussed with PwC the matters required to be discussed by Auditing Standard No. 16, as adopted by the PCAOB, relating to communications with audit committees. In addition, the Audit and Compliance Committee has received from PwC the written disclosures and letter required by applicable requirements of the PCAOB regarding PwC’s communications with the Committee concerning independence, has discussed with PwC their independence from the Company and its management, and has considered whether PwC’s provision of non-audit services to the Company is compatible with maintaining the firm’s independence.

The Audit and Compliance Committee discussed with the Company’s General Auditor and PwC the overall scope and plan for their respective audits. Internal Audit is responsible for preparing an annual audit plan and conducting internal audits under the direction of the Company’s General Auditor, who is accountable to the Audit and Compliance Committee. The Audit and Compliance Committee met with each of the General Auditor, the Controller and PwC, with and without management present, to discuss the results of their examinations, their evaluations of the Company’s internal controls, and the overall quality of the Company’s financial reporting. In addition, the Audit and Compliance Committee met with the Chief Executive Officer and Chief Financial Officer of the Company to discuss the processes that they have undertaken to evaluate the accuracy and fair presentation of the Company’s financial statements and the effectiveness of the Company’s systems of disclosure controls and procedures and internal control over financial reporting.

Based on the reviews and discussions referred to above, the Audit and Compliance Committee recommended to the Board of Directors that the Company’s audited financial statements be included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016 for filing with the SEC.

Audit and Compliance Committee

Daniel L. Vasella, Chairman
John J. Brennan
Ralph de la Vega
Anne L. Lauvergeon
Michael O. Leavitt

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Table of Contents

EXECUTIVE COMPENSATION


           
  ITEM 3

ADVISORY RESOLUTION TO APPROVE EXECUTIVE COMPENSATION (SAY ON PAY)

Pursuant to regulations under Schedule 14A of the Securities Exchange Act of 1934, we are asking you to approve, on an advisory basis, the compensation of American Express’s named executive officers disclosed in the Compensation Discussion and Analysis (CD&A), the Summary Compensation Table and the related compensation tables, notes and narrative in this proxy statement.

Our Board believes that the compensation of our executive officers is aligned with performance, is sensitive to our share price, appropriately motivates and retains our executives, and is a competitive advantage in attracting and retaining the high caliber of executive talent necessary to drive our business forward and build sustainable value for our shareholders. We believe our executive compensation program delivers pay which is strongly linked to company performance over time.

We engage with shareholders throughout the year, including discussing our compensation program and practices, and we also obtain feedback through this annual say on pay vote. Although this advisory vote is non-binding, the results of this vote and the views expressed by our shareholders in these discussions will inform the Compensation and Benefits Committee’s future decisions about our executive compensation. If shareholders approve our recommendation to continue with annual say on pay voting, our next say on pay vote will occur at the 2018 annual meeting.

ITEM 3 RECOMMENDATION: Our Board of Directors recommends that you vote FOR the following advisory resolution:

RESOLVED, that the compensation paid to the Company’s Named Executive Officers, as disclosed pursuant to Item 402 of Regulation S-K, including the Compensation Discussion and Analysis, compensation tables and narrative discussion, is approved.

 
 
 
 
 
 
 
 
 
 
 
 
 
 
  

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Table of Contents

EXECUTIVE COMPENSATION
Compensation Discussion and Analysis

COMPENSATION DISCUSSION AND ANALYSIS

Our Compensation Discussion and Analysis (CD&A) describes our executive compensation programs and compensation decisions in 2016 for our Named Executive Officers (NEOs), who for 2016 were:

Name Title
Kenneth I. Chenault Chairman and Chief Executive Officer
Stephen J. Squeri Vice Chairman
Jeffrey C. Campbell Executive Vice President and Chief Financial Officer
Laureen E. Seeger Executive Vice President and General Counsel
Douglas E. Buckminster President, Global Consumer Services

TABLE OF CONTENTS

44   1. 2016 IN SUMMARY: CEO PAY DECISIONS
44-46   2. HOW OUR PAY PROGRAM LINKS TO OUR BUSINESS STRATEGY
         44          Compensation Strategy
45 Elements of Total Direct Compensation
    46   Setting incentive plan goals
46-52 3. 2016 PAY OUTCOMES
46 2016 Company Performance
48 2016 CEO Performance Against Annual Goals
49 Awarded Total Direct Compensation (TDC) for CEO in 2016
50 CEO Pay – Awarded TDC (January 2014 – January 2016) and Realizable Compensation Comparison
    50   Other Named Executive Officers’ Awarded TDC
53 4. DETERMINATION OF LTIA PAYOUTS FOR AWARDS MADE IN PRIOR YEARS
       53       Performance RSUs Awarded in January 2014-Vesting Based on 2014-2016 Performance
    53   Portfolio Grant Awarded in January 2014-Vesting Based on 2014-2016 Performance
54-61 5. COMPENSATION AND BENEFITS COMMITTEE: GOVERNANCE AND PRACTICES
55 Shareholder Engagement and its Influence on Our Programs
55 Changes for 2017 - Updates to Annual Incentive Program
56 Key Compensation Practices – What We Do and Don’t Do
57 Assessing Competitive Positioning
58 Other Policies and Guidelines
60 Post-Employment Compensation
61 Note Regarding 2016 TDC Decisions and Summary Compensation Table
    61   Glossary of Key Compensation Terms

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Table of Contents

EXECUTIVE COMPENSATION
Compensation Discussion and Analysis

1. 2016 In Summary: CEO Pay Decisions

American Express closed 2016 with strong progress against our three priorities for 2016 and 2017: (1) accelerating revenue growth; (2) optimizing investments; and (3) resetting our cost base. Highlights for 2016 include:

Diluted EPS was $5.65 (including the gain from our sale of the Costco portfolio); excluding restructuring charges, adjusted EPS was $5.93, which exceeded our initial guidance of $5.40 - $5.701
 
Revenue performance improved sequentially in the fourth quarter as a result of a record number of new card acquisitions, growth in loans and a growing number of merchants accepting our cards globally
 
We made significant progress in removing $1 billion from our overall cost base by the end of 2017, on a run rate basis
 
We made a record level of investments in marketing and promotion and enhanced our Card Member value proposition to support sustainable future revenue growth

Due to this strong performance, the Compensation and Benefits Committee awarded our CEO compensation equal to his target level, $22.0 million.

Recognizing the Company’s strategic reset is ongoing and not yet complete, the Committee decided to reallocate our CEO’s target level bonus from cash into long-term incentives (see page 49). As a result, all of Mr. Chenault’s compensation for 2016, other than his base salary, consisted of performance-contingent, multi-year awards tied to specific financial and operational goals, with the majority being equity-based. Mr. Chenault’s 2016 compensation will therefore be closely tied to the ultimate success of our strategic initiatives and aligned with long-term shareholder outcomes. (See Section 3 for details.)

2. How Our Pay Program Links to Our Business Strategy

Compensation Strategy

Our executive pay program is deliberate, consistent and continues to align with our Company’s business strategy.

We align pay with company performance and support a long-term, high performance business model
 
We link most of the pay for senior executives to long-term business strategies and key priorities. The CEO’s pay has added emphasis on long-term and stock-based incentives (91% of CEO’s awarded pay for 2016), with a substantial stockholding requirement (see page 58 for details).
 
We measure performance against challenging markers established before each performance cycle and aligned with our key business priorities
 
We discourage imprudent risk taking by avoiding undue emphasis on any one metric or short-term goal

These principles have served us well for years, and we have adapted them in response to input from shareholders and regulators, including the Board of Governors of the Federal Reserve System (Federal Reserve).

1 Adjusted diluted earnings per share (EPS), a non-GAAP measure, excludes $266 million after-tax restructuring charges ($410 million pre-tax) for the year ended December 31, 2016. Management believes adjusted diluted EPS is useful in evaluating the ongoing operating performance of the Company and the Company’s performance against its 2016 EPS outlook originally provided in the Company’s Q4’15 earnings release on January 21, 2016, at which point restructuring charges and other contingencies were not estimable and thus not included in the outlook. See Appendix A for a reconciliation to EPS on a GAAP basis.

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EXECUTIVE COMPENSATION
Compensation Discussion and Analysis

Elements of Total Direct Compensation

Variable compensation, which makes up most of NEO pay, covers annual and multi-year performance periods and depends on performance against comprehensive and carefully selected measures. Compensation for 2016 had the following elements:

Base Salary

Base salaries correspond to experience and job scope and provide competitive fixed pay.

Annual Incentive2

Performance Measures3
Shareholder (55%)
Strategic and Transformational (15%)
Customer (15%)
Employee (15%)

Long-Term Incentive

Portfolio Grant Award
(PG)

Payout range 0-125% of target
Vests in 3 years (2017-2019)
Paid in cash (except for CEO, who
has had some or all deferred and
payable in equity)
   
Financial
Metrics
      Strategic
Milestones
   

Stock Option Award

Vests 3 years after grant
10-year term

 
Net
Income5
 

Performance RSU Award
(PRSU)

Payout range 0-125% of target
Vests in 3 years (2017-2019)
Ties payout to 3-year performance

 
ROE4  



2 Historically, all or a portion of the AIA awarded to our CEO has been paid in a form other than cash and has been deferred. Mr. Chenault’s 2016 AIA was earned based on his 2016 performance, but all of the payout was reallocated into long-term incentive awards: a combination of a portfolio grant, performance RSUs and stock options. The portfolio grant is subject to achievement of three-year (2017-19) financial and strategic milestones approved by the Compensation and Benefits Committee in Q1 2017, and the performance RSUs depend on 2017-19 ROE performance. The stock options vest three years after grant, subject to meeting performance conditions, and are exercisable for ten years. All or a portion of our CEO’s AIA earned for performance years 2010 – 2015 was paid in RSUs with additional one-year vesting subject to positive net income. For these 2010-2015 RSU awards, 50% were settled in cash and 50% in shares with 100% of the net shares to be held for one year post retirement.
3 Details of performance measures under each of the below categories can be found on page 48.
4 Average ROE between 23-27% provides 100% target payout. Details of the applicable payout grid are available on page 53.
5 Subject to positive cumulative net income over the vesting period.

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Table of Contents

EXECUTIVE COMPENSATION
Compensation Discussion and Analysis

Setting Incentive Plan Goals

The Compensation and Benefits Committee sets comprehensive performance goals annually and remains engaged throughout the year to monitor company strategy and performance toward goals.

Key Steps:

        Board reviews competitive environment and business strategy at a two-day
offsite in May and at meetings throughout the year
 
   
The Board discusses the business environment as well as regulatory, competitive and technological developments
The Board reviews company performance against plan and against peers
Directors are given meaningful updates to business strategy

        Management presents the annual financial plan in January; the Committee
reviews and approves final incentive plan metrics and goals, which are then
approved by the Committee in Q1 of each year
 
   
Management presents company financial data and forward looking guidance
Based on the above, the Committee sets financial and strategic incentive plan goals calibrated and aligned with Company strategy

        The Committee remains engaged throughout the year, evaluates annual
performance and determines final payout amounts
 
   
The Committee reviews performance against goals at multiple points
At the end of the year, it determines incentive payouts according to performance relative to the goals
It assesses Company performance relative to peers with respect to revenue growth, billings growth and other relevant factors
A combination of objective and subjective measurements brings rigor to the process while allowing the Committee to account for unforeseen and relevant market, political and other factors

3. 2016 Pay Outcomes

As a part of the annual pay decision process, the Committee considers overall company performance as well as performance against specific pre-established enterprise-wide financial goals, achievement of strategic and transformational initiatives, performance relative to our peers and financial markets, and a risk/control and compliance assessment.

2016 Company Performance

In response to competitive dynamics over the past few years, our leadership team took decisive steps to put American Express in a position of strength. We believe we are appropriately managing our business for the long term while being mindful of the short-term impact of ending certain cobranding relationships. In re-setting the Company’s strategic focus, we identified three priorities for 2016-2017:

Accelerating Revenue Growth
 

Optimizing Investments
 

Re-setting the Cost Base


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EXECUTIVE COMPENSATION
Compensation Discussion and Analysis

The Company made strong progress against these goals in 2016, as evidenced by the following:

FY’15 FY’16 Key Achievements

Accelerating
Revenue Growth

Revenue
(in millions)

$32,818
(adj $29,358)6

$32,119
(adj $30,926)6

Acquired 10 million new Card Members

Experienced healthy loan growth

Increased adjusted (excluding Costco-related volumes) worldwide spending on cards

Total Loans Held
for Investment7

(in millions)

$59,847

$66,726

Grew loans while maintaining excellent credit performance

Lending net write-off rates remained best-in-class relative to large issuer peers in the U.S.

Optimizing
Investments

Return on
Average Equity

24%8

26%

Continued to leverage strong capital position to return a total of over $5.6 billion of capital to shareholders through buybacks and dividends in 2016

Earnings Per
Share (EPS)

$5.05
(adj $5.38)
9

$5.65
(adj $5.93)
9

Adjusted diluted EPS of $5.93
(excluding restructuring charges) in line with the raised EPS outlook disclosed in October 2016 and above the initial guidance range given in January 2016

Re-setting the
Cost Base

Operating
Expenses

(in millions)

$11,769

$10,421

Operating expenses and total expenses were down versus the prior year, including benefits from gains on the sale of the Costco and JetBlue cobrand card portfolios in 2016 (which were reported as expense reductions)
Accelerated progress on expense reduction throughout the year
Continued investments in service infrastructure, data management and digital capabilities aimed at growing the business

6 Adjusted for Costco-related revenues and foreign exchange. Refer to Annex A for a reconciliation.
7 Total loans held for investment represents Card Member loans held for investment and Other Loans. Total loans, which also includes Card Member loans held for sale, was $74,947 million for FY’15.
8 Excluding a $335 million after-tax charge ($419 million pre-tax) primarily related to the impairment of goodwill and technology assets and restructuring in the prepaid services business, adjusted ROE for FY’15 was 25.6%. Refer to Annex A for a reconciliation.
9 Adjusted diluted earnings per share (EPS), a non-GAAP measure, excludes the $335 million after-tax prepaid services business charge ($419 million pre-tax) from 2015 and the $266 million after-tax restructuring charges ($410 million pre-tax) from 2016. Refer to Annex A for a reconciliation of EPS on a GAAP basis.

Our business and financial performance in 2016 enabled us to raise our earnings expectations over the course of the year. We also increased our spending on growth initiatives, particularly during the fourth quarter, to take advantage of the opportunities in the marketplace and position the Company for long-term growth.

We achieved this despite a more challenging competitive and regulatory environment.

Total Shareholder Return
American Express has enjoyed success under its current leadership. Since Mr. Chenault took the helm as CEO (April 23, 2001) to December 31, 2016, the Company’s total shareholder return (TSR)10 of 153% over that period has exceeded both the S&P Financials (48%) and S&P 500 (146%) indices. More recent TSR for American Express has lagged these indices.

10 Total Shareholder Return (TSR) is the total return on common shares over a specified period, expressed as a percentage (calculated based on the change in stock price over the relevant measurement period and assuming reinvestment of dividends). Source: Bloomberg (returns compounded daily).

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EXECUTIVE COMPENSATION
Compensation Discussion and Analysis

American Express’s TSR for 2016 was 9%. The share price reacted favorably to the momentum displayed in the second half of the year and also benefitted from the post-election rally that lifted financial sector shares in general. Overall the Company’s TSR has lagged that of the S&P Financials and the S&P 500 indices on a one-, three- and five-year basis.

2016 CEO Performance Against Annual Goals

In determining the CEO’s compensation, the Committee sets and reviews specific targets for the year across financial, strategic and operational objectives.

2016 CEO Performance Against Annual Goals


Shareholder (55%)       Actual       Target      
Strategic and Transformational (15%)
On track to reduce expense base by $1 billion by the end of 2017 on a run rate basis
Reversal of trial court judgment against the Company in the antitrust action brought by the Department of Justice
Accelerated Merchant Coverage in a profitable manner – added approximately 1 million new merchant locations in the United States
Strengthened Card Member Value Proposition – substantial increase in product portfolio through the introduction of new and refreshed products and investment in Membership Rewards experiences
Made progress in lending growth initiatives
New transactions, business progress and innovation – we continued to make progress in performance marketing, big data, non-card lending and digital capabilities. Acquired inAuth, a mobile devices authentication company
EPS11 $5.65 $5.40-$5.70
Revenue Growth12 (1%) (3%) to (1%)
ROE 26% 25.0% or more
Q4 Adjusted Revenue Exit
Momentum (FX adjusted)13
Above Target 5%-7%
 
Customer (15%)
Amex Net Promoter Score increased by 200 bps in 2016
Growth in many international markets, including billings growth on an FX-adjusted basis and an increase in international active locations in force
 
Employee (15%)
Target talent retention goals were achieved
Diversity and inclusion measures were achieved at above target
We continued to be recognized as an Employer of Choice in 20 U.S. surveys (including Fortune, Black Enterprise, and Anita Borg Institute) and internationally in 14 countries

11 Adjusted EPS, a non-GAAP measure, was $5.93, which excludes restructuring charges of $266 million ($410 million pre-tax). Please refer to Annex A for a reconciliation to GAAP EPS.
12 The growth rate of total revenues net of interest expense, adjusted for FX. Refer to Annex A for reconciliation to GAAP revenue.
13 Q4 Adjusted Exit Revenue Momentum, a non-GAAP measure, is our Fourth Quarter 2016 revenue growth over the prior year, adjusted for FX and adjusted for the impact of Costco and JetBlue on the prior year.

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EXECUTIVE COMPENSATION
Compensation Discussion and Analysis

Performance and Risk Modifiers
The Compensation and Benefits Committee also considered the Company’s performance against peers (e.g., EPS, TSR, write-off rates), as well as the Chief Risk Officer’s assessment and determination that the Company achieved its 2016 results by taking risks within the Company’s risk appetite. Finally, the Committee also considered Mr. Chenault’s leadership contributions and his long track record of success.

Awarded Total Direct Compensation (TDC) for CEO in 2016

The Committee determined to award Mr. Chenault compensation at target, or $22.0 million, the target level for the CEO since 2014.

While acknowledging that the Company exceeded initial expectations and made significant progress in 2016, the Committee also recognized that additional work lies ahead to reset the Company’s trajectory toward profitable growth and high returns. Accordingly, the Committee reallocated Mr. Chenault’s bonus for 2016, $6.625 million, into awards payable over the long term. As a result, other than his base salary, all of Mr. Chenault’s compensation for 2016 consists of performance-contingent, multi-year grants mostly denominated in the Company’s stock. This reinforces the Company’s philosophy to strongly link CEO compensation to future performance and ultimately to shareholder returns. The Committee’s decision is reflected below14:

CEO Compensation for 2016
In millions:

91 percent of TDC awarded for 2016 is deferred and tied to company performance.

14 Due to SEC reporting rules, timing differences result in different amounts being allocated in the chart above as compared to the Summary Compensation Table. A reconciliation is shown on page 61.
15 The combined equity target value was $8,250,000. Generally, the Compensation and Benefits Committee grants an equal number of stock options and Performance RSUs. The values for the equity compensation elements are approximated in the table above using the January 26, 2016 stock price and Black-Scholes valuation on that date.

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Table of Contents

EXECUTIVE COMPENSATION
Compensation Discussion and Analysis

CEO Pay – Awarded Total Direct Compensation (January 2014 – January 2016) and Realizable Compensation Comparison16

Because our pay program is subject to performance against goals and a majority of compensation is denominated in equity, realizable pay can differ meaningfully from the value of the compensation granted. The chart below shows how realizable pay over the past three years has averaged less than the value of the compensation at grant—reflecting both below-target level performance in 2015 and the share price decline.

In the following chart:

Target compensation is as specified by the Committee at the start of each year
 

Awarded total direct compensation (awarded TDC) includes salary, AIA earned and the grant date value of long-term incentives granted in January for performance in the prior year17
 

Realizable compensation refers to the value in January 2017 of TDC awarded in prior years (Please refer to page 62 for the methodology used to determine realizable compensation)


CEO-Awarded TDC vs. Realizable Compensation (Three-Year Average)

Realizable compensation is 8 percent lower than awarded TDC over the 3-year period while TSR20
is down by 6 percent, showing a strong link between pay outcomes and Company stock price performance.

In millions:

Other Named Executive Officers Awarded TDC

The Committee uses a similar process to determine compensation for the other NEOs, except that the CEO first develops recommendations based on his assessment of company and individual performance and our pay mix guidelines. The Committee then assesses each NEO’s results, which also support CEO objectives, in light of each business unit and staff group’s risk/control and compliance rating. It also takes note of the Company’s overall performance as described in the discussion of CEO pay above, individual achievements of each NEO against goals set at the start of the year and each NEO’s leadership over the course of the year. The discussion below provides highlights for each of the NEOs.

16 This analysis is a supplement and is not a substitute for the Summary Compensation Table presented on page 63.
17 See page 33 of the Proxy Statement filed in March 2014 for details on January 2014 Awarded TDC. See page 33 of the Proxy Statement filed in March 2015 for details on January 2015 Awarded TDC. See page 48 of the Proxy Statement filed in March 2016 for details on January 2016 Awarded TDC.
18 January 2014 Awarded TDC - $24.40 million; January 2015 Awarded TDC - $25.10 million; January 2016 Awarded TDC - $18.52 million. See footnote 17 for additional details.
19 As of January 31, 2017, Realizable Compensation is $19.16 million, $19.68 million and $23.44 million from Awarded TDC in January 2014, January 2015 and January 2016, respectively.
20 The Compensation and Benefits Committee makes pay decisions at its meeting at the end of each January (covering pay for the prior fiscal year). Cash incentives are paid in the first quarter following the Committee meeting date, and long-term incentives are granted soon after awards are approved by the Committee. Therefore, for the purposes of this analysis, the Company’s three-year TSR is calculated from January 31, 2014 to January 31, 2017. We use the closing share price on January 31, 2017 ($76.38) given it was the last business day of January 2017.

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EXECUTIVE COMPENSATION
Compensation Discussion and Analysis

Stephen J. Squeri, Vice Chairman
Mr. Squeri has served as Vice Chairman since July 2015. He is responsible for Global Commercial Services, the global business-to-business group providing payment and expense management solutions to small, mid-sized and large companies around the world. He also oversees Prepaid & Alternative Payments, as well as the Global Services Group, which comprises the Company’s shared services functions including global customer care, credit administration, technology, real estate, procurement and marketing operations. His 2016 achievements included:

Delivering solid financial results in business units he led including strong expense management
 

Delivering superior customer service globally, as evidenced by improved customer satisfaction metrics
 

Enabling a number of different capabilities across the Company that drove significant progress against the Company’s business objectives
 

Improving operational efficiency and effectiveness through consolidation of key processes and functions
 

Leading the Company-wide effort to reset the cost base and cut $1 billion in expenses by the end of 2017

Jeffrey C. Campbell, Executive Vice President and Chief Financial Officer
Mr. Campbell has served as Executive Vice President and Chief Financial Officer since August 2013. He is responsible for leading the Company’s Finance and Corporate Development organizations and representing American Express to the financial community. His 2016 achievements included:

Assisting in achieving operational cost targets aligned with the Company’s risk-balanced plan
 

Ensuring a strong financial and regulatory reporting control environment
 

Continuing to enhance planning processes consistent with regulatory requirements, while managing the Company’s CCAR and Basel processes to achieve capital, funding and liquidity plans
 

Effectively communicating business and financial information to regulatory bodies and the financial community
 

Exhibiting leadership that improved strategic and financial decisions

Laureen E. Seeger, Executive Vice President and General Counsel
Ms. Seeger has served as Executive Vice President and General Counsel since July 2014. In 2016, she led the Law, Government Affairs, Global Security and Corporate Secretarial functions. Her 2016 achievements included:

Vigorously and successfully defending the Company’s interests in litigation
 

Delivering exceptional guidance and leadership to executive management and the Board on legal and governance ramifications of strategic matters
 

Supporting business initiatives such as new product launches and strategic customer agreements and transitions
 

Monitoring, advising business leadership on and championing the Company’s interests with respect to global laws and regulation in a complex environment
 

Ensuring the safety and security of the Company’s global workforce

Douglas E. Buckminster, President, Global Consumer Services
Mr. Buckminster has served as President of Global Consumer Services (GCS) since October 2015. His 2016 achievements included:

Delivering strong financial results with progress in the proprietary issuing and network businesses. Drove good results across the cobrand portfolio and re-signed certain key partnerships
 

Restructuring the GCS organization to capture global synergies, drive operating efficiencies and strengthen subject matter expertise in growth areas
 

Reinvigorating service-based differentiation and accelerating the digitization of our core marketing and servicing processes
 

Effectively guiding the GCS organization through executional imperatives (e.g., Costco & JetBlue exits, global regulatory changes)


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EXECUTIVE COMPENSATION
Compensation Discussion and Analysis

NEOs Awarded TDC Decisions ($000s)

The Compensation and Benefits Committee’s TDC decisions for the NEOs for performance year 2016 are presented in the table below21:

A significant portion of the NEOs’ Awarded TDC is tied to future performance of the Company,
including stock price performance.

NEO Offer Letters
On joining the Company in May 2014, Ms. Seeger was entitled to a total sign-on cash award of $7,900,000 payable over a period of three years (2015-2017) to replace, in line with external market practices, some of the long-term incentives she forfeited by leaving her prior employer. The second of these payments was made in July 2016.

See the Potential Payments Upon Termination or Change in Control (CIC) table, on pages 72-75, for details.

21 Due to SEC reporting rules, timing differences result in different amounts being allocated in the chart above as compared to the Summary Compensation Table. A reconciliation is shown on page 61.
22 The NEOs’ performance RSUs are earned based on three-year average (2017-2019) ROE performance. With respect to equity awarded to NEOs (noted above), an equal number of shares were granted in the form of performance RSUs and stock options.

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EXECUTIVE COMPENSATION
Compensation Discussion and Analysis

4.  Determination of LTIA Payouts for Awards Made In Prior Years

Performance RSUs Awarded in January 2014-Vesting Based on 2014-2016 Performance

Performance RSUs were awarded in January 2014 for the three-year performance period ending December 2016. The awards vest based on the Company’s three-year average ROE performance.

The below chart provides additional details.

 
      3-Year Average ROE   Payout Percent*      
   ≥30%       125%        
    28%   108%  
  27%   100%    
26.4%   100% Actual  
  23%   100%  
  22%   95%    
  20%   75%    
   ≤5%   0%  
 

*   Percent of target shares granted.

Given that average ROE for years 2014-2016 was 26.4 percent (29.1 percent for 2014, 24.0 percent for 2015 and 26.0 percent for 2016), the Committee awarded a payout of 100 percent of target. This resulted in the vesting of the following shares for the CEO and other NEOs:

Target Number
of Shares
Shares Vested**
K.I. Chenault       78,361       78,361
S.J. Squeri 26,260 26,260
J.C. Campbell 21,008 21,008
D.E. Buckminster 11,344 11,344
**  In addition to these amounts, deferred dividends were paid on the actual number of shares vested in the first quarter of 2017. Ms. Seeger joined the Company in July 2014 and did not receive a January 2014 Performance RSU award.

Portfolio Grant Awarded in January 2014-Vesting Based on 2014-2016 Performance

The Portfolio Grant (PG) is a program with three-year performance cycles23. Under the program, management is assessed and rewarded for performance against a combination of concrete financial and other shareholder objectives and for results against specific strategic objectives that indicate success in positioning the Company for the future. For the three-year award cycle ending December 31, 2016, the program elements and their weights were:

1. 3-Year Cumulative EPS—20% weighting

2. 3-Year TSR vs. S&P 500—30% weighting

3. Strategic Milestones—50% weighting

Based on its assessment of performance, the Committee determined that performance underachieved objectives and set the payout for the 2014-2016 cycle at 60% of the target award. Specifically:

3-Year Cumulative EPS
The target goal established at the beginning of the three-year cycle was cumulative earnings of $17.89 per share, a level of earnings consistent with the Company’s business plan and management expectations at the start of the performance period. No payout would be earned on this factor for performance below a 4% compound annual growth rate (CAGR), or $15.84 per share. The maximum payout, 125% of target, was set at $19.06 per share, which represented a 14% CAGR.

On a GAAP basis, cumulative earnings were $16.26 per share; however, the Committee deemed it appropriate to consider adjusted financials when determining payout for this factor. On an as-adjusted basis (excluding impairment and restructuring charges)24, the Company earned $16.87 per share over the time period, which would correspond to a 56% payout against target for this factor.

23 Participants receive zero percent of the award at threshold level, 100 percent of the award at target level, and 125 percent of the award at maximum level. The payout range for achievement of strategic milestones is 0-125 percent and actual payout is based on actual performance against goals as well as the Compensation and Benefits Committee’s judgment.
24 Refer to Annex A for reconciliation of adjustments to GAAP financials.

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EXECUTIVE COMPENSATION
Compensation Discussion and Analysis

3-Year TSR vs. S&P 500
This factor would pay at 100% if the Company’s TSR was equal to the S&P 500 and scaled down to no payout if TSR lagged the index by 9% or more. The maximum payout (125%) would be achieved if the Company’s TSR outperformed the index by 5% or more.

Actual performance over the period lagged the index by 13%, which corresponds to no payout.

Strategic Milestones
The strategic milestones established for this grant covered a range of customer and revenue-generating initiatives, including loyalty coalition revenue, merchant acceptance and customer satisfaction. The range of payouts for achievement against strategic milestones, as with the other elements, is from zero to 125% of target.

The Committee noted considerable success in terms of the growth rate of U.S. merchants accepting the Company’s cards, the growth rate of loyalty coalition revenue and the improving and industry-leading customer satisfaction score. The Committee also noted global expansion in the corporate payments business, the deliberate shift in the Company’s strategy mid-cycle in this award period and management’s progress against new, specific initiatives to accelerate revenue growth in core areas, reset the Company’s cost base and optimize investments. As a result, the Committee determined that management met expectations in its strategic accomplishments.

Final Scoring
The Committee determined that given the shift in the Company’s strategy during the performance period, the strategic accomplishments over the three-year period and the underperformance in earnings (both on a GAAP and as-adjusted basis) and TSR over the 3-year period, the award should pay out at 60% of its targeted amount.

The CEO and other NEOs’ PG 2014-16 grants resulted in the following payouts ($000s) at 60% of target:

PG 2014-16
Grant
Amount
PG 2014-16
(Q1 2017)
Payout
K.I. Chenault
(See Note below)
$  5,125 $  3,075
S.J. Squeri     $ 1,325        $ 795
J.C. Campbell $ 1,500 $ 900
L.E. Seeger $ 1,100 $ 660
D.E. Buckminster $ 900 $ 540

Note: Mr. Chenault’s payment of $3,075,000 was in the form of RSUs granted in January 2017 that vest one year from the grant date; one-half of RSUs are payable in shares (net shares must be held until one year after retirement) and the other half are payable in cash. Accordingly, the grant amount of these RSUs will be included in the Summary Compensation Table next year in the stock awards column.

The grant amounts of PG 2014-16 were included in the Grants of Plan-Based Awards table in the 2015 Proxy Statement. The cash payouts made in February 2017 (for all NEOs except the CEO) are included in the Summary Compensation Table on page 63 (non-equity incentive plan compensation for 2016).

5.  Compensation and Benefits Committee: Governance and Practices

55        Shareholder Engagement and its Influence on Our Programs
55 Changes for 2017 - Updates to Annual Incentive Program
56 Key Compensation Practices – What We Do and Don’t Do
57 Assessing Competitive Positioning
58 Other Policies and Guidelines
60 Post-Employment Compensation

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EXECUTIVE COMPENSATION
Compensation Discussion and Analysis

Shareholder Engagement and its Influence on Our Programs

Shareholder Feedback/Consideration of 2016 Advisory Vote on Executive Compensation

We have benefited from shareholder feedback about executive compensation, including feedback given through our say on pay votes, for the past eight years. Our say on pay proposal received 81.9 percent support in 2016. At the direction of our Board of Directors, each year we reach out to our largest shareholders to discuss topics including our performance, executive compensation program, proxy disclosures and corporate governance. Our Lead Independent Director and Chairman of the Compensation and Benefits Committee engages directly in some of these meetings. Since January 2016, we have met with investors representing over 53 percent of shares outstanding, and the Chairman of the Compensation and Benefits Committee has participated in the discussions with several of our largest shareholders. We bring feedback from these discussions to our Board and its committees, including the Compensation and Benefits and the Nominating and Governance Committees. Shareholder feedback has influenced a number of changes to our executive compensation program over the years, including:

Modifying the AIA program for employees below the CEO level to move toward a more formulaic approach - effective 2017
 

Adding performance vesting criteria to our annual RSU grant
 

Enhancing the process the Compensation and Benefits Committee uses to determine CEO compensation
 

Clarifying the CEO’s target and maximum incentive compensation opportunities
 

Modifying our peer group


The Compensation and Benefits Committee will continue to consider the outcome of say on pay vote results and other shareholder input in its future decisions regarding executive compensation.

Changes for 2017 - Updates to Annual Incentive Program

Starting in 2017, in response to shareholder feedback as noted above, we are simplifying our AIA program for all employees below the CEO level. The CEO’s AIA decision framework (introduced in 2013) remains unchanged. The new AIA design will determine AIA payouts for the other NEOs and senior executives. It is a more formulaic program that considers quantitative goals set at the beginning of the fiscal year, along with individual performance, to determine the final payout. The design will work as follows:

Individual Target Amount   X  

Performance Multiplier

Company / Individual Line
of Business (0 – 150%)

  X   Individual
Performance Multiplier
(Committee Discretion)
(0 – 125%)
  =   Annual AIA

Individual Target Amount — At the beginning of the fiscal year, the Compensation and Benefits Committee will review and set the target annual incentive amount for executive officers at a level intended to reflect their role and responsibilities.
 

Performance Multiplier — The performance multiplier is comprised of company and business components. Company performance is weighted at 70% and the line of business performance at 30%. In the first quarter of the year, the Compensation and Benefits Committee will approve performance objectives against which to evaluate performance at the end of the year.
 

Individual Multiplier —Allows the Committee to modify an award downwards or upwards within a 0-125% range to reflect factors such as individual performance, leadership, compliance with risk and control objectives and other relevant factors.


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Table of Contents

EXECUTIVE COMPENSATION
Compensation Discussion and Analysis

Key Compensation Practices – What We Do and Don’t Do

Key executive compensation practices are summarized below. We believe these practices promote good governance and best serve the interests of our shareholders:

WHAT WE DO

Link pay outcomes to company performance and total shareholder return

Defer a significant portion of our CEO and NEOs’ total pay so that it is subject to future company performance and aligned with shareholder interests

Maintain ongoing dialogue with shareholders and incorporate their feedback into our compensation programs

Maintain significant stock ownership requirements for NEOs, including a requirement that the CEO hold a portion of his shares through one year after retirement

Subject cash incentives and equity awards to recoupment and forfeiture provisions

Discourage imprudent risk taking, including Chief Risk Officer’s review of goals and results to confirm that actual results were achieved within the Company’s risk appetite

Prohibit executive officers from hedging their company stock, including entering into any derivative transaction on company shares (e.g., short sale, forward, option or collar)

Prohibit executive officers from pledging shares subject to stock ownership guidelines, and strictly control whether any shares may be pledged at all (no executive officer shares are pledged)

Conduct an in-depth review of our CEO’s and NEOs’ goals and performance (by an independent Compensation and Benefits Committee)

Provide Compensation and Benefits Committee discretion to clawback the cash portion of the CEO’s AIA if the Company does not achieve acceptable performance in the following year

Evaluate management succession and leadership development efforts

Maintain a cap on CEO incentive compensation payments (125% of target)

Require termination of employment in addition to a change in control before accelerating equity vesting (known as “double trigger”)

Ensure that we include performance criteria with respect to incentive compensation plans to support tax deductibility for the Company

Employ a robust goal setting process focused on aligning CEO and NEO goals with company strategy

Review CEO pay from alternative perspectives – Target compensation, Awarded TDC and Realizable Compensation


WHAT WE DON'T DO

No employment contracts with NEOs

No payment of dividends or dividend equivalents on RSUs granted to NEOs until they vest

No excise tax gross-ups upon a change in control

No repricing of underwater stock options without shareholder approval

No individual change in control arrangements


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EXECUTIVE COMPENSATION
Compensation Discussion and Analysis

Compensation and Benefits Committee Consultant

The Compensation and Benefits Committee endeavors to follow good governance practices and is composed solely of independent directors. The Committee is responsible for our executive officer compensation decisions. It has retained Semler Brossy Consulting Group (Semler Brossy) as its independent compensation consultant. It held four meetings over the course of 2016, all of which ended with executive sessions without management present. During 2016, Semler Brossy attended committee meetings, including executive sessions, and provided compensation advice independent of the Company’s management. The Committee assessed the independence of Semler Brossy pursuant to SEC rules and concluded that their work did not raise any conflicts of interest.

Assessing Competitive Positioning

Our pay program is designed to reward achievement of financial and strategic goals and to attract, retain and motivate our leaders in a competitive talent market. The Compensation and Benefits Committee periodically examines pay practices and pay data for a group of 20 companies as a source of benchmarking data to better understand the competitiveness of our compensation program and its various elements. While the benchmarking data is used to assess the competitiveness of our compensation program, it is not used to make specific pay decisions. In addition, we do not target a specific percentile relative to peers or make pay decisions based on market data alone. CEO and NEO performance and retention are the primary drivers of pay.

How We Select the Company’s Peers
In selecting the current peer group, the Compensation and Benefits Committee identified prominent S&P 500 companies, generally with revenue levels similar to ours, and the companies fall into the following categories: (1) financial institutions; (2) iconic global consumer brands; and (3) payments related and technology businesses.

In 2016, the Compensation and Benefits Committee evaluated the appropriateness of the peer group and maintained the same categories as mentioned above. The Committee specifically considered and addressed the impact of the spin-off of PayPal from eBay on the Company’s peer group and determined to exclude eBay and add PayPal given its stronger relevance as a peer in the payments industry as a digital and mobile payment company. The remainder of the group was unchanged.

Comparator Group 2016

Financial Institutions   Iconic Global Consumer Brands   Payments Related & Technology Businesses
Bank of America
Bank of New York Mellon
BlackRock
Capital One Financial
Citigroup
Goldman Sachs
JPMorgan Chase
Morgan Stanley
US Bancorp
Wells Fargo
Coca-Cola
Colgate Palmolive
Nike
PepsiCo
Walt Disney
Discover
MasterCard
Visa
Paypal
Cisco

    2017 PROXY STATEMENT | 57



Table of Contents

EXECUTIVE COMPENSATION
Compensation Discussion and Analysis

Other Policies and Guidelines

Stock Ownership Guidelines
Our stock ownership guidelines require the CEO and our other NEOs to own and maintain a substantial stake in the Company. The CEO and our other NEOs are required to accumulate a target number of shares (i.e., shares owned outright, excluding unvested/unearned shares and unexercised stock options), and to retain a portion of the net after-tax shares received upon vesting or exercise of their equity awards. The specific requirements are as follows:

Holding Requirement
            Target Number of
Shares
         Before Target Met       After Target Met
K.I. Chenault25 500,000 75% of net shares
until target number of
shares is met

50% of net
shares for
one year
S.J. Squeri 75,000
J.C. Campbell 75,000
L.E. Seeger 25,000
D.E. Buckminster 25,000
25 In addition to these requirements, Mr. Chenault is required to hold, one year beyond his retirement from the Company, 50 percent of his 2010-2015 year-end AIA and Portfolio Grant payouts delivered in the form of RSUs.

With the exception of Mr. Campbell and Ms. Seeger, who were hired in 2013 and 2014, respectively, all of our NEOs own more than the target number of shares. Mr. Campbell and Ms. Seeger are on track to meet their requirements over the next few years. Mr. Chenault beneficially owned 1,075,334 shares as of December 30, 2016 with an estimated value of $79,660,743 using the Company’s closing stock price on the same day.

Discouraging Imprudent Risk Taking

Our executive compensation program is structured to provide a balance of cash and stock; annual, medium-term and long-term incentives; and financial, strategic and stock performance measures over various time periods. It is designed to encourage the proper level of risk taking consistent with our business model and strategies. Our business and risk profile is different from other financial services firms; for example, we do not generally trade securities, derivatives, mortgages or other financial instruments other than for hedging our risks. Our executive compensation program is designed to be consistent with the Federal Reserve principles for safety and soundness.

The following policies and procedures help discourage imprudent risk taking:

Annual risk goals: Our Chief Risk Officer reviews business unit and NEO goals in relation to the Company’s risk appetite and sets certain annual risk goals for the Company at the beginning of each year.

Monitoring of risk: We monitor return on economic capital, credit risk metrics and performance against our risk appetite metrics, and we assign control and compliance ratings to each business unit and staff group as part of our annual assessment of performance.

Adjustment of compensation: At year-end, our Chief Risk Officer meets with the Compensation and Benefits Committee and certifies that actual results were achieved without taking imprudent risks. Larger losses are analyzed as part of the year-end process, and the Chief Risk Officer issues a year-end memorandum describing changes in the risk profile of the Company. If deemed necessary, risk adjustments are made to company and business unit annual incentive funding levels as well as to individual incentive awards.

Cross-section of metrics: We assess performance against a cross-section of key metrics over multiple time frames to discourage undue focus on short-term results or on any one metric and to reinforce risk balancing in performance measurement. Our incentive plans are not overly leveraged (i.e., there is a cap on the maximum payout).

Deferred incentive compensation: At least 50 percent of incentive compensation for executive officers is deferred for at least three years with performance-based vesting.


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EXECUTIVE COMPENSATION
Compensation Discussion and Analysis

Clawback policies: We maintain clawback policies that include a requirement that our CEO’s cash AIA is subject to clawback at the discretion of the Compensation and Benefits Committee if the Company does not achieve acceptable performance the next year.

Performance-based vesting: Performance RSUs are used in place of time-based RSUs for the Company’s senior employees.

Stock ownership and holding requirements: We have robust stock ownership requirements for our CEO and other NEOs (as described above), including the retention of a portion of net shares for one year after stock option exercises and RSU vesting.

Clawback Policies

We would seek to recover, to the extent practicable, performance-based compensation from any executive officer and certain other members of senior management in those circumstances when:

The payment of such compensation was based on the achievement of financial results that were subsequently the subject of a financial restatement; and

In the view of the Company’s Board of Directors, the employee engaged in fraud or misconduct that caused or partially caused the need for the restatement, and a smaller amount would have been paid to the employee based upon the restated financial results.

In addition, as noted above, the cash portion of the CEO’s AIA is subject to clawback at the discretion of the Compensation and Benefits Committee if the Company does not achieve acceptable performance in the following year.

American Express also maintains a detrimental conduct policy covering approximately 500 employees, including the CEO. This policy requires an executive to forfeit unvested awards and to repay the proceeds from some or all of his or her compensation issued under our incentive compensation program in the event the executive engages in conduct that is detrimental to the Company.

Hedging and Pledging Restrictions
 
Executive officers may not hedge company shares (e.g., no short sales, forwards, options or collars). They may not pledge shares subject to stock ownership and holding requirements. We strictly control the pledge of any shares by requiring prior approval of the Company Secretary and the Chairman of the Nominating and Governance Committee to ensure that the pledge will not violate securities laws or insider trading restrictions or potentially present reputational risk. No executive officer shares are currently pledged.

Perquisites

We provide limited perquisites to support our objective to attract and retain talent for key positions, as well as to address security concerns. We also provide a flexible cash perquisite allowance of $35,000 for executive officers of the Company.

Award Timing

Consistent with past practice, annual cycle LTIA awards were granted to NEOs in January after the regularly scheduled January Compensation and Benefits Committee meeting. Our off-cycle LTIA awards (for new hires, mid-year promotions, retention grants, etc.) are granted on pre-established grant dates.

Tax Treatment

Tax rules generally limit the deductibility of compensation paid to our NEOs to $1 million per year unless such compensation is performance-based. In general, the Company intends to structure its incentive compensation arrangements in a manner that would comply with these tax rules. However, the Compensation and Benefits Committee maintains the flexibility to pay non-deductible incentive compensation.

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Table of Contents

EXECUTIVE COMPENSATION
Report of the Compensation and Benefits Committee

Post-Employment Compensation

Retirement Benefits
NEOs receive retirement benefits through the following plans:

Retirement Savings Plan (RSP): A qualified 401(k) savings plan available to all eligible employees.

Retirement Restoration Plan (RRP): A nonqualified savings plan that makes up for 401(k) benefits that would otherwise be lost as a result of U.S. tax limits.

Deferred Compensation: Allows NEOs to defer a portion of their base salary and AIA payout. The annual deferral limit is equal to one times their base salary.

All retirement benefits are more fully described under Retirement Plan Benefits on page 69 and under Nonqualified Deferred Compensation on pages 70 and 71.

Severance: Senior Executive Severance Policy
Under the Senior Executive Severance Policy, NEOs who are terminated involuntarily (except in cases of misconduct) receive cash severance benefits equal to two years of base salary and AIA and also receive a pro rata AIA payment for the year of termination. LTIAs continue to vest and certain benefits continue during the severance period, unless the executive begins full-time, outside employment. U.S.–based NEOs who are age 65 or older are not eligible for severance unless the Compensation and Benefits Committee specifically approves severance for such an executive.

To protect shareholders and our business model, executives are required to comply with non-compete, non-solicitation, confidentiality and non-denigration provisions during the period of time they are receiving severance. Our uniform severance policy helps to avoid special treatment and provides an important enforcement mechanism for these protections. The Compensation and Benefits Committee must pre-approve severance for an executive officer.

Change in Control Benefits
The Company provides change in control (CIC) benefits to encourage executives to consider the best interests of shareholders by stabilizing any concerns about their own personal financial well-being in the face of a potential CIC of the Company. Detailed information is provided under Potential Payments Upon Termination or Change in Control (CIC) on pages 72-75.

Report of the Compensation and Benefits Committee

The Committee has reviewed and discussed the Compensation Discussion and Analysis with management. Based on such review and discussion, it recommended to the Board of Directors, and the Board of Directors approved, the inclusion of the Compensation Discussion and Analysis in this Proxy Statement.

Compensation and Benefits Committee

Robert D. Walter, Chairman
Ursula M. Burns
Peter Chernin
Samuel J. Palmisano
Ronald A. Williams

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EXECUTIVE COMPENSATION
Report of the Compensation and Benefits Committee

Note Regarding 2016 TDC Decisions and Summary Compensation Table

It is important to recognize that the way the Compensation and Benefits Committee presents TDC is different from the SEC-required disclosure in the Summary Compensation Table (SCT) and is not a substitute for the information in that table.

In summary, the main difference between the SCT and TDC is the timing of disclosure related to equity awards. The chart below details this methodology.

            Summary Compensation Table*       Total Direct Compensation
Concept and Purpose

Uses SEC methodology, which includes a mix of both cash compensation actually earned during 2016 and equity granted

SEC-mandated compensation disclosure

 

Includes only pay that is awarded based on 2016 performance

Reflects the Compensation and Benefits Committee’s January 2017 compensation decisions based on 2016 performance

Calculated as a sum of: Base Salary  
Base salary paid in 2016
Base salary set for 2017
    Annual bonus
Annual cash bonus earned for 2016 performance
Total annual bonus awarded for 2016 performance – regardless of form of payment (i.e., cash or equity)
  Portfolio Grant award
Value of PG earned for 2014-2016 (if paid in cash)
Value of PG 2017-2019 granted for performance year ending 2016
  Equity awards
Accounting value of equity awards (Stock Options and RSUs) granted in 2016
Grant date value of equity awards (Stock Options and RSUs) granted in January 2017 for performance year ending 2016

*   The SEC rules also require disclosure of additional elements of compensation beyond the ones mentioned in this table, such as future pay opportunities for pension benefits, above market interest rate on deferred compensation and all other compensation.

Glossary of Key Compensation Terms

NEOs       Named Executive Officers: refers collectively to the Executive Officers referenced herein and includes Messrs. Chenault, Squeri, Campbell and Buckminster and Ms. Seeger
 
TDC Total Direct Compensation: the sum of base salary, Annual Incentive Awards (AIA) and Long-Term Incentive Awards (LTIA)
 
AIA Annual Incentive Award: the Company’s annual incentive program that measures Shareholder, Customer, Employee and long-term signpost goals over a one-year period
 
LTIA Long-Term Incentive Award: the combination of cash- and equity-based long-term incentives that align with long-term business objectives and shareholder value creation; includes Portfolio Grants (PG), Restricted Stock Units (RSUs) and Stock Options (SOs)
 
PG Portfolio Grant: cash-denominated, performance-based long-term incentive that measures financial performance and the achievement of strategic milestones, all measured over a three-year period
 
RSUs Restricted Stock Units: share-denominated long-term incentives. Performance RSUs refer to performance-based restricted stock units that are conditioned on ROE performance over a three-year period (also subject to service vesting)
 
SOs Stock Options: share-denominated long-term incentive that has value only if the Company’s share price appreciates above the grant price

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Table of Contents

EXECUTIVE COMPENSATION
Report of the Compensation and Benefits Committee

CEO Realizable Compensation Methodology

Pay Component Comments Methodology26
Salary        
       
Salary for the year
Annual Incentive Award
(Cash–denominated)
Portion of AIA awarded for the prior performance year
Denominated in cash
Annual Incentive Award
(RSU–denominated)
Portion of AIA awarded for the prior performance year paid in RSUs that vest one year after grant. 50 percent of net shares received upon vesting must be retained until at least one year after retirement
 
RSUs not subject to retention requirement are valued using the Company’s stock price on the vesting date
RSUs subject to retention are valued using the January 31, 2017 closing stock price
Portfolio Grant
January 2014 award vested in January 2017 at 60 percent of target and the earned amount was paid in RSUs (see page 54)
January 2015 and January 2016 awards are still outstanding and the potential payout range is 0-125 percent of target based on three-year performance. Based on performance to date, these PGs are likely to be earned at or below target
January 2014 award valued at actual payout level
January 2015 and January 2016 awards are valued assuming a 70 and 100 percent of target payout27
Performance RSUs
January 2014 award vested in January 2017 at 100 percent of target (see page 53)
January 2015 and January 2016 awards are still outstanding and the potential payout range is 0-125 percent of target based on three-year performance. Based on performance to date, these Performance RSUs are likely to be earned at target28
January 2014 shares are valued using the Company’s stock price on vesting date
January 2015 and January 2016 shares are valued using January 31, 2017 stock price and are valued assuming payout at 100 percent of target
Stock Options
January 2014 exercise price: $86.64
January 2015 exercise price: $83.30
January 2016 exercise price: $55.09
All grants, except the January 2016 award, are underwater and accordingly are valued at zero based on January 31, 2017 stock price and exercise price of each option grant

26 The Compensation and Benefits Committee makes pay decisions at its meeting at the end of each January (covering performance for the prior fiscal year). Cash incentives are paid in the first quarter (following the Committee meeting date) and long-term incentives are granted soon after awards are approved by the Compensation and Benefits Committee. Therefore, for the purposes of this analysis, outstanding RSUs and stock options are valued using the closing share price on the last business day of January 2017 (January 31, 2017: $76.38) to align with the timing of Compensation and Benefits Committee decision-making and long-term incentive award vesting.
 
27 Payout range is 0-125 percent of target. Actual payout could be higher or lower than the assumed payout based on future performance. See page 48 of the Proxy Statement filed in March 2016 for information on the Portfolio Grant awarded in January 2016. See page 33 of the Proxy Statement filed in March 2015 for information on the Portfolio Grant awarded in January 2015.
 
28 See page 44 of the Proxy Statement filed in March 2016 for information on the Performance RSUs awarded in January 2016 and page 27 of the Proxy Statement filed in March 2015 for information on the Performance RSUs awarded in January 2015.

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EXECUTIVE COMPENSATION
Summary Compensation Table

Summary Compensation Table

The following Summary Compensation Table (SCT) summarizes the compensation of our NEOs for the year ended December 31, 2016, using the SEC-required disclosure rules. It is important to recognize that 2016 TDC determined by the Compensation and Benefits Committee is different than the amounts disclosed below using the SEC-required disclosure rules. See page 61 for key differences between the SCT and TDC awarded by the Compensation and Benefits Committee for 2016.

Name and Principal Position Year Salary Bonus
(1)
Stock
Awards
(2)
Option
Awards
(2)
Non-equity
Incentive Plan
Compensation
(3)
Change in
Pension
Value and
Non-Qualified
Deferred
Compensation
Earnings
(4)
All Other
Compensation
(5)
Total
K.I. Chenault    2016       $ 2,000,000    $ 0    $ 12,809,527    $ 1,573,150          $ 0              $ 518,804    $ 562,158    $ 17,463,639
       Chairman and Chief 2015 $ 2,000,000 $ 0 $ 16,339,045 $ 2,563,088 $ 0 $ 300,525 $ 785,433 $ 21,988,091
       Executive Officer 2014 $  2,000,000 $ 4,500,000 $ 12,429,114 $ 2,535,762 $ 0 $ 417,925 $ 913,282 $ 22,796,083
S.J. Squeri 2016 $ 1,350,000 $ 5,100,000 $ 3,763,308 $ 886,690 $ 795,000 $ 50,006 $ 386,262 $ 12,331,266
       Vice Chairman 2015 $ 1,301,154 $ 2,750,000 $ 8,563,819 $ 811,088 $ 771,150 $ 0 $ 359,965 $ 14,557,176
  2014 $ 1,250,000 $ 4,150,000 $ 2,275,166 $ 849,774 $ 1,217,850 $ 86,630 $ 376,972 $ 10,206,392
J.C. Campbell 2016 $ 1,000,000 $ 3,925,000 $ 2,023,235 $ 476,703 $ 900,000 $ 0 $ 230,988 $ 8,555,926
       Executive Vice President 2015 $ 1,000,000 $ 4,850,000 $ 2,147,224 $ 752,688 $ 873,000 $ 0 $ 222,403 $ 9,845,315
       and Chief Financial Officer 2014 $ 1,000,000 $ 6,150,000 $ 1,820,133 $ 679,819 $ 3,177,000 $ 0 $ 240,215 $ 13,067,167
L.E. Seeger 2016 $ 800,000 $ 4,733,000 $ 1,618,599 $ 381,365 $ 660,000 $ 0 $ 200,109 $ 8,393,073
       Executive Vice President 2015 $ 800,000 $ 3,858,000 $ 1,480,824 $ 519,088 $ 640,200 $ 0 $ 157,631 $ 7,455,743
       and General Counsel
D.E. Buckminster 2016 $ 700,000 $ 2,200,000 $ 1,294,890 $ 305,095 $ 540,000 $ 37,529 $ 246,427 $ 5,323,941
       President, Global Consumer 2015 $ 616,538 $ 1,650,000 $ 1,092,146 $ 382,841 $ 523,800 $ 0 $ 194,096 $ 4,459,421
       Services 2014 $ 600,000 $ 2,150,000 $ 982,844 $ 367,092 $ 953,100 $ 66,847 $ 2,883,175 $ 8,003,058

(1) The amounts in this column reflect AIA cash payments for annual performance. For Mr. Chenault, his 2016 AIA was reallocated and paid out in the form of long-term incentive awards, comprising a combination of Stock Options, Performance RSUs and PG 2017-19. For Ms. Seeger, the 2016 amount also includes installments of a sign-on cash payment of $2,633,000 made in accordance with her employment offer letter to replace a portion of long-term incentives forfeited at her prior employer as a result of joining the Company.
 
(2) Represents the aggregate grant date fair value of the awards pursuant to FASB ASC Topic 718, Compensation – Stock Compensation. Additional details on accounting for stock-based compensation can be found in Note 11 “Stock Plans” to our Consolidated Financial Statements contained in our 2016 Annual Report on Form 10-K.
 
A significant portion of Mr. Chenault’s total direct compensation is delivered in the form of equity that is deferred. The table below provides detail on the RSUs included in the stock awards column:

2016 2015 2014
Annual RSU award granted in January for performance in the prior year*       $ 5,851,825             $ 7,311,824             $ 6,789,197
Portion of AIA awarded in RSUs in January for performance in the prior year* $ 3,974,964 $ 3,599,893 $ 1,949,920
Payment of PG award in the form of RSUs. Amount in column reflects the RSUs granted in January with respect to PG awards whose performance periods ended the prior year $ 2,982,738 $ 5,427,328 $ 3,689,997
TOTAL $ 12,809,527 $ 16,339,045 $ 12,429,114

For example, 2016 amount shows RSUs awarded in January 2016 for 2015 performance.
 

With respect to the RSU awards for Mr. Chenault, the amount in the Stock Awards column of the SCT reflects the aggregate value of all of the awards set forth in the table above, including the target value of his annual RSU award, assuming that target performance is achieved against the average ROE target during the three-year performance period ($5,851,825). For all other executives, the amount in the Stock Awards Column of the SCT reflects only the target value of their annual RSU awards, assuming that target performance is achieved against the average ROE target during the three-year performance period.

For each executive’s annual RSU award, the maximum value as of the grant date, assuming the highest level of performance will be achieved, is as follows: Messrs. Chenault ($7,314,740), Squeri ($4,704,135), Campbell ($2,529,017) and Buckminster ($1,618,599) and Ms. Seeger ($2,023,235).


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EXECUTIVE COMPENSATION
Summary Compensation Table

(3) The 2016 amounts in this column reflect the cash payment made to the NEO in respect of a payout under the PG 2014-16 awards granted in 2014, in accordance with award terms. For Mr. Chenault, the 2016 amount excludes payment of $3,075,000 which was made in the form of RSUs granted in January 2017 that vest one year from the grant date. One-half of these RSUs are payable in cash and the other half are payable in shares (net shares must be held until one year after retirement).
 
(4) The amounts in this column reflect the actuarial increase or decrease in the present value of the NEOs’ benefits under all defined benefit pension plans established by the Company. The amounts reflect the impact of changes in interest rates and the NEOs’ changes in age during the year which are used to measure the present value. When interest rates fall, as they did during 2016, the present value of this benefit will increase, but this increase does not represent any additional benefit to the executive.
 
(5) See the All Other Compensation Table below for additional information.

All Other Compensation Table

Name    Year      Perquisites
and
Other
Personal
Benefits
(1)
     Tax Payments/
Reimbursements
(2)
     Company
Contributions
to Defined
Contribution
Plans
(3)
     Executive Life
Insurance
(4)
     Dividends
and
Dividend
Equivalents
(5)
     Total
K.I. Chenault 2016     $ 285,310           $ N/A        $ 270,000               $ 6,848          $ N/A $ 562,158
2015 $ 259,358 $ N/A $ 520,000 $ 6,075 $ N/A $ 785,433
2014 $ 344,795 $ N/A $ 560,000 $ 5,393 $ 3,094 $ 913,282
S.J. Squeri 2016 $ 79,472 $ N/A $ 303,750 $ 3,040 $ N/A $ 386,262
  2015 $ 82,973 $ N/A $ 274,249 $ 2,743 $ N/A $ 359,965
2014 $ 79,989 $ N/A $ 293,750 $ 2,478 $ 755 $ 376,972
J.C. Campbell 2016 $ 73,248 $ N/A $ 150,000 $ 7,740 $ N/A $ 230,988
2015 $ 74,663 $ N/A $ 140,000 $ 7,740 $ N/A $ 222,403
2014 $ 82,229 $ N/A $ 153,846 $ 4,140 $ N/A $ 240,215
L.E. Seeger 2016 $ 72,369 $ N/A $ 120,000 $ 7,740 $ N/A $ 200,109
2015 $ 43,645 $ N/A $ 109,846 $ 4,140 $ N/A $ 157,631
D.E. Buckminster 2016 $ 86,303 $ N/A $ 157,500 $ 2,624 $ N/A $ 246,427
2015 $ 60,909 $ N/A $ 130,778 $ 2,409 $ N/A $ 194,096
2014 $ 789,328 $ 1,950,150 $ 141,000 $ 2,244 $ 453 $ 2,883,175

(1) See the Perquisites and Other Personal Benefits table below for additional information regarding the components of this column.
 
(2) For Mr. Buckminster, who was on international assignment in London until June 2014, trailing tax equalization payments or reimbursements have been made and recorded following the termination of his assignment in 2014 in order to address any foreign tax obligations relating to income received, awarded or earned during his assignment. In 2016, Mr. Buckminster received a net foreign tax credit of approximately $699,097 relating to payments made by the Company on his behalf in previous years. This amount was returned to the Company and is not reflected in the table above.
 
(3) This column reflects Company contributions to the NEOs’ accounts under the Company’s Retirement Savings Plan (RSP) and the RRP-RSP Related Account. See pages 69-71 for a further description of the RSP and the RRP-RSP Related Account.
 
(4) This column reflects income imputed to the NEO under the Company’s executive life insurance program.
 
(5) This column reflects dividends and dividend equivalents paid in connection with unvested RSUs awarded to the NEOs. Starting in 2015, there are no amounts reflected in this column because all dividends were factored into the grant date fair value of the awards included in the Summary Compensation Table in the year of grant. Dividends and dividend equivalents on unvested RSUs granted to executive officers will be paid only if and when underlying shares vest.

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EXECUTIVE COMPENSATION
Summary Compensation Table

Perquisites and Other Personal Benefits

Name Year Local and
Other Travel
Benefits
(1)
Personal
Use of
Company
Aircraft
(2)
Flexible
Perquisite
Allowance
(3)
Home
Security
System
(4)
Security
During
Personal
Trips
(4)
International
Assignment
(5)
Other
Benefits
(6)
Total
K.I. Chenault     2016              $ 19,731     $ 152,538           $ 35,000     $ 48,715     $ 15,111     N/A     $ 14,215     $ 285,310
2015 $ 13,089 $ 145,611 $ 35,000 $ 30,570 $ 23,234 N/A $ 11,854 $ 259,358
2014 $ 23,377 $ 181,638 $ 35,000 $ 45,373 $ 19,952 N/A $ 39,455 $ 344,795
S.J. Squeri 2016 $ 30,000 $ 0 $ 35,000 N/A N/A N/A $ 14,472 $ 79,472
2015 $ 30,000 $ 0 $ 35,000 N/A N/A N/A $ 17,973 $ 82,973
2014 $ 30,000 $ 0 $ 35,000 N/A N/A N/A $ 14,989 $ 79,989
J.C. Campbell 2016 $ 30,000 $ 0 $ 35,000 N/A N/A N/A $ 8,248 $ 73,248
2015 $ 30,000 $ 0 $ 35,000 N/A N/A N/A $ 9,663 $ 74,663
2014 $ 30,000 $ 3,091 $ 35,000 N/A N/A   N/A $ 14,138 $ 82,229
L.E. Seeger 2016 $ 30,000 $ 0 $ 35,000 N/A N/A N/A $ 7,369 $ 72,369
2015 $ 0 $ 0 $ 35,000 N/A N/A N/A $ 8,645 $ 43,645
D.E. Buckminster 2016 $ 30,000 $ 0 $ 35,000 N/A N/A        $ 19,608 $ 1,695 $ 86,303
2015 $ 0 $ 0 $ 35,000 N/A N/A $ 24,021 $ 1,888 $ 60,909
2014 $ 0 $ 0 $ 35,000 N/A N/A $ 752,358 $ 1,970 $ 789,328

(1) For 2016, local and other travel benefits include local travel allowance for NEOs other than Mr. Chenault. For Mr. Chenault, the Company’s security policy requires him to use for all travel purposes, to the maximum extent practicable, the automobiles and aircraft provided by the Company to executives for business travel. The calculation of the incremental cost for personal use of Company-owned automobiles and aircraft is based on the variable cost to the Company of operating the automobiles and aircraft and includes, among other things, fuel costs, maintenance costs and, in the case of aircraft, the cost of trip-related crew hotels and meals, and landing and ground handling fees. The calculation does not include fixed costs that would have been incurred regardless of whether there was any personal use of the automobiles or aircraft (e.g., purchase costs and depreciation, driver and flight crew fixed salaries and benefits, insurance costs, etc.).
 
(2) Effective January 1, 2010, the Company requires reimbursement by Mr. Chenault for incremental costs in excess of $200,000 per year for travel on Company aircraft that is deemed by the SEC to be personal use, including use to travel to outside board meetings.
 
(3) The amount in this column reflects the perquisite allowance paid to the NEOs.
 
(4) The amounts in these columns include costs associated with home security and security during personal trips for Mr. Chenault.
 
(5) The amounts shown include expatriate services and allowances in connection with Mr. Buckminster’s repatriation to the United States, due to his international assignments. The services provided to Mr. Buckminster are provided to all employees on international assignment. Amounts that were paid or received in British Pound Sterling were converted to U.S. Dollars based on the conversion rate as of the date paid, received or allocated.
 
(6) This column reflects the aggregate amount of other perquisites and personal benefits provided, none of which individually exceeded the greater of $25,000 or 10 percent of the total amount of all perquisites and other personal benefits reported for the NEO. These other benefits consist of office parking, reimbursement for certain information technology services, payment of service awards and the cost of certain meals from the Company’s dining facilities. In addition to the perquisites and other benefits described in the table and footnotes above, our NEOs also receive occasional secretarial support with respect to personal matters and may, on occasion, use the Company’s tickets for sporting and entertainment events for personal rather than business purposes. We incur no incremental cost for the provision of such additional benefits.
 
For Mr. Chenault, the 2014 amount includes premiums for Director’s Charitable Award Program life insurance.

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EXECUTIVE COMPENSATION
Grants of Plan-Based Awards

Grants of Plan-Based Awards

The following table provides information on SO, PRSU and PG 2016-18 awards granted to each of our NEOs in 2016 under the 2007 Incentive Compensation Plan.

Name     Award Type
(1)
      Grant
Date
      Approval
Date
      Estimated Future Payouts under
Non-Equity Incentive Plan Awards
(2)
      Estimated Future Payouts under
Equity Incentive Plan Awards
(2)
      Exercise
Price or
Base Price
of Option
Awards
($/sh)(3)
      Grant Date
Fair Value
of Stock
and
Option
Awards
(4)
Threshold       Target       Maximum Threshold
(#)
      Target
(#)
      Maximum
(#)
K.I. Chenault  PG 2016-18 1/26/2016 1/25/2016               $ 0 $ 5,125,000 $ 6,406,250
SO 1/26/2016 1/25/2016 121,198 $ 55.09 $ 1,573,150
RSU 1/26/2016 1/25/2016 126,297 $ 6,957,702
PRSU 1/26/2016 1/25/2016 0 106,223 132,778 $ 5,851,825
S.J. Squeri PG 2016-18 1/26/2016 1/25/2016 $ 0 $ 1,500,000 $ 1,875,000
SO 1/26/2016 1/25/2016 68,312 $ 55.09 $ 886,690
PRSU 1/26/2016 1/25/2016 0 68,312 85,390 $ 3,763,308
J.C. Campbell PG 2016-18 1/26/2016 1/25/2016 $ 0 $ 1,500,000 $ 1,875,000
SO 1/26/2016 1/25/2016 36,726 $ 55.09 $ 476,703
PRSU 1/26/2016 1/25/2016 0 36,726 45,907 $ 2,023,235
L.E. Seeger PG 2016-18 1/26/2016 1/25/2016 $ 0 $ 1,100,000 $ 1,375,000
SO 1/26/2016 1/25/2016   29,381 $ 55.09 $ 381,365
PRSU 1/26/2016 1/25/2016 0 29,381 36,726 $ 1,618,599
D.E. Buckminster PG 2016-18 1/26/2016 1/25/2016 $ 0 $ 1,200,000 $ 1,500,000
SO 1/26/2016 1/25/2016 23,505 $ 55.09 $ 305,095
PRSU 1/26/2016 1/25/2016 0 23,505 29,381 $ 1,294,890
(1) Portfolio Grant (PG) Awards. These awards link compensation to our financial and strategic performance over a three-year period. The goals for the performance period were based on financial performance metrics and strategic milestones.
The Company discloses the specific performance metric goals as well as the performance outcomes of each PG award at the end of the performance period so that shareholders can assess the appropriateness thereof. The Company does not disclose the goals at the time of grant due to competitive sensitivity. The potential award payout is determined based on a table of possible performance and earned payout levels, including a cap on the overall earned payout level. The actual payout could be higher or lower than the notional target value based on performance.
Stock Options (SO). The SOs have a ten-year term and 100 percent of these shares become exercisable on the third anniversary of the grant date, subject to the Company achieving positive Cumulative Net Income over the vesting period.
Performance-based Restricted Stock Units (PRSU). Except as specified otherwise, RSU awards will be granted with performance-based awards vesting on the third anniversary of the grant date in an amount determined based on performance against the average ROE target during the three-year performance period.
126,297 RSUs granted to Mr. Chenault are in connection with his 2015 AIA and payout of PG 2013-15 and will vest on the first anniversary of the grant date subject to the performance hurdle of positive Cumulative Net Income over the vesting period. One half of these RSUs are payable in cash and the other half are payable in shares (net shares must be held until one year after retirement). Dividend equivalents on RSUs will accrue but will not be paid unless and until the underlying shares vest.
(2) The amounts shown under these columns represent potential aggregate threshold, target and maximum payouts for achievement of threshold, target and maximum performance levels for awards granted. The ”threshold ” payout is zero, since it represents the level of performance for which no award would be earned. The “target” payout is equal to 100 percent of the NEO’s grant value and represents the amount that may be paid for achieving the target level of performance across all performance goals. The “maximum” payout (125 percent) represents the amount that may be paid for achieving or exceeding the maximum level of performance across all performance goals, subject to an overall cap on the payout amount.
(3) The exercise price of the SOs is the closing price of the Company’s common shares on the NYSE on the grant date.
(4) Represents the aggregate grant date fair value of the awards pursuant to FASB ASC Topic 718, Compensation – Stock Compensation. Additional details on accounting assumptions for stock-based compensation are referenced in footnote 2 of the Summary Compensation Table.
All awards are subject to continuous employment with the Company (unless specified otherwise), except awards may vest upon death, disability termination, retirement or, in certain circumstances, in connection with a change in control of the Company, as described in the Potential Payments Upon Termination or Change in Control Table.

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EXECUTIVE COMPENSATION
Outstanding Equity Awards at Fiscal Year-End 2016

Outstanding Equity Awards at Fiscal Year-End 2016

The following table shows the number of shares covered by exercisable and unexercisable SOs and unvested RSUs granted under the 2007 Incentive Compensation Plan for our NEOs on December 31, 2016.

Name     Grant Date     Option Awards     Stock Awards

Number of
Securities
Underlying
Unexercised
Options (#)
Exercisable

    Number of
Securities
Underlying
Unexercised
Options (#)
Unexercisable
    Equity
Incentive
Plan
Awards:
Number of
Securities
Underlying
Unexercised
Unearned
Options
(#)
    Option
Exercise
Price
($)
    Option
Expiration
Date
Number
of Shares
or Units
of Stock
that have
Not Vested
(#)
    Market
Value of
Shares
or Units
of Stock
that have
Not Vested
($)(a)
    Equity
Incentive
Plan Awards:
Number of
Unearned
Shares,
Units or
other Rights
that have Not
Vested
(#)
    Equity
Incentive
Plan Awards:
Market or
Payout Value
of Unearned
Shares, Units,
or other Rights
that have Not
Vested
($)(a)
K.I. Chenault 1/26/2016 121,198 (1) $ 55.09 1/26/2026 126,297 (b) $ 9,356,082
1/26/2016 106,223 (c) $ 7,869,000
1/26/2015 87,777 (1) $ 83.30 1/26/2025 87,777 (c) $ 6,502,520
1/28/2014 78,361 (1) $ 86.64 1/28/2024 78,361 (c) $ 5,804,983
1/29/2013 103,786 (1) $ 59.45 1/29/2023
1/24/2012 123,706 (2) $ 49.23 1/24/2022
1/27/2011 135,981 (2) $ 44.54 1/27/2021
1/26/2010 650,918 (2) $ 38.10 1/26/2020
1/29/2009 1,196,888 (2) $ 16.71 1/29/2019
S.J. Squeri 1/26/2016 68,312 (1) $ 55.09 1/26/2026 68,312 (c) $ 5,060,553
10/30/2015 68,250 (d) $ 5,055,960
1/26/2015 27,777 (1) $ 83.30 1/26/2025 27,777 (c) $ 2,057,720
1/26/2015 15,006 (e) $ 1,111,644
1/28/2014 26,260 (1) $ 86.64 1/28/2024 26,260 (c) $ 1,945,341
1/29/2013 33,652 (1) $ 59.45 1/29/2023
1/24/2012 37,486 (2) $ 49.23 1/24/2022
1/27/2011 32,965 (2) $ 44.54 1/27/2021
J.C. Campbell 1/26/2016 36,726 (1) $ 55.09 1/26/2026 36,726 (c) $ 2,720,662
1/26/2015 25,777 (1) $ 83.30 1/26/2025 25,777 (c) $ 1,909,560
1/28/2014 21,008 (1) $ 86.64 1/28/2024 21,008 (c) $ 1,556,273
7/31/2013 24,892 (3) $ 73.77 7/31/2023
7/31/2013 49,785 (1) $ 73.77 7/31/2023
L.E. Seeger 1/26/2016 29,381 (1) $ 55.09 1/26/2026 29,381 (c) $ 2,176,544
1/26/2015 17,777 (1) $ 83.30 1/26/2025 17,777 (c) $ 1,316,920
7/31/2014 28,409 (f) $ 2,104,539
D.E. Buckminster 1/26/2016 23,505 (1) $ 55.09 1/26/2026 23,505 (c) $ 1,741,250
1/26/2015 13,111 (1) $ 83.30 1/26/2025 13,111 (c) $ 971,263
1/28/2014