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Section 1: DEF 14A (DEF 14A)

DEF 14A
Table of Contents

 

 

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 Pursuant to §240.14a-12

 

LOGO

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)(1) 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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Table of Contents

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Table of Contents

 

LOGO

March 24, 2020                                

 

Items of Business

To vote on the following proposals:

 

    Election of directors proposed by our Board of Directors for a term of one year, as set forth in this proxy statement
   
    Ratification of the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm for 2020
   
    Advisory resolution to approve executive compensation
   
    Approval of the Amended and Restated American Express Company Incentive Compensation Plan
   
    Two shareholder proposals if properly presented at the meeting
   
    Such other business that may properly come before the meeting
LOGO

 

  

WHEN

Tuesday, May 5, 2020

9:00 a.m. Eastern Time

 

LOGO

 

  

WHERE

American Express Company, 200 Vesey Street,

26th Floor, New York, New York 10285

 

LOGO   

RECORD DATE

March 9, 2020

 

 

LOGO   

ADMISSION

We do not require tickets for admission to the meeting but do limit attendance to shareholders as of the record date or their proxy holders. Please bring proof of your common share ownership, such as a current brokerage statement, and photo identification.

  

 

We are monitoring the developments related to the impact of COVID-19 (Coronavirus) on a daily basis. As a result, we may impose additional procedures or limitations on meeting attendees (beyond those described above) or may decide to hold our annual meeting partly or solely by means of virtual communications, if permitted by applicable law. If we decide to modify the structure of our annual meeting, we will announce the decision to do so in advance, and details on how to participate will be issued by press release (which will be filed with the SEC) and available at http://ir.americanexpress.com and www.proxyvote.com.

 

Please retain the 16-digit control number included on your notice, on your proxy card or in the voting instructions that accompanied your proxy materials as you will need this number should we determine to allow for virtual attendance and you elect to participate by visiting www.virtualshareholdermeeting.com/AXP2020.

 

We also encourage all shareholders to continue to review guidance from public health authorities as the time for our annual meeting approaches.

 

  

 

 

Detailed information regarding our 2020 annual meeting, including how to cast your vote, can be found in “Other Information” starting on page 81.

Important notice regarding the availability of proxy materials for the 2020 annual meeting to be held on May 5, 2020:

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 24, 2020.

 

*

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.

 

LOGO

Tangela S. Richter

Corporate Secretary and Chief Governance Officer

 

Cautionary Note Regarding Forward-Looking Statements

This proxy statement includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, which are subject to risks and uncertainties. The forward-looking statements, including the Company’s aspirational environmental commitments and goals, contain words such as “believe,” “expect,” “anticipate,” “intend,” “plan,” “aim,” “will,” “may,” “should,” “could,” “would,” “likely,” “estimate,” “predict,” “potential,” “continue” or other similar expressions. Actual results may differ from those set forth in the forward-looking statements due to a variety of factors, including: the Company’s inability to address competitive pressures and implement its strategies and business initiatives; changes in developing standards and certifications; the cost and availability of renewable energy projects, energy attribute certificates, certified carbon offset projects, certified paper and green buildings and alternatives to single-use plastic; supply chain and market disruption; regulation; changes in customer or colleague behavior; management’s decision to increase or decrease investments; potential M&A activity and the acquisition of less efficient companies; severe weather conditions; changes in the Company’s real estate and technology strategies; and an inability of waste management systems to divert waste to recycling and composting facilities. A further description of these and other risks and uncertainties can be found in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019 and the Company’s other filings with the U.S. Securities and Exchange Commission. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date on which they are made. We undertake no obligation to update or revise any forward-looking statements.

 

 


Table of Contents
LOGO

 

    Notice of Annual Meeting of Shareholders
  1       Executive Summary
  5       Corporate Governance at American Express
    5     ITEM 1: Election of Directors for a Term of One Year
    5     Our Director Nominees
    13     Our Board’s Composition
    15     Our Board Evaluation Process
    17     Our Board Leadership Structure
    17     Our Board’s Primary Role and Responsibilities, Structure and Processes
    20     Our Board Committees
    23     Our Corporate Governance Framework
    25     Shareholder Engagement
    28     Compensation of Directors
    29     Director Stock Ownership
    29     Director and Officer Liability Insurance
    29     Certain Relationships and Transactions
    31     The Powerful Backing of American Express
  36       Audit Committee Matters
    36     ITEM 2: Ratification of Appointment of Independent Registered Public Accounting Firm
    38     PricewaterhouseCoopers LLP Fees and Services
    39     Report of the Audit and Compliance Committee
  40       Executive Compensation
    40     ITEM 3: Advisory Resolution to Approve Executive Compensation (Say-on-Pay)
  40       Compensation Discussion and Analysis
    41     Executive Summary
    43     Say-On-Pay
    45     Compensation Programs
    49     2020 Annual Target Direct Compensation
    49     Settlement of LTIA granted in January 2017
    51     Discouraging Imprudent Risk Taking
    52     Stock Ownership Guidelines
    53     Peer Group and Benchmarking
    53     Role of the Independent Compensation Consultant
    54     Report of the Compensation and Benefits Committee
  67       Equity Compensation Plans
  68      
ITEM 4: Approval of the Amended and Restated
Incentive Compensation Plan
  74       Shareholder Proposals
    74     ITEM 5: Shareholder Proposal Relating to Action by Written Consent
    76     ITEM 6: Shareholder Proposal Relating to Gender/Racial Pay Equity
  79       Stock Ownership Information
    80     Delinquent Section 16(a) Reports
  81       Other Information
    81     Attending the Annual Meeting of Shareholders and Webcast
    81     Notice of Business to Come Before the Meeting
    81     Additional Voting Information
    83     Multiple Shareholders Sharing the Same Address
    84     2021 Annual Meeting of Shareholders Information
    84     Availability of Form 10-K
  85      
Annex A—Information Regarding Non-GAAP
Financial Measures
  87      

Exhibit A—Amended and Restated American
Express Company 2016 Incentive Compensation
Plan
 


Table of Contents

Executive Summary

Our Company’s Strategic Imperatives

American Express is a globally integrated payments company that provides customers with access to products, insights and experiences that enrich lives and build business success. We are a leader in providing credit and charge cards to consumers, small businesses, mid-sized companies and large corporations around the world. Our results for 2019 reflect our strategy of investing in share, scale and relevance and demonstrate our success in executing against our four strategic imperatives:

 

1.  

Expand leadership

in the premium

consumer space

  2.  

Build on our strong

position in commercial

payments

  3.  

Strengthen our global,

integrated network to

provide unique value

  4.  

Make American

Express an essential

part of our customers’

digital lives

Business Performance

In 2019, we continued to invest in new card acquisitions, new services and Card Member benefits, refreshing and launching new products, and expanding our merchant network. Business performance highlights in 2019 include:

 

 

Added 11.5 million new proprietary Card Members, with around 70% choosing fee-based products;

 

 

Grew worldwide spending on our cards by 6% and on our proprietary cards by 8% after adjusting for foreign exchange translations(1), with growth led by consumers and international regions;

 

 

Increased total loans by 8%;

 

 

Achieved virtual parity coverage in the U.S., with approximately 99% of credit-card accepting merchants now able to accept American Express(2), and remained committed to growing coverage globally, adding over 2 million merchant locations outside of the U.S.;

 

 

Saw strong industry-leading credit performance; and

 

 

Continued to invest in new services, capabilities and Card Member benefits, new card acquisitions and expanding our merchant network globally.

Financial Results

2019 financial highlights include:

 

 

Delivered $43.6 billion in revenue, an all-time high;

 

 

Total revenue for the year grew by 8%, or 9% after adjusting for foreign exchange translations(1); Revenue growth was broad-based, driven by a well-balanced mix of fee, spend and lend revenues, and the fourth quarter of 2019 marked the tenth consecutive quarter with FX-adjusted revenue growth of 8% or more;

 

 

Earnings per share (EPS) for the full year 2019 were $7.99, or $8.20 after adjusting for the impact of a litigation-related charge, a 12% increase over the prior year on an adjusted basis(3); and

 

 

Return on equity (ROE) was 29.6%; and during the year we returned approximately $6 billion of capital to our shareholders, including increasing the dividend by 10%, beginning with the third quarter 2019 dividend declaration.

 

(1) 

FX-adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into U.S. dollars (i.e., assumes the foreign exchange rates used to determine results for the year ended December 31, 2019 apply to the period(s) against which such results are being compared). Total revenues net of interest expense on an FX-adjusted basis is a non-GAAP measure. Management believes the presentation of information on an FX-adjusted basis is helpful to investors by making it easier to compare the Company’s performance in one period to that of another period without the variability caused by fluctuations in currency exchange rates.

(2) 

Source: AXP internal data and The Nilson Report, Issue 1169, “General Purpose Cards—U.S. 2019, Table: 2019 Merchant Acceptance Locations in the U.S.”

(3) 

Adjusted Diluted Earnings per share and the related growth rate, excluding the impacts of a litigation-related charge in Q1’19 and, for the growth rate, certain discrete tax benefits in Q4’18, are non-GAAP measures. Management believes adjusted diluted EPS is useful in evaluating the ongoing operating performance of the Company. See Annex A for a reconciliation to diluted EPS on a GAAP basis.

 


 

2020 PROXY REPORT  |  AMERICAN EXPRESS        1


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LOGO

Key 2019 Performance Results

 

 

LOGO

How our Compensation Program Supports our Business Strategy

Our compensation program supports our business strategy through program design as well as aggressive financial and business growth goals. As a result, our compensation program is closely aligned with Company performance and is sensitive to the Company’s stock performance. Most senior executives’ compensation is variable and covers annual and multi-year performance periods. For example, our Long-Term Incentive Award is granted in two forms: performance restricted stock units (80% of award) and stock options (20% of award). Each of these incentives aligns executives’ interests with those of shareholders, including through the use of multi-year, performance-based vesting periods.

Our compensation program, including our executive compensation principles and strategy, is discussed in detail under the Compensation Discussion and Analysis section of this proxy statement.

Say on Pay, Shareholder Engagement and Feedback

We actively seek feedback from our shareholders and other stakeholders throughout the year. In 2019, we met with shareholders representing approximately 48% of our outstanding shares to discuss executive compensation, corporate governance and related matters. In order to establish a direct line of communication between shareholders and our Board, our Lead Independent Director, Mr. Ronald Williams, actively participated in certain of these meetings. The Compensation and Benefits Committee maintained the 2018 program structure when making 2019 pay decisions considering the strong 96.5% shareholder support for our say-on-pay resolution at our 2019 Annual Meeting.

Our shareholder engagement and response to shareholder feedback are discussed in detail under the Shareholder Engagement and Compensation Discussion and Analysis sections of this proxy statement.

 

(4) 

Total revenues net of interest expense on an FX-adjusted basis is a non-GAAP measure. See footnote 1 on page 1 for an explanation of FX-adjusted information.

(5) 

Adjusted Diluted Earnings per share, excluding the impacts of a litigation-related charge in Q1’19, is a non-GAAP measure. Management believes Adjusted Diluted EPS is useful in evaluating the ongoing operating performance of the Company. See Annex A for a reconciliation to diluted EPS on a GAAP basis.

(6) 

Billed business represents transaction volumes (including cash advances) on cards and other payment products issued by American Express (proprietary billed business) and cards issued under network partnership agreements with banks and other institutions, including joint ventures (Global Network Services billed business). In-store spending activity within Global Network Services retail cobrand portfolios, from which we earn no revenue, is not included in billed business.

 

 


 

2        AMERICAN EXPRESS  |  2020 PROXY REPORT


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Our Board of Directors

The following provides summary information about each director nominee. Our director nominees possess a range of diverse skills, backgrounds, experience and viewpoints that we believe are integral to an effective board. Detailed information about each individuals’ qualifications, experience, skills and expertise along with select professional and community contributions can be found starting on page 6.

Our Director Nominees

 

Name

  Position   Age   Director Since   AC   CB   NGPR     R  

Charlene Barshefsky

  Director   69   2001              

John J. Brennan

  Director   65   2017          

Peter Chernin

  Director   68   2006            

Ralph de la Vega

  Director   68   2016            

Anne Lauvergeon

  Director   60   2013            

Michael O. Leavitt

  Director   69   2015            

Theodore J. Leonsis

  Director   64   2010            

Karen L. Parkhill

  Director   54   2020              

Lynn A. Pike

  Director   63   2020              

Stephen J. Squeri

  CEO & Chairman   61   2018                

Daniel L. Vasella

  Director   66   2012            

Ronald A. Williams

  Lead Independent Director   70   2007            

Christopher D. Young

  Director   48   2018            

  Member       Chair

 

AC    Audit and Compliance    CB    Compensation and Benefits      NGPR   

Nominating, Governance and

Public Responsibility

               R    Risk

Director Nominee Statistics

 

              

Gender

Diversity

  

Racial/      

Ethnic      

Diversity      

  

International      

  

Average      

Age      

   Independence         

Average        

Tenure        

31%    23%      15%      63.5      92%      6.3   
         years             years        
              

Diversity of Skills, Viewpoints and Expertise

 

Core Business, Operations and Organizational Leadership

       Financial Services

Industry

  

Government/Legal/

Regulatory/Public Policy

      

Investment

and M&A

   Public Company Governance

Technology

and Information

Security

       Consumer   

Risk Management

       Global Perspective    Brand and Marketing

 


 

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LOGO

Corporate Governance Highlights

 

Board    

    Structure and    

    Independence    

  

 

LOGO  Election of two new directors, Karen L. Parkhill and Lynn A. Pike, in 2020

LOGO  Strong Lead Independent Director with explicit duties and responsibilities

LOGO  All directors are independent except the Chairman

LOGO  Diverse and highly skilled Board that provides a range of viewpoints

LOGO  Consideration of optimal Board leadership structure for the Company

LOGO  Executive sessions led by the Lead Independent Director at each regular in-person board meeting without management present

LOGO  Executive sessions at committee meetings led by independent committee chairs without management present

 

Shareholder    

Rights    

  

 

LOGO  Proxy access rights

LOGO  Annual election of all directors

LOGO  Majority voting for directors (in uncontested elections)

LOGO  Shareholders representing at least 25% of outstanding shares are able to call special meetings

 

Board    

Oversight    

  

 

LOGO  Oversees the Company’s annual business plan and corporate strategy, succession planning and risk management

LOGO  Monitors the Company’s workplace culture, “tone at the top” and values

LOGO  Proactive, comprehensive and strategic Board and senior management succession planning

LOGO  Annual off-site Board meeting focused on Company strategy

LOGO  Key management and rising talent reviewed at an annual talent review

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

LOGO  Director access to experts and advisors, both internal and external

 

Strong    

Corporate    

Governance    

Practices    

  

 

LOGO  Prohibition on hedging and pledging transactions by executive officers and directors

LOGO  Sound policy on public company board service

LOGO  Responsive, active and ongoing shareholder engagement

LOGO  Regular Board and committee refreshment with a range of tenures

LOGO  Robust Code of Conduct for Members of the Board of Directors and Code of Conduct for American Express Colleagues, each with an annual certification requirement

LOGO  Mandatory retirement age of 72 years for all directors

LOGO  Annual Board and committee performance assessments

LOGO  Comprehensive claw-back policy for senior executives

LOGO  Robust annual risk assessment of executive compensation programs, policies, and practices

LOGO  Significant share ownership requirements for senior executives and directors

LOGO  Strong commitment to Corporate Social Responsibility

LOGO  Wide-ranging director orientation and continuing educational programs

 

For a detailed discussion of our corporate governance framework and our director nominees, please see “Corporate Governance at American Express” beginning on page 5.

 

 


 

4        AMERICAN EXPRESS  |  2020 PROXY REPORT


Table of Contents

Corporate Governance at American Express

Item 1: Election of Directors for a Term of One Year

Our Board currently has 13 members. Each director is standing for election to hold office until the next annual meeting of shareholders or until their successors are duly elected and qualified. Our Board has appointed Laureen E. Seeger, Tangela S. Richter and Kristina V. Fink as proxies to vote your shares on your behalf. The proxies intend to vote for the election of each of the 13 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. If the Board nominates another individual, the persons named as proxies may vote for that nominee.

Our Director Nominees

Our director nominees hold and 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. Our nominees have been chief executive officers, chief financial officers, chief operating officers and members of senior management of large, global businesses. Through these roles, our nominees have developed expertise in core business strategy, operations, finance, human capital management and leadership development, compliance, controls and risk management, as well as the skills to respond to rapidly evolving business environments and foster innovation and business transformation. Additionally, our nominees’ experiences serving in government and on other boards bring valuable knowledge and expertise in the areas of public policy, governance, succession planning, compensation, financial reporting, and regulatory compliance.

Detailed biographical information for each director nominee follows. We have included career highlights, other public directorships and select professional and community contributions along with the top qualifications, experience, skills and expertise that we believe each director brings to our Board. Our Board considered all of the aforementioned attributes and the results of our annual board evaluations when deciding to re-nominate the following directors.

 


 

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LOGO

LOGO   

Charlene

Barshefsky

 

Senior International Partner, WilmerHale

 

Director since 2001

Independent

Age 69

Career Highlights

 

  Senior International Partner at WilmerHale where she advises U.S. and international companies on international business transactions, government relations, market access, and foreign government regulation of business and investments

 

  Former U.S. Trade Representative and member of President Clinton’s Cabinet, where she served as chief trade negotiator and principal trade policymaker for the United States, negotiating complex market access, regulatory, and investment agreements with virtually every major country in the world

Specific qualifications, experience, skills and expertise:

 

  High-level government service

 

  Expertise negotiating with foreign governments

 

  Advisor to firms on doing business in international markets

 

  Broad legal and public policy experience

 

  Public company governance

Select Professional and Community Contributions

 

  Trustee, Howard Hughes Medical Institute

 

  Member, Council on Foreign Relations

 

Other Current Public Directorships

 

  The Estée Lauder Companies Inc.

Other Public Directorships in the past five years

 

  Starwood Hotels & Resorts Worldwide, Inc.

 

  Intel Corporation

 


    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

 


LOGO   

John J.

Brennan

 

Chairman Emeritus and Senior Advisor, The Vanguard Group, Inc.

 

Director since 2017

Independent

Age 65

Career Highlights

 

  Chairman emeritus and senior advisor of The Vanguard Group, Inc., a global investment management company

 

  Former CEO, CFO and Chairman of the Board of The Vanguard Group, Inc.

 

  Former Chairman of the Board of Governors of The Financial Industry Regulatory Authority (FINRA), a U.S. financial services industry regulator

 

  Former Chairman of the Financial Accounting Foundation, an overseer of financial accounting and reporting standard-setting boards

Specific qualifications, experience, skills and expertise:

 

  Core business, operations and management

 

  CFO and financial accounting expertise

 

  Risk and audit oversight

 

  Financial industry operations and regulation

 

  Institutional investor perspective

Select Professional and Community Contributions

 

  Chairman, Board of Trustees of the University of Notre Dame

 

  Chairman, Vanguard Charitable Endowment Program

 

  Founding Trustee, King Abdullah University of Science and Technology

 

Other Public Directorships in the past five years

 

  General Electric Company

 

  LPL Financial Holdings, Inc.

 

 

 


 

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LOGO   

Peter

Chernin

 

Founder and CEO, Chernin Entertainment, LLC

 

Director since 2006

Independent

Age 68

Career Highlights

 

  Founder and CEO of Chernin Entertainment, LLC, a film and television production company, and The Chernin Group, LLC, which focuses on strategic opportunities in media, technology and entertainment

 

  Co-Founder and Partner of TCG, a multi-stage investment firm dedicated to building consumer businesses

 

  Former President, Chief Operating Officer and director of News Corporation

 

  Former Chairman and CEO of the Fox Group, where he oversaw the global operations of the company’s film, television, satellite cable and digital media businesses

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

Select Professional and Community Contributions

 

  Co-Chairman and Co-Founder, Malaria No More

 

  Director and Co-chair, Board of Visitors of the University of California, Berkeley

 

  Former Director, Harvard AIDS Initiative

 

Other Public Directorships in the past five years

 

  Pandora Media, Inc.

 

  Twitter, Inc.

 

 


    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

 


LOGO   

Ralph de la

Vega

 

Former Vice Chairman, AT&T Inc.

 

Director since 2016

Independent

Age 68

Career Highlights

 

  Former Vice Chairman of AT&T Inc. and CEO of Business Solutions and International, where he led AT&T’s Integrated Business Solutions group (both mobile and IP services), which served nearly all of the Fortune 1000 firms globally, AT&T’s Mexican wireless business and DIRECTV Latin America

 

  Former President and CEO of AT&T Mobile and Business Solutions

 

  Former Chief Operating Officer of Cingular Wireless

Specific qualifications, experience, skills and expertise:

 

  Core business, operations and management

 

  Global business leader

 

  Deep business experience in Latin America

 

  Digital and mobile technology expertise

 

  Financial accounting expertise

Select Professional and Community Contributions

 

  Director, Junior Achievement Worldwide

 

  Director, Latino Donor Collaborative

 

  Former Executive Board Member, Boy Scouts of America

 

Other Current Public Directorships

 

  Amdocs

 

 


 

LOGO

 

 

2020 PROXY REPORT  |  AMERICAN EXPRESS        7


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LOGO

LOGO   

Anne

Lauvergeon

 

Chairman and CEO, A.L.P.

 

Director since 2013

Independent

Age 60

Career Highlights

 

  Chairman and CEO of A.L.P., a private French advisory company

 

  Chairman of Sigfox, an internet of things operator

 

  Chairman of IB2

 

  Former CEO of Areva

 

  Former Advisor for Economic International Affairs to the French Presidency and Deputy Chief of Staff

Specific qualifications, experience, skills and expertise:

 

  Core business, operations and management

 

  Deep business experience in Europe

 

  Government experience

 

  Public policy experience in sustainability

 

  Global business leader

Select Professional and Community Contributions

 

  Co-Chairman of the Innovation Committee, Mouvement des Enterprises de France

 

  Former Member, United Nations Global Compact Board

 

  Former Executive Committee Member, World Business Council for Sustainable Development

 

  Former Chair, Innovation 2030 Commission (France)

 

Other Current Public Directorships

 

  Suez

 

  Koç Holding

Other Public Directorships in the past five years

 

  Airbus Group

 

  Rio Tinto plc

 

  Total S.A.

 

 


    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

 


LOGO   

Michael O.

Leavitt

 

Founder and Chairman,
Leavitt Partners, LLC

 

Director since 2015

Independent

Age 69

Career Highlights

 

  Founder and Chairman of Leavitt Partners, LLC, a health care consulting firm, and Chairman of Leavitt Equity Partners, a private equity fund

 

  Former U.S. Secretary of Health and Human Services

 

  Former Administrator of the U.S. Environmental Protection Agency

 

  Former Governor of Utah

Specific qualifications, experience, skills and expertise:

 

  Deep government experience

 

  Senior executive and administrative experience

 

  Public policy experience

 

  Regulatory experience

 

  Public company governance

Select Professional and Community Contributions

 

  Former Board Member, Cancer Treatment Centers of America

 

Other Current Public Directorships

 

  Medtronic, Inc.

Other Public Directorships in the past five years

 

  HealthEquity, Inc.

 

 

 


 

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Table of Contents
LOGO   

Theodore J.

Leonsis

 

Founder, Chairman and CEO, Monumental Sports & Entertainment, LLC

 

Director since 2010

Independent

Age 64

Career Highlights

 

  Founder, Chairman and CEO 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 Capital City Go-Go, Wizards District Gaming, Caps Gaming and the Capital One Arena in Washington, D.C.

 

  Former Vice Chairman Emeritus of AOL LLC, a leading global ad-supported Web company

 

  Former Chairman of Revolution Money, Inc., acquired by American Express in January 2010

Specific qualifications, experience, skills and expertise:

 

  Successful innovator and entrepreneur

 

  Core business, operations and management

 

  Expertise in social media and digital trends

 

  Brand and marketing expertise

 

  Public company governance

Select Professional and Community Contributions

 

  Chairman, D.C. College Access Program, Inc.

 

  Co-Founder and Vice-Chair, Greater Washington Partnership

 

  Co-Founder and Co-Executive Chairman, aXiomatic Gaming

 

  Council Member, National Museum of African American History and Culture

 

Other Current Public Directorships

 

  Groupon, Inc.

 

 


    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

 


LOGO   

Karen L.

Parkhill

 

Executive Vice President and Chief Financial Officer, Medtronic

 

Director since 2020

Independent

Age 54

Career Highlights

 

  Executive Vice President and Chief Financial Officer of Medtronic, where she leads the global finance organization and key supporting functions including Treasury, Controller, Tax, Internal Audit, Investor Relations, Corporate Strategy and Business Development

 

  Former Vice Chairman and Chief Financial Officer of Comerica, where she directly managed the Finance department overseeing Accounting, Business Finance, Corporate Planning and Development, Investor Relations, Treasury and Economics, with responsibility for all financial reporting

 

  Former Chief Financial Officer of the Commercial Banking business at JP Morgan Chase and Co.

Specific qualifications, experience, skills and expertise:

 

  Public company CFO

 

  Financial accounting expertise

 

  Banking industry expertise

 

  Core business, operations and management

 

  Risk and audit oversight

Select Professional and Community Contributions

 

  Former Member, International Women’s Forum

 

  Former National Trustee, Boys and Girls Clubs of America

 

  Former Director, Methodist Health System

 

Other Public Directorships in the past five years

 

  Comerica Inc.

 


 

LOGO

 

 

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Table of Contents

LOGO

LOGO   

Lynn A.

Pike

 

Former President, Capital One Bank

 

Director since 2020

Independent

Age 63

Career Highlights

 

  Former President of Capital One Bank and a former member of the Capital One Executive Committee

 

  Former President of Business Banking at Bank of America, as well as the former President of California for that corporation

Specific qualifications, experience, skills and expertise:

 

  Unique perspective as Chair of American Express National Bank

 

  Banking industry expertise

 

  Core business, operations and management

 

  Payments and network industry expertise

 

  Regulatory experience

Select Professional and Community Contributions

 

  Chair of American Express National Bank

 

  Director, Bankwork$

 

  Director, California State University Channel Islands Foundation

 

Other Current Public Directorships

 

  Hiscox Ltd.

 

 


    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

 


LOGO   

Stephen J.

Squeri

 

Chairman and CEO, American Express Company

 

Director since 2018

Chairman of the Board since

2018

Age 61

Career Highlights

 

  Chairman and CEO of American Express Company

 

  Mr. Squeri has held many positions during his 34 years at American Express, including Vice Chairman, Group President of Global Corporate Services, Group President of Global Services and Executive Vice President and Chief Information Officer

Specific qualifications, experience, skills and expertise:

 

  Unique perspective as Company CEO

 

  Global business leader

 

  Core business, operations and management

 

  Payments and network industry expertise

 

  Expertise in digital and mobile innovation

Select Professional and Community Contributions

 

  Trustee, Valerie Fund

 

  Trustee, Manhattan College

 

  Member, Board of Governors of Monsignor McClancy Memorial High School
 

 


 

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LOGO   

Daniel L.

Vasella

 

Honorary Chairman and Former Chairman and CEO, Novartis AG

 

Director since 2012

Independent

Age 66

Career Highlights

 

  Honorary Chairman and former Chairman and CEO of Novartis AG, a company that engages in the research, development, manufacture and marketing of health care products worldwide

 

  Former Chief Operating Officer, Senior Vice President, Head of Worldwide Development and Head of Corporate Marketing at Sandoz Pharma Ltd.

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

 

  Public company governance

Select Professional and Community Contributions

 

  Foreign Honorary Member, American Academy of Arts and Sciences

 

  Former Member, International Business Leaders Advisory Council for the Mayor of Shanghai

 

  Former Trustee, Carnegie Endowment for International Peace

 

Other Current Public Directorships

 

  PepsiCo, Inc.

 

 


    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

 


LOGO   

Ronald A.

Williams

 

Former Chairman and CEO, Aetna, Inc.

 

Director since 2007

Lead Independent Director since 2018

Age 70

Career Highlights

 

  Chairman and CEO of RW2 Enterprises, LLC, where he advises senior corporate executives on the development of effective strategies and the achievement of transformational leadership grounded in core values

 

  Operating advisor to Clayton, Dubilier & Rice, LLC, a private equity firm

 

  Former Chairman and CEO of Aetna, Inc., a leading diversified health care benefits company

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

 

  Public company governance

Select Professional and Community Contributions

 

  Trustee, Massachusetts Institute of Technology

 

  Trustee, Committee for Economic Development

 

  Vice Chair, Board of Trustees of the Conference Board

 

Other Current Public Directorships

 

  The Boeing Company

 

  Johnson & Johnson

Other Public Directorships in the past five years

 

  Envision Healthcare

 

 


 

LOGO

 

 

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LOGO

LOGO   

Christopher D.

Young

 

Former CEO, McAfee, LLC

 

Director since 2018

Independent

Age 48

Career Highlights

 

  Former CEO of McAfee, LLC, one of the world’s leading independent cybersecurity companies

 

  Former Senior Vice President and General Manager at Intel Security Group, where he led the initiative to spin out McAfee

 

  Former Senior Vice President, Security and Government Group at Cisco Systems, Inc., a technology networking company

Specific qualifications, experience, skills and expertise:

 

  Cybersecurity expert

 

  Core business, operations and management

 

  Experience in national security and emergency preparedness

 

  Product development and marketing experience

 

  Risk oversight

Select Professional and Community Contributions

 

  Member, President’s National Security Telecommunications Advisory Committee

 

  Former Director, Cyber Threat Alliance

 

  Former Member, Board of Trustees of Princeton University

 

Other Current Public Directorships

 

  Snap Inc.

Other Public Directorships in the past five years

 

  Rapid7

 


    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

 


 

 


 

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Our Board’s Composition

As illustrated by the director biographies on the previous pages, our Board is made up of a diverse group of leaders with substantial experience in their respective fields. We believe that our Board has assembled the right mix of members to provide effective oversight and insightful strategic guidance.

We continually review our Board’s composition to identify the skills needed for our Company both in the near term and into the future. Ongoing board succession planning, along with our mandatory retirement age for directors, assures that the Board continues to maintain an appropriate mix of objectivity, skills and experiences to provide fresh perspectives and effective oversight and guidance to management, while leveraging the institutional knowledge and historical perspective of our longer-tenured directors. To that end, in 2019, our Board engaged a third-party consultant to gain an outside perspective and help support Board succession processes and assessments as several Board retirements are expected to occur within the next few years due to our mandatory retirement age. Our Board believes that this workstream will help ensure an orderly Board succession process over the next few years.

Ideal Director Nominee Attributes

The Nominating, Governance and Public Responsibility Committee assesses potential candidates based on their history of achievement, the breadth of their business experiences, whether they bring specific skills or expertise in areas that the committee has identified as desired and whether they possess personal attributes and diverse experiences that will contribute to the sound functioning of the Board. While we do not have a specific policy on board diversity, our Corporate Governance Principles provide that the Board should be diverse, engaged and independent. When reviewing potential board nominees, the Nominating, Governance and Public Responsibility Committee considers the diversity of the Board, including gender and race, and does not discriminate on the basis of ethnicity, sexual orientation, culture or nationality. Specifically, we seek individuals who:

 

  have established records of significant accomplishment in leading global businesses and large, complex organizations

 

  have achieved prominence in their fields and possess skills or significant experience in areas of strategic importance to our business

 

  possess integrity, independence, energy, forthrightness, strong analytical skills and the commitment to devote the necessary time and attention to the Company’s affairs

 

  demonstrate they can challenge and stimulate management and exercise sound judgment

 

  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

Process for Identifying and Adding New Directors

The Nominating, Governance and Public Responsibility Committee uses a professional search firm to help identify, evaluate and conduct due diligence on potential director candidates. 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 maintains an ongoing list of potential candidates and considers recommendations made by the Board’s independent directors.

In addition, the Nominating, Governance and Public Responsibility Committee considers all shareholder recommendations for director candidates and applies the same standards in considering candidates submitted by shareholders as it does in evaluating all other candidates. Shareholders can recommend candidates by writing to the committee in care of the Company’s Corporate Secretary, whose contact information is on page 27. Shareholders who wish to submit nominees for election at an annual or special meeting of shareholders should follow the procedure described on page 84.

 


 

LOGO

 

 

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LOGO

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

 

 

STEP

 

 

STEP

 

 

STEP

 

1

 

Collect

Candidate Pool

 

LOGO  Independent search firms

 

LOGO  Independent director recommendations

 

LOGO  Shareholder recommendations

 

2

 

Holistic

Candidate Review

 

Potential candidates are comprehensively reviewed and the subject of rigorous discussion during Nominating, Governance and Public Responsibility Committee meetings and Board meetings.

 

The candidates that emerge from this process are interviewed by members of the Nominating, Governance and Public Responsibility Committee and other Board members, including the Chairman and Lead Independent Director.

 

 During these meetings, directors assess candidates on the basis of their skills and experience, their personal attributes and their expected contribution to the current mix of competencies and diversity on the Board.

 

 Simultaneous due diligence is conducted, including soliciting feedback from other directors and persons outside the Company.

 

 

3

 

Recommendation

to the Board

 

The Nominating, Governance and Public Responsibility Committee presents qualified candidates to the Board for review and approval.

 

 

 

Six new directors

added since 2014:

 

 

LOGO  Ethnic, gender and geographic diversity  

 

LOGO  Technology and cybersecurity expertise  

 

LOGO  Current and former CEOs

 

LOGO  Current and former CFOs

 

LOGO  Senior government and regulatory experience

 

LOGO  Global business leaders

 

LOGO  M&A and investment experience  

 

LOGO  Financial Services Industry Expertise

 

 

 

We believe the composition of our Board appropriately reflects a diversity of viewpoints, skills, professional and personal backgrounds and experiences to effectively lead our Company.

 

LOGO

 

 


 

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Table of Contents

Our Board Evaluation Process

Our Board continually seeks to improve its performance. Throughout the year our Lead Independent Director has regular one-on-one discussions with our Board members and conveys their feedback on an ongoing basis to our Chairman. Separately, our Chairman, Chief Legal Officer and Corporate Secretary each routinely communicate with our Board members to obtain real-time feedback.

Our Nominating, Governance and Public Responsibility Committee oversees the formal annual evaluation process of the effectiveness of our Board and its standing committees. Conducting a robust annual evaluation process allows the Board to assess its performance and practices and identify areas for improvement. As part of the evaluation process, our Board analyzes and assesses the performance of both the Chairman and the Lead Independent Director, as well as the overall leadership structure of the Company.

In 2019, we leveraged the third-party consultant our Board had engaged to assist with strategic Board succession planning to augment our annual Board evaluation process. The individual interviews conducted with each Board member for this project were used to gain individual feedback from our Board which was shared with the full Board at an in-person meeting.

We believe that this continuous feedback cycle along with our formal annual evaluation process helps to ensure the continued effectiveness of our Board.

Our Board evaluations cover the following areas:

  

 

LOGO  Board efficiency and overall effectiveness

 

LOGO  Board and committee structure

 

LOGO  Satisfaction with the performance of the Chairman

 

LOGO  Satisfaction with the performance of the Lead Independent Director

 

LOGO  Board member access to the Lead Independent Director, CEO and other members of senior management

 

LOGO  Quality of Board discussions and balance between presentations and discussion

 

LOGO  Quality and clarity of materials presented to directors

 

LOGO  Board and committee information needs

 

LOGO  Satisfaction with Board agendas and the frequency and format of meetings and time allocations

 

LOGO  Areas where directors want to increase their focus

 

LOGO  Board dynamics and culture

 

LOGO  Board and committee access to experts and advisors

 

LOGO  Satisfaction with the format of the evaluation

 


 

LOGO

 

 

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LOGO

 

 

Below is a summary of our Board Evaluation process:

 

 
 

 

   1

 

 

 

 
 

Annual Board and Committee Evaluations

 

The process, including evaluation method, is reviewed annually by the Nominating, Governance and Public Responsibility Committee.

 

We currently use a written questionnaire for the Board and each standing committee that is updated and tailored to address the significant processes that drive board effectiveness.

 

Each director completes the written questionnaire on an unattributed basis for the Board and for each committee on which they serve.

 

The questionnaire includes open-ended questions and space for candid commentary.

 

 
 

 

   2

 

 

 

 
 

Summary of the Written Evaluations

 

The Company’s Corporate Secretary collates the responses, highlighting trends since the prior year.

 

All written comments are unattributed, included verbatim and shared with the full Board and each applicable committee.

 

 
 

 

   3

 

 

 

 
 

Board and Committee Review

 

The Chair of the Nominating, Governance and Public Responsibility Committee leads the discussion of the Board and committee evaluations at the Board level using the responses to the written questionnaire as a guide. Separately, each committee chair leads a discussion of the applicable committee evaluation at each committee meeting and reports on their discussions to the full Board.

 

Directors also deliver feedback to the Lead Independent Director and Chairman of the Board and suggest changes and areas for improvement.

 

Our third-party consultant delivered feedback to our full Board and proposed enhancements to our current processes.

 

 
 

 

   4

 

 

 

 
 

Actions

 

Actions taken in response to this process over the years include:

 

Streamlined Board committee structure and meeting cadence;

 

Board meetings in international locations with Company site visits;

 

Director orientation program was modified and enhanced;

 

Management with varying degrees of seniority present to the Board and its committees;

 

Information and materials regularly provided to directors continue to be enhanced and evolved to alleviate “information overload” and to enable directors to focus on the key data;

 

Format of board meetings has been altered to enable more time for director discussion with and without the CEO present;

 

Number of informal meetings between directors and key executives has been increased;

 

Increased time for informal director gatherings;

 

Director education and presentations on emerging risk areas, corporate governance, industry disruptors and competitors; and

 

Board members added with expertise in critical areas.

 

 

 
 

 


 

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Table of Contents

Our Board Leadership Structure

We believe that strong independent leadership is essential for our Board to effectively perform its primary oversight functions.

Our Board has been led by Mr. Squeri, our Chairman and CEO, and Mr. Williams, our Lead Independent Director, since 2018. Messrs. Squeri and Williams have forged a strong, collaborative, candid and productive working relationship. Their leadership is supplemented by engaged and expert committee chairs along with independent-minded, skilled and committed directors.

Our Board and Nominating, Governance and Public Responsibility Committee recently completed their annual review of the Board’s leadership structure. The review considered the insightful, effective and sound leadership provided by Mr. Williams during his tenure as Lead Independent Director as well as the tangible benefits of having a Chairman and CEO with an operational focus and extensive company experience given the global and complex nature of our business. Following thoughtful review and consideration, our Board continues to believe that our current leadership structure is the right structure for our Company. Our current structure allows the Board to focus on key strategic, policy and operational issues, provides critical and effective leadership (both internally and externally), and creates an environment in which the Board can work effectively and appropriately challenge management; all of which we believe will benefit the long-term interests of our shareholders.

Strong Lead Independent Director with Defined Role and Responsibilities

The Board recognizes that in circumstances like ours where the positions of Chairman and CEO are combined, a strong Lead Independent Director with a clearly defined role and set of responsibilities is paramount for constructive and effective leadership.

Therefore, the position of Lead Independent Director at American Express comes with a clear mandate and significant authority and responsibilities which are detailed in our Board-approved Corporate Governance Principles.

Our Corporate Governance Principles provide that the Lead Independent Director will:

 

LOGO

Preside at all meetings of the Board at which the Chairman is not present, including the executive sessions of the independent directors, and apprise the Chairman of the issues considered and decisions reached at those sessions;

 

LOGO

Call additional meetings of independent directors as needed;

 

LOGO

Lead the Board in putting forth its expectations for “tone at the top”;

 

LOGO

Meet regularly with the Chairman and serve as a liaison between the Chairman and the independent directors;

 

LOGO

Facilitate effective and candid communication to optimize Board performance;

 

LOGO

Advise the Chairman of the Board’s informational needs and review and approve the types of information sent to the Board and Board meeting agendas;

 

LOGO

Review and approve the schedule of Board meetings to assure there is sufficient time for discussion of all agenda items;

 

LOGO

Monitor and coordinate with the Chairman on appropriate governance issues and developments; and

 

LOGO

Be available as appropriate for consultation and direct communication with major shareholders.

In addition, all Board members are encouraged to propose the inclusion of additional Board agenda items that they deem necessary or appropriate in carrying out their duties. All Board members have direct access to the Chairman and Lead Independent Director.

Our Board’s Primary Role and Responsibilities, Structure and Processes

Our Board bears the responsibility for the oversight of management on behalf of our shareholders in order to ensure long-term value creation. In that regard, the primary responsibilities of our Board include, but are not limited to (i) oversight of the Company’s annual business plan, (ii) corporate strategy and goals, (iii) ongoing succession planning and talent management and (iv) risk management.

 


 

LOGO

 

 

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LOGO

How our Board Oversees our Annual Business Plan and Corporate Strategy

Our Board oversees our strategic direction and business activities. At the beginning of each year, our senior management presents our consolidated annual business plan to the Board, and the Board discusses the Company’s results relative to the plan periodically throughout the year. Each year, the Board engages in a two-day offsite strategy meeting with management where it conducts a comprehensive review and discussion of the Company’s strategic goals over the short-, medium- and long-term, as well as management’s plans to achieve such goals. In addition, at least once a year, each of the global business groups presents an in-depth review of their business to the Board, which includes a review of the strategic goals of the business and business performance relative to business strategy.

 

 

LOGO

How our Board Engages in Ongoing CEO and Key Executive Succession Planning

Our Board ensures that we have the right management talent to pursue our strategies successfully.

The entire Board 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 and development plans are 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 and senior management 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.

The Board also oversees management’s succession planning for other key executive positions. Our Board calendar includes at least one meeting each year at which the Board conducts a detailed talent review which includes a review of the Company’s talent strategies, leadership pipeline and succession plans for key executive positions.

Additionally, the results of the Company’s Annual Colleague Experience Survey are reviewed each year in detail with the Board. Our Annual Colleague Experience Survey provides insights into employee satisfaction, leadership efficacy, learning opportunities, and career development. The insights provided by the survey help improve the American Express employee experience, workplace culture and business results. We believe that maintaining our strong workplace culture, adhering to our Blue Box Values and ensuring that our people feel valued, recognized, and backed will help us attract, retain and develop the right talent to lead the Company and successfully execute our corporate strategy. Please see page 35 for additional information about our workplace culture.

 

 


 

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Table of Contents

How our Board Oversees Risk Management

Board of Directors

We are committed to Board-level risk management. Our Board monitors our “tone at the top” and risk culture and oversees emerging strategic risks. Risk management is overseen by our Board 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 executive sessions with our Chief Risk Officer, Chief Compliance & Ethics Officer, Chief Audit Executive and other senior management with regard to our risk management processes, controls, talent and capabilities.

 

  

Risk Committee

 

LOGO  Provides oversight of our enterprise-wide risk management framework, processes and methodologies. Approves our Enterprise Risk Management (ERM) policy, which covers risk governance, risk oversight and risk appetite, including credit risk, market risk, liquidity risk, operational risk, reputational risk, country risk, model risk, asset-liability management 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

LOGO  Reviews and concurs in the appointment, replacement, performance and compensation of our Chief Risk Officer

LOGO  Receives regular updates from the Chief Risk Officer on key risks, transactions and exposures

LOGO  Receives reports on cybersecurity and related risks at least twice a year

LOGO  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

LOGO  Provides oversight of management’s execution of capital management, liquidity planning and resolution planning

LOGO  Monitors the quality and effectiveness of the Company’s technology security, data privacy and disaster recovery capabilities

 

  
  

Audit and Compliance Committee

 

LOGO  Assists the Board in its oversight responsibilities relating to the integrity of our annual and quarterly consolidated 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 control over financial reporting and legal and regulatory compliance

LOGO  Provides oversight of our Internal Audit Group

LOGO  Reviews and concurs in the appointment, replacement, performance and compensation of our Chief Audit Executive and approves Internal Audit’s annual audit plan, charter, policies, budget and overall risk assessment methodology

LOGO  Receives regular updates on the status of the audit plan and results including significant reports issued by Internal Audit and the status of our corrective actions

LOGO  Reviews and approves our compliance policies, which includes our Compliance Risk Tolerance Statement

LOGO  Reviews the effectiveness of our Corporate-wide Compliance Risk Management Program

LOGO  Appoints, replaces, reviews and evaluates the qualifications of the Company’s independent registered public accounting firm

 

  
  

Compensation and Benefits Committee

 

LOGO  Works with the Chief Colleague Experience Officer and 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

LOGO  Uses a risk-balanced incentive compensation framework to decide on our bonus pools and the compensation of senior executives

 

 


 

LOGO

 

 

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LOGO

Board Oversight of Information and Cyber Security

We are a global financial services company and understand the substantial operational risks for companies in our industry as well as the importance of preserving the trust of our customers and securing their personal information. To that end, we have an extensive cybersecurity governance framework in place. Our Board receives reports on cybersecurity at least once a year and our Risk Committee receives reports on cybersecurity at least twice a year, including in at least one joint meeting with the Audit and Compliance Committee, and all receive ad hoc updates as needed. In addition, the Risk Committee annually approves the Company’s Information Security Program.

We have a very experienced information security team and we actively develop and recruit leadership and specialists from both the government and private sector. We have implemented an Information Security Program and Operating Model that is designed to protect the confidentiality, integrity and availability of information and information systems from unauthorized access, use, disclosure, disruption, modification or destruction. Our Information Security Program and Operating Model are based on the National Institute of Standards and Technology (NIST) Cybersecurity Common Standards Framework, which consist of controls designed to identify, protect, detect, respond to and recover from information and cyber security incidents. The framework defines risks and associated controls which are embedded in our processes and technology. Those controls are measured and monitored by a combination of subject matter experts and a security operations center with our integrated cyber detection, response and recovery capabilities.

 

Program Highlights

 

  LOGO

We have a robust Cyber Crisis Response Plan in place which provides a documented framework for handling high severity security incidents and facilitates coordination across multiple parts of the Company.

 

  LOGO

We deploy a defense-in-depth strategy with multiple layers of controls including embedding security into our technology investments.

 

  LOGO

We invest in threat intelligence and are active participants in industry and government forums to improve sector cybersecurity defense.

 

  LOGO

We collaborate with our peers in the areas of threat intelligence, vulnerability management and response and drills.

 

  LOGO

We routinely perform simulations and drills at both a technical and management level.

 

  LOGO

We incorporate external expertise and reviews in all aspects of our program.

 

  LOGO

All colleagues receive annual cybersecurity awareness training.

We continuously assess the risks and changes in the cyber environment and dynamically adjust our program and investments as appropriate.

How our Management Oversees Risk

We use our comprehensive Enterprise-Wide 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. The ERMC is the highest-level management committee to oversee all firm-wide risks and is responsible for risk governance, risk oversight and risk appetite. 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 Company-wide. The ERMC reviews key risk exposures, trends and concentrations, significant compliance matters, and provides guidance on the steps to monitor, control and report major risks.

Our Board Committees

In July 2019, after a holistic review of the Board’s standing committee structure, our Board approved the reduction of its standing committees from six to four by dissolving the Innovation and Technology Committee and the Public Responsibility Committee. The topics previously covered by the Innovation and Technology Committee are now covered by the full Board. Our Board made this decision at this point in time given the Company’s digital evolution since the inception of the committee in 2010 and the fact that technology now permeates every aspect of the Company. The topics previously covered by the Public Responsibility Committee are now covered by the newly renamed Nominating, Governance and Public Responsibility Committee to allow for elevated oversight of environmental and social issues. In connection with the committee restructuring, our Board revised its standing committee membership effective October 1, 2019.

Our Board’s current standing committee membership information is listed on the following pages. Effective March 9, 2020, our Board approved revisions to the membership of our standing committees. Each current member of our standing committees and each member in 2019 was independent and fulfilled the requirements applicable to each committee on which they served.

 

 


 

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Board Committee Responsibilities

 

Audit and Compliance Committee

 

           

COMMITTEE HIGHLIGHTS

 

LOGO

  

9

Meetings in 2019

  

Members

John J. Brennan

Ralph de la Vega

Anne L. Lauvergeon

Michael O. Leavitt

Karen L. Parkhill

Daniel L. Vasella (Chair)

  

Independence

Each member of the

committee is independent

and financially literate.

  

Audit Committee Financial Expert

Each of Mr. Brennan,

Mr. de la Vega and

Ms. Parkhill meet the requirements as defined by SEC rules.

           

Role and Responsibilities

  Assists the Board in its oversight of the integrity of our consolidated financial statements and related 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 39 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, including with the Company’s Chief Financial Officer, Chief Legal Officer, Chief Compliance & Ethics Officer, and Chief Audit Executive, and also with the Lead Engagement Partner from the Company’s independent registered public accounting firm

 

 

Compensation and Benefits Committee

 

           

COMMITTEE HIGHLIGHTS

 

LOGO

  

6

Meetings

in 2019

  

Members

John J. Brennan

Peter Chernin

Ralph de la Vega

Theodore J. Leonsis

Ronald A. Williams (Chair)

Christopher D. Young

  

Independence

Each member of the

committee is independent.

  
           

Role and 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 that appropriately balance risk with business objectives, and the review of our compensation practices so business performance is achieved without taking imprudent or excessive risk, with appropriate input from the Company’s Chief Risk Officer

  Evaluates potential conflicts of interest with respect to its advisors

  The committee may delegate certain of its responsibilities to one or more of its members or to executive officers or designated senior executives, to the extent permissible under its charter, the Company’s bylaws, the terms of the applicable plans, laws, rules, regulations and listing standards, and subject to any limitations imposed by our Board from time to time

 

Compensation and Benefits Committee Interlocks and Insider Participation

  Neither any current member of the committee nor any person who served as a member of the committee during the last fiscal year is a former or current officer or employee of the Company or any of its subsidiaries. Neither any current member of the committee nor any person who served as a member of the committee during the last fiscal year has any relationship required to be disclosed under this caption under the rules of the SEC.

 

 


 

LOGO

 

 

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LOGO

Nominating, Governance and Public Responsibility Committee

 

           

COMMITTEE HIGHLIGHTS

 

LOGO

  

5

Meetings in 2019

  

Members

Peter Chernin (Chair)

Michael Leavitt

Theodore J. Leonsis

Lynn A. Pike

Ronald A. Williams

  

Independence

Each member of the

committee is independent.

  
           

Role and Responsibilities

  Considers and recommends candidates for election to the Board

  Provides oversight of and advice with respect to corporate governance matters at the Company consistent with the long-term best interests of the Company and its shareholders

  Advises the Board on director compensation

  Oversees the annual performance evaluation process for the Board and Board committees, including establishing criteria for evaluating their performance

  Advises the Board on Board leadership

  Considers feedback from shareholders regarding governance practices

  Administers the Related Person Transaction Policy

  Supports the Board with respect to CEO and management succession planning

  Reviews legislation, regulations and policies affecting us and the communities we serve, as well as our philanthropic programs, our political action committee, our corporate political contributions and our government relations activities

  Considers the Company’s practices and positions on environmental and social issues and the impact those issues have on the Company’s business and key stakeholders

 

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. 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 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 https://ir.americanexpress.com/CustomPage/Index?KeyGenPage=430313

 

 

Risk Committee

 

           

COMMITTEE HIGHLIGHTS

 

LOGO

  

7

Meetings in 2019

  

Members

Charlene Barshefsky

John J. Brennan (Chair)

Anne L. Lauvergeon

Daniel L. Vasella

Christopher D. Young

  

Independence

Each member of the

committee is independent.

  
           

Role and Responsibilities

  Assists the Board in its oversight of the Company’s enterprise-wide risk management framework and roles and responsibilities of the three lines of defense, and other risk management 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

  Monitors the quality and effectiveness of the Company’s Information Security Program

  Meets regularly in executive session with the Company’s Chief Risk Officer

 

Please see How our Board Oversees Risk Management on page 19 for additional information regarding the activities of the committee.

 

 

 


 

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Our Corporate Governance Framework

We have adopted Corporate Governance Principles that, together with the charters of the four standing committees of the Board (Audit and Compliance, Compensation and Benefits, Nominating, Governance and Public Responsibility and Risk), our Code of Conduct (which constitutes our code of ethics for colleagues) and the Code of Business Conduct for 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 committee level, guide the Company’s operations.

Our Board, along with management, regularly reviews our Corporate Governance Principles and practices to ensure that they are appropriate and reflect our high standards and Blue Box Values. In reviewing our Corporate Governance Principles and making recommendations, the Nominating, Governance and Public Responsibility Committee considers the views of shareholders expressed to us in engagement meetings, as well as publicly available discourse on governance.

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 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 Corporate Secretary:

 

  Corporate Governance Principles

 

  Charters for each of the four standing Board committees

 

  Code of Conduct (which constitutes our code of ethics)

 

  Code of Business Conduct for Members of our 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% of our common shares for at least three 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 Shareholder Meeting is the greater of (i) two or (ii) 20% 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 Corporate Secretary under the terms of our bylaws.

Director Attendance

During 2019, our Board met six times and our committees met 37 times (in the aggregate and including the meetings held by the Innovation and Technology Committee and Public Responsibility Committee prior to their dissolution). All directors attended 75% or more of the meetings of the Board and Board committees on which they served in 2019.

All of our directors, with the exception of one, serving on our Board at the time of our 2019 annual meeting attended the meeting. Our Board strongly encourages all of its members to attend the annual meeting but understands there may be exigent circumstances.

Our meeting attendance policy is set forth in our Corporate Governance Principles.

Executive Sessions

Executive sessions of independent 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. Any director may request additional executive sessions of independent directors. During 2019, our independent directors met in executive session at each regularly scheduled Board meeting.

Our Board’s Size

Our Corporate Governance Principles provide that while the Board need not adhere to a fixed number of directors, generally a board of 12-14 directors offers a sufficiently large and diverse group to address the important issues facing the Company and provides a wide range of perspectives while being small enough to encourage personal involvement and discussion.

 


 

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LOGO

Trading in Company Securities

We prohibit hedging and pledging transactions in Company securities by executive officers and directors. Employees that are not executive officers are also prohibited from hedging Company securities and discouraged from pledging Company securities and may only due so if certain criteria are met.

Additionally, we require members of senior management as well as our directors to pre-clear every transaction in Company securities for themselves, their immediate family members, and any family trust with the Corporate Secretary. This includes gifts, transactions in discretionary accounts and non-routine transactions such as optional cash purchases in the Dividend Reinvestment Plan.

Our Board’s Independence

 

12/13 Director Nominees are Independent

Our Corporate 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 March 2020 that all of its members in 2019, other than Mr. Squeri, and all of the Board’s director nominees for election at the 2020 annual meeting, other than Mr. Squeri, are independent.

Ambassador Barshefsky is a partner at the law firm of WilmerHale, an international 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 that we consider to be de minimus in nature. 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, Governance and Public Responsibility 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 1% of the firm’s annual revenue in each of the past three years and represented less than 0.1% of American Express’ revenues in each such year. Further, the Nominating, Governance and Public Responsibility Committee reviewed the nature of American Express’ 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’ Board should not impair American Express’ ability to engage WilmerHale when American Express determines such engagements to be appropriate and in our best interests. The committee is satisfied that WilmerHale, when engaged for legal work, is chosen by American Express’ 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’ professional engagement of WilmerHale does not impair Ambassador Barshefsky’s independence.

 

 


 

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Shareholder Engagement

Our Board’s Commitment to Shareholder Engagement

 

Why We Engage

Our directors and management recognize the benefits that come from robust dialogue with shareholders and other relevant parties and we have embraced an active engagement strategy for many years. We engage with shareholders throughout the year in order to:

 

  Provide visibility and transparency into our business, our performance and our governance and compensation 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

 

When We Engage

 

 

LOGO

 


 

LOGO

 

 

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LOGO

How We Engage

Following our 2019 Annual Meeting, we engaged with shareholders representing approximately 48% of our outstanding shares on corporate governance, executive compensation and related matters. During these meetings, depending on the investor’s priorities, we discussed and sought direct feedback on a broad number of issues including company strategy and performance, board composition, corporate social responsibility and our executive compensation programs. Please see “Shareholder Engagement and Responsiveness to 2019 Say-on-Pay Vote” starting on page 44, for a detailed discussion of the changes we have made to our executive compensation program in response to this shareholder feedback. The below table provides a snapshot of our ongoing engagement process and outcomes.

 

 

 

Board Involvement

Our Lead Independent Director who also serves as our Compensation and Benefits Committee Chair is available for engagement with shareholders, including participating in joint corporate governance and investor relations meetings. We deliver extensive feedback to our Board regarding shareholder meetings.

 

LOGO     

 

  

Actions Taken by the Board Following Shareholder Engagement

 

Shareholderfeedback is thoughtfully considered and has led to modifications in our executive compensation programs, governance practices, and disclosure. Some of the actions we have taken that are informed by shareholder feedback over the last several years include:

 

LOGO   Redesigned performance restricted stock unit awards to include relative ROE metric and relative TSR modifier

 

LOGO   Eliminated Portfolio Grant (long-term cash) program in 2019 and transitioned target award values to 100% equity tied to Company and stock performance for Named Executive Officers (NEOs)

 

LOGO   Continue to align compensation program with the Company’s strategic priorities

 

LOGO   Adopted proxy access

 

LOGO   Adopted shareholder right to call special meetings

 

LOGO   Made changes to our executive compensation peer group

 

LOGO   Simplified our Annual Incentive Award program to be more formulaic and based on a single Company scorecard

 

LOGO   Will not provide office support to future retiring CEOs

 

LOGO   Enhanced our website disclosures on political contributions and diversity and inclusion

 

LOGO   Continue to enhance our proxy disclosures

 

LOGO   Amended our Corporate Governance Principles to limit the number of public company boards on which our directors may serve

 

LOGO   Conducted an independent review of our pay programs and found that female colleagues are paid at parity compared to their male counterparts globally and minority colleagues in the U.S. are paid at parity compared to their non-minority colleagues in the U.S.

 

LOGO   Continue to evolve and enhance our Corporate Social Responsibility Report (available on our website)

 

LOGO   Added directors with financial services, payments, cybersecurity and digital backgrounds

 

Investor Relations and
Senior Management

We provide 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, you may visit our Investor Relations website at http://ir.americanexpress.com.

 

 

 

LOGO     

 

Corporate 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 annual shareholder meetings, our executive compensation practices and our corporate social responsibility practices.

 

 

 

LOGO     

 

 


 

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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 Corporate Secretary, who will forward your communication to the intended recipient. However, at the discretion of the Corporate Secretary, materials considered to be inappropriate or harassing, unsolicited advertisements, or promotional materials and invitations to conferences may not be forwarded.

If you have an inquiry about our financial statements, accounting practices or internal controls, please direct your concern to the Chair of the Audit and Compliance Committee. If the inquiry relates to our governance practices, business ethics or corporate conduct, it should be directed to the Chair of the Nominating, Governance and Public Responsibility 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 Corporate Secretary as follows:

Tangela S. Richter

Corporate Secretary and Chief Governance Officer

American Express Company

200 Vesey Street

New York, NY 10285

(212) 640-2000

[email protected]

 


 

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LOGO

Compensation of Directors

The Nominating, Governance and Public Responsibility Committee reviews director compensation and seeks 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. No changes were made to the Company’s non-management director compensation programs for 2019.

The following table provides information on the 2019 compensation of non-management directors who served for all or a part of 2019. 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

   $ 131,957      $ 190,000      $ 103,090      $ 425,047  

John J. Brennan

   $ 165,000      $ 190,000      $ 14,045      $ 369,045  

Peter Chernin

   $ 135,000      $ 190,000      $ 64,852      $ 389,852  

Ralph de la Vega

   $ 127,826      $ 190,000      $ 24,691      $ 342,517  

Anne L. Lauvergeon

   $ 122,826      $ 190,000      $ 35,995      $ 348,821  

Michael O. Leavitt

   $ 130,380      $ 190,000      $ 34,304      $ 354,684  

Theodore J. Leonsis

   $ 108,152      $ 190,000      $ 48,011      $ 346,163  

Richard C. Levin(4)

   $ 38,268      $      $ 35,647      $ 73,915  

Samuel J. Palmisano(4)

   $ 36,323      $      $ 12,625      $ 48,948  

Daniel L. Vasella

   $ 158,750      $ 190,000      $ 44,494      $ 393,244  

Ronald A. Williams

   $ 155,000      $ 265,000      $ 115,735      $ 535,735  

Christopher D. Young

   $ 117,826      $ 190,000      $ 6,723      $ 314,549  

 

(1) 

Annual Retainers. For service in 2019, we paid non-management directors an annual retainer of $95,000 for board service. We paid an additional annual retainer of $20,000 to members of the Audit and Compliance and Risk Committees, $10,000 to members of the Compensation and Benefits Committee, and $5,000 to members of the Nominating and Governance Committee (Nominating, Governance and Public Responsibility Committee as of July 2019), Innovation and Technology (through July 2019) and Public Responsibility Committees (through July 2019). We also paid an annual retainer to the Chair of each of the Board committees as follows: Audit and Compliance, Compensation and Benefits, Innovation and Technology, Public Responsibility and Risk, $20,000; and Nominating and Governance (Nominating, Governance and Public Responsibility as of July 2019), $25,000. In July 2019, our Board approved the reduction of its standing committees from six to four by dissolving the Innovation and Technology Committee and the Public Responsibility Committee and in connection with the committee restructuring, our Board revised its standing committee membership effective October 1, 2019. Each director affected by these changes (Charlene Barshefsky, Ralph de la Vega, Anne L. Lauvergeon, Michael O. Leavitt, Theodore J. Leonsis, and Christopher D. Young) received corresponding pro-rated fees. 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% of his or her aggregate board and committee meetings. In addition, our Lead Independent Director during 2019, Ronald A. Williams, received an annual retainer of $100,000 (which includes $75,000 in SEUs (see footnote 2)).

 

    

All non-management directors, except Theodore J. Leonsis, deferred all or a portion of their 2019 retainers into a cash account, a share equivalent unit (SEU) 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 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 7, 2019, the date of last year’s annual meeting, each non-management director elected to the Board was credited with SEUs having a value of $190,000, which consisted of 1,649 SEUs, based on the market price of our common shares for the average of the 15 trading days immediately preceding such date. In addition, our Lead Independent Director during 2019, Ronald A. Williams, received an annual SEU retainer of $75,000, which consisted of 630 SEUs for the year based on the market price of our common shares for the average of the last 10 trading days of such calendar quarter. 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% of their annual retainer fees into either: (1) a cash account in which amounts deferred will be credited at the rate of 120% of the applicable federal long-term rate for December of the prior year or (2) their SEU account. Directors will receive cash payments upon payout of their deferrals.

 

 


 

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The balances in directors’ SEU accounts as of December 31, 2019 are set forth in the table below. These amounts represent the aggregate number of SEUs granted under the SEU Plan for all years of service as a director and 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

 

Charlene Barshefsky

     65,740  

John J. Brennan

     10,464  

Peter Chernin

     41,642  

Ralph de la Vega

     11,291  

Anne L. Lauvergeon

     24,092  

Michael O. Leavitt

     17,993  

Theodore J. Leonsis

     31,029  

Richard C. Levin(4)

      

Samuel J. Palmisano(4)

      

Daniel L. Vasella

     29,618  

Ronald A. Williams

     69,839  

Christopher D. Young

     5,604  

 

(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.

 

    

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 2019 in these amounts: Amb. Barshefsky $103,036, Mr. Brennan $13,991, Mr. Chernin $64,798, Mr. de la Vega $16,637, Ms. Lauvergeon $35,940, Gov. Leavitt $26,250, Mr. Leonsis $47,957, Mr. Levin $27,593, Mr. Palmisano $12,571, Dr. Vasella $44,440, Mr. Williams $107,681, and Mr. Young $6,669.

 

    

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. The death benefit of $500,000 funds a donation to a charitable organization that the director recommends. The Company paid no premiums for the policies of non-management directors who served for all or part of 2019.

 

    

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 2019.

 

(4) 

Messrs. Levin and Palmisano retired from our Board on May 7, 2019.

Director Stock Ownership

Our Corporate Governance Principles provide that non-management directors are required to obtain a personal holding of shares (directly or through SEUs) with a value of $1 million within five years of joining the Board. All non-management directors have achieved or are on track to achieve this requirement during the required time period.

Director and Officer Liability Insurance

We have an insurance program in place to provide coverage for director and officer liability. The coverage 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. A portion of the insurance program is blended with certain other insurances covering the Company. The insurance program is effective from November 30, 2019 to November 30, 2020 and is provided by a consortium of insurers. ACE American Insurance Company and XL Specialty Insurance Company are the lead insurers with various other insurers providing excess coverage. We expect to obtain similar coverage upon expiration of the current insurance program. The annual premium for the insurance program is approximately $4.8  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% 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, 2019, no Related Person has had a material interest in any of our ongoing business transactions or relationships except as described on the following page.

 


 

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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, Governance and Public Responsibility Committee, other than certain pre-approved transactions (described below). 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 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 Corporate Secretary is responsible for assisting the Nominating, Governance and Public Responsibility 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 when it is impracticable or undesirable to delay a decision on a proposed transaction until the next meeting of the Nominating, Governance and Public Responsibility Committee, the Chair 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 Nominating, Governance and Public Responsibility 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, Governance and Public Responsibility Committee has pre-approved certain categories of transactions as being consistent with the best interests of the Company. These categories, which may exceed the proscribed threshold for Related Person Transactions, include but are not limited to, director and executive officer compensation, use of Company products and services, transactions involving indebtedness to the Company, certain banking-related transactions, immaterial ordinary course transactions with other entities, charitable contributions and indemnification payments.

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 U.S. card-issuing bank 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 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 enter into 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 sister-in-law of Mr. Squeri, our Chairman and CEO, is employed by the Company in a non-executive position and received compensation in 2019 of between $270,000 and $300,000. The compensation and other terms of employment of Mr. Squeri’s sister-in-law 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 have periodically engaged Martellus Group (Martellus), a consulting company where the spouse of our Chief Risk Officer, Mr. Raymond Joabar, is a co-owner. Each transaction was conducted on, and all services were provided in, the ordinary course of business and on arm’s-length terms. In 2019, we made aggregate payments to Martellus of approximately $400,000 for consulting services. 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. Additionally, the Company may from time to time make charitable contributions to not-for-profit organizations where our directors or executive officers are directors or trustees.

 

 


 

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The Powerful Backing of American Express

We provide powerful backing to the communities where our customers and employees (whom we refer to as colleagues) live and work.

How We Approach Environmental, Social and Governance (ESG)

Our approach to environmental, social and governance (ESG) is a natural extension of both our mission—to become essential to our customers by providing differentiated products and services to help them achieve their aspirations—and our commitment to doing what is right. We deliver value for both our business and our communities by investing financial and human resources in ways that address the social, environmental, and economic needs of our communities, customers, colleagues, shareholders, and partners.

We view service through many lenses:

 

  Delivering exceptional products, services, and experiences;

 

  Enabling commerce and helping businesses grow;

 

  Promoting a culture of respect—one that fosters inclusion and trust;

 

  Upholding the highest standard of integrity;

 

  Safeguarding our customers’ privacy and data;

 

  Making a difference in the communities where we live and work; and

 

  Helping preserve treasures of the past for future generations to enjoy.

All of this is underscored by disciplined risk management that ensures we are building a Company that will endure as a place where people want to work, invest, and do business.

Governance

Our executive management reviews and evaluates performance and long-term goals with respect to environmental, social and governance matters within their business units.

At the Board of Directors level, the Nominating, Governance and Public Responsibility Committee reviews our Corporate Social Responsibility (CSR) program, monitors progress against our goals, and provides guidance on our efforts. Day to day, our CSR team works with colleagues throughout the Company to shape our efforts and monitor progress on key issues.

We are currently in the process of reviewing our environmental, social and governance priorities. We are also conducting a scenario analysis aligned to the Task Force on Climate-related Financial Disclosures (TCFD) framework to assess risks and opportunities related to climate change.

Strategic Engagement

Our strategy begins by identifying our key stakeholders, then engaging with them to understand the environmental, social and governance issues that matter to them, and the impact those issues have on our business. We have identified eight key stakeholder groups based on their impact on our business activities including shareholders, colleagues, customers (Card Members, businesses and merchants), governments and regulators, suppliers, community and nongovernmental organizations, ESG research and rating agencies, and partners and peers. Our continued engagement with these stakeholders helps ensure we are meeting their expectations and advancing our efforts to operate responsibly.

 


 

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2019 HIGHLIGHTS

 

 

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Our New Environmental Commitments and Goals

As first announced in our 2018-2019 Corporate Social Responsibility report, the following are our new aspirational environmental commitments and goals:

 

 

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(1) 

Operations include all our managed facilities, field sites and data centers. Managed facilities are individual properties operationally managed by our global real estate team and housing critical business functions. Field sites are individual properties that are not operationally managed by our global real estate team but directly by our business units. They are typically smaller sites, less than 30,000 square feet (including airport lounges, foreign exchange kiosks, and sales offices) that are owned or leased by American Express. The Company’s zero net carbon emissions commitment covers scope 1 (direct emissions from sources owned or controlled by American Express), scope 2 (indirect location-based and market-based emissions), and scope 3 emissions (waste and employee business travel, including third-party air, rail and rental cars) through renewable energy credits, carbon offsets, and reduced GHG emissions.

 

(2) 

Measurement is based only on managed facilities where metered and/or measured data is available; per employee goals based on number of employees located in such managed facilities.

 

(3) 

Single-use plastics is defined as plastic items that are used only once before they are thrown away or recycled. These items are things like plastic bags, straws, coffee stirrers, soda and water bottles and most food packaging. Materials that are plastic yet designed to be reusable (i.e. reusable plastic food containers or water bottles) are out of scope.

 

(4) 

Green building certified percentage is represented by the total square footage of leased or owned facilities. actively occupied by American Express (excluding parking lot square footage) certified under a global or locally recognized third-party environmental building rating system as meeting their performance criteria (LEED, BREEAM, NABERS, and GreenMark).

 

 


 

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Our Ratings

We monitor our performance across a number of environmental, social and governance related ratings and rankings. In each of the following, we outperform or are in line with our peers.

 

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Our Workplace Culture

Our colleagues are instrumental in enabling the Company to deliver on its vision to provide the world’s best customer experience every day. To attract and retain the best talent, we continuously invest in programs, benefits and resources to ensure our colleagues can grow in their careers and thrive professionally and personally. Our focus has helped us build a reputation for being an employer of choice, earning a spot among the top 20 companies on Fortune’s ranking of the World’s Most Admired Companies for the last ten years. In addition, we were recently ranked number nine on the 2020 Fortune 100 Best Companies to Work For list in the U.S.

We are committed to making sure our colleagues are as diverse as our customers and the communities where we live and work. We value and embrace differences, and believe unique perspectives, backgrounds and experiences are critical to our success. Fostering an inclusive culture helps us maintain an environment where all colleagues are engaged, have a voice, and can thrive. At American Express, being yourself matters. Our Colleague Networks play an important role in creating a culture of belonging at American Express, providing opportunities for colleagues to meet with others of shared backgrounds and interests to engage and learn from each other. We have 16 networks with nearly 100 chapters globally, encompassing the full spectrum of diversity, including disability, ethnicity, faith, gender, gender identity, generations, sexual orientation and veteran status. Networks include the Black Engagement Network (BEN), Hispanic Origin and Latin American Network (HOLA), and PRIDE, our LGBTQ+ network. We have also provided inclusive leadership and unconscious bias training to all colleagues across the Company, to motivate specific, effective behaviors for managing bias and develop skills to build inclusive, high-performing teams.

In addition, we place a strong focus on continuous professional development as the ability to constantly learn is critical to the success of our people and our business. We provide learning opportunities in many forms, including tools and guidance for maximizing learning on the job; cross-border and cross-business unit assignments; career coaching, mentoring, and professional networking; rotation opportunities; virtual learning sessions; and formal classroom instruction. Through the American Express Leadership Academy, we provide training and development experiences tailored to individuals at all levels of the company that are designed to instill specific behaviors that drive successful leadership.

The health and wellbeing of our colleagues plays an integral role in their ability to thrive at work and at home. We take a holistic approach to wellbeing, providing resources that address the physical, financial, and emotional health of our colleagues and their families. Last year, we celebrated the tenth anniversary of Healthy Living, our award-winning corporate wellness program that provides supportive resources, enhanced access to care and incentives to foster a healthier lifestyle, including through on-site health centers, healthful dining options in our cafeterias, and a range of programs to help colleagues address health concerns. Our Healthy Minds program provides colleagues access to free, confidential professional counseling to help plan for life events, address personal challenges, and manage everyday events that impact work, health, and family. We built on this initiative in 2019 by making available to all colleagues virtual training designed to help educate colleagues on the signs of mental stress and how to support co-workers who may be impacted by mental health issues.

Learn More about Environmental, Social and Governance Matters at American Express

Please visit http://about.americanexpress.com/corporate-responsibility-reports to learn how we, together with our customers, colleagues and shareholders, are making a difference in our communities and https://www.americanexpress.com/us/company/global-diversity-and-inclusion.html to learn more about our commitment to making sure our colleagues are as diverse as our customers and communities.

 


 

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Audit Committee Matters

Item 2: Ratification of Appointment of Independent Registered Public Accounting Firm

 

Our Board recommends that you vote FOR the

following resolution:

The Audit and Compliance Committee has sole authority to appoint and replace the Company’s independent registered public accounting firm, which reports directly to the Committee, and is directly responsible for its compensation and oversight of its work. The Audit and Compliance Committee conducted its annual evaluation of PricewaterhouseCoopers LLP (PwC) and, after assessing the performance and independence of PwC, the Committee believes that retaining PwC is in the best interests of the Company. The Audit and Compliance Committee reappointed PwC as our independent registered public accounting firm for 2020.

We are asking you to ratify this appointment. If shareholders fail to ratify the appointment, the Audit and Compliance Committee will consider it a directive 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.

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 financial statements of the Company and its subsidiaries for 2020, is hereby ratified and approved.

 


 

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Actions Taken by the Audit and Compliance Committee to Support its Recommendation

 

 

A DETAILED ASSESSMENT

 

The Audit and Compliance Committee charter requires a detailed review of the independent audit firm, including as compared to other firms, at least every 10 years. 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 of opportunity for improvement that were discussed with PwC.

 

PwC’s OBJECTIVITY AND INDEPENDENCE

 

The Audit and Compliance Committee reviews relationships between PwC and American Express that may reasonably be thought to bear on independence and reviews PwC’s annual independence evaluation and assesses their independence. Recognizing that independence and objectivity can be compromised by an auditor’s provision of non-audit services, the Audit and Compliance Committee has approved a management policy governing the provision of services by PwC.

 

QUALITY OF PwC’s AUDITING PRACTICES

 

The Audit and Compliance Committee 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, if any. The Audit and Compliance Committee also 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.

 

PwC’s PERFORMANCE AS AUDITOR

 

The Audit and Compliance Committee 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 Audit and Compliance Committee’s expectations. The Audit and Compliance Committee also 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

 

PwC has been our independent auditor since 2005. The lead engagement partner of PwC is subject to a mandatory five-year rotation period. The Audit and Compliance Committee chair is involved in selecting the lead engagement partner. During the year, the Audit and Compliance Committee chair meets one-on-one with the lead engagement partner to promote a candid dialogue and the Audit and Compliance Committee meets in executive session with the lead engagement partner to discuss the progress of the audit and any audit issues, deliver Audit and Compliance Committee feedback and discuss any other relevant matters.

 

PwC’s COMMUNICATIONS WITH THE AUDIT AND COMPLIANCE COMMITTEE

 

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

 

 

TERMS OF THE ENGAGEMENT AND AUDIT FEES

 

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

 

 


 

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PricewaterhouseCoopers LLP Fees and Services

Fees for 2019 and 2018

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

   2019      2018  

Audit Fees

   $ 26,551      $ 23,704  

Audit-Related Fees(1)

     4,518        5,181  

Tax Fees

     425        1,002  

All Other Fees

     97        148  

TOTAL

   $ 31,591      $ 30,035  

 

(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 were $19K and $8K in 2019 and 2018, respectively.

In the table above, in accordance with SEC rules, “Audit Fees” consist of fees for professional services rendered for the integrated audit of our consolidated 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, due diligence related to mergers and acquisitions, 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 Audit and Compliance Committee in accordance with pre-approval procedures established by the Audit and Compliance Committee. In accordance with SEC rules, the Audit and Compliance Committee’s pre-approval procedures have two different approaches to pre-approving audit and permitted non-audit services performed by PwC.

The Audit and Compliance Committee specifically pre-approves the terms and fees of the planned annual audit and permitted non-audit services that are to be performed by PwC. Other proposed engagements may be pre-approved up to an aggregate fee threshold, pursuant to procedures established by the Audit and Compliance Committee that are detailed as to the particular and defined classes of services without consideration by the Audit and Compliance Committee of the specific case-by-case services to be performed. We refer to this pre-approval method as “general pre-approval” and the Company’s Controller reports such pre-approved engagements to the Audit and Compliance Committee at least quarterly.

The procedures also require all proposed engagements of PwC for services of any kind that have not received specific or general pre-approval as described above to be approved by the Audit and Compliance Committee (or, should a time-sensitive need arise, its Chair) prior to the beginning of any such services. All services provided by our independent registered public accounting firm have been pre-approved in accordance with these procedures. The Audit and Compliance Committee has reviewed that the services performed by PwC and the related fees were consistent with the maintenance of PwC’s independence.

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.

 

 


 

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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 the applicable requirements of the PCAOB and the SEC. In addition, the Audit and Compliance Committee has received from PwC the written disclosures and letters required by applicable requirements of the PCAOB regarding PwC’s communications with the audit 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 Chief Audit Executive 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 Chief Audit Executive, who is accountable to the Audit and Compliance Committee. The Audit and Compliance Committee met with the Chief Audit Executive, 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 CEO 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 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, 2019 for filing with the SEC.

AUDIT AND COMPLIANCE COMMITTEE

Daniel L. Vasella, Chair

John J. Brennan

Ralph de la Vega

Anne Lauvergeon

Michael O. Leavitt

Karen L. Parkhill

 


 

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Executive Compensation

Item 3: Advisory Resolution to Approve Executive Compensation (Say-on-Pay)

 

The Board recommends a vote FOR this item.

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 the Company’s Named Executive Officers (NEOs) disclosed in the Compensation Discussion and Analysis (CD&A), the 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 and appropriately motivates and retains our executives. 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.

RESOLVED, that the compensation paid to the Company’s NEOs, as disclosed pursuant to Item 402 of Regulation S-K, including in the CD&A, compensation tables, notes and narrative discussion, is hereby approved.

Compensation Discussion and Analysis

Our CD&A describes our executive compensation programs and compensation decisions for our NEOs, who for 2019 were:

 

Stephen J.   Jeffrey C.   Douglas E.   Anré D.    Laureen E.
Squeri   Campbell   Buckminster   Williams    Seeger
Chairman   Chief Financial   Group President,   Group President,    Chief Legal
and CEO   Officer   Global Consumer   Global Merchant and    Officer
    Services Group   Network Services   

 

 


 

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Executive Summary

2019 Company Performance

2019 was another good year for our shareholders, our customers and our colleagues. We continued the steady, consistent performance that we have delivered over the past two years. In doing so, we generated broad-based growth across our businesses by remaining focused on our vision to deliver the best customer experience every single day.

Our confidence in our ability to generate steady and consistent results over the long-term is based on several factors, including the fundamental strengths we derive from our differentiated business model; the significant growth opportunities we see across our business; and our demonstrated success in executing against the four strategic imperatives – expanding our leadership in the premium consumer space, building on our position in commercial payments, strengthening our global integrated network to provide unique value, and making American Express an essential part of our customers’ digital lives. For 2019, the Compensation and Benefits Committee determined the Company’s overall performance to be above the target levels established in the Company’s annual performance scorecard, and took this into consideration in assigning annual bonuses for 2019 (see pages 46-47 for additional details).

Our 2019 financial results – shown below – demonstrate that our strategy of investing in share, scale and relevance is working.

 

 

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(1)

Total revenues net of interest expense on an FX-adjusted basis is a non-GAAP measure. See footnote 1 on page 1 for an explanation of FX-adjusted information.

(2)

Adjusted Diluted Earnings per share, excluding the impacts of a litigation-related charge in Q1’19 and certain discrete tax benefits in Q4’18, is a non-GAAP measure. Management believes adjusted diluted EPS is useful in evaluating the ongoing operating performance of the Company. See Annex A for a reconciliation to diluted EPS on a GAAP basis.

(3)

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), calculated as of 12/31/2019.

 


 

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CEO Total Direct Compensation

The CEO’s 2019 Total Direct Compensation decision is consistent with our pay for performance philosophy and focuses on variable and “at-risk” compensation that is closely aligned with Company performance and is sensitive to the Company’s stock performance. The chart below shows that 93% of the CEO’s 2019 compensation is performance-based with a significant portion (63%) tied to the future performance of the Company.

 

 

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The CEO’s compensation shown below reflects the target direct compensation for 2019 that was set at the start of 2019, as well as the Compensation and Benefits Committee’s compensation decision in January 2020 considering 2019 performance and external market data provided by the Compensation and Benefits Committee’s independent compensation consultant.

 

 

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Say-On-Pay

 

The Compensation and Benefits Committee values the input of our shareholders and regularly engages with them on executive compensation matters to foster a constructive dialogue on the programs and decision-making process. The Compensation and Benefits Committee considers the long-term interests of the Company and our shareholders when making decisions regarding our compensation program.

 

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In 2019, we met with shareholders representing approximately 48% of our outstanding shares and other constituents to discuss executive compensation, corporate governance and related matters.

 

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  A substantial majority (96.5%) of the votes cast at our 2019 Annual Meeting of Shareholders favored our say-on-pay proposal. The strong shareholder support for our 2018 compensation program, reflected by our say-on-pay results, and our shareholder engagement discussions influenced the Compensation and Benefits Committee’s decision to continue the 2018 program design for 2019.
 
 

Pay Principles

We believe our executive compensation program is thoughtful, consistent and continues to align with the Company’s business strategies.

 

 

  We align pay with Company performance and to 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 performance-based incentives
(93% of CEO’s pay), with a substantial stockholding requirement.

  We measure performance against challenging goals established at the start of each performance cycle that are aligned with our key business priorities.

  We discourage imprudent risk taking by avoiding undue emphasis on any one metric or short-term goal.

 

We continue to refine our pay principles in response to input from shareholders and regulators, including the Board of Governors of the Federal Reserve System (Federal Reserve).

Compensation Governance Practices

The Company’s executive compensation program is overseen by the Compensation and Benefits Committee with the advice and support of the Company’s independent compensation consultant as well as the Company’s management team. The following are key characteristics of the Company’s executive compensation program, which we believe promote good governance and best serve the interests of our shareholders:

 

What We Do

 

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  Link a significant portion of pay to business and stock performance

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  Employ robust goal-setting process to align goals with Company strategy

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  Bind cash incentives and equity awards to recoupment and forfeiture provisions

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  Apply a clawback provision to the cash portion of the CEO’s AIA if the Company does not achieve acceptable performance in the following year

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

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Maintain significant NEO stock ownership requirements

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  Cap NEO AIA payments (187.5% of target for extraordinary performance)

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  Prohibit executive officers from hedging company stock (e.g., no short sales, forwards, options or collars) or margining or pledging shares

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Have double-trigger change-in-control provisions

 

What We Don’t Do

 

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  Pay dividends or dividend equivalents on Performance Restricted Stock Units granted to NEOs unless they vest

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Provide excessive perquisites, benefits or severance benefits

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Make excise tax gross-ups upon a change-in-control

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  Maintain individual employment agreements or change-in-control arrangements

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Reprice options

 

 

 


 

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Shareholder Engagement and Responsiveness to 2019 Say-on-Pay Vote

We have a longstanding practice of engaging with our shareholders on executive compensation matters and taking appropriate action considering feedback received.

 

 

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Compensation Programs

The following table summarizes the key elements of our executive compensation program and demonstrates the program’s focus on annual and long-term incentive compensation that is closely aligned with Company performance and is sensitive to the Company’s stock performance:

 

 

 

BASE SALARY

   

ANNUAL INCENTIVE AWARD

(AIA)

   

LONG-TERM INCENTIVE AWARD

(LTIA)

  
  PURPOSE     PURPOSE     PURPOSE   
 

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

   

AIA is designed to recognize the Company’s annual performance as well as individual performance.

   

LTIA is intended to align incentives with shareholder interests and the Company’s long-term financial objectives.

  
      COMPOSITION     `     COMPOSITION   
      LOGO     LOGO   
 

*   Details are on page 48.

  

Annual Incentive Award

The AIA is an annual cash-denominated performance-based component of executive compensation designed to recognize Company performance as well as individual performance.

The AIA is structured to reflect specific and measurable Company goals, approved by the Compensation and Benefits Committee at the beginning of the year, including key objectives in four categories: Shareholder, Customer, Colleague and Strategic Imperatives. The Compensation and Benefits Committee believes each performance metric is a clear driver of annual Company performance and aligns with the Company’s focus on continued long-term value creation.

The Compensation and Benefits Committee uses the same Company scorecard, in contrast to the use of multiple scorecards before 2018, to determine annual incentives for executives, including the NEOs, to promote an enterprise-wide focus and simplify our program. The Company scorecard is based on the following metrics:

 

    Components   Weighting   Key Metrics Considered

Annual

    Incentive    

Award

 

  Shareholder

  55%  

  Revenue Growth, EPS, ROE

 

  Customer

  15%  

  Net Promoter Score, Billings Growth, New Accounts Acquired, Active Locations in Force

 

  Colleague

  15%  

  Talent Retention and Diversity Representation

 

  Strategic Imperatives

  15%  

  Expand leadership in the premium consumer space

     

  Build on our strong position in commercial payments

     

  Strengthen our global, integrated network to provide unique value

         

  Make American Express an essential part of our customers’ digital lives

 


 

LOGO

 

 

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LOGO

The AIA is a 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 works as follows for each NEO:

 

                                  
                                  
       
        

 

Individual NEO   

Target Amount   

 

 

 

Company
Performance
Multiplier (0-150%)

 

 

 

Individual   
Performance   
Multiplier (0-125%)   

 

 

 

Annual AIA   
Payout (Payout   
Range: 0-187.5%)   

 

    
                                  
                                  
                Performance               Multiplier                             
           

Significantly

Outperform

  150%                     
           

Meets

Expectations

  100%                     
            Significantly   <100%;
Compensation
and Benefits
Committee
                    
            Underperform   judgment                     
                                  
 
 

Actual payout is subject to reduction considering the Compensation and Benefits Committee’s

assessment of risk results during the year.

 

                  

2019 Annual Incentive Awards

2019 Performance Multiplier – Company

The Compensation and Benefits Committee evaluated the following results against the performance objectives approved for all NEOs by the Compensation and Benefits Committee at the beginning of 2019. Goals approved at the start of the year were consistent with the full-year guidance that the Company provided publicly in January 2019. For each metric, the goals represent a measurement for a range of outcomes that could result in a higher or lower payout. Payouts for 2019 performance occurred in February 2020.

Based on Company performance in 2019, relative to the goals, the Compensation and Benefits Committee approved the Company performance multiplier at 127.5% of target.

 

Shareholder (55%)

  2019 Target    2019 Actual Performance    2018 Actual Performance

Revenue Growth (FX-adjusted)

  10%          9%(4)                    10%(4)                

EPS

  $8.10          $8.20(5)                    $7.33(5)                

ROE

  25%          30%(5)                    31%(5)                

Customer (15%)

                

  Net Promoter Score

  Goal achieved in line with target level; 30 basis points above 2018

  Billings Growth (FX-adjusted)

  10%          6%                    9%                

  New Accounts Acquired

  Goal achieved in line with target level

  Active Locations in Force

 

Achieved virtual parity coverage in the U.S., with approximately 99% of credit-card accepting merchants now able to accept American Express(6), and remained committed to growing coverage globally, adding over 2 million merchant locations outside of the U.S.

Colleague (15%)

                

  Quantitative Talent Retention and Diversity Representation Goals to globally increase minority and women representation at management levels and retain our key talent (High Potential or High Performers)

   Goals achieved at or above target levels

 

(4)

Total revenues net of interest expense on an FX-adjusted basis is a non-GAAP measure. See footnote 1 on page 1 for an explanation of FX-adjusted information. Reported revenue growth was 8% and 9% for 2019 and 2018, respectively.

(5)

Adjusted diluted EPS and adjusted ROE, excluding the impacts of a litigation-related charge in Q1’19 and certain discrete tax benefits in Q4’18, are non-GAAP measures. See Annex A for a reconciliation to diluted EPS and ROE on a GAAP basis.

(6)

Source: AXP internal data and The Nilson Report, Issue 1169, “General Purpose Cards – U.S. 2019, Table: 2019 Merchant Acceptance Locations in the U.S.”

 

 


 

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Strategic Imperatives (15%)

  2019 Results            

  Leading in the Premium Consumer Space

 

LOGO  7% proprietary U.S. Consumer billings growth

 

 

LOGO  14% proprietary International Consumer FX-adjusted billings growth

 

 

LOGO  Continued to execute product refreshment strategy, refreshing 16 products globally

 

 

LOGO  ~70% of card acquisitions on fee-based products

 

  Building on Strong Position in Commercial Payments    

 

LOGO  #1 U.S. Small Business Issuer by volume(7)

 

 

LOGO  American Express is the world’s largest commercial card issuer(8)

 

 

LOGO  American Express Global Commercial Services serves >60% of the 2019 FORTUNE Global 500(9)

 

 

LOGO  16% International Small & Medium Enterprise (SME) FX-adjusted billings growth

 

 

LOGO  6% proprietary U.S. SME billings growth

 

   

LOGO  Executed partnerships in the AP Automation space and acquired AcomPay

 

  Strengthening Our Network

 

LOGO  Achieved virtual parity coverage in the U.S., with approximately 99% of credit-card accepting merchants now able to accept American Express(10)

 

 

LOGO  Remained committed to growing coverage globally, adding over 2 million merchant locations outside of the U.S.

 

 

LOGO  Made progress on building new and improved network functionality and capabilities

 

 

LOGO  People’s Bank of China officially accepted our network application, an important next step in our plan to build a network business in China

 

  Becoming Digitally Essential

 

LOGO  72% of new proprietary Consumer and SME Card Members acquired through digital channels

 

 

LOGO  81% of Active Card Members engaged with us digitally in 2019(11)

 

 

LOGO  Built upon the digital capabilities and experiences we offer to Card Members through the integration of acquisitions and expansion of partnerships

 

Company Performance Multiplier Score

 

 

 

127.5%

 

Performance Multiplier – Individual

The Compensation and Benefits Committee has discretion to modify awards downward or upward to differentiate and reward leadership performance. For 2019, factors considered in determining the appropriate individual multiplier for the NEOs included demonstrating the Company’s enumerated leadership behaviors (Setting the Agenda, Bringing Others With You and Doing It the Right Way). The maximum individual performance multiplier for leadership performance is 125%.

Summary of NEOs’ AIA for 2019

The following table summarizes the actual AIA earned by each NEO for the 2019 performance year based on the achievement of goals detailed above (in thousands).

 

Name   Target AIA             x           Company Multiplier           x           Individual Multiplier           =           Actual AIA  
S.J. Squeri   $ 4,500           127.5         122       $ 7,000  
J.C. Campbell   $ 3,500           127.5         121       $ 5,400 (12) 
D.E. Buckminster   $ 3,700           127.5         121       $ 5,700  
A.D. Williams   $ 3,150           127.5         121       $ 4,850  
L.E. Seeger   $ 1,600           127.5         115       $ 2,350  

 

(7)

Source: AXP internal data and The Nilson Report, Issue 1155, “Top US Commercial Card Issuers, Table: Small Business Credit Card, 2018 Purchase Volume.”

(8)

Source: Euromonitor International Limited; Consumer Finance 2020ed by commercial credit and charge card payment value, 2018 data.

(9)

As determined by an analysis conducted by American Express Global Commercial Services. FORTUNE® and FORTUNE Global 500® are trademarks of FORTUNE Media IP Limited and are used under license. FORTUNE® and FORTUNE Median IP Limited are not affiliated with, and do not endorse the products or services of, American Express.

(10)

Source: AXP internal data and The Nilson Report, Issue 1169, “General Purpose Cards – U.S. 2019, Table: 2019 Merchant Acceptance Locations in the U.S.”

(11)

Digital Engagement represents Card Member accounts with spend greater than $0 and at least one American Express website or mobile app visit vs. all Card Member accounts with spend greater than $0 for full year 2019.

(12)

To comply with regulatory guidance that at least 50% of incentive compensation be deferred, $100,000 of Mr. Campbell’s 2019 AIA was paid in the form of RSUs granted in January 2020. Mr. Campbell’s AIA figure in the above table does not reflect this adjustment. Payment of these RSUs is deferred for three years from the grant date, subject to positive net income but not to continued employment.

 


 

LOGO

 

 

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LOGO

Long-Term Incentive Award

Our LTIA aligns NEOs’ interests with those of shareholders and establishes retention incentives through multi-year, performance-based vesting periods. The Compensation and Benefits Committee granted the following long-term incentive awards in January 2020 considering Company and individual performance in 2019, target compensation for 2019 as well as market data for each NEO:

January 2020 Long-Term Incentive Award ($000)

 

      S.J. Squeri      J.C. Campbell      D.E. Buckminster      A.D. Williams      L.E. Seeger  

Performance Restricted Stock Units

   $ 11,600      $ 4,240      $ 4,720      $ 3,880      $ 3,520  

Stock Options

   $ 2,900      $ 1,060      $ 1,180      $ 970      $ 880  

Total

   $ 14,500      $ 5,300      $ 5,900      $ 4,850      $ 4,400  

The elements of the Company’s LTIA and their respective features are described in the table below:

 

Element

   Key Metrics    Features

Performance Restricted Stock Units

(80% of award)

  

 3-year average ROE as compared to performance peers

 Relative TSR compared to the same performance peers as ROE

  

 3-year cliff vesting period

 Payout tied to 3-year relative performance and stock price performance

 0-120% of target shares awarded

Stock Options

(20% of award)

  

 Stock price appreciation

  

 3-year cliff vesting period

 Must meet net income threshold to be exercisable

 10-year term

Performance Restricted Stock Units

As a financial institution with a lending book and fee income, we consider effective returns on capital to be a validation of high performance. The program requires top-quartile ROE for Performance Restricted Stock Units to pay out at target, and above-target payouts are contingent on TSR performance being in the top third of our peer group regardless of our ROE performance. Median ROE performance results in an 80% payout.

 

AXP Relative ROE
Performance
   Payout %(13)               AXP Relative TSR
Performance
  Payout %

>90th

  

120%

   

 

+

   

67th Percentile or better of

Performance Peer Group

  No

cap

   75th

  

100%

   

   50th

  

80%

     

 

   25th

  

50%

     

 

< 67th Percentile of

Performance Peer Group

 

 

Cap at

100%

<25th

  

0%

   

 

 

 

Performance Peers

Our comparators include the largest financial companies in the lending and payments business and reflect strong alignment with the Company’s business. Our peer group for this LTIA program includes the Company’s key competitors as well as a subset of S&P 500 Financials within similar industries as the Company and with ROEs subject to Comprehensive Capital Analysis and Review (CCAR) and other similar macroeconomic conditions as the Company, including global credit, lending and regulatory trends:

 

 
    

  Bank of America

 

  Fifth Third Bancorp

 

  M&T Bank

 

  State Street

    
 

  BNY Mellon

 

  Goldman Sachs

 

  Morgan Stanley

 

  Truist Financial         

 
 

  Capital One  Financial

 

  Huntington Bancshares

 

  Northern Trust

 

  U.S. Bancorp

 
 

  Citigroup

 

  JPMorgan Chase

 

  PayPal

 

  Visa

 
 

  Citizens Financial  Group

 

  KeyCorp

 

  PNC Financial Services  Group

 

  Wells Fargo

 
 

  Discover

 

  Mastercard

 

  Regions Financial

   
         

The performance peer group was updated to account for the merger between BB&T Corporation and SunTrust Banks Inc. Both companies were removed from the group and replaced by Truist Financial, the company created as a result of the merger.

 

(13)

Straight line interpolation applies if performance is between two points.

 

 


 

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2020 Annual Target Direct Compensation

The Compensation and Benefits Committee reviews target direct compensation each year. In reviewing target compensation levels, the Compensation and Benefits Committee considers various factors, such as roles and responsibilities, experience, industry expertise, internal equity, Company and individual performance, as well as market data and pay mix for the Company’s peer group, which was provided by the Compensation and Benefits Committee’s independent compensation consultant. For performance year 2020, the Compensation and Benefits Committee approved the target direct compensation shown below. All compensation components except salary are performance-based:

 

  Actual AIA payout will be based on Company and individual performance in 2020 considering performance against pre-established 2020 goals

 

  Performance Restricted Stock Units cliff vest after three years based on Relative ROE and Relative TSR performance over 2020-2022

 

  Stock Options cliff vest 100% after three years

2020 Target Direct Compensation ($000)

 

      S.J. Squeri      J.C. Campbell      D.E. Buckminster      A.D. Williams      L.E. Seeger  

Base Salary

   $ 1,500      $ 1,000      $ 1,100      $ 850      $ 850  

AIA

   $ 4,500      $ 3,700      $ 4,000      $ 3,400      $ 2,850  

Performance Restricted Stock Units

   $ 11,600      $ 4,240      $ 4,720      $ 3,880      $ 3,520  

Stock Options

   $ 2,900      $ 1,060      $ 1,180      $ 970      $ 880  

Total Target Direct Compensation

   $ 20,500      $ 10,000      $ 11,000      $ 9,100      $ 8,100  

The table above shows the Compensation and Benefits Committee’s decisions in the first quarter of 2020 and differs from amounts listed in the Summary Compensation Table (on page  55) and is not a substitute for the information in that table.

Settlement of LTIA granted in January 2017

The Compensation and Benefits Committee awarded incentives in 2017 that vest based on performance over a three-year period. The target goals established in the first quarter of 2017 were consistent with the Company’s business plan and management expectations at the start of the performance period. While evaluating actual performance, the Compensation and Benefits Committee deemed it appropriate to consider adjustments when determining the payout to exclude the impact of events that were not contemplated when setting goals at the start of 2017. The Compensation and Benefits Committee considered these adjustments appropriate so that management does not benefit or get penalized by one-time events (e.g., the impact of the Tax Cuts and Jobs Act of 2017 (the Tax Act) is excluded).

Portfolio Grant Awarded in January 2017

(Vesting Based on 2017-2019 Performance)

Under the Portfolio Grant (PG) program, management is assessed and rewarded for performance against a combination of financial objectives (EPS and revenue) and results against specific strategic milestones that indicate success in positioning the Company for the future. The PG program was eliminated as of 2019, with target award amounts transitioned to equity.

GAAP rules related to revenue recognition changed after the targets were set. As such, the Company adjusted the 2019 revenue goals from $35.40 billion to $39.06 billion for target incentive payout and from $36.44 billion to $40.21 billion for maximum incentive payout. This adjustment reflects the same level of growth as under the original targets.

 

3-year Cumulative 2017-2019 EPS(14)

(30% of Portfolio Grant)

  

2019 Revenue(15) (billions)

(20% of Portfolio Grant)

LOGO    LOGO

(14) EPS includes: 2017 $5.87 (adj.), 2018 $6.36 (adj.), and 2019 $7.20 (adj.); See Annex A for a reconciliation to EPS on a GAAP basis.

 

(15) The Compensation and Benefits Committee deemed it appropriate to consider adjustments to the Company’s reported results when determining the payout for this factor to exclude FX impacts since these changes are beyond management’s control and were not reflected in the original plan. See Annex A for a reconciliation to revenue net of interest expense on a GAAP basis.

 


 

LOGO

 

 

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LOGO

Progress on Strategic Milestones (50% of Portfolio Grant)

The strategic milestones established for this grant covered a range of initiatives, including merchant coverage and operating expense initiatives. The range of payouts for achievement against strategic milestones, as with the other elements, is from zero to 125% of target. The Compensation and Benefits Committee assesses results and performance for each strategic milestone goal in determining the final score outcome. Strategic milestones goals were:

 

    Strategic Milestones    Achievements       

Outcome

 

Compensation and
Benefits Committee
concluded

that milestones

were scored at

the maximum

payout level

(125%)

1.

  Acceleration of Merchant Coverage balanced with reducing Discount Rate Erosion    Achieved virtual parity coverage in the U.S., with approximately 99% of credit-card accepting merchants now able to accept American Express(16), and remained committed to growing coverage globally, adding over 2 million merchant locations outside of the U.S. We did this while minimizing discount rate erosion and growing discount revenue at 7% for 2019.   

2.

  Acceleration of Lending Accounts Receivable Growth: 8-10% CAGR over 2016 Accounts Receivable (including non-Card Accounts Receivable)    Lending Account Receivables CAGR of 11% from 2017-2019 was approximately 2x industry growth(17), with the majority of growth coming from existing customers allowing us to maintain industry leading credit metrics.   
3.   On track to remove $1 billion of cost    Achieved the goal of removing $1 billion of cost at end of 2017 on a rate run basis.   

Final Scoring for 2017-2019 Portfolio Grant

Based on the above discussions of actual performance against goals, the Compensation and Benefits Committee concluded that the award was earned at 125% of its targeted amount.

Performance RSUs Awarded in January 2017

(Vesting Based on 2017-2019 Performance)

Performance RSUs were awarded in January 2017 for the three-year performance period ending December 2019. The awards vest based on the Company’s three-year average adjusted ROE performance, which was 26.7%(18).

 

LOGO LOGO        

Perquisites

We provide limited perquisites to support our objective to attract and retain talent for key positions, as well as to address security concerns. For the CEO, 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 for business travel. We also provide an annual cash perquisite allowance of $35,000 for executive officers of the Company, which includes all NEOs. Our NEOs are also eligible to receive certain benefits available to all other colleagues with a corporate card. For example, Membership Reward points are now earned on their corporate cards and are available for personal use. In 2020, the Company eliminated its $30,000 travel allowance that was previously provided to NEOs other than our CEO.

 

(16)

Source: AXP internal data and The Nilson Report, Issue 1169, “General Purpose Cards – U.S. 2019, Table: 2019 Merchant Acceptance Locations in the U.S.”

(17)

Source: New York Fed Consumer Credit Panel (Q4 2019) /Equifax.

(18)

2017 adjusted ROE excludes the impacts of the Tax Act charge of $2.6 billion in Q4’17. 2018 adjusted ROE excludes the impact of certain discrete tax benefits in Q4’18 and the lower U.S. federal statutory corporate income tax rate due to the Tax Act. 2019 adjusted ROE excludes the impact of a litigation-related charge in Q1’19 and the lower U.S. federal statutory corporate income tax rate due to the Tax Act. See Annex A for a reconciliation to ROE on a GAAP basis.

 

 


 

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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 U.S. colleagues.

 

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

 

  Deferral Plan: Allows U.S. NEOs to defer a portion of their base salary and AIA payout. The annual deferral limit is equal to one times the NEO’s base salary.

NEO retirement benefits are more fully described under Retirement Plan Benefits on page 61 and under Nonqualified Deferred Compensation on pages 62 and 63.

Severance: Senior Executive Severance Policy

The Compensation and Benefits Committee must pre-approve severance for the Company’s executive officers. Under the Senior Executive Severance Policy, NEOs who are terminated involuntarily (except in cases of misconduct) receive cash severance benefits equal to one and one half years of base salary and target AIA on a serial basis. The Company also provides 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.

 

Discouraging

Imprudent Risk Taking

 

Our executive compensation program is:

 

  Structured to provide a balance of cash and stock; annual and long-term incentives; and varied performance measures over different time horizons;

 

  Designed to encourage the proper level of risk taking consistent with our business model and strategies; and

 

  Designed to be consistent with regulatory principles for safety and soundness.

 

 

 

 

The following policies and procedures help discourage imprudent risk taking:

 

  Our Chief Risk Officer reviews goals for safety and soundness in relation to the Company’s risk appetite and sets certain annual risk goals for the Company at the beginning of each year.

 

    LOGO
 

 

  We monitor relevant metrics, including credit risk and market risk metrics, performance against our risk appetite thresholds as well as material operational risk events on a regular basis. We assign control and compliance ratings to each business unit as part of our annual assessment of performance.

 


 

LOGO

 

 

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LOGO

  At year-end, our Chief Risk Officer meets with the Compensation and Benefits Committee and certifies as to whether actual results were achieved with proper risk governance and oversight, and whether the Company executed on its broad range of programs that help to avoid imprudent risk taking. The Chief Risk Officer issues a year-end memorandum summarizing an overall assessment of the Company’s risk profile. If deemed necessary, risk adjustments are made to Company annual incentive funding levels as well as to individual incentive awards.

 

  We assess Company performance against a cross-section of key metrics and 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).

 

  At least 50% of total incentive compensation for executive officers is deferred for at least three years with performance-based payout.

 

  Performance Restricted Stock Units are used in place of time-based RSUs for the Company’s senior colleagues.

 

  We have robust stock ownership requirements for our CEO and other NEOs (as described below).

Stock Ownership Guidelines

Our current 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 shares (i.e., shares owned outright, excluding unvested/unearned shares and unexercised stock options) with a value equivalent to a target multiple of their base salary, and to retain 50% of the net after-tax shares received upon vesting or exercise of their equity awards until guidelines are met. The specific requirements are as follows:

 

       

CEO

 

 

10x

 

BASE SALARY

    

All Other

NEOs

 

 

3x

 

BASE SALARY

All of our NEOs own more than the target number of shares.

Clawback and Recoupment Policies

We seek to recover, to the extent practicable, performance-based compensation from any executive officer and certain other members of senior management under certain circumstances. The Company has two arrangements to clawback or cancel awards:

 

  Detrimental Conduct Agreement

 

  Incentive Compensation Recoupment Policy

The table below outlines our policies:

 

     Detrimental Conduct Agreement    Incentive Compensation Recoupment Policy

WHO

 

◾ Approximately 1,500 colleagues at Vice President level and above (including CEO)

  

◾ All colleagues

WHEN

 

◾ Colleague engages in detrimental conduct:

 

  Working for a competitor (applies to approximately 500 colleagues)

 

  Soliciting AXP colleagues or customers

 

  Denigrating the Company in the media

 

  Engaging in certain misconduct that leads to termination

 

  Other detrimental conduct categories (e.g. sharing confidential information)

  

◾ AXP financial results are restated:

 

  Colleagues engaged in fraud or misconduct that caused or partially caused the need for the restatement; and

  Less compensation would have been paid to the colleagues based upon the restated financial results

 

WHAT

 

◾Forfeit unvested equity awards and repay proceeds from Incentive Compensation Plan awards that vested in the last two years

  

◾Company will seek to recover the difference between the amount actually paid and what should have been paid based on the restated financial results

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

 

 


 

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Tax Treatment

Tax rules generally limit the deductibility of compensation paid to our NEOs to $1 million per year. Prior to the Tax Act, “performance-based” compensation was excepted from this limit and the Company generally structured its incentive compensation arrangements in a manner that was intended to comply with these tax rules. The Compensation and Benefits Committee maintains the flexibility to pay nondeductible incentive compensation.

Peer Group and Benchmarking

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 only one of a number of factors used to make final pay decisions.

How We Select the Company’s Compensation Peers

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

 

            

 

Comparator Group for 2019

 

           
  

Financial Institutions

 

    

Iconic Global Consumer Brands

    

Payments & Technology

Businesses

 
  

  Bank of America

 

  BNY Mellon

 

  BlackRock

 

  Capital One Financial

 

  Citigroup

 

  Goldman Sachs

 

  JPMorgan Chase

 

  Morgan Stanley

 

  U.S. Bancorp

 

  Wells Fargo

 

    

  Coca-Cola

 

  Colgate-Palmolive

 

  Nike

 

  PepsiCo

 

  Starbucks

    

  Cisco

 

  Discover

 

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Role of the Independent Compensation Consultant

The Compensation and Benefits Committee endeavors to follow good governance practices and is composed solely of independent directors. The Compensation and Benefits Committee is responsible for approving our executive officer compensation decisions. It has retained Semler Brossy Consulting Group (Semler Brossy) as its independent compensation consultant. It held six meetings over the course of 2019, all of which ended with executive sessions without management present. During 2019, Semler Brossy attended Compensation and Benefits Committee meetings, including executive sessions, and provided compensation advice independent of the Company’s management. The Compensation and Benefits Committee assessed the independence of Semler Brossy pursuant to SEC rules and concluded that their work did not raise any conflicts of interest.

 


 

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2020 PROXY REPORT  |  AMERICAN EXPRESS        53


Table of Contents

LOGO

Report of the Compensation and Benefits Committee

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

COMPENSATION AND BENEFITS COMMITTEE*

 

John J. Brennan

Peter Chernin

Ralph de la Vega

  

Theodore J. Leonsis

Ronald A. Williams, Chair

 

*

Reflects 2019 committee membership

Note Regarding 2019 Total Direct Compensation Decisions and Summary Compensation Table

It is important to recognize that the way the Compensation and Benefits Committee presents Total Direct Compensation (on page 42) is different from the SEC-required disclosure in the Summary Compensation Table on the following page and is not a substitute for the information in that table.

In summary, the main difference between the Summary Compensation Table and Total Direct Compensation 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 2019 and estimated value of equity granted in 2019

 

SEC-mandated compensation disclosure

   Includes only pay that is awarded based on 2019 performance— reflects the Compensation and Benefits Committee’s January 2020 compensation decisions based on 2019 performance
      

Calculated as a sum of:

   Base Salary   

 Base salary paid in 2019

  

 Base salary set for 2020

   Annual bonus   

 Annual cash bonus earned for 2019 performance

  

 Total annual bonus awarded for 2019 performance— regardless of form of payment (i.e., cash or equity)

   Portfolio Grant award   

 Value of PG earned for 2017- 2019 (if paid in cash)

  

 Not applicable because program eliminated as of 2019

     Equity awards   

 Accounting value of equity awards (Stock Options and Performance Restricted Stock Units) granted in 2019

  

 Grant date value of equity awards (Stock Options and Performance Restricted Stock Units) granted in January 2020 for performance year ending 2019

 

**

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.

 

 


 

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Table of Contents

Summary Compensation Table

The following Summary Compensation Table summarizes the compensation of our NEOs for the year ended December 31, 2019, using the SEC-required disclosure rules. It is important to recognize that 2019 Total Direct Compensation determined by the Compensation and Benefits Committee is different than the amounts disclosed below. See page 54 for key differences between the Summary Compensation Table and Total Direct Compensation awarded by the Compensation and Benefits Committee for 2019 Performance.

A portion of the 2018 to 2019 total compensation increase is due to the Company’s transition from the Portfolio Grant program, a cash-based program, to equity awards starting in 2019. See footnote 3 for more detail.

 

Name and

Principal

Position

  Year     Salary     Bonus(1)     Stock
Awards(2),(3)
    Option
Awards(2),(3)
    Non-Equity
Incentive Plan
Compensation(4)
    Change in
Pension Value
and
Non-Qualified
Deferred
Compensation
Earnings(5)
    All Other
Compensation(6)
    Total(3)  

S.J. Squeri

    2019     $ 1,500,000     $ 7,000,000     $ 10,318,663     $ 2,439,992     $ 1,875,000     $ 83,985     $ 578,362     $   23,796,002  

Chairman and CEO

    2018     $ 1,487,500     $ 5,850,000     $ 5,999,903     $ 1,499,996     $ 1,860,000     $ 758     $ 643,285     $ 17,341,442  
    2017     $ 1,375,962     $ 7,000,000     $ 3,765,808     $ 5,384,176     $ 1,046,750     $ 60,075     $ 520,893     $ 19,153,664  

J.C. Campbell

    2019     $ 1,000,000     $ 5,300,000     $ 4,405,932     $ 899,979     $ 1,875,000     $ 0     $ 264,580     $ 13,745,491  

Chief Financial Officer

    2018     $ 1,000,000     $ 4,900,000     $ 3,120,447     $ 729,372     $ 1,860,000     $ 0     $ 254,833     $ 11,864,652  
    2017     $ 1,019,231     $ 4,600,000     $ 2,024,562     $ 475,352     $ 1,185,000     $ 0     $ 312,122     $ 9,616,267  

D.E. Buckminster

    2019     $ 983,333     $ 5,700,000     $ 4,059,749     $ 959,993     $ 1,625,000     $ 68,497     $ 274,100     $ 13,670,672  

Group President, Global Consumer Services Group

    2018     $ 881,250     $ 4,500,000     $ 2,586,045     $ 613,855     $ 1,488,000     $ 0     $ 258,600     $ 10,327,750  
    2017     $ 754,808     $ 3,350,000     $ 1,619,681     $ 2,630,276     $ 711,000     $ 46,428     $ 321,717     $ 9,433,910  
                                                                       

A.D. Williams

    2019     $ 841,667     $ 4,850,000     $ 3,467,769     $ 819,983     $ 1,250,000     $ 59,057     $ 240,332     $ 11,528,808  

Group President, Global Merchant and Network Services

    2018     $ 781,250     $ 3,700,000     $ 2,220,580     $ 529,371     $ 1,116,000     $ 0     $ 192,159     $ 8,539,360  
                 
                                                                       

L.E. Seeger

    2019     $ 800,000     $ 2,350,000     $ 3,044,865     $ 719,983     $ 1,375,000     $ 0     $ 223,910     $ 8,513,758  

Chief Legal Officer

    2018     $ 800,000     $ 2,500,000     $ 2,023,953     $ 475,896     $ 1,364,000     $ 0     $ 223,910     $ 7,387,759  
    2017     $ 815,385     $ 5,034,000     $ 1,619,681     $ 380,289     $ 869,000     $ 0     $ 265,679     $ 8,984,034  

 

(1)

The amounts in this column reflect AIA cash payments for annual performance. Mr. Campbell’s 2019 amount excludes $100,000 that was made in the form of RSUs granted in January 2020 to comply with regulatory guidance that at least 50% of incentive compensation be deferred. Payment of these RSUs is deferred for three years from the grant date, subject to positive net income performance but not to continued employment.

 

(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 10 Stock Plans, to our Consolidated Financial Statements contained in our 2019 Annual Report on Form 10-K.

 

(3)

For each executive’s stock award, the maximum value as of the grant date, assuming the highest level of performance will be achieved and based on the closing price of the Company’s common shares on the NYSE on the grant date, is as follows: Messrs. Squeri ($11,711,865), Campbell ($4,919,781), Buckminster ($4,607,814) and Williams ($3,935,926) and Ms. Seeger ($3,455,962).

 

    

A portion of the change from 2018 to 2019 under the “Stock Awards” and “Option Awards” columns is due to the Company’s transition from the Portfolio Grant program, a cash-based program, to equity awards starting in 2019. SEC rules require that cash incentives under the Portfolio Grant program are reported under the “Non-Equity Incentive Plan Compensation” column following the conclusion of the three-year performance cycle. Conversely, equity awards are reported under the “Stock Awards” and “Option Awards” columns as compensation for the year in which the grants were made. Therefore, as a result of the transition from the Portfolio Grant program, cash incentive amounts that would have been disclosed as 2021 compensation in the Company’s 2022 Proxy Statement are now disclosed as 2019 compensation in this 2020 Proxy Statement. For enhanced comparability of 2019 and 2018 total compensation, the following shows 2019 total compensation excluding the impact of the elimination of the Portfolio Grant program:

 

    

S.J. Squeri: $20,972,396

 

    

J.C. Campbell: $12,176,779

 

    

D.E. Buckminster: $12,311,128

 

    

A.D. Williams: $10,483,000

 

    

L.E. Seeger: $7,363,300

 

(4)

The 2019 amounts in this column reflect the cash payment made to the NEO in respect of a payout under the PG 2017-19 awards granted in 2017, in accordance with award terms.

 

(5)

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. Mr. Campbell and Ms. Seeger are not eligible to participate in the defined benefit plan due to their employment commencement dates.

 

(6)

See the All Other Compensation table on the following page for additional information.

 


 

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All Other Compensation

 

Name

   Year      Perquisites
and Other
Personal
Benefits(1)
     Tax Payments/
Reimbursements(2)
     Company
Contributions
to Defined
Contribution
Plans(3)
     Executive
Life
Insurance(4)
     Total  

S.J. Squeri

     2019      $ 304,329        N/A      $ 270,000      $ 4,033      $ 578,362  
     2018      $ 384,242        N/A      $ 255,375      $ 3,668      $ 643,285  
       2017      $ 101,831        N/A      $ 415,709      $ 3,353      $ 520,893  

J.C. Campbell

     2019      $ 76,840        N/A      $ 180,000      $ 7,740      $ 264,580  
     2018      $ 67,093        N/A      $ 180,000      $ 7,740      $ 254,833  
       2017      $ 72,170        N/A      $ 232,212      $ 7,740      $ 312,122  

D.E. Buckminster

     2019      $ 101,064        $   0      $ 169,500      $ 3,536      $ 274,100  
     2018      $ 108,566        $   0      $ 146,813      $ 3,221      $ 258,600  
       2017      $ 96,944       
$   0
 
   $ 221,858      $ 2,915      $ 321,717  

A.D. Williams

     2019      $ 88,442        N/A      $ 147,750      $ 4,140      $ 240,332  
       2018      $ 59,206        N/A      $ 128,813      $ 4,140      $ 192,159  

L.E. Seeger

     2019      $ 72,170        N/A      $ 144,000      $ 7,740      $ 223,910  
     2018      $ 72,170        N/A      $ 144,000      $ 7,740      $ 223,910  
       2017      $ 72,170        N/A      $ 185,769      $ 7,740      $ 265,679  

 

(1)

See the Perquisites and Other Personal Benefits table on the following page 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 2019, American Express realized a foreign tax credit of approximately $163,000 relating to payments made by the Company on Mr. Buckminster’s 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 RSP and RRP-RSP. See pages 61-63 for a further description of the RSP and the RRP-RSP.

 

(4)

This column reflects income imputed to the NEOs under the Company’s executive life insurance program.

 

 


 

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Table of Contents

Perquisites and Other Personal Benefits

 

Name

  Year     Local and
Other
Travel
Benefits(1)
    Personal
Use of
Company
Aircraft(1),(2)
    Flexible
Perquisite
Allowance(3)
    Home
Security
System(4)
    Security
During
Personal
Trips(4)
    International
Assignment/
Relocation(5)
    Other
Benefits(6)
    Total  

S.J. Squeri

    2019     $ 23,843     $ 197,350     $ 35,000     $ 2,770     $ 36,496       N/A     $ 8,870     $ 304,329  
    2018     $ 19,820     $ 198,219     $ 35,000     $ 81,482     $ 31,001       N/A     $ 18,720     $ 384,242  
      2017     $ 30,000     $ 20,354     $ 35,000       N/A       N/A       N/A     $ 16,477     $ 101,831  

J.C. Campbell

    2019     $ 30,000     $ 11,840     $ 35,000       N/A       N/A       N/A     $ 0     $ 76,840  
    2018     $ 30,000     $ 2,093     $ 35,000       N/A       N/A       N/A     $ 0     $ 67,093  
      2017     $ 30,000     $ 0     $ 35,000       N/A       N/A       N/A     $ 7,170     $ 72,170  

D.E. Buckminster

    2019     $ 30,000     $ 6,861     $ 35,000       N/A       N/A     $ 29,203     $ 0     $ 101,064  
    2018     $ 30,000     $ 8,154     $ 35,000       N/A       N/A     $ 34,693     $ 719     $ 108,566  
      2017     $ 30,000     $ 0     $ 35,000       N/A       N/A     $ 31,225     $ 719     $ 96,944  

A.D. Williams

    2019     $ 30,000     $ 0     $ 35,000       N/A       N/A       N/A     $ 23,442     $ 88,442  
      2018     $ 0     $ 0     $ 35,000       N/A       N/A       N/A     $ 24,206     $ 59,206  

L.E. Seeger

    2019     $ 30,000     $ 0     $ 35,000       N/A       N/A       N/A     $ 7,170     $ 72,170  
    2018     $ 30,000     $ 0     $ 35,000       N/A       N/A       N/A     $ 7,170     $ 72,170  
      2017     $ 30,000     $ 0     $ 35,000       N/A       N/A       N/A     $ 7,170     $ 72,170  

 

(1)

For 2019, local and other travel benefits include local travel allowance for NEOs other than Mr. Squeri. The Company’s security policy requires the CEO 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)

The CEO’s personal use of Company aircraft is limited to $200,000 per year and the CEO is required to reimburse the Company any incremental costs in excess of $200,000 per year for travel on Company aircraft that is deemed by the SEC to be personal use. Messrs. Campbell and Buckminster’s 2019 amounts are in connection with personal travel in accordance with appropriate approvals.

 

(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. Squeri.

 

(5)

The amounts shown include international tax and reporting services (not payments or reimbursements) in connection with Mr. Buckminster’s repatriation to the U.S. due to trailing tax liabilities. The services provided to Mr. Buckminster are provided to all employees on international assignment.

 

(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% of the total amount of all perquisites and other personal benefits reported for the NEO. These other benefits consist of office parking, reimbursements for certain information technology services and, on occasion, use of the Company’s tickets for sporting and entertainment events for personal rather than business purposes. We generally incur no incremental cost for the provision of such additional benefits.

 


 

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Grants of Plan-Based Awards

The following table provides information on awards granted to each of our NEOs.

 

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
($/sh)(1)
    Grant Date
Fair Value
of Stock
and Option
Awards
($)(3)
 
  Threshold
($)
    Target
($)
    Maximum
($)
    Threshold
(#)
    Target
(#)
    Maximum
(#)
 

S.J. Squeri

  AIA             1/22/2019     $ 0     $ 4,500,000     $ 8,437,500                                          
  SO     1/29/2019       1/22/2019                                       104,407             $ 100.96     $ 2,439,992  
    PRSU     1/29/2019       1/22/2019                               0       96,671       116,005             $ 10,318,663  

J.C. Campbell

  AIA             1/22/2019     $ 0     $ 3,500,000     $ 6,562,500                                          
  SO     1/29/2019       1/22/2019                                       38,510             $ 100.96     $ 899,979  
  RSU     1/29/2019       1/22/2019                                       5,942                     $ 599,904  
    PRSU     1/29/2019       1/22/2019                               0       35,657       42,788             $ 3,806,028  

D.E. Buckminster

  AIA             1/22/2019     $ 0     $ 3,700,000     $ 6,937,500