SCHEDULE 14A INFORMATION
Proxy Statement Pursant to Section 14(a) of the Securities Exchange Act
of 1934
Filed by the Registrant [X]
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))
[X] Definitive Proxy Statement (Revised)
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
American Express Company
(Name of Registrant as Specified In Its Charter)
.............................................................................
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
..............................................................
2) Aggregate number of securities to which transaction applies:
..............................................................
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
..............................................................
5) Total Fee Paid:
..............................................................
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the form or Schedule and the date of its filing.
(1) Amount Previously Paid:
..............................................................
(2) Form, Schedule or Registration Statement No.:
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(4) Date Filed:
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<PAGE>
AMERICAN EXPRESS COMPANY
[American Express Logo] 200 VESEY STREET
NEW YORK, NEW YORK 10285
------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 24, 1995
------------
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of American
Express Company, a New York corporation, will be held at the executive offices
of the Company, 200 Vesey Street, 26th Floor, New York, New York 10285 (see
directions on back cover), on Monday, April 24, 1995 at 10:00 A.M., local time,
for the following purposes:
1. To elect directors;
2. To ratify the selection by the Company's Board of Directors of
Ernst & Young LLP, independent auditors, to audit the accounts of the
Company and its subsidiaries for 1995;
3. 4. and 5. To consider and vote upon three shareholder proposals
relating to cumulative voting, term limits for directors, and outsourcing,
respectively, each of which the Board of Directors opposes; and
To transact such other business as may properly come before the meeting or
any adjournment thereof.
By Order of the Board of Directors:
/s/ STEPHEN P. NORMAN
STEPHEN P. NORMAN
Secretary
March 10, 1995
WHETHER OR NOT YOU INTEND TO BE PRESENT AT THE MEETING, PLEASE MARK,
SIGN AND DATE THE ENCLOSED PROXY AND RETURN IT IN THE ENCLOSED PREPAID ENVELOPE.
This Statement is printed on recycled paper.
[recycled logo]
<PAGE>
AMERICAN EXPRESS COMPANY
[American Express Logo] 200 VESEY STREET
NEW YORK, NEW YORK 10285
March 10, 1995
PROXY STATEMENT
VOTE BY PROXY
This proxy statement is furnished in connection with the solicitation of
proxies by the Board of Directors of the Company for the Annual Meeting of
Shareholders to be held on Monday, April 24, 1995, and any adjournment thereof.
A copy of the notice of the meeting is attached. This proxy statement and the
accompanying form of proxy are first being mailed to shareholders on or about
March 14, 1995.
You are cordially invited to attend the meeting, but whether or not you
expect to attend in person, you are urged to mark, sign and date the enclosed
proxy and return it in the enclosed prepaid envelope. Shareholders have the
right to revoke their proxies at any time prior to the time their shares are
actually voted. If a shareholder attends the meeting and desires to vote in
person, his or her proxy will not be used.
The enclosed proxy indicates on its face the number of common shares
registered in the name of each shareholder of record on March 6, 1995, including
shares that may have accumulated through automatic reinvestment of dividends in
the Company's Shareholder's Stock Purchase Plan.
Proxies furnished to employees indicate the number of shares credited to
their employee benefit plan accounts. Accordingly, proxies returned by employees
who participate in such plans will be considered to be voting instructions to
the respective plan trustees or administrators with respect to shares credited
to such accounts.
CONFIDENTIAL VOTING
As a matter of Company practice, the proxies, ballots and voting
tabulations relating to individual shareholders are kept private by the Company.
Such documents are available for examination only by the Inspectors of Election
and certain employees of the Company's independent tabulating agent engaged in
processing proxy cards and tabulating votes. The vote of any individual
shareholder is not disclosed to management except as may be necessary to meet
legal requirements. However, all comments directed to management from
shareholders, whether written on the proxy card or elsewhere, will be forwarded
to management.
<PAGE>
GENERAL
Unless contrary instructions are indicated on the proxy, all shares
represented by valid proxies received pursuant to this solicitation (and not
revoked before they are voted) will be voted as follows:
FOR the election of all nominees for directorships named herein,
FOR ratification of the selection of Ernst & Young LLP as independent
auditors for 1995,
AGAINST the shareholder proposal relating to cumulative voting,
AGAINST the shareholder proposal relating to term limits for directors,
and
AGAINST the shareholder proposal relating to outsourcing.
In the event a shareholder specifies a different choice on the proxy, his
or her shares will be voted in accordance with the specification so made.
The closing price of the Company's common shares on March 6, 1995, as
reported by the New York Stock Exchange Composite Transactions Tape, was $33.125
per share.
The Company's 1994 Annual Report has been mailed to shareholders in
connection with this solicitation. A COPY OF THE COMPANY'S ANNUAL REPORT TO THE
SECURITIES AND EXCHANGE COMMISSION ON FORM 10-K, EXCLUSIVE OF CERTAIN EXHIBITS,
MAY BE OBTAINED WITHOUT CHARGE BY WRITING TO STEPHEN P. NORMAN, SECRETARY,
AMERICAN EXPRESS COMPANY, 200 VESEY STREET, NEW YORK, NEW YORK 10285-5000.
COST OF PROXY SOLICITATION
The cost of soliciting proxies will be borne by the Company. Proxies may
be solicited on behalf of the Company by directors, officers or employees of the
Company in person or by telephone, facsimile transmission or telegram. The
Company has engaged the firm of Morrow & Co. to assist the Company in the
distribution and solicitation of proxies. The Company has agreed to pay Morrow &
Co. a fee of $12,500 plus expenses for these services.
The Company will also reimburse brokerage houses and other custodians,
nominees and fiduciaries for their expenses, in accordance with the regulations
of the Securities and Exchange Commission ("SEC"), the New York Stock Exchange
and other exchanges, for sending proxies and proxy material to the beneficial
owners of common shares.
2
<PAGE>
THE SHARES VOTING
The only voting securities of the Company are common shares, of which
there were 497,048,645 shares outstanding as of March 6, 1995, each share being
entitled to one vote. To the knowledge of management, no person beneficially
owned more than five percent of the outstanding common shares of the Company,
except as set forth in the table below.
NUMBER OF AMERICAN
NAME(S) & ADDRESS(ES) EXPRESS COMMON SHARES PERCENT OF
OF BENEFICIAL OWNER(S) BENEFICIALLY OWNED CLASS (%)
--------------------- -------------------- ----------
Warren E. Buffett, 48,500,000 (1) 9.8%
Berkshire Hathaway Inc.
and subsidiaries
1440 Kiewit Plaza
Omaha, Nebraska 68131
Edward C. Johnson 3d and 34,875,356 (2) 7.0%
FMR Corp.
82 Devonshire Street
Boston, Massachusetts 02109
-----------
(1) Reflects shares beneficially owned as of March 1, 1995, according to
information provided to the Company by Berkshire Hathaway Inc.
("Berkshire"). Of the shares shown, 38,315,793 shares were beneficially
owned by Berkshire's subsidiary, National Indemnity Company. Mr. Buffett,
Berkshire and the subsidiaries share voting and dispositive power over the
shares shown. Mr. Buffett, his spouse and a trust of which Mr. Buffett is
a trustee, but in which he has no economic interest, own approximately
43.8% of the outstanding shares of Berkshire. As a result of such
ownership and control, Mr. Buffett may be deemed to be the beneficial
owner of shares beneficially owned by Berkshire.
The Company and Berkshire have entered into an agreement which becomes
effective if Berkshire acquires 10% or more of the Company's voting
securities and remains effective so long as Berkshire owns 5% or more of
the Company's voting securities. Under the agreement so long as Harvey
Golub is the Company's Chief Executive Officer, Berkshire and its
subsidiaries will vote all Company common shares owned by them in
accordance with the recommendations of the Board of Directors of the
Company. Subject to certain exceptions, Berkshire and its subsidiaries
will not sell Company common shares to any person who owns more than 5% of
the Company's voting securities or who seeks to change the control of the
Company, without the consent of the Company.
(2) Reflects shares beneficially owned as of December 31, 1994 according to a
statement on Schedule 13G filed with the SEC. FMR Corp. ("FMR") and Mr.
Johnson held sole dispositive power with respect to 34,868,856 shares,
sole voting power with respect to 1,377,550 shares, shared dispositive
power with respect to 5,000 shares and shared voting power with respect to
5,000 shares. Of the shares shown, 32,416,506 shares were beneficially
owned by FMR's wholly-owned subsidiary, Fidelity Management and Research
Company, and 3,800 shares were beneficially owned by Fidelity
International Limited ("FIL"). Approximately 47% of the voting stock of
3
<PAGE>
FIL is owned by Mr. Johnson and members of his immediate family. Mr.
Johnson serves as Chairman of FMR and FIL. As a result of such common
ownership and control, FMR may be deemed to be the beneficial owner of the
shares owned by FIL. FMR disclaims beneficial ownership of the 3,800
shares beneficially owned by FIL. The number of shares shown included
14,872 shares resulting from the assumed exchange of $650,000 principal
amount of 6.5% Subordinated Exchangeable Debentures of Alleghany
Corporation, which are exchangeable for Common Shares of the Company.
VOTE REQUIRED
The 15 nominees receiving the greatest number of votes cast by the holders
of the Company's common shares entitled to vote at the meeting will be elected
directors of the Company.
The affirmative vote of a majority of the votes cast at the meeting is
necessary for the ratification of the selection of auditors and approval of each
of the shareholder proposals.
METHOD OF COUNTING VOTES
Each common share is entitled to one vote. Votes will be counted and
certified by the Inspectors of Election, who are employees of Chemical Bank, the
Company's independent Transfer Agent and Registrar. Under SEC rules, boxes and a
designated blank space are provided on the proxy card for shareholders to mark
if they wish either to abstain on one or more of the proposals or to withhold
authority to vote for one or more nominees for director. In accordance with New
York State law, such abstentions are not counted in determining the votes cast
in connection with the selection of auditors and approval of the various
shareholder proposals. Votes withheld in connection with the election of one or
more of the nominees for director will not be counted as votes cast for such
individuals.
The New York Stock Exchange has informed the Company that proposals one
and two are considered "discretionary" items upon which brokerage firms may vote
in their discretion on behalf of their clients if such clients have not
furnished voting instructions at least fifteen days prior to the date of the
shareholders' meeting. However, proposals three, four and five are
"non-discretionary," and brokers who have received no instructions from their
clients do not have discretion to vote on these items. Such "broker non-votes"
will not be considered as votes cast in determining the outcome of the
shareholder proposals.
SHAREHOLDERS ENTITLED TO VOTE
Only shareholders of record at the close of business on March 6, 1995 will
be entitled to notice of and to vote at the Annual Meeting of Shareholders.
SECURITY OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth, as of March 1, 1995, beneficial ownership
of common shares of the Company by each current director and nominee for
director and by all current directors and executive officers of the Company as a
group. Except as described below, each of the persons and group listed below has
sole voting and investment power with respect to the shares shown. No current
director or nominee beneficially owns any of the Company's outstanding preferred
shares.
4
<PAGE>
<TABLE>
<CAPTION>
NUMBER OF
AMERICAN EXPRESS
NUMBER OF COMMON SHARES
AMERICAN EXPRESS WHICH MAY BE
NAMES OF DIRECTORS COMMON ACQUIRED WITHIN
AND NOMINEES SHARES OWNED (1)(2) 60 DAYS (3)
------------------ ------------------- ----------------
<S> <C> <C>
Daniel F. Akerson .......................... 10,000 -0-
Anne L. Armstrong .......................... 1,500 8,361
Edwin L. Artzt ............................. 1,000 -0-
William G. Bowen ........................... 2,800 6,080
David M. Culver ............................ 1,248 8,361
Charles W. Duncan Jr ....................... 52,060 8,361
Richard M. Furlaud ......................... 25,000 19,765
Harvey Golub ............................... 227,162 752,509
Beverly Sills Greenough .................... 1,500 3,800
F. Ross Johnson ............................ 14,000 8,361
Vernon E. Jordan Jr ........................ 1,747 8,361
Henry A. Kissinger ......................... 2,400 8,361
Drew Lewis ................................. 15,000 8,361
Aldo Papone ................................ 38,203 2,660
Roger S. Penske ............................ 10,000 6,080
Frank P. Popoff ............................ 3,000 3,800
Jeffrey E. Stiefler ........................ 126,293 255,801
All current Directors and Executive Officers
as a group (30 individuals) (4) .......... 1,389,695(5) 3,442,412
</TABLE>
------------
(1) The number of shares owned by Mr. Golub, Mr. Stiefler and all current
directors and executive officers as a group includes 661, 137 and 42,173
shares held in their respective employee benefit plan accounts as of dates
ranging from December 30, 1994 to February 28, 1995. In addition to the
share amounts shown in this column, the following directors have invested
all or a portion of their directors' fees in Company Common Share
Equivalent Units as of December 31, 1994 under the Directors' Deferred
Compensation Plan described on page 10: Mrs. Armstrong--5,952 units; Mr.
Duncan--20,759 units; Mr. Furlaud--31,304 units; Mr. Jordan--12,058 units;
and Dr. Kissinger--6,248 units.
The number of common shares shown includes 2,000 shares held by a trust of
which Mr. Popoff is a trustee. The number of common shares shown does not
include shares as to which the nominees and all current directors and
executive officers as a group have disclaimed beneficial ownership, as
follows: 400 shares owned by the wife of Mr. Culver, 2,018 shares held by
a trust of which Mr. Culver is a co-trustee, 6,060 shares held by Duncan
Investors Ltd. of which Mr. Duncan is a partner, 2,864 shares owned by a
child of Mr. Golub, and 27,338 shares disclaimed by all current directors
and executive officers as a group.
(2) The number of shares owned by Mr. Golub, Mr. Stiefler and all current
directors and executive officers as a group includes 132,858, 76,979 and
728,993 shares, respectively, of restricted stock as to which shares the
5
<PAGE>
holders possess sole voting power, but no investment power, during the
restricted period. Restrictions on the sale or transfer of such restricted
stock lapse over a period of years ending in the year 2002.
(3) Shares shown include common shares subject to stock options and common
shares issuable upon conversion of convertible debentures. Mr. Golub, Mr.
Stiefler and all current directors and executive officers as a group hold
debentures that are convertible into 11,810, 2,675 and 25,316 shares,
respectively.
(4) The Company's current directors and executive officers as a group
beneficially owned approximately 4.8 million of the Company's common
shares as of March 1, 1995, representing approximately one percent of the
Company's outstanding common shares.
(5) The number of common shares shown also includes 1,100 shares held by a
trust of which an executive officer is co-trustee and 432 shares owned by
minor children of such executive officer.
Common Share Equivalent Units, shares of restricted stock, stock options
and convertible debentures shown in the table above and in the following table
reflect adjustments made in connection with the May 31, 1994 spin-off of Lehman
Brothers Holdings Inc. ("Lehman") as described on pages 11 and 21.
SECURITY OWNERSHIP OF NAMED EXECUTIVES
The following table sets forth, as of March 1, 1995, beneficial ownership
of common shares of the Company by Harvey Golub, Chief Executive Officer of the
Company, and each of the four other most highly compensated executive officers
of the Company at the end of 1994 (collectively, the "named executives"). Except
as described below, each of the named executives has sole voting and investment
power with respect to the shares shown. None of the named executives
beneficially owns any of the Company's outstanding preferred shares.
<TABLE>
<CAPTION>
AMERICAN EXPRESS
NUMBER OF AMERICAN COMMON SHARES
EXPRESS COMMON WHICH MAY BE ACQUIRED PERCENT OF
NAME SHARES OWNED (1)(2) WITHIN 60 DAYS (3) CLASS (%)
----- ------------------- --------------------- ----------
<S> <C> <C> <C>
H. Golub.............................. 227,162 752,509 0.20
J. E. Stiefler........................ 126,293 255,801 0.08
J. S. Linen (4)....................... 155,790 401,045 0.11
K. I. Chenault........................ 82,355 290,527 0.08
D. R. Hubers........................... 40,683 143,994 0.04
</TABLE>
-------------
(1) The number of shares owned by Messrs. Golub, Stiefler, Linen, Chenault and
Hubers includes 661, 137, 7,363, 4,914 and 179 shares held in their
respective employee benefit plan accounts as of dates ranging from
December 30, 1994 to February 28, 1995.
The number of common shares shown does not include shares as to which
Messrs. Golub, Chenault and Hubers have disclaimed beneficial ownership,
as follows: 2,864 shares owned by a child of Mr. Golub, 14,342 shares held
by Mr. Chenault's wife outright or as trustee or custodian for their
children, and 700 shares held by Mr. Hubers as custodian for a child.
6
<PAGE>
(2) The number of shares owned by Messrs. Golub, Stiefler, Linen, Chenault and
Hubers includes 132,858, 76,979, 42,195, 69,607 and 20,755 shares,
respectively, of restricted stock as to which shares the holders possess
sole voting power, but no investment power, during the restricted period.
Restrictions on the sale or transfer of such restricted stock lapse over a
period of years ending in the year 2002.
(3) Shares shown include common shares subject to stock options and common
shares issuable upon conversion of convertible debentures. Messrs. Golub,
Stiefler and Chenault hold debentures that are convertible into 11,810,
2,675 and 3,980 shares, respectively.
(4) The number of common shares owned by Mr. Linen includes 1,100 shares held
by a trust of which he is a co-trustee and 432 shares owned by his minor
children.
GOVERNANCE OF THE COMPANY
In accordance with applicable New York State law, the business of the
Company is managed under the direction of its Board of Directors. Traditionally,
the large majority of directors has consisted of persons who are neither
officers nor employees of the Company or any of its subsidiaries. Of the 15
director nominees, only Messrs. Golub and Stiefler are employees of the Company
or a subsidiary. Richard M. Furlaud is retiring as a director on April 24, 1995,
pursuant to the Board's mandatory retirement policies. Mr. Furlaud has served as
a director since June 1972 and also served as non-executive Chairman of the
Board from February to August 1993. Mr. Penske is not standing for re-election
as a director in order to devote more time to his business interests.
There are currently six standing committees of the Board of Directors.
Committee membership, the number of committee meetings held during 1994 and the
functions of those committees are described below.
AUDIT COMMITTEE
The current members of the Audit Committee are Charles W. Duncan Jr.
(Chairman), William G. Bowen, Richard M. Furlaud, Beverly Sills Greenough, Henry
A. Kissinger and Drew Lewis.
The Audit Committee represents the Board in discharging its
responsibilities relating to the accounting, reporting, financial and internal
control practices of the Company and its subsidiaries. The Committee has general
responsibility for reviewing with management the financial and internal controls
and the accounting, audit and reporting activities of the Company and its
subsidiaries. The Committee annually reviews the qualifications and objectivity
of the Company's independent auditors, makes recommendations to the Board as to
their selection, reviews the scope, fees and results of their audit, reviews
their non-audit services and related fees, is informed of their significant
audit findings and management's responses thereto, and annually reviews the
status of significant current and potential legal matters. In addition, the
Committee reviews the scope of the internal auditors' plans each year and the
results of their audits. The Committee also receives reports on the U.S. Federal
Sentencing Compliance program, including a review of the distribution of and
compliance with the Company's Code of Conduct, which is sent periodically to
7
<PAGE>
employees of the Company and its subsidiaries around the world, and receives
reports as to any exceptions. The Committee is also empowered to conduct its own
investigations into issues related to the aforementioned responsibilities and to
retain independent counsel or outside experts for such purposes.
During 1994 the Audit Committee met six times.
COMPENSATION AND BENEFITS COMMITTEE
The current members of the Compensation and Benefits Committee are Roger
S. Penske (Chairman), Anne L. Armstrong, Richard M. Furlaud, F. Ross Johnson,
Vernon E. Jordan Jr. and Frank P. Popoff.
The Compensation and Benefits Committee consists solely of directors who
are not current or former employees of the Company or a subsidiary and oversees
incentive compensation plans for officers and key employees, approves standards
for setting compensation levels for Company executives and administers the
Company's executive incentive compensation plans for senior executives. The
Committee also approves the compensation of certain employees whose salaries are
above specified levels and makes recommendations to the Board for approval as
required. The Committee conducts an annual review of the performance of the
Company's Chief Executive Officer. It also reviews senior management development
programs and appraises senior management's performance. The Committee is
authorized to hire and regularly consult with independent compensation advisors.
The Committee represents the Board in discharging its responsibilities
with respect to the Company's employee pension, savings and welfare benefit
plans. It appoints the members of management who serve on the Employee Benefits
Administration Committee and the Benefit Plans Investment Committee, which are
responsible, respectively, for the administration of the plans of the Company
and for the custody and management of assets of those plans that are funded. The
Committee receives periodic reports from the Administration and Investment
Committees on their activities.
During 1994 the Compensation and Benefits Committee met six times.
COMMITTEE ON DIRECTORS
The current members of the Committee on Directors are Vernon E. Jordan Jr.
(Chairman), Anne L. Armstrong, David M. Culver, Charles W. Duncan Jr. and
Richard M. Furlaud.
The Committee on Directors identifies and recommends candidates for
election to the Board. It advises the Board on all matters relating to
directorship practices, including the criteria for selecting directors, policies
relating to tenure and retirement of directors, and compensation and benefit
programs for non-employee directors. The Committee makes recommendations
relating to the duties and membership of committees of the Board.
The Committee recommends processes to evaluate the performance and
contributions of individual directors and the Board as a whole and approves
procedures designed to provide that adequate orientation and training are
provided to new members of the Board.
8
<PAGE>
The Committee also considers candidates who are recommended by
shareholders in accordance with the early notification and other requirements
set forth on page 37. Any shareholder who wishes to recommend a candidate for
election to the Board should submit such recommendation to the Secretary of the
Company.
During 1994 the Committee on Directors met six times.
EXECUTIVE COMMITTEE
The current members of the Executive Committee are Harvey Golub
(Chairman), William G. Bowen, David M. Culver, Charles W. Duncan Jr., Vernon E.
Jordan Jr. and Roger S. Penske.
The Executive Committee is empowered to meet in place of the full Board
when emergency issues or scheduling makes it difficult to convene all of the
directors. The Committee may act on behalf of the Board on all matters permitted
by New York State law. All actions taken by the Committee must be reported at
the Board's next meeting.
The Executive Committee held no meetings during 1994.
FINANCE COMMITTEE
The current members of the Finance Committee are David M. Culver
(Chairman), F. Ross Johnson, Henry A. Kissinger, Drew Lewis, Aldo Papone and
Jeffrey E. Stiefler.
The Finance Committee oversees the investing of the Company's funds,
reviews the parameters of investment programs, receives reports on the progress
of investment activities and considers strategies as they relate to changing
economic and market conditions. The Committee's duties also include
responsibility for reviewing with management the capital needs and allocations
of the Company and its subsidiaries, including the Company's external and
intra-company dividend policies. The Committee also provides consultation on the
financial aspects of divestitures, acquisitions, major capital commitments,
major borrowings and proposed issuances of debt or equity securities, whether
privately or publicly distributed.
During 1994 the Finance Committee met three times.
PUBLIC RESPONSIBILITY COMMITTEE
The current members of the Public Responsibility Committee are William G.
Bowen (Chairman), Beverly Sills Greenough, Aldo Papone and Frank P. Popoff.
The Public Responsibility Committee reviews and considers the Company's
position and practices on issues in which the business community interacts with
the public, such as consumer policies, employment opportunities for minorities
and women, protection of the environment, purchasing from minority-owned
businesses, philanthropic contributions, privacy, shareholder proposals
involving issues of public interest, and similar issues, including those
involving the Company's positions in international affairs.
During 1994 the Public Responsibility Committee met three times.
9
<PAGE>
DIRECTORS' FEES AND OTHER COMPENSATION
Directors who are not current employees of the Company or one of its
subsidiaries receive a retainer of $16,000 per quarter with the proviso that
directors who attend fewer than 75 percent of the meetings of the Board and
committees on which they serve do not receive the fourth quarterly retainer.
Each non-employee director who serves as the chairman of one of the Board's
standing committees receives an annual retainer of $10,000. Directors do not
receive separate fees for attendance at Board or committee meetings. Directors
are reimbursed for their customary and usual expenses incurred in attending
Board, committee and shareholder meetings, including those for travel, food and
lodging. Directors who are current employees of the Company or a subsidiary
receive no fees for service on the Board or Board committees of the Company or
any of its subsidiaries.
The Company maintains a Retirement Plan for Non-Employee Directors. The
plan is an unfunded, nonqualified plan that covers directors of the Company who
are not current or former employees of the Company or its subsidiaries. Such
non-employee directors who serve at least five full years are eligible to
receive, upon their retirement from the Board of Directors, an annual benefit of
$30,000. The benefit will be payable for a period of years equal to the number
of full years of service as a director or until death occurs, whichever is
earlier. In addition, the Board, upon recommendation of the Committee on
Directors, has the discretion to grant an appropriate amount of such retirement
benefits to any non-employee director who does not otherwise qualify for a
retirement benefit under the plan. The Company also provides each non-employee
director with group term life insurance coverage of $50,000 and accidental death
and dismemberment insurance coverage of $300,000. Non-employee directors are
also eligible to purchase $50,000 of additional group term life insurance
coverage. In 1994 eight non-employee directors purchased such insurance.
The Company has established a Directors' Deferred Compensation Plan under
which directors may defer all or a portion of their compensation in either a
cash-based account or in Company Common Share Equivalent Units until retirement
or another specified date. A Company Common Share Equivalent Unit is an account,
payable in cash only, which is designed to replicate the value of an American
Express common share. During 1994 deferred amounts credited to the cash-based
account earned interest at a rate equivalent to the Moody's Average Corporate
Bond Yield, and amounts credited to the Company Common Share Equivalent Units
were valued on the basis of the price of the Company's common shares plus
reinvested dividend equivalents. At the present time six directors participate
in the plan.
In 1993 the shareholders of the Company approved a new Directors' Stock
Option Plan (the "1993 Plan"), which provides for the automatic annual grant to
each non-employee director of a nonqualified option to purchase 1,000 common
shares of the Company, as of the date of each annual meeting of shareholders at
which the director is elected or re-elected, commencing with the 1994 annual
meeting. The 1993 Plan replaced a similar plan approved by shareholders in 1987
under which options previously granted to non-employee directors remain
outstanding. The option exercise price is 100 percent of the fair market value
of a common share on the date of grant. Each option has a ten-year term and
generally becomes exercisable in three equal annual installments beginning on
the first anniversary of the date of grant. On April 25, 1994 each of the then
10
<PAGE>
incumbent non-employee directors (representing 11 of the 15 current nominees)
received options to purchase 1,000 shares at an exercise price of $29.63 per
share.
On May 31, 1994 the Company completed the spin-off of Lehman through a
special distribution to shareholders of all of the Lehman common stock owned by
the Company. Company shareholders received one share of Lehman common stock for
each five Company common shares held on May 20, 1994, the record date for the
spin-off. To reflect the spin-off of Lehman, Common Share Equivalent Units and
stock options issued under the above plans and outstanding prior to the spin-off
were adjusted by a factor of approximately 1.1404 to preserve the economic value
of the awards in accordance with the terms of these plans. For example, a
deferred compensation account which reflected 1,000 Units was adjusted to 1,140
Units. Similarly, the April 1994 grants to non-employee directors of options to
purchase 1,000 shares at an exercise price of $29.63 per share were adjusted to
become grants of options to purchase 1,140 shares at an exercise price of $25.98
per share.
In 1988 as part of its overall program to promote charitable giving as a
means to enhance the quality of life in the many communities in which the
Company's businesses operate, the Company established a Directors' Charitable
Award Program pursuant to which the Company has purchased life insurance
policies on the lives of participating directors and advisors to the Board who
previously served as directors. Upon the death of an individual director or
advisor, the Company receives a $1 million death benefit, or $500,000 in the
case of such advisors. The Company in turn will donate one-half of the
individual death benefit to the American Express Foundation and one-half to one
or more qualifying charitable organizations recommended by the individual
director or advisor. Individual directors and advisors derive no financial
benefit from this program since all charitable deductions accrue solely to the
Company. The program results in only nominal cost to the Company, and benefits
paid to the Company's Foundation reduce the amount of funding that the Company
provides to the Foundation.
During 1994 Messrs. Culver, Furlaud and Penske each received a retainer of
$8,333 for service as a director of Lehman until May 31, 1994. In addition, each
received a fee of $750 for attendance at each Lehman board meeting and a fee of
$500 for attendance at each meeting of a board committee. Until May 31,1994
Messrs. Culver, Furlaud and Penske served on the Finance Committee of Lehman, of
which committee Mr. Culver was chairman. Mr. Culver received a retainer of
$2,083 for serving as chairman of the Finance Committee. Messrs. Furlaud and
Penske each received a retainer of $1,042 for serving on the Finance Committee.
In addition, as former Lehman directors Messrs. Culver, Furlaud and Penske
are 100% vested in and are entitled to benefits under the Lehman Retirement Plan
for Non-Employee Directors, and Mr. Furlaud participated in the Lehman Deferred
Compensation Plan for Non-Employee Directors. These plans were similar to the
Company's plans described above.
Messrs. Duncan and Papone serve as directors of American Express Bank Ltd.
("AEB"), for which each receives an annual retainer of $20,000 and fees of
$1,000 for attendance at each board meeting. Mr. Duncan also receives an annual
retainer of $5,000 as chairman of the Audit Committee and $750 for attendance at
each committee meeting.
11
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Effective December 31, 1990, Mr. Papone retired as Chairman and Chief
Executive Officer of American Express Travel Related Services Company, Inc.
("TRS"). Mr. Papone is continuing to serve as a director of the Company. During
1994 Mr. Papone served as Senior Advisor and provided consulting services
individually and through his firm to the Company and TRS pursuant to two
consulting agreements providing for compensation of $18,750 per month under the
Company agreement and $250,000 for 1994 under the TRS agreement. These
arrangements are expected to continue in 1995.
In 1994 the Company paid Kissinger Associates, Inc., of which Dr.
Kissinger is chairman, $100,000 for consulting and international advisory
services. In addition, Lehman paid Kissinger Associates a fee of $20,833 per
month to provide consultation and services relating to certain areas of the
world where rapidly changing events have caused economic and political
volatility.
ELECTION OF DIRECTORS
An entire Board of Directors, consisting of 15 members, is to be elected
at the meeting, to hold office until the next Annual Meeting of Shareholders. In
the case of a vacancy, the Board of Directors, upon the recommendation of the
Committee on Directors, may elect another director as a replacement or may leave
the vacancy unfilled. Decisions regarding the election of new directors during
the year normally are based upon such considerations as the size of the Board
and the need to obtain fresh perspectives or to replace the particular skills or
experience of former directors.
During 1994 the Board of Directors met 11 times and each of the current
directors attended more than 75 percent of the meetings of the Board and of the
Board committees on which the director served, except for Mr. Lewis, who
attended 71 percent of such meetings.
Unless authority to vote is withheld, the persons specified in the
enclosed proxy intend to vote for the following nominees, all of whom have
consented to being named in this proxy statement and to serving if elected.
Although management knows of no reason why any nominee would be unable to serve,
the persons designated as proxies reserve full discretion to vote for another
person in the event any nominee is unable to serve.
The following information is provided with respect to the nominees for
directorships. Italicized wording indicates principal occupation.
DANIEL F. AKERSON Nominee for Director Age 46
Chairman and Chief Executive Officer, General Instrument Corporation, a company
engaged in developing technology, systems and product solutions for the
interactive delivery of video, voice and data, 1993 to present; President and
Chief Operating Officer, MCI Communications Corporation, a telecommunications
company, 1992 to 1993, Chief Operating Officer 1992, Executive Vice President
and Group Executive, 1990 to 1992, Senior Vice President and Chief Financial
Officer, 1987 to 1990; General Partner, Forstmann Little & Co., 1993 to present;
Director, Gulfstream Aerospace Corporation and Plasma & Materials Technologies,
Inc.; Member, Board of Directors, the Business School of the College of William
and Mary.
12
<PAGE>
ANNE L. ARMSTRONG Director since 1983 Age 67
Chairman of the Board of Trustees, Center for Strategic and International
Studies, a non-profit public policy institution, 1987 to present; Chairman,
President's Foreign Intelligence Advisory Board, 1981 to 1990; former United
States Ambassador to Great Britain and Northern Ireland; Director, General
Motors Corporation, Halliburton Company, Boise Cascade Corporation and Glaxo
Plc.; Member, Board of Overseers, Hoover Institution; Member, American Academy
of Diplomacy, Council of American Ambassadors and Council on Foreign Relations.
EDWIN L. ARTZT Director since 1994 Age 64
Chairman of the Board and Chief Executive Officer, The Procter & Gamble Company,
a worldwide consumer products company, 1990 to present; Director, Delta Air
Lines, Inc., GTE Corporation, Teradyne, Inc., American Enterprise Institute for
Public Policy Research, Juvenile Diabetes Foundation and Cincinnati Business
Committee; Trustee, Cincinnati Institute of Fine Arts; Member, The Business
Council and The Business Roundtable; International Councillor, Center for
Strategic and International Studies.
WILLIAM G. BOWEN Director since 1988 Age 61
President, The Andrew W. Mellon Foundation, a not-for-profit corporation engaged
in philanthropy, 1988 to present; former President, Princeton University;
Director, Merck, Inc., Reader's Digest Association Inc. and The Rockefeller
Group, Inc.; Member, Board of Trustees, Denison University.
DAVID M. CULVER Director since 1980 Age 70
Chairman, CAI Capital Corporation, a Canadian-based equity investment fund, 1990
to present; Chairman, D. Culver & Co. Investments, Inc., a private investment
firm, 1989 to present; former Chairman and Chief Executive Officer, Alcan
Aluminium Limited; Director, The Seagram Company Ltd.; Honorary Chairman,
Business Council on National Issues; Member, Advisory Council of the Institute
of International Studies of Stanford University, Board of Governors of The
Joseph H. Lauder Institute of Management and International Studies (University
of Pennsylvania) and Board of Trustees of the Lester B. Pearson College of the
Pacific.
CHARLES W. DUNCAN JR. Director since 1981 Age 68
Private Investor, 1985 to present; Director, American Express Bank Ltd.,
Chemical Banking Corporation, The Coca-Cola Company, Newfield Exploration
Company, Panhandle Eastern Corporation, Texas Commerce Bancshares, Inc., United
Technologies Corporation and The Robert A. Welch Foundation; Chairman of the
Board of Governors, Rice University; Member, Council on Foreign Relations.
HARVEY GOLUB Director since 1990 Age 56
Chairman and Chief Executive Officer, American Express Company, August 1993 to
present, President and Chief Executive Officer, February 1993 to August 1993,
President, 1991 to 1993, Vice Chairman, 1990 to 1991; Chairman and Chief
Executive Officer, American Express Travel Related Services Company, Inc., 1991
13
<PAGE>
to present; Chairman, American Express Financial Corporation (previously known
as IDS Financial Corporation), a national financial planning, insurance and
investment advisory firm, 1990 to 1992, Chairman and Chief Executive Officer,
1990 to 1991, President and Chief Executive Officer, 1984 to 1990; Director,
American Express Bank Ltd.; Member, Board of Trustees, Carnegie Hall, New York
City Partnership, New York Chamber of Commerce and Industry and United Way of
New York City; Member, President's Commission for the Arts and the Humanities
and The Business Roundtable.
BEVERLY SILLS GREENOUGH Director since 1990 Age 65
Chairman, Lincoln Center for the Performing Arts, 1994 to present; Managing
Director, Metropolitan Opera, 1991 to present; General Director and President,
New York City Opera, 1979 to 1990; Director, Time Warner Inc., Human Genome
Sciences, Inc. and Lincoln Center Theater; Member, President's Task Force on the
Arts.
F. ROSS JOHNSON Director since 1986 Age 63
Chairman and Chief Executive Officer, RJM Group, a management advisory and
investment firm, 1989 to present; Director, National Service Industries, Inc.,
Power Corporation of Canada, Archer Daniels Midland Company and Noma Industries
Ltd.; Chairman, Bionaire, Ltd.; former Chairman, Economic Club of New York.
VERNON E. JORDAN JR. Director since 1977 Age 59
Senior Partner, Akin, Gump, Strauss, Hauer & Feld, L.L.P., attorneys,
Washington, D.C. and Dallas, Texas, 1982 to present; Director, Bankers Trust
Company, Bankers Trust New York Corporation, Xerox Corporation, J.C. Penney
Company Inc., Dow Jones & Company, Inc., Corning, Incorporated, Revlon Group,
Inc., Ryder Systems, Inc., Sara Lee Corporation and Union Carbide Corporation;
Trustee, The Brookings Institution, Ford Foundation and Taconic Foundation;
Member, Board of Governors, Joint Center for Political and Economic Studies;
Chairman of the Board, National Academy Foundation.
HENRY A. KISSINGER Director since 1984 Age 71
Chairman, Kissinger Associates, Inc., an international consulting firm, 1982 to
present; former Secretary of State of the United States; former Chairman,
National Bipartisan Commission on Central America; Director, Continental Grain
Corporation, CBS Inc., Revlon Group, Inc., Freeport-McMoran, Inc. and Trust
Company of the West; Counselor, International Advisory Committee of The Chase
Manhattan Bank and Chairman, International Advisory Board of American
International Group Inc.; Honorary Governor, Foreign Policy Association;
Counselor and Trustee, Center for Strategic and International Studies; Trustee,
Metropolitan Museum of Art.
DREW LEWIS Director since 1986 Age 63
Chairman and Chief Executive Officer, Union Pacific Corporation, a
transportation and energy company, 1987 to present; Director, Ford Motor
Company, AT&T Corp. and FPL Group, Inc.
14
<PAGE>
ALDO PAPONE Director since 1990 Age 62
Senior Advisor, American Express Company, 1991 to present; Chairman and Chief
Executive Officer, American Express Travel Related Services Company, Inc., 1989
to 1990; Director, American Express Bank Ltd., IMRS Inc., Springs Industries,
Inc., Body Shop International, Hospital for Special Surgery and The National
Corporate Theatre Fund.
FRANK P. POPOFF Director since 1990 Age 59
Chairman and Chief Executive Officer, The Dow Chemical Company, a producer of
chemicals and chemical products, 1992 to present, President and Chief Executive
Officer, 1987 to 1992; Director, Marion Merrell Dow Inc., DowElanco, Dow Corning
Corporation, U S WEST, Inc. and Chemical Financial Corporation; Member, Indiana
University School of Business Dean's Advisory Council, Chemical Manufacturers
Association, Policy Committee, The Business Roundtable, and The Business
Council.
JEFFREY E. STIEFLER Director since 1993 Age 48
President, American Express Company, August 1993 to present; President and Chief
Executive Officer, American Express Financial Corporation, 1991 to 1993,
President 1990 to 1991, Executive Vice President, Sales and Marketing 1987 to
1990; Director, American Express Bank Ltd., National Computer Systems, Inc., the
University of Minnesota Carlson School of Business and The Children's Theatre
Company.
BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation and Benefits Committee of the Company's Board of
Directors (the "Committee") administers the Company's executive officer
compensation programs. The Committee is composed entirely of non-employee
directors who are not eligible to participate in any of the Company's executive
compensation programs. The Committee has access to independent compensation
consultants and data.
OVERVIEW AND PHILOSOPHY
The objectives of the Company's executive compensation programs have been
to:
-- Attract, motivate and retain the highest quality executives.
-- Align their financial interests with those of the Company's long-term
investors.
-- Incent them to achieve tactical and strategic objectives in a manner
consistent with the Company's corporate Values.
In furtherance of these objectives, the Company's executive compensation
policies and programs are designed to:
-- Focus participants on high priority goals to increase shareholder
value.
-- Reward American Express Quality Leadership ("AEQL"). AEQL is the
Company's total quality management process to meet or exceed the
expectations of its three key constituencies: shareholders, customers
and employees.
15
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-- Encourage behaviors that exemplify the Company's core Values relating
to customers, quality of performance, employees, integrity, teamwork
and good citizenship.
-- Assess performance based on results and pre-set goals. Establish goals
that link the business activities of each individual and team to the
goals of the applicable business unit and the Company.
-- Increase executive stock ownership to promote a proprietary interest in
the success of the Company.
In November 1993 the Committee adopted mandatory stock ownership levels
for approximately 175 senior executives. Each executive officer of the Company
is required over time to attain an ownership level of Company shares with value
equal to a multiple of base salary at January 1994, subject to adjustment. For
executive officers, the applicable multiple ranges from two times to five times
base salary, depending on job title and responsibilities. For Mr. Golub, the
multiple is five times his base salary. Restricted stock awards do not count
toward fulfilling the requirement.
For each of 1994 and 1995 the Committee adopted a Pay for Performance
Deferral Program, which permits eligible participants to defer annual
compensation up to a maximum of one times base salary. The program annually
credits interest equivalents to, or reduces the value of, deferred amounts
according to a schedule based on the Company's reported annual return on equity
("ROE"). The Committee may adjust the schedule for major accounting changes, if
the Company's ROE objectives change significantly, or if the annual return on a
benchmark treasury note falls below or rises above a specified level. Deferred
balances are reduced in value if the annual ROE is zero or less for a given
year. If a participant elects to defer any compensation under this program, he
or she must defer such compensation for at least five years. The Committee may
delay payments under the program until they are fully deductible under Section
162(m) of the U.S. Internal Revenue Code of 1986, as amended (the "Code").
Deferred amounts are linked to Company performance until paid out.
Section 162(m) of the Code limits the Company's tax deduction to $1
million per year (the "Million Dollar Cap") for certain compensation paid to
each of its Chief Executive Officer ("CEO") and the four highest compensated
executives other than the CEO named in the proxy statement (the "covered
executives"). Proposed regulations issued under the Code exclude from the
Million Dollar Cap compensation that is calculated based on attainment of
pre-established, objective performance goals, if certain other requirements are
met. The Committee's policy is to structure compensation awards for covered
executives that will be deductible without limitation where doing so will
further the purposes of the Company's executive compensation programs. However,
the Committee also considers it important to retain flexibility to design
compensation programs that recognize a full range of performance criteria
important to the Company's success, even where compensation payable under such
programs may not be fully deductible.
EXECUTIVE OFFICER COMPENSATION FOR 1994
Executive officer compensation for 1994 included base salary, annual
incentive bonus awards and long-term incentive awards. The Committee established
base salary, incentive bonus and long-term incentive award reference points for
each executive officer position based on job responsibilities and a review of
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<PAGE>
the compensation practices for comparable jobs at other major corporations that
compete with the Company in its primary lines of business or for executive
talent, or are of comparable size and scope of operations. A comparative group
of over 50 companies was selected with the help of an outside compensation
consultant, and includes companies in the Standard & Poor's 500 Index and
companies in the Standard & Poor's Financials. Actual awards were based
primarily on the Committee's discretionary assessment of Company or business
unit performance and individual performance.
The Committee established a salary reference point for each executive
officer position within the range of the 50th to 65th percentiles of
compensation for comparable jobs in the comparative group, except that the
reference point may fall outside the range to reflect relative job
responsibilities. Merit increases in base salary are based on individual
performance. In 1994 the Committee continued the practice of extending the time
interval between merit increases of base salary to 18 months or longer, except
in the case of promotions or other job changes or where warranted by special
circumstances.
The Committee established an annual incentive target for 1994 for each
executive officer within the range of the 50th to 65th percentiles of
compensation for comparable jobs in the comparative group, except that the
target may fall outside the range to reflect relative job responsibilities. (For
executive officers other than Messrs. Golub and Stiefler, guidelines for paying
cash incentive awards range from 0-200% of target based on performance, with
Committee discretion to make awards outside the guidelines for unusual
performance.) The amount of each executive's annual incentive award for 1994 was
determined by the Committee based on its assessment of the executive's
contributions to results in the following related performance areas: increase in
shareholder value (as indicated, for example, by shareholder return, earnings
growth and return on equity), customer satisfaction (as indicated, for example,
by customer satisfaction measures, client retention and growth in products and
services), employee satisfaction (as indicated, for example, by the Company's
employee values survey results), implementation of AEQL initiatives (as
indicated, for example, by process changes that achieve significant results for
the Company) and achievement of reengineering initiatives (as indicated, for
example, by cost savings). The Committee exercised its judgment in determining
each executive officer's award giving the greatest emphasis to results that
contribute to increasing shareholder value at the business unit level (for
business unit officers) and at the Company level (for Company officers).
In March 1994 the Committee granted 1994 incentive awards to Messrs. Golub
and Stiefler as their annual incentive compensation component. A target value
for each award was established with reference to the 50th and 65th percentiles
of compensation for comparable jobs in the comparative group and the relative
responsibilities of the positions. The awards were structured to meet the
requirements for exclusion from the Million Dollar Cap. As such, each award
provides for a maximum award amount for specified performance, determined on a
formula basis by application of a performance grid that measures the Company's
1994 ROE and 1994 growth in earnings per share from continuing operations. The
Committee retained the discretion to adjust the formula-derived award values
downward after certifying that the performance goals set forth in the grid had
been met. In exercising its discretion to determine the final value of each
17
<PAGE>
award, the Committee assessed performance in the same performance areas
described above relating to annual incentive awards for other executive
officers. The named executives were awarded bonuses above target, ranging from
1.3 to approximately 1.7 times target.
Long-term incentive compensation awards are granted annually and are
designed to provide competitive, performance-based compensation that links value
to Company, business unit and individual performance over multi-year performance
periods. In 1994 such long-term compensation consisted of performance grant
awards (PG-V awards) and ten-year stock option awards with an exercise price
equal to fair market value on the date of grant. The Company expects that
compensation derived from the PG-V and stock option awards will be fully
deductible by the Company and excluded from the limitations of the Million
Dollar Cap. For each executive officer the Committee established reference
points for these awards within the range of the 50th to 65th percentiles of the
comparative group, except that the reference points may fall outside the range
to reflect relative job responsibilities. In 1994 the Committee granted awards
for the named executives that were consistent with the award reference points.
The size and grant value of actual awards were determined by the Committee after
reviewing the individual's annual performance, applicable award guidelines, size
of previous awards, and relative contributions of the individuals. The number or
value of options currently held by an executive is not taken into account in
determining the number of stock option shares granted.
The PG-V awards are long-term performance awards with two components
valued at the end of the January 1994 to December 1996 performance period. PG-V
awards made to the Company's executive officers were structured to meet the
requirements for exclusion from the limitations of the Million Dollar Cap. One
component is valued based on achievement of specified Company or business unit
targets for cumulative earnings (or earnings per share) and average return on
equity. The second component is valued based on the Company's average daily
share price for the 60-trading day period prior to the date of the Committee's
meeting in February 1997. Minimum performance levels for cumulative earnings and
ROE are required for the second component to have any value. In determining the
actual final value of the awards, the Committee has retained the discretion to
adjust downward the formula value of the award.
Nonqualified stock option awards were granted to link executive
compensation to the creation of incremental shareholder value. The ten-year
nonqualified stock option awards reward executives only to the extent that the
Company's share price increases for all shareholders. Each stock option has an
exercise price per share set at the fair market value per share as of the grant
date. Generally, each option becomes fully exercisable over a period of three
years after grant. At exercise of a stock option, an executive is expected under
Company policy to hold the acquired shares, except as required to pay taxes in
connection with the exercise or other identified reasons. The Committee has
never repriced stock option awards.
The Committee may also grant bonus, restricted stock, stock option or
other long-term incentive awards to executive officers to recognize special
individual contributions or job promotions, to attract new hires from outside
the Company or in case of other special circumstances. In 1994 the Committee
granted a restricted stock award to Mr. Chenault in recognition of special
contributions. The Committee may also accelerate vesting of awards in cases
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<PAGE>
where the circumstances so warrant. The Company's executive officers also
participate in pension, incentive savings, perquisite and other programs. These
programs are designed to be competitive with the practices at other major
corporations.
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER FOR 1994
In February 1995 the Committee awarded Mr. Golub $2,040,000 as payout of
his 1994 incentive award. The formula-derived maximum value of the award was
determined based on Company ROE for 1994 of 20.3 percent and growth in Company
earnings per share from continuing operations of 16.5 percent in 1994. The
Committee certified that these performance goals had been satisfied. Under the
terms of the award, 1994 ROE and earnings were based on continuing operations
and excluded from shareholders' equity the effect of SFAS No. 115, which
requires mark-to-market valuations of certain investments, and the Company's
investment in Lehman Brothers Holdings Inc., and 1993 earnings excluded the gain
on the sale of stock of First Data Corporation. In determining the actual award,
the Committee assessed Company performance in 1994, Mr. Golub's personal role in
achieving that performance and the economic and competitive environment in which
that performance was achieved. The Committee's assessment included the following
accomplishments against the priorities set for the year:
-- Total shareholder return (share price appreciation plus dividends) of
12.5% from year-end 1993 to year-end 1994, compared with total return
of 1.4% for the S&P 500 Index and (3.5)% for the S&P Financials.
-- Increased shareholder value, as indicated by ROE and growth in earnings
per share, continued strengthening of the Company's balance sheet and a
return to top-line revenue growth in TRS.
-- Development and implementation of a company-wide vision and strategy
based on the American Express Brand, including the successful spin-off
of Lehman to shareholders, expansion of traditional businesses
associated with the brand, the rebranding of IDS Financial Services
under the name of American Express Financial Advisors, and development
of a set of operating principles to guide company-wide action.
-- Continued progress in meeting TRS' strategic priorities: improving
relationships with service establishments; building Cardmember loyalty;
continuing to build consumer lending, Corporate Card, Travel and
Travelers Cheque businesses; developing the Purchasing Card business;
and continuing to build American Express Financial Advisors.
Accomplishments included the successful introduction of several new
Card products and services, the improvement of merchant coverage and
the acquisition of three major travel businesses.
-- Continued significant attention on identifying and closing gaps in
employee satisfaction, which has a direct impact on the Company's
ability to enhance many of its brand attributes, including quality
customer service, integrity, trust and security. Increased employee
satisfaction was measured by improvements in the Company's 1994
employee values survey, notwithstanding the Company's reengineering
initiatives.
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-- Significant progress in reengineering the Company's core business
processes and operating structure. Under Mr. Golub's leadership, in
October 1994 the Company announced the second phase of its
reengineering program which aims to achieve best-in-class economics for
all of the Company's significant services and business processes. Each
of the Company's significant businesses has developed strategic quality
plans with specific actions to close gaps with the Company's key
constituencies: employees, customers and shareholders. Mr. Golub
developed and made progress in implementing "health of the franchise"
measures throughout the organization to identify and close key customer
gaps.
In the Committee's judgment, much of the credit for the Company's
accomplishments in 1994 and the continued improvement in the Company's
performance is directly attributable to Mr. Golub's leadership. In recognition
of this, Mr. Golub's 1994 incentive award was 1.7 times the target value
established for such award.
In February 1995 the Committee increased Mr. Golub's annual salary by
12.5% to $900,000, his first salary increase since February 1993. Mr. Golub's
salary increase was based on the Committee's assessment of his accomplishments.
In February 1994 the Committee granted Mr. Golub long-term incentive
awards. The awards consisted of a ten-year nonqualified stock option to purchase
200,000 common shares (adjusted to 228,093 shares as a result of the spin-off of
Lehman) at fair market value at the date of grant and a PG-V award with a grant
value of $1,000,000. The stock option becomes exercisable over three years. The
PG-V award earns value as described on page 25 and vests after three years.
These awards were consistent with the award reference points established by the
Committee as described above.
The three-year performance period for PG-III awards granted in February
1992 ended in December 1994. In accordance with the award provisions, Mr.
Golub's PG-III award was valued based on the Company's 1992-1994 ROE and
earnings per share results, and the average share price for the 60 trading days
ending with the February 1995 Committee meeting. Under the award terms, the
Committee adjusted applicable financial results of the Company to exclude the
effect of unusual events (including the Lehman spin-off, gains and losses from
dispositions, accounting changes and restructuring activities), and adjusted
individual payouts to reflect major job promotions and/or contributions to AEQL.
Mr. Golub's PG-III payout reflected these adjustments, consistent with other
participants, including recognition of his promotion to CEO during the
performance period.
COMPENSATION AND
BENEFITS COMMITTEE
Roger S. Penske, Chairman
Anne L. Armstrong
Richard M. Furlaud
F. Ross Johnson
Vernon E. Jordan Jr.
Frank P. Popoff
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The following table shows, for the fiscal years ending December 31, 1994,
1993 and 1992, the cash and other compensation paid or accrued and certain
long-term awards made to the named executives for services in all capacities.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION LONG-TERM COMPENSATION
------------------------------- ----------------------------------
AWARDS(3) PAYOUTS
-------------------- ----------
OTHER RESTRICTED LONG-TERM
NAME AND PRINCIPAL ANNUAL STOCK OPTIONS/ INCENTIVE ALL OTHER
POSITION AT COMPENSA- AWARDS SARs PAYOUTS COMPENSA-
DECEMBER 31, 1994 YEAR SALARY($) BONUS($) TION($)(2) ($)(4) (# SHARES) ($)(5) TION($)(6)
------------------ ---- -------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
H. Golub............. 1994 $800,000 $2,040,000(1) $236,729 0 228,093 $1,799,872 $167,474
Chairman and Chief 1993 776,923 1,850,000 106,086 $3,390,000 456,166 907,842 228,822
Executive Officer 1992 650,000 900,000 7,346 0 128,297 907,842 189,587
J.E. Stiefler........ 1994 575,000 1,428,000(1) 252,187 0 159,658 1,647,497 144,349
President 1993 496,635 1,202,500 280,287 1,866,500 119,743 456,970 323,315
1992 425,000 925,000 4,438 0 62,723 456,970 55,332
J.S. Linen........... 1994 550,000 850,000 190,733 0 62,723 1,360,226 142,879
Vice Chairman 1993 550,000 660,000 55,307 197,750 62,723 393,870 181,846
1992 530,769 650,000 61,779 534,375 68,425 393,870 352,746
K.I. Chenault........ 1994 475,000 785,000 -- 442,498 79,829 1,008,132 69,643
President, 1993 443,269 625,000 -- 475,000 79,829 84,752 44,718
U.S.A.-Travel 1992 -- -- -- -- -- -- --
Related Services
D.R. Hubers.......... 1994 400,000 660,000 -- 0 79,829 705,175 79,823
President and Chief 1993 346,923 450,000 -- 468,272 49,037 261,126 65,964
Executive Officer- 1992 -- -- -- -- -- -- --
American Express
Financial Corporation
</TABLE>
------------
(1) Paid pursuant to 1994 incentive awards described on page 17.
(2) Amounts reported in this column for 1994 reflect perquisites, other
personal benefits and amounts reimbursed for the payment of taxes.
Included is the cost to the Company of the following: for Mr. Golub, local
travel allowance of $71,261 (plus $43,739 for the payment of related
taxes) and personal travel expenses of $79,076; for Mr. Stiefler, local
travel allowance of $84,661 (plus $51,339 for the payment of related
taxes) and personal travel expenses of $79,387; and for Mr. Linen, local
travel allowance of $84,661 (plus $51,339 for the payment of related
taxes).
(3) To reflect the spin-off of Lehman described on page 11, stock-based awards
issued under the 1979 and 1989 Long-Term Incentive Plans and outstanding
prior to the spin-off were adjusted by a factor of approximately 1.1404 to
preserve the economic value of the awards. For example, an award of 1,000
shares of restricted stock or stock incentive units contained as part of
Portfolio Grant awards was changed to 1,140 shares or units. Similarly, a
stock option to purchase 1,000 shares at an exercise price of $29.63 per
21
<PAGE>
share was changed to an option to purchase 1,140 shares at an exercise
price of $25.98 per share. The numbers of shares underlying grants of
restricted stock, stock options and stock incentive units and the exercise
prices of stock options are shown in the tables on pages 21 through 25 as
adjusted for the spin-off.
(4) Restricted stock awards are valued in the table above at their fair market
value based on the per share closing price of the Company's common shares
on the New York Stock Exchange on the date of grant. Restricted stock
holdings as of December 31, 1994 and their fair market value based on the
per share closing price of $29.50 on December 30, 1994 were as follows:
NUMBER OF VALUE ON
NAME RESTRICTED SHARES DECEMBER 31, 1994
---- ----------------- -----------------
H. Golub ....................... 132,858 $3,919,311
J.E. Stiefler .................. 76,979 2,270,881
J.S. Linen ..................... 50,748 1,497,066
K.I. Chenault .................. 49,607 1,463,407
D.R. Hubers .................... 22,466 662,747
Dividends are payable on the restricted shares to the extent and on the
same date as dividends are paid on all other Company common shares. In
1993 Mr. Golub was awarded 114,041 shares of restricted stock which
provided for vesting in equal installments on the first four anniversaries
of the date of grant, and Mr. Stiefler was awarded 57,021 shares of
restricted stock which provided for vesting in equal installments on the
second through fifth anniversaries of the date of grant.
(5) Includes payouts of performance grant award PG-III. Sixty percent of the
initial value of the PG-III awards was based on achievement of cumulative
earnings and average return on equity targets for the business segments of
the Company and for the Company on a consolidated basis for the period
January 1992 to December 1994, weighted based on the executive's
responsibilities. Forty percent was based on stock incentive units whose
value was measured by the Company's share price during the 60 trading days
prior to February 27, 1995. The initial value of the awards was adjusted
by the Committee as described on page 20.
(6) Amounts reported under "All Other Compensation" for 1994 include the
dollar value of the following:
<TABLE>
<CAPTION>
EMPLOYER
CONTRIBUTIONS ABOVE-MARKET
PAYMENTS UNDER PROFIT EARNINGS ON VALUE OF
UNDER CAPITAL SHARING, SAVINGS DEFERRED SPLIT-DOLLAR
PARTNERS I AND II AND RELATED PLANS COMPENSATION LIFE INSURANCE
----------------- ----------------- ------------ --------------
<S> <C> <C> <C> <C>
H. Golub ............... $70,065 $18,615 $14,113 $64,681
J.E. Stiefler .......... 96,930 20,975 2,042 24,402
J.S. Linen ............. 93,744 9,542 8,731 30,862
K.I. Chenault .......... 29,079 18,802 1,021 20,741
D.R. Hubers ............ 19,386 26,039 1,234 33,164
</TABLE>
Capital Partners I and Capital Partners II are limited partnerships
established by Lehman in 1985 and 1988, respectively. Pursuant to these
partnerships, senior officers were offered the opportunity to invest in a
22
<PAGE>
portfolio of high risk investments. An affiliate of Lehman is general
partner and invested most of the capital of the partnerships. Amounts
reported reflect income distributions and distributions related to the
liquidation of assets.
The following table contains information concerning the grant of
nonqualified stock options in tandem with stock appreciation rights (SARs) in
1994 to the named executives:
OPTION/SAR GRANTS IN 1994
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS (1)
---------------------------------------------------------
NUMBER OF % OF TOTAL
SECURITIES OPTIONS/SARs
UNDERLYING GRANTED TO EXERCISE GRANT DATE
OPTIONS/SARs EMPLOYEES PRICE PRESENT
NAME GRANTED (#) IN 1994 ($/SH) EXPIRATION DATE VALUE $(2)
---- ------------ ------------ ----------- --------------- ----------
<S> <C> <C> <C> <C> <C>
H. Golub...................... 228,083 3.9% $25.977 3/28/04 $1,762,000
J.E. Stiefler ................ 159,658 2.7 25.977 3/28/04 1,233,400
J.S. Linen ................... 62,723 1.1 25.868 2/28/04 444,950
K.I. Chenault ................ 79,829 1.4 25.868 2/28/04 566,300
D.R. Hubers................... 79,829 1.4 25.868 2/28/04 566,300
</TABLE>
------------
(1) Stock options were granted in February 1994 to Messrs. Linen, Chenault and
Hubers and in March 1994 to Messrs. Golub and Stiefler. The numbers of
shares underlying option grants and the exercise prices shown reflect
adjustments made as a result of the Lehman spin-off as described on page
21. Options become exercisable in cumulative annual installments of 331/3
percent per year on each of the first three anniversaries of the grant
date. These options were granted in tandem with SARs. SARs can be
exercised only in very limited circumstances, such as when the option is
about to expire, when the participant retires, or, for executive officers,
when the related stock option becomes fully exercisable and then only to
the extent of 50 percent of the underlying shares. Upon exercise of an
SAR, the holder may receive cash, common shares or other consideration
equal in value to (or, at the discretion of the Committee, less than the
value of) the difference between the option price and the fair market
value of the Company's common shares, and the appropriate portion or all
of the related stock option is cancelled. Upon termination or exercise of
any stock option, any tandem SAR automatically terminates.
(2) These values were calculated as of the respective grant dates using a
variation of the Black-Scholes option pricing model. The model is a
complicated mathematical formula premised on immediate exercisability and
transferability of the options, which are not features of the Company's
options granted to executive officers and other employees. The values
shown are theoretical and do not necessarily reflect the actual values the
recipients may eventually realize. Any actual value to the officer or
other employee will depend on the extent to which market value of the
Company's stock at a future date exceeds the exercise price. In addition
to the stock prices at times of grants and the exercise prices, which are
identical, and the ten-year term of each option, the following assumptions
were used to calculate the values shown for options granted in February
23
<PAGE>
and March 1994, respectively: expected dividend yield (3.74 percent and
3.73 percent-- the historic average yield for the most recent 60 months
prior to the grant dates), expected stock price volatility (.2764 and
.2901--the most recent volatility for the month-end stock prices of the
Company's common shares for the 60 months prior to the grant dates), and
risk-free rate of return (5.87 percent and 6.47 percent-- equal to the
yield on a zero-coupon ten-year bond on the option grant dates). The
assumptions and the calculations used for the model were provided by an
independent consulting firm.
The following table sets forth information for the named executives
regarding the exercise of stock options and/or SARs during 1994 and unexercised
options and SARs held as of the end of 1994:
<TABLE>
<CAPTION>
AGGREGATED OPTION/SAR EXERCISES IN 1994 AND
YEAR-END 1994 OPTION/SAR VALUES
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING IN-THE-MONEY
UNEXERCISED OPTIONS/SARs OPTIONS/SARs
AT DECEMBER 31, 1994 AT DECEMBER 31, 1994(1)
------------------------ ---------------------------
SHARES
ACQUIRED VALUE
ON EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
NAME (#) ($) (#) (#) ($) ($)
---- --------- ------- ---------- ------------ ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
H. Golub................. 0 0 621,906 574,960 $3,833,345 $2,701,406
J.E. Stiefler............ 22,000 $145,750 237,965 260,396 1,546,122 993,983
J.S. Linen............... 32,000 496,992 357,329 127,348 2,028,229 670,873
K.I. Chenault............ 624(2) 10,701 244,732 148,255 1,245,782 619,716
D.R. Hubers.............. 11,404(2) 101,883 110,542 119,364 533,243 432,699
</TABLE>
------------
(1) Based on the $29.50 closing price of the Company's common shares on the
New York Stock Exchange on December 30, 1994.
(2) These stock options, which were exercised after May 31, 1994, reflect
adjustments for the Lehman spin-off as described on page 21.
24
<PAGE>
The following table sets forth information concerning long-term incentive
plan awards made in 1994 to the named executives:
<TABLE>
<CAPTION>
LONG-TERM INCENTIVE PLANS -- AWARDS IN 1994
ESTIMATED FUTURE PAYOUTS
UNDER NON-STOCK PRICE-BASED COMPONENT(1)
----------------------------------------
DOLLAR VALUE($)/ PERFORMANCE
NAME NUMBER OF UNITS(1) PERIOD THRESHOLD ($) TARGET ($) MAXIMUM ($)
----- ------------------ ----------- ------------ ---------- ------------
<S> <C> <C> <C> <C> <C>
H. Golub.............. $600,000 Financial Incentive 1994-96 $450,000 $900,000 $2,700,000
14,695 Stock Incentive Units 1994-96 -- -- --
----------------------------------------------------------------------------------------------------------
J.E. Stiefler......... $420,000 Financial Incentive 1994-96 315,000 630,000 1,890,000
10,287 Stock Incentive Units 1994-96 -- -- --
----------------------------------------------------------------------------------------------------------
J.S. Linen............ $330,000 Financial Incentive 1994-96 247,500 495,000 1,485,000
8,082 Stock Incentive Units 1994-96 -- -- --
----------------------------------------------------------------------------------------------------------
K.I. Chenault......... $285,000 Financial Incentive 1994-96 213,750 427,500 1,282,500
6,980 Stock Incentive Units 1994-96 -- -- --
----------------------------------------------------------------------------------------------------------
D.R. Hubers........... $285,000 Financial Incentive 1994-96 213,750 427,500 1,282,500
6,980 Stock Incentive Units 1994-96 -- -- --
----------------------------------------------------------------------------------------------------------
</TABLE>
(1) Reflects Performance Grant-V awards ("PG-V awards") granted in February
and March 1994 for the January 1994 to December 1996 performance period.
PG-V awards provide competitive compensation to retain participants in the
employment of the Company and incentives toward the achievement of Company
and business unit goals that are important to shareholders. Each PG-V
award contains two components shown in this table, Financial Incentive and
Stock Incentive Unit components. The Financial Incentive component will
earn value based on achievement of the cumulative earnings (or earnings
per share) and average return on equity targets for a business segment of
the Company or the Company on a consolidated basis, depending on whether
the executive is employed by a business unit or the Company. The
threshold, target or maximum amounts may be earned if varying combinations
of the pre-established cumulative earnings (or earnings per share) and
average return on equity targets are met. The component will not earn
value unless minimum levels of these performance measures are achieved
during the performance period. Each Stock Incentive Unit will earn value
equal to the average of the high and low sales prices of the Company's
common shares for the 60 trading days prior to the Committee's meeting in
February 1997. Minimum performance levels for cumulative earnings and
return on equity are required for the Stock Incentive Unit to have any
value. The number of Stock Incentive Units is shown as adjusted for the
Lehman spin-off as described on page 21.
PG-V awards granted to the Company's executive officers were structured to
meet proposed IRS regulations for deductibility of "performance-based"
compensation under the Million Dollar Cap. Under these regulations,
compensation is performance-based if it is paid pursuant to objective
performance goals and certain other requirements are met. The regulations
permit the value produced by these goals to be adjusted downward only. The
25
<PAGE>
threshold, target and maximum estimated future payouts for the Financial
Incentive component of the PG-V award were established relative to the
dollar grant value of this component to provide the Committee with
flexibility to adjust the values produced by both components of the award
downward and still maintain the deductibility of payments under the
awards. The final value of the awards (including downward adjustments)
will be determined by the Committee based on its assessment of factors
such as Company, business unit and individual performance for the 1994-96
performance period.
PERFORMANCE GRAPH
The graph below compares the cumulative total shareholder return on the
common shares of the Company for the last five fiscal years with the cumulative
total return on the Standard & Poor's 500 Index and the Standard & Poor's
Financials over the same period assuming the investment of $100 in the Company's
common shares, the S&P 500 Index and the S&P Financials on December 31, 1989 and
the reinvestment of all dividends. On May 31, 1994 the Company distributed to
shareholders all of the Lehman common stock owned by it as a special dividend.
The graph below accounts for this distribution as though it were paid in cash
and reinvested in common shares of the Company.
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN
AMONG AMERICAN EXPRESS COMPANY, S&P 500 INDEX,
AND S&P FINANCIALS
(The table below contains the data points used in the Performance Graph
which appears in the printed Proxy Statement.)
Year-End
Data 1989 1990 1991 1992 1993 1994
------- ---- ---- ---- ---- ---- ----
American
Express $100.00 $61.50 $ 63.69 $ 79.87 $102.69 $115.54
S&P 500 $100.00 $96.89 $126.28 $135.88 $149.52 $151.55
Index
S&P
Financials $100.00 $78.58 $118.31 $145.88 $161.97 $156.36
26
<PAGE>
PENSION BENEFITS
American Express Company. The American Express Retirement Plan is a
funded, qualified, noncontributory, defined benefit pension plan that provides
benefits for eligible employees. The American Express Supplementary Pension Plan
is an unfunded, nonqualified deferred compensation arrangement that primarily
provides benefits that cannot be payable under a qualified plan like the
American Express Retirement Plan because of the maximum limitations imposed on
such plans by the Code. Together these two plans are called the American Express
pension plans. Eligible employees, including employees of the Company, AEB, TRS
and certain other affiliates, participate in the American Express pension plans.
AMERICAN EXPRESS PENSION PLANS
<TABLE>
<CAPTION>
AVERAGE
COMPENSATION FOR 5 HIGHEST
PAID CONSECUTIVE YEARS IN LAST 10
YEARS OF SERVICE 15 YEARS 20 YEARS 25 YEARS 30 YEARS 35 YEARS
--------------------------------- -------- -------- -------- -------- -----------
<S> <C> <C> <C> <C> <C>
$ 700,000.................... $120,750 $166,250 $211,750 $257,250 $ 302,750
1,100,000.................... 189,750 261,250 332,750 404,250 475,750
1,500,000.................... 258,750 356,250 453,750 551,250 648,750
1,900,000.................... 327,750 451,250 574,750 698,250 821,750
2,300,000.................... 396,750 546,250 695,750 845,250 994,750
2,700,000.................... 465,750 641,250 816,750 992,250 1,167,750
</TABLE>
The table above illustrates the aggregate annual pension benefits provided
by the American Express Retirement Plan, as amended, and the American Express
Supplementary Pension Plan, as amended, for the benefit of eligible employees
upon retirement at age 65, assuming the employee will receive a straight life
annuity on a monthly basis. Certain optional forms of benefit payments may be
available. Reduced benefits may begin after separation as early as age 55 for
employees who have completed at least 10 years of service. Unreduced early
retirement benefits are available for employees who meet certain age and service
requirements. The benefits shown in the table are not subject to reduction for
Social Security benefit amounts and are based on years of service after November
30, 1989.
The annual pension benefits under these plans are based on a participant's
average base salary plus bonus for the five highest paid consecutive years
during his or her last ten years before retirement or employment termination.
Generally, benefits vest for employees after five years of service. Prior to
December 1, 1989, retirement benefits were based on 1.6 percent of an employee's
average final compensation, reduced by 1.4 percent of an employee's primary
Social Security benefit, for each year of service. Beginning December 1, 1989,
retirement benefits are based on one percent of an employee's average final
compensation for each of the first five years of service, 1.15 percent of such
compensation for each of the next five years, and 1.3 percent of such
compensation for all years of service thereafter. As of January 1, 1995, Messrs.
Golub, Stiefler, Linen and Chenault had 4, 1, 24 and 13 years of credited
service, respectively, for purposes of computing their benefits under these
plans.
27
<PAGE>
At the time of Mr. Golub's employment by the Company in 1983, the Company
entered into a separate unfunded, nonqualified deferred compensation arrangement
with him. Under this arrangement, at the time of his retirement the Company will
calculate the annual pension benefits that would have been payable to him had he
commenced participation in the American Express Retirement Plan and
Supplementary Pension Plan effective November 1, 1978 (which includes an
additional five years of credited service above his actual service with the
Company (four years) and American Express Financial Corporation ("AEFC") (seven
years), in order to compensate him for benefits he forfeited on termination of
his previous employment). For purposes of this arrangement, Mr. Golub would thus
be credited with a total of 16 years of credited service as of January 1, 1995.
The Company will pay Mr. Golub on an unfunded basis to the extent of any
difference between such calculation and amounts he is eligible to receive under
the American Express pension and AEFC retirement plans based on his actual
credited service under each of these plans.
The Compensation and Benefits Committee approved an unfunded, nonqualified
arrangement for Mr. Linen, who in 1990 transferred at the request of the Company
from his position at TRS to a position at a predecessor of Lehman. (During 1992
Mr. Linen returned to TRS at the Company's request and now is an officer and
employee of the Company.) The arrangement provides that the total of the value
of the pension benefits to which he would be entitled at the time of his
retirement, plus the value of his base salary and cash bonus received during
such employment, would not be lower than would have been the case had he
remained in his prior position at TRS. The Committee has retained broad
discretion in the methodology for determining the respective values for
comparisons and in making any equitable adjustments deemed necessary to carry
out the intent of the arrangement.
American Express Financial Corporation. AEFC maintains the IDS Retirement
Plan, which is a funded, qualified, noncontributory, integrated, defined benefit
pension plan covering eligible employees. AEFC also maintains the IDS
Supplemental Retirement Plan, an unfunded, non-qualified, deferred compensation
arrangement that primarily provides benefits that cannot be payable under a
qualified plan like the IDS Retirement Plan because of the maximum limitations
imposed by the Code. Together these two plans are called the AEFC retirement
plans. Eligible employees, including employees of AEFC and certain other
affiliates, participate in the AEFC retirement plans.
AEFC RETIREMENT PLANS
<TABLE>
<CAPTION>
GROSS ANNUAL BENEFIT (TO BE REDUCED BY
AVERAGE BASE SALARY FOR 5 HIGHEST 0.53% OF COVERED COMPENSATION FOR EACH YEAR
PAID CONSECUTIVE YEARS IN LAST 10 OF SERVICE UP TO A MAXIMUM OF 35 YEARS)
YEARS OF SERVICE -----------------------------------------------------------------------
15 YEARS 20 YEARS 25 YEARS 30 YEARS 35 YEARS
--------------------------------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
$ 100,000................... $ 22,500 $ 30,000 $ 37,500 $ 45,000 $ 52,500
250,000.................. 56,250 75,000 93,750 112,500 131,250
350,000.................. 78,750 105,000 131,250 157,500 183,750
450,000.................. 101,250 135,000 168,750 202,500 236,250
550,000.................. 123,750 165,000 206,250 247,500 288,750
700,000.................. 157,500 210,000 262,500 315,000 367,500
1,250,000................... 281,250 375,000 468,750 562,500 656,250
</TABLE>
28
<PAGE>
The table above illustrates the aggregate annual pension benefits provided
by the AEFC retirement plans for the benefit of eligible employees upon
retirement at age 65. The annual pension benefit under these arrangements is
based on 1.5 percent of the participant's average base salary paid by AEFC for
the five highest paid consecutive years during the last ten years of employment,
and on total years of credited service at retirement up to a maximum of 35
years. As of January 1, 1995, Messrs. Golub, Stiefler and Hubers had seven, nine
and 22 years of credited service, respectively, for purposes of computing their
benefits under the AEFC retirement plans.
----------------
In 1994 the Board of Directors approved an amendment to the American
Express Retirement Plan benefit formula to convert employees' accrued benefits
to a discounted lump sum account balance that would receive annual additions
equal to a percentage of an employee's base salary plus bonus. The applicable
percentage will be determined by the age and service of the employee. In
addition, annual earnings equivalents derived from published treasury rates for
five-year treasury securities will be added to the employees' accounts. The
Company anticipates that the amendment will be effective in July 1995 and that
the IDS Retirement Plan will merge into the American Express Retirement Plan
upon the effective date of the amendment.
The Board of Directors has also approved the merger of the American
Express Supplementary Pension Plan and the IDS Supplemental Retirement Plan and
the amendment of the resulting plan to provide benefits ancillary to the new
American Express Retirement Plan design.
SEVERANCE AND CHANGE IN CONTROL ARRANGEMENTS
During 1993 the Compensation and Benefits Committee and the Board of
Directors adopted a uniform policy for severance arrangements applicable to
senior management (including the named executives) of the Company, effective
January 1, 1994. In addition, in 1994 the Committee and the Board adopted
certain arrangements applicable to senior management and other employees that
would be effective upon a change in control of the Company.
Under the severance policy, in the event that the Company terminates the
employment of participating officers for reasons generally other than
misconduct, the officer would be entitled to receive severance payments in
installments over a period not to exceed two years, subject to the execution of
an agreement and compliance with certain restrictive covenants, including a
covenant not to compete or solicit employees, a nondisclosure covenant and a
release of claims. If the officer does not comply with these covenants following
termination of employment, severance payments will be subject to forfeiture or
recovery by the Company. For each named executive officer, the amount of
severance will equal two years' base salary at the then current rate and two
times the amount of bonus earned by the executive for the prior year.
Senior management of the Company, including the named executives, would
be entitled to receive the same amount of severance in a lump sum (subject to
compliance with certain of these covenants) if, within two years following a
change in control of the Company, the officer is terminated by the Company for
reasons generally other than willful misconduct or conviction of a felony or the
officer resigns for good reason (the "Termination Conditions"). Good reason
29
<PAGE>
means certain reductions in base salary, certain relocations, the assignment of
duties materially inconsistent with the duties prior to the change in control,
or a significant reduction in the officer's position. A change in control
includes the acquisition of beneficial ownership by certain persons of 25% or
more of the Company's common shares or all outstanding voting securities of the
Company, the current Board members of the Company cease to constitute a majority
thereof (except that any new Board member approved by at least a majority of the
current Board is considered to be a member of the current Board), or approval by
the Company's shareholders of certain reorganizations, mergers, consolidations,
liquidations or sales of all or substantially all of the Company's assets.
If either of the Termination Conditions is met, senior officers,
including the named executives, would also receive a pro rata bonus for the year
in which the officer is terminated, based on the average of the prior two years'
bonuses. The Company would also transfer to the officers the policies under the
Company's Key Executive Life Insurance Plan, which currently provides coverage
equal to four times annual base salary up to a maximum of $1,500,000. Upon a
change in control, the Company would fully fund accrued benefits under the
Company's Supplementary Pension Plan with a lump sum contribution to a trust. If
a termination described above occurs within one year following a change in
control, such officers would be entitled to an additional benefit under the
supplementary plan as though they had been credited with an additional two years
of service and age under the American Express Retirement Plan (or one year of
credit if the termination occurs between one and two years following a change in
control). Upon a change in control, participants in the Company's deferred
compensation plans, including the Pay for Performance Deferral Program, would
receive an additional credit to their accounts of an amount equal to two years
of interest based on the rate for the year prior to the change in control and a
lump sum payment of their balances in these plans. Upon a change in control
outstanding stock options and restricted stock awards issued under the Company's
1979 and 1989 Long-Term Incentive Plans (other than certain options issued
outside of the U.S.) would immediately vest. If either of the Termination
Conditions is met, outstanding Portfolio Grant awards issued to senior officers
under these plans would immediately vest and would be valued based on an award
period prorated to the date of termination of employment. Generally, to the
extent necessary to avoid the disallowance of the deductibility of payments or
benefits under the plans or programs described above, such payments or benefits
will be reduced to a level such that they will not constitute parachute payments
within the meaning of Section 280G of the Code.
CERTAIN TRANSACTIONS AND OTHER MATTERS
In the ordinary course of business, the Company and its subsidiaries from
time to time engage in transactions with other corporations or financial
institutions whose officers or directors are directors or officers of the
Company or a subsidiary. Transactions with such corporations and financial
institutions are conducted on an arm's-length basis and may not come to the
attention of the directors or officers of the Company or of the other
corporations or financial institutions involved.
From time to time, executive officers and directors of the Company and
their associates may be indebted to certain subsidiaries of the Company under
lending arrangements offered by those subsidiaries to the public. For example,
such persons may during the past year have been indebted to American Express
30
<PAGE>
Centurion Bank for balances on the OptimaSM Card and may be similarly indebted
to other subsidiaries of the Company during 1995. Such indebtedness is in the
ordinary course of the Company's business, is substantially on the same terms,
including interest rates, as those prevailing at the time for comparable
transactions with other persons and does not involve a more than normal risk of
collectibility or present other features unfavorable to the Company. The Company
and its subsidiaries and affiliates, in the ordinary course of business, may
have individuals in their employ who are related to executive officers or
directors of the Company. These individuals are compensated commensurate with
their duties. In addition, such executive officers, directors and associates may
engage in transactions in the ordinary course of business involving other goods
and services provided by the Company and its subsidiaries, such as travel,
insurance and investment services, on terms similar to those extended to
employees of the Company generally.
In the ordinary course of business, the Company and its subsidiaries
maintain various arm's-length relationships with Berkshire Hathaway Inc.
("Berkshire"), FMR Corp. or companies in which they have substantial equity
positions, including the relationships described below. Some of these companies
are service establishments that accept the American Express(R) Card for charges
for goods and services and pay TRS fees when the Card is used. TRS provides
Corporate Card and travel services to, and sells American Express Travelers
Cheques through, a number of these companies and receives fees and commissions
for these products and services. A company in which Berkshire has a substantial
equity position is a participating airline in TRS' Membership Miles(R) program
and receives payments from TRS in connection with such participation. The
Company and its subsidiaries also engage in banking, finance, securities
brokerage or other commercial transactions with companies in which Berkshire has
a substantial equity position and pay or receive fees in connection with these
transactions.
In August 1994 the Company redeemed all of the 122,448.98 CAP Preferred
Shares sold to subsidiaries of Berkshire in 1991 for $300,000,000. In accordance
with the terms of the Preferred Shares, the redemption price was paid in the
form of 13,997,141 common shares of the Company. Through the date of redemption,
the Preferred Shares paid dividends at the annual rate of $216.75 per share. In
November 1994 the Company sold put options on its common shares, including 2.9
million options with a weighted average strike price of $30.89 per share which
were sold to a company in which Berkshire has a substantial equity position.
In 1983 the shareholders of the Company approved the adoption of the Stock
Purchase Assistance Plan ("SPAP") with the purpose of encouraging members of
senior management to increase their proprietary interest in the future
performance of the Company by providing full recourse loans to key employees for
exercising stock options (and/or for paying any taxes in respect thereof) or for
buying Company common shares at fair market value from the Company or on the
open market. The SPAP is administered by the Compensation and Benefits Committee
or its delegate. The maximum aggregate borrowing authority under SPAP is
presently $30 million. Under the terms of SPAP, eligible key employees
(approximately 170 persons, including those named in the Summary Compensation
Table on page 21) may borrow a maximum of 300 percent of their respective annual
base salaries, provided that such persons furnish sufficient collateral under
guidelines established from time to time by the Committee (presently 100 percent
of the amount of the loan on the date of grant). Such loans currently have
31
<PAGE>
five-year maturities, bear interest payable quarterly at a variable rate of two
percentage points below the prime rate of a major New York City bank, and are
payable in full upon the occurrence of certain events, including termination of
employment. Based on the current prime rate, such loans bear interest at the
rate of 7.0 percent per annum. During 1994 Messrs. Golub, Stiefler, Linen,
Chenault and Hubers had a maximum amount outstanding under SPAP of $66,463,
$525,250, $894,008, $--0-- and $205,318, respectively, and the same amounts were
outstanding as of March 8, 1995, except that Messrs. Golub and Linen had repaid
their loans in full as of such date. For all executive officers as a group, the
maximum aggregate amount outstanding during 1994 under SPAP was $3,674,724, and
as of March 8, 1995 the aggregate amount outstanding was $2,582,854.
Two purported shareholder derivative actions, now consolidated, were
brought in October 1990 in New York State Supreme Court, and three purported
derivative actions, also consolidated, were brought in early 1991 in the United
States District Court for the Southern District of New York against all of the
then current directors, certain former directors and certain former officers and
employees of the Company. The consolidated state court complaint alleges that
the defendants breached their duty of care in managing the Company, purportedly
resulting in losses and in the Company's payment of $8 million in July 1989 to
certain charities agreed to by the Company and Edmond J. Safra. Plaintiffs in
the state court action seek a declaratory judgment, unspecified money damages
and an accounting. The federal actions were dismissed in December 1993, and the
dismissal was upheld by the Second Circuit Court of Appeals in November 1994.
Plaintiffs in the federal action subsequently commenced another state court
action raising the same allegations as the consolidated state court complaint.
A purported shareholder derivative action was brought in June 1991 in the
United States District Court for the Eastern District of New York against the
then current directors of the Company. In January 1992 this action was
transferred to the United States District Court for the Central District of
California for coordinated or consolidated proceedings with all other federal
actions related to First Capital Holdings Corp. ("FCH"). The complaint alleges
that the Board of Directors should have required Lehman to divest its investment
in FCH and to write down its investment sooner. In addition, the complaint
alleges that the failure to act constituted a waste of corporate assets and
caused damage to the Company's reputation. The complaint seeks a judgment
declaring that the directors named as defendants breached their fiduciary duties
and duties of loyalty and requiring the defendants to pay money damages to the
Company and remit their compensation for the periods in which the duties were
breached, attorneys' fees and costs and other relief.
The Company contests the allegations made in the above actions.
SELECTION OF AUDITORS
The Board of Directors recommends to the shareholders their ratification
of its selection of Ernst & Young LLP, independent auditors, to audit the
accounts of the Company and its subsidiaries for 1995. The following resolution
will be offered at the shareholders' meeting:
RESOLVED, that the appointment by the Board of Directors of Ernst & Young
LLP, independent auditors, to audit the accounts of the Company and its
subsidiaries for 1995 be, and hereby is, ratified and approved.
32
<PAGE>
In the event the shareholders fail to ratify the appointment, the Board of
Directors will consider it a direction to select other auditors for the
subsequent year. Even if the selection is ratified, the Board of Directors, in
its discretion, may direct the appointment of a new independent accounting firm
at any time during the year, if the Board feels that such a change would be in
the best interests of the Company and its shareholders.
Ernst & Young LLP has been serving as the Company's independent auditors
since 1975. Ernst & Young LLP follows a policy of rotating the partner in charge
of the Company's audit every seven years. Other partners and non-partner
personnel are rotated on a periodic basis. The Company paid Ernst & Young LLP
the sum of $9.8 million for the firm's 1994 annual examination of the financial
statements of the Company and its subsidiaries.
A representative of Ernst & Young LLP will be present at the shareholders'
meeting with the opportunity to make a statement if he or she desires to do so
and will be available to respond to appropriate questions.
SHAREHOLDER PROPOSALS
Management receives many suggestions and proposals throughout the year
from shareholders, customers of the Company and others. Such suggestions are
welcomed, and management seeks to assure that its views on the actions it
proposes to take in their implementation or rejection are communicated to the
proponents. Some proposals from shareholders are presented to the Company in the
form of resolutions, and they may be either implemented by management or
withdrawn by the proponent after review and discussion with their proponents and
therefore need not be presented to shareholders in the proxy statement. An
example of a proposal of this nature is a proposal to endorse the CERES
Principles that was filed by the American Baptist Home Mission Society and other
religious groups. The proponents agreed to withdraw the proposal from this
year's proxy material in recognition of the Company's commitment to maintain its
dialogue with representatives of the CERES Principles and in recognition of
management's continuing accomplishments and initiatives in the environmental
area. Other resolutions from shareholders, like the ones presented below, are
regarded by management as being not in the best interests of the Company and its
shareholders, and are presented to the shareholders for a vote.
FIRST SHAREHOLDER PROPOSAL (ITEM 3)
Mr. John J. Gilbert and/or Ms. Margaret R. Gilbert, 29 East 64th Street,
New York, New York 10021-7043, record owners of 360 shares and representing
additional family interests of 266 shares, will cause to be introduced from the
floor the following resolution:
"RESOLVED: That the stockholders of American Express Company, assembled in
annual meeting in person and by proxy, hereby request the Board of Directors to
take the steps necessary to provide for cumulative voting in the election of
directors, which means each stockholder shall be entitled to as many votes as
shall equal the number of shares he or she owns multiplied by the number of
directors to be elected, and he or she may cast all of such votes for a single
candidate, or any two or more of them as he or she may see fit."
33
<PAGE>
SHAREHOLDERS' REASONS IN SUPPORT OF PROPOSAL:
"Continued very strong support along the lines we suggest were shown at
the last annual meeting when 36%, an increase over the previous year, 3,283
owners of 130,122,120 shares, were cast in favor of this proposal. The vote
against included 3,631 unmarked proxies.
"A law enacted in California provides that all state pension holdings and
state college funds, invested in shares, must be voted in favor of cumulative
voting proposals, showing increasing recognition of the importance of this
democratic means of electing directors.
"The National Bank Act provides for cumulative voting. Unfortunately, in
many cases companies get around it by forming holding companies without
cumulative voting. Banking authorities have the right to question the capability
of directors to be on banking boards. Unfortunately, in many cases authorities
come in after and say the director or directors were not qualified. We were
delighted to see that the SEC has finally taken action to prevent bad directors
from being on the boards of public companies.
"We think cumulative voting is the answer to find new directors for
various committees. Additionally, some recommendations have been made to carry
out the Valdez 10 points. The 11th should be having cumulative voting and ending
stagger systems of electing directors, in our opinion.
"Many successful corporations have cumulative voting. For example,
Pennzoil having cumulative voting defeated Texaco in that famous case. Another
example is Ingersoll-Rand, which has cumulative voting and won two awards. In
FORTUNE magazine it was ranked second in its industry as `America's Most Admired
Corporations' and the WALL STREET TRANSCRIPT noted `on almost any criteria used
to evaluate management, Ingersoll-Rand excels.' Also, in 1994 they raised their
dividend. We believe that American Express should follow these examples.
However, our compliments to management for rotating meetings and having the
video of the meeting available for stockholders, as well as the employees.
"If you agree, please mark your proxy for this resolution; otherwise it is
automatically cast against it, unless you have marked to abstain."
YOUR BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST THIS PROPOSAL FOR THE
FOLLOWING REASONS:
Similar proposals with respect to cumulative voting have been presented by
the proponent at several of the Company's previous Annual Meetings and have been
rejected by the shareholders each time. Your management remains committed to the
view that the present system of voting for directors provides the best assurance
that the decisions of the directors will be in the interests of all
shareholders, as opposed to the interests of special interest groups.
Cumulative voting makes it possible for a special interest group to elect
one or more directors whose loyalty might be directed more to the narrow
interests of a particular group of shareholders. The present system of voting
utilized by the Company and by most leading corporations prevents the `stacking'
of votes behind a single director and thereby promotes the election of directors
on the basis of representing the interests of the shareholders as a whole.
34
<PAGE>
The Company concurs in the statement of a leading institutional investor,
the New York State and Local Retirement Systems, on the issue of cumulative
voting:
"Directors must act for the overall good of the corporation and all
shareholders rather than the interests of a particular bloc of votes. Since
minority directors elected as a result of cumulative voting may be preoccupied
with the agenda of special interest groups or particular shareholders rather
than the economic interest of all owners, the Fund generally does not support
the adoption of such a voting process."
Management does not believe any valid reasons have been submitted for
changing the present system of voting. The issue of cumulative voting is
periodically reviewed by the Committee on Directors.
ACCORDINGLY YOUR BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST THIS PROPOSAL.
SECOND SHAREHOLDER PROPOSAL (ITEM 4)
Mrs. Evelyn Y. Davis, Watergate Office Building, 2600 Virginia Avenue,
N.W., Suite 215, Washington, D.C. 20037, record owner of 148 common shares, has
advised the Company that she plans to introduce the following resolution:
"RESOLVED: `That the stockholders of American Express recommend that the
Board take the necessary steps so that future outside directors shall not serve
for more than six years.'"
SHAREHOLDER'S REASONS IN SUPPORT OF PROPOSAL:
"REASONS: `The President of the U.S.A. has a term limit, so do Governors
of many states.' `Newer directors may bring in fresh outlooks and different
approaches with benefits to all shareholders.' `No director should be able to
feel that his or her directorship is until retirement.' `Last year the owners of
14,278,816 shares, representing approximately 4.3% of shares voting, voted FOR
this proposal.' `If you AGREE, please mark your proxy FOR this resolution.'"
YOUR BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST THIS PROPOSAL FOR THE
FOLLOWING REASONS:
Management opposes the foregoing resolution, both because it feels term
limits unnecessarily curtail the useful tenure of directors and because the
six-year term called for by the proposal, whatever one feels about the merits of
term limits, is unjustifiably short.
Management feels that directors become increasingly effective as their
knowledge of the Company and its officers and employees increases. This is
particularly true in the case of a large global corporation such as American
Express Company, which is engaged in a variety of businesses in diverse
locations around the world during a period of rapid technological and
competitive change. A term limit for directors, especially a limit as short as
six years, needlessly deprives the shareholders and the Company of the benefits
of directors' experience and knowledge at a time in their tenure when they are
becoming increasingly effective and productive.
35
<PAGE>
The average tenure of the Company's 16 current directors is in excess of
eight years. Ten of the 16 have already served six or more years. Management
feels that, if adopted, the foregoing proposal would deprive the Company of
experienced oversight, promote needless turnover of directors, and weaken the
Company's present effective system of governance.
ACCORDINGLY, YOUR BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST THIS PROPOSAL.
THIRD SHAREHOLDER PROPOSAL (ITEM 5)
Ms. Pamela M. Paulsen, 4990 SW 94th Avenue, Cooper City, Florida
33328-3411, owner of at least 1,255 shares through the Company's Incentive
Savings Plan, has advised the Company that she plans to introduce the following
proposal:
"It is requested/recommended that all past and future outsourcing
initiatives whereby functions/processes are outsourced to corporations outside
of the American Express organization are outsourced to corporations within the
United States that will support the overall economic growth of the economy,
provide job growth in industries thereby decreasing the unemployment rate of the
nation and still achieve World Class Economics for American Express.
"It is further requested/recommended that all functions/processes
currently outsourced be evaluated to ascertain their compliance to this
request/recommendation. That all exceptions be documented and reported to the
Board of Directors for evaluation. This includes functions/processes performed
by all corporations which do not provide economic growth of the economy and/or
provide job growth in industries thereby decreasing the unemployment rate of the
nation. This includes all situations such as corporations from other countries
performing functions/processes totally with their country and/or whether they
have on-site representation with an American Express location."
SHAREHOLDER'S REASONS IN SUPPORT OF PROPOSAL:
"It is acknowledged and recognized that the concentration of
re-engineering efforts focused on streamlining processes to improve servicing
and overall profitability has yielded improved margin growth in stock value and
the level of confidence within the financial industry.
"A critical component of attaining these past accomplishments and future
proposals is dependent upon the outsourcing of functions/processes outside of
the organization."
YOUR BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST THIS PROPOSAL FOR THE
FOLLOWING REASONS:
Management feels that implementation of the proponent's recommendations
regarding outsourcing would represent an unproductive and inefficient use of
management's time, as well as being contrary to the best interests of the
Company's shareholders and contrary to the nation's interest in promoting free
trade.
36
<PAGE>
First, management feels that decisions regarding sourcing, staffing, and
resource allocations should be based on such factors as quality, value,
efficiency and service rather than the domicile of the provider. Only by basing
its sourcing decisions on objective, `bottom line' considerations can management
best serve its core constituencies: its shareholders, customers and employees.
Second, it is unclear that directing all outsourcing assignments to
corporations "within the United States" can be practically implemented. For
example, would a United States operating subsidiary of a Canadian
telecommunications company qualify as an acceptable outsourcing partner? Would a
subsidiary of American Express Company operating in the Philippines in need of
tax and accounting advice be prevented from hiring a local firm? In an era of
multinational corporations operating globally and dependent upon continuous
trans-border flows of data, funds and communications, national distinctions are
becoming increasingly blurred.
Management feels that the appropriate way to benefit the United States
economy is for the Company to deliver above-average financial returns to its
investors, a group that is overwhelmingly domiciled in the U.S. Moreover, by
strengthening the Company's U.S. operations through competitively advantageous
sourcing policies, the Company can generate growth that can lead to additional
employment opportunities in the U.S. over time as well.
ACCORDINGLY, YOUR BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST THIS PROPOSAL.
NOMINATIONS, OTHER BUSINESS AND DEADLINE FOR SHAREHOLDER PROPOSALS
Under an amendment to the Company's By-Laws adopted in July 1994,
nominations for director may be made only by the Board or a Board committee or
by a shareholder entitled to vote in accordance with the following procedures. A
shareholder may nominate a candidate for election as a director at an annual
meeting of shareholders only by delivering notice to the Company not less than
90 nor more than 120 days prior to the first anniversary of the preceding year's
annual meeting, except that if the annual meeting is advanced or delayed by more
than 30 days from such anniversary date, notice must be received not later than
the tenth day following the earlier of the date notice of the meeting is first
given or announced publicly. With respect to a special meeting called to elect
directors, a shareholder must deliver notice not later than the tenth day
following the earlier of the date notice of the meeting is first given or
announced publicly. Any shareholder delivering notice of nomination must include
certain information about the shareholder and the nominee as well as a written
consent of the proposed nominee to serve if elected.
The By-Laws also provide that no business may be brought before an annual
meeting except as specified in the notice of the meeting (which includes
shareholder proposals that the Company is required to set forth in its proxy
statement under SEC Rule 14a-8) or as otherwise brought before the meeting by or
at the direction of the Board or by a shareholder entitled to vote in accordance
with the following procedures. A shareholder may bring business before an annual
meeting only by delivering notice to the Company within the time limits
described above for delivering notice of a nomination for the election of a
director at an annual meeting. Such notice must include a description of and the
reasons for bringing the proposed business before the meeting, any material
interest of the shareholder in such business and certain other information about
the shareholder.
37
<PAGE>
A copy of the full text of the By-Law provisions discussed above is set
forth in Exhibit A to this proxy statement, and the preceding discussion is
qualified in its entirety by reference to such exhibit.
The foregoing requirements are separate and apart from and in addition to
the SEC's requirements that a shareholder must meet in order to have a
shareholder proposal included in the Company's proxy statement under SEC Rule
14a-8. The Company's 1996 Annual Meeting of Shareholders will be held on April
22, 1996. Shareholders who intend to present a proposal for action at that
meeting to be included in the Company's proxy statement must submit their
proposals to the Secretary of the Company on or before November 11, 1995.
CERTAIN FILINGS
The Company and its executive officers and directors continue to pursue
strict compliance with the SEC rules relating to the reporting of changes in
beneficial ownership of Company securities. The Company is pleased to note that
all open market transactions in the Company's securities reportable on Form 4
were timely and correctly reported by the Company's executive officers and
directors during their respective terms of service in 1993 and 1994. With
respect to reporting changes in ownership that are exempt from current reporting
on Form 4, one transaction was not timely reported. In July 1993 Thomas Schick,
an executive officer, surrendered 395 shares to fulfill a tax withholding
obligation on a restricted stock award. The surrender was promptly reported upon
its discovery in early 1995.
DIRECTORS AND OFFICERS LIABILITY INSURANCE
The Company has purchased a directors and officers liability insurance
policy from Aetna Casualty and Surety Company that provides coverage for
directors and elected and appointed officers of the Company and its
subsidiaries in certain situations where the Company or its subsidiaries are not
permitted to indemnify directors or officers under applicable law. For
situations where the Company or its subsidiaries are permitted to indemnify
directors or officers, the Company has purchased an insurance policy from Amexco
Insurance Company, a wholly-owned subsidiary of the Company incorporated in
March 1993. The Company has also purchased excess coverage from Lloyds, Aetna
Casualty and Surety Company, Reliance Insurance Company, CNA Insurance Company,
Zurich Insurance Company, Chubb Insurance Company and A.C.E. Insurance Company
(Bermuda) Ltd. The inception date of these policies is March 31, 1994. These
policies insure the Company and its subsidiaries for amounts they are permitted
to pay as indemnification to directors or officers for legal fees or judgments,
and also insure the officers and directors for situations where the Company is
not permitted to provide indemnification. The annualized premiums for these
policies were approximately $3.2 million in 1994. Each major subsidiary pays its
proportionate share of the premium. The current policies are due to expire on
March 31, 1995, and similar coverage is expected to be renewed.
The Company has also obtained an insurance policy, dated March 31, 1994,
from National Union Fire Insurance Company of Pittsburgh that provides coverage
for directors and employees who are fiduciaries of the Company's employee
benefit plans against expenses and defense costs incurred as a result of alleged
38
<PAGE>
breaches of fiduciary duty as defined in the Employee Retirement Income Security
Act of 1974, as amended. The Company has also purchased excess coverage from
Zurich Insurance Company. This policy is also dated March 31, 1994. The
annualized premium for these policies in 1994 was approximately $168,000.
In accordance with the indemnification provisions of the Company's
By-Laws, in 1994 and early 1995 the Company advanced approximately $115,000 in
legal fees and expenses on behalf of the Company's current and former directors
and officers in connection with the derivative actions described on page 32 of
this proxy statement.
* * * *
Management does not know of any business to be transacted at the meeting
other than as indicated herein. However, certain shareholders may present topics
for discussion from the floor. Should any matter other than as indicated herein
properly come before the meeting for a vote, the persons designated as proxies
will vote thereon in accordance with their best judgment.
You are urged to mark, sign, date and return the enclosed proxy in the
prepaid envelope provided for such purpose. Prompt return of your proxy may save
your Company the expense of a second mailing.
We encourage all shareholders to attend the Annual Meeting of Shareholders
on April 24, 1995. If you will need special assistance at the meeting because of
a disability or if you desire this document in an alternative accessible format,
please contact Stephen P. Norman, Secretary, American Express Company, 200 Vesey
Street, New York, New York 10285-5000. Because space may be limited, we hope
that registered shareholders will give us advance notice of their plans by
marking the box provided on the proxy card.
HARVEY GOLUB
Chairman and Chief Executive Officer
39
<PAGE>
EXHIBIT A
EXCERPT FROM
BY-LAWS
OF
AMERICAN EXPRESS COMPANY
SECTION 2.9 Business to Be Transacted at Shareholders' Meetings. No
business shall be transacted at any annual meeting of shareholders, except as
may be (i) specified in the notice of the meeting given by or at the direction
of the Board (including, if so specified, any shareholder proposal submitted
pursuant to the rules and regulations of the Securities and Exchange
Commission), (ii) otherwise brought before the meeting by or at the direction of
the Board or (iii) otherwise brought before the meeting in accordance with the
procedure set forth in the following paragraph, by a shareholder of the
corporation entitled to vote at such meeting.
For business to be brought by a shareholder before an annual meeting of
shareholders pursuant to clause (iii) above, the shareholder must have given
written notice thereof to the Secretary of the corporation, such notice to be
received at the principal executive offices of the corporation not less than 90
nor more than 120 days prior to the one year anniversary of the date of the
annual meeting of shareholders of the previous year; provided, however, that in
the event that the annual meeting of shareholders is called for a date that is
not within 30 days before or after such anniversary date, notice by the
shareholder must be received at the principal executive offices of the
corporation not later than the close of business on the tenth day following the
day on which the corporation's notice of the date of the meeting is first given
or made to the shareholders or disclosed to the general public (which disclosure
may be effected by means of a publicly available filing with the Securities and
Exchange Commission), whichever occurs first. A shareholder's notice to the
Secretary shall set forth, as to each matter the shareholder proposes to bring
before the annual meeting of shareholders, (i) a brief description of the
business proposed to be brought before the annual meeting of shareholders and of
the reasons for bringing such business before the meeting and, if such business
includes a proposal to amend either the certificate of incorporation or these
by-laws, the text of the proposed amendment, (ii) the name and record address of
the shareholder proposing such business, (iii) the number of shares of each
class of stock of the corporation that are beneficially owned by such
shareholder, (iv) any material interest of the shareholder in such business and
(v) such other information relating to the proposal that is required to be
disclosed in solicitations pursuant to the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the Securities and Exchange Commission
or other applicable law. Notwithstanding anything in these by-laws to the
contrary, no business shall be conducted at an annual meeting of shareholders
except in accordance with the procedures set forth in this Section 2.9;
provided, however, that nothing in this Section 2.9 shall be deemed to preclude
discussion by any shareholder of any business properly brought before the annual
A-1
<PAGE>
meeting of shareholders in accordance with such procedures. The chairman of an
annual meeting of shareholders shall, if the facts warrant, determine and
declare to the meeting that the business was not properly brought before the
meeting in accordance with the provisions of this Section 2.9, and if he should
so determine, he shall so declare to the meeting and any such business not
properly brought before the annual meeting of shareholders shall not be
transacted.
SECTION 3.11 Nomination of Directors. Subject to the rights of holders of
any class or series of stock having a preference over the common shares as to
dividends or upon liquidation, nominations for the election of directors may
only be made (i) by the Board or a committee appointed by the Board or (ii) by a
shareholder of the corporation entitled to vote at the meeting at which a person
is to be nominated in accordance with the procedure set forth in the following
paragraph.
A shareholder may nominate a person or persons for election as directors
only if the shareholder has given written notice of its intent to make such
nomination to the Secretary of the corporation, such notice to be received at
the principal executive offices of the corporation (i) with respect to an annual
meeting of shareholders, not less than 90 nor more than 120 days prior to the
one year anniversary of the date of the annual meeting of shareholders of the
previous year; provided, however, that in the event that the annual meeting of
shareholders is called for a date that is not within 30 days before or after
such anniversary date, notice by the shareholder must be received at the
principal executive offices of the corporation not later than the close of
business on the tenth day following the day on which the corporation's notice of
the date of the meeting is first given or made to the shareholders or disclosed
to the general public (which disclosure may be effected by means of a publicly
available filing with the Securities and Exchange Commission), whichever occurs
first and (ii) with respect to a special meeting of shareholders called for the
purpose of electing directors, not later than the close of business on the tenth
day following the day on which the corporation's notice of the date of the
meeting is first given or made to the shareholders or disclosed to the general
public (which disclosure may be effected by means of a publicly available filing
with the Securities and Exchange Commission), whichever occurs first. A
shareholder's notice to the Secretary shall set forth (i) the name and record
address of the shareholder who intends to make such nomination, (ii) the name,
age, business and residence addresses and principal occupation of each person to
be nominated, (iii) the number of shares of each class of stock of the
corporation that are beneficially owned by the shareholder, (iv) a description
of all arrangements and understandings between the shareholder and each proposed
nominee and any other person or persons (including their names) pursuant to
which the nomination(s) are to be made by such shareholder, (v) such other
information relating to the person(s) that is required to be disclosed in
solicitations for proxies for election of directors pursuant to the Securities
Exchange Act of 1934, as amended, and the rules and regulations of the
Securities and Exchange Commission or other applicable law and (vi) the written
consent of each proposed nominee to be named as a nominee and to serve as a
director of the corporation if elected, together with an undertaking, signed by
each proposed nominee, to furnish to the corporation any information it may
request upon the advice of counsel for the purpose of determining such proposed
nominee's eligibility to serve as a director. The chairman of the meeting shall,
if the facts warrant, determine and declare to the meeting that a nomination was
not made in accordance with the foregoing procedures and if he should so
determine, he shall so declare to the meeting and the defective nomination shall
be disregarded.
A-2
<PAGE>
DIRECTIONS TO THE 1995 AMERICAN EXPRESS COMPANY
ANNUAL MEETING OF SHAREHOLDERS
American Express Company's world headquarters, site of the Company's 1995
Annual Meeting of Shareholders, are located at 200 Vesey Street on the west side
of lower Manhattan in the office complex known as the World Financial Center.
The World Financial Center is a part of Battery Park City, a 10 acre development
of office buildings, residences and parks created in the 1970's and 1980's by
land fill amongst former Hudson River piers on the southwestern tip of
Manhattan. It is connected to the World Trade Center by two pedestrian
overpasses and is also accessible at street level by automobile.
BY SUBWAY
Take any of the several subway lines (A, C, E, N, R or the 1, 2, 3, 4, 5
or 9 trains) that stop at or near the World Trade Center. Walk from the World
Trade Center across the Westside Highway (also known as West Street) via one of
the two pedestrian overpasses. The American Express building is on the north
side of the Winter Garden in the World Financial Center.
BY AUTOMOBILE OR TAXICAB
Proceed to the Westside Highway in lower Manhattan, orienting toward the
twin towers of the World Trade Center. Enter the World Financial Center, which
is directly across the Westside Highway from the towers, by turning west on
either Murray Street or Vesey Street. Proceed to the main entrance of the
American Express building, located at the corner of Vesey Street and the
Westside Highway.
<PAGE>
AMERICAN EXPRESS COMPANY
[Logo]
Proxy Solicited on Behalf of the Board of Directors of
the Company for Annual Meeting on April 24, 1995
P The undersigned hereby appoints Michael P. Monaco, Louise M. Parent and
R Stephen P. Norman, or any of them, proxies or proxy, with full power of
O substitution, to vote all common shares of American Express Company
X which the undersigned is entitled to vote at the Annual Meeting of
Y Shareholders to be held at the executive offices of the Company, 200
Vesey Street, 26th Floor, New York, New York 10285, on April 24, 1995
at 10:00 A.M., local time, and at any adjournment thereof, as directed
below with respect to the proposals set forth in the Proxy Statement
and in their discretion upon any matter that may properly come before
the meeting or any adjournment thereof.
Election of Directors. Nominees:
D.F. Akerson, A.L. Armstrong, E.L. Artzt,
W.G. Bowen, D.M. Culver, C.W. Duncan Jr.,
H. Golub, B. Sills Greenough, F.R. Johnson,
V.E. Jordan Jr., H.A. Kissinger, D. Lewis,
A. Papone, F.P. Popoff, J.E. Stiefler.
(COMMENTS/ADDRESS CHANGE)
----------------------------------------
----------------------------------------
----------------------------------------
----------------------------------------
(If you have written in the above space,
please mark the corresponding box on the
reverse side of this card.)
You are encouraged to specify your choices by marking the appropriate
boxes, SEE REVERSE SIDE, but you need not mark any boxes if you wish to
vote in accordance with the Board of Directors' recommendations. Your
shares cannot be voted unless you sign this card. The signer hereby
revokes all proxies heretofore given by the signer to vote at said
meeting or any adjournment thereof.
(Continued and to be signed on other side)
<PAGE>
[X] Please mark
your votes
this way.
------ ----------- ----------
Common Div. Reinv. Restricted
This proxy, when properly executed, will be voted in the manner directed hereon
by the undersigned shareholder. If no direction is given, this proxy will be
voted FOR proposals 1 and 2 and AGAINST proposals 3, 4 and 5.
The Board of Directors recommends a vote FOR Items 1 and 2.
ITEM 1--ELECTION OF DIRECTORS.
[ ] FOR ALL NOMINEES [ ] WITHHELD FROM ALL NOMINEES
FOR the slate, except vote WITHHELD from the following nominees(s):
------------------------------------------------------------------
ITEM 2--SELECTION OF ERNST & YOUNG LLP AS INDEPENDENT AUDITORS.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
The Board of Directors recommends a vote AGAINST Items 3, 4 and 5.
ITEM 3--SHAREHOLDER PROPOSAL RELATING TO CUMULATIVE VOTING.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
ITEM 4--SHAREHOLDER PROPOSAL RELATING TO TERM LIMITS FOR DIRECTORS.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
ITEM 5--SHAREHOLDER PROPOSAL RELATING TO OUTSOURCING.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
I PLAN TO ATTEND MEETING. [ ]
COMMENTS/ ADDRESS CHANGE [ ]
Please mark this box if you have written
comments/address change on the reverse
side.
Receipt is hereby acknowledged of the
American Express Company Notice of
Meeting and Proxy Statement.
Signature(s) ..................................... Date ...................
NOTE: Please date and sign exactly as name appears hereon. Joint owners should
each sign. When signing as attorney, executor, administrator, corporate
officer, trustee or guardian, please give full title as such.
<PAGE>
AMERICAN EXPRESS COMPANY
[Logo]
Proxy Solicited on Behalf of the Board of Directors of
the Company for Annual Meeting on April 24, 1995
P The undersigned hereby appoints Michael P. Monaco, Louise M. Parent and
R Stephen P. Norman, or any of them, proxies or proxy, with full power of
O substitution, to vote all common shares of American Express Company
X which the undersigned is entitled to vote at the Annual Meeting of
Y Shareholders to be held at the executive offices of the Company, 200
Vesey Street, 26th Floor, New York, New York 10285, on April 24, 1995
at 10:00 A.M., local time, and at any adjournment thereof, as directed
below with respect to the proposals set forth in the Proxy Statement
and in their discretion upon any matter that may properly come before
the meeting or any adjournment thereof.
Election of Directors. Nominees:
D.F. Akerson, A.L. Armstrong, E.L. Artzt,
W.G. Bowen, D.M. Culver, C.W. Duncan Jr.,
H. Golub, B. Sills Greenough, F.R. Johnson,
V.E. Jordan Jr., H.A. Kissinger, D. Lewis,
A. Papone, F.P. Popoff, J.E. Stiefler.
(COMMENTS/ADDRESS CHANGE)
----------------------------------------
----------------------------------------
----------------------------------------
----------------------------------------
(If you have written in the above space,
please mark the corresponding box on the
reverse side of this card.)
You are encouraged to specify your choices by marking the appropriate
boxes, SEE REVERSE SIDE, but you need not mark any boxes if you wish to
vote in accordance with the Board of Directors' recommendations. Your
shares cannot be voted unless you sign this card. The signer hereby
revokes all proxies heretofore given by the signer to vote at said
meeting or any adjournment thereof.
(Continued and to be signed on other side)
<PAGE>
[X] Please mark
your votes
this way.
------ ----------- ------------
ISP IDS I&T IDS DVPSP/RP
This proxy, when properly executed, will be voted in the manner directed hereon
by the undersigned shareholder. If no direction is given, this proxy will be
voted FOR proposals 1 and 2 and AGAINST proposals 3, 4 and 5.
The Board of Directors recommends a vote FOR Items 1 and 2.
ITEM 1--ELECTION OF DIRECTORS.
[ ] FOR ALL NOMINEES [ ] WITHHELD FROM ALL NOMINEES
FOR the slate, except vote WITHHELD from the following nominees(s):
------------------------------------------------------------------
ITEM 2--SELECTION OF ERNST & YOUNG LLP AS INDEPENDENT AUDITORS.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
The Board of Directors recommends a vote AGAINST Items 3, 4 and 5.
ITEM 3--SHAREHOLDER PROPOSAL RELATING TO CUMULATIVE VOTING.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
ITEM 4--SHAREHOLDER PROPOSAL RELATING TO TERM LIMITS FOR DIRECTORS.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
ITEM 5--SHAREHOLDER PROPOSAL RELATING TO OUTSOURCING.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
I PLAN TO ATTEND MEETING. [ ]
COMMENTS/ ADDRESS CHANGE [ ]
Please mark this box if you have written
comments/address change on the reverse
side.
Receipt is hereby acknowledged of the
American Express Company Notice of
Meeting and Proxy Statement.
Signature(s) ..................................... Date ...................
NOTE: Please date and sign exactly as name appears hereon. Joint owners should
each sign. When signing as attorney, executor, administrator, corporate
officer, trustee or guardian, please give full title as such.
<PAGE>
American Express Trust Company
1200 Northstar West
625 Marquette Avenue
Minneapolis, Minnesota 55402
March 10, 1995
To: Members of one or more of the following plans:
-American Express Incentive Savings Plan ("ISP")
-IDS Incentive & Thrift Plan ("IDS I&T")
-IDS DVP Savings Plan ("IDS DVPSP")
-IDS DVP Retirement Plan ("IDS DVPRP")
(American Express Trust Company is the Trustee for each of the above plans.)
Enclosed are a proxy card and Proxy Statement for use in connection with
the 1995 Annual Meeting of Shareholders of American Express Company (the
"Company") to be held on April 24, 1995. Also enclosed is a copy of the
Company's Annual Report to Shareholders for 1994, unless you have already
received the Annual Report in another mailing by the Company's transfer agent.
Under terms of each of the above plans, you are entitled to instruct the
applicable Trustee(s) as to the manner in which you wish the Company's common
shares credited to your account(s) to be voted at the Annual Meeting or any
adjournment thereof.
The enclosed proxy card indicates the number of whole shares credited to
your account(s) in one or more of the plans listed above as of February 28,
1995.
Please indicate your vote with respect to each of the items set forth on
the enclosed card and sign, date and mail the card as promptly as possible,
using the enclosed business reply envelope. It is important that Chemical Bank,
which is acting on behalf of and at the direction of the Trustee, receive your
card for tabulation by April 19, 1995.
Your vote will be held in strict confidence.
Pursuant to the terms of the ISP, the IDS I&T, the IDS DVPSP and the IDS
DVPRP, all Company common shares credited to your account(s) under the plan(s)
(with the exception noted below) as to which voting instructions are not timely
received, and all shares held by these plans that have not been allocated to
individual accounts, will be voted by the Trustee, on a plan-by-plan basis, in
the same proportion as the other shares held in such plan(s) have been voted.
The ISP holds shares previously held by the American Express Stock
Ownership Plan (the "AESOP") resulting from the merger of the AESOP into the ISP
(the "transferred shares"). To the extent that transferred shares are credited
to your account under the ISP that are attributable to AESOP contributions with
respect to plan years prior to 1987, such transferred shares will not be voted
if the Trustee does not receive timely voting instructions.
American Express Trust Company
Trustee of the American Express Incentive Savings Plan,
the IDS Incentive & Thrift Plan, the IDS DVP Savings
Plan and the IDS DVP Retirement Plan.
<PAGE>
