SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No. )
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
[ ] 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:
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2) Aggregate number of securities to which transaction applies:
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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 stated how it was determined):
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4) Proposed maximum aggregate value of transaction:
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5) Total Fee paid:
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[ ] 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.
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AMERICAN EXPRESS COMPANY
[logo] 200 VESEY STREET
NEW YORK, NEW YORK 10285
- --------------------------------------------------------------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 22, 1996
- --------------------------------------------------------------------------------
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 22, 1996 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 1996;
3. To consider and vote upon a proposal to approve amendments to the
Company's 1989 Long-Term Incentive Plan to authorize an additional 23.7 million
common shares for issuance and to permit the Company to continue the deduction
for tax purposes of certain compensation under the Plan;
4. To consider and vote upon a shareholder proposal relating to
cumulative voting, 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:
STEPHEN P. NORMAN
SECRETARY
March 11, 1996
WHETHER OR NOT YOU INTEND TO BE PRESENT AT THE MEETING, PLEASE SIGN AND
DATE THE ENCLOSED PROXY AND RETURN IT IN THE ENCLOSED PREPAID ENVELOPE.
This Statement is printed on recycled paper.
[recycle logo]
<PAGE>
AMERICAN EXPRESS COMPANY
[logo] 200 VESEY STREET
NEW YORK, NEW YORK 10285
March 11, 1996
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 22, 1996, 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 13, 1996.
You are cordially invited to attend the meeting, but whether or not you
expect to attend in person, you are urged to 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 4, 1996, including
shares enrolled 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 1996,
FOR the amendments to the Company's 1989 Long-Term Incentive Plan to
authorize additional shares for issuance and to permit the continued
deductibility of certain compensation paid thereunder, and
AGAINST the shareholder proposal relating to cumulative voting.
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 4, 1996, as
reported by the New York Stock Exchange Composite Transactions Tape, was $46.875
per share.
The Company's 1995 Annual Report has been mailed to shareholders in
connection with this solicitation. A COPY OF THE COMPANY'S 1995 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 10285-5005.
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.
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<PAGE>
THE SHARES VOTING
The only voting securities of the Company are common shares, of which
there were 479,695,263 shares outstanding as of March 4, 1996, each share being
entitled to one vote. To the knowledge of management, no person beneficially
owned, as of the dates hereinafter mentioned, 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) AND ADDRESS(ES) EXPRESS COMMON SHARES PERCENT OF
OF BENEFICIAL OWNER(S) BENEFICIALLY OWNED CLASS (%)
------------------- --------------------- ---------
Warren E. Buffett, 49,456,900 (1) 10.2%
Berkshire Hathaway Inc.
and subsidiaries
1440 Kiewit Plaza
Omaha, Nebraska 68131
Edward C. Johnson 3d, 41,866,481 (2) 8.7%
Abigail P. Johnson and
FMR Corp.
82 Devonshire Street
Boston, Massachusetts 02109
- -------------
(1) Reflects shares beneficially owned as of December 31, 1995, according
to information provided by Berkshire Hathaway Inc. ("Berkshire"). Of the
shares shown, 39,005,293 shares were beneficially owned by National
Indemnity Company, a subsidiary of Berkshire. 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 43.3% 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.
In connection with obtaining the approval of the Board of Governors of the
Federal Reserve System to acquire up to 17% of the outstanding voting
shares of the Company, Berkshire and the Company have entered into an
agreement (effective for such time as Berkshire owns 10% or more of the
Company's outstanding voting securities), and Berkshire has made
commitments to the Board of Governors, designed to ensure that Berkshire's
investment in the Company will at all times be passive. Pursuant to an
additional agreement, so long as Berkshire owns 5% or more of the
Company's voting securities and 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, 1995, according to a
statement on Schedule 13G filed with the SEC. According to such Schedule
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13G, FMR Corp. ("FMR") and Mr. Johnson held sole dispositive power with
respect to 41,859,781 shares, sole voting power with respect to 3,206,838
shares, shared dispositive power with respect to 5,000 shares, and shared
voting power with respect to 5,000 shares. Of the shares shown, 36,614,163
shares were beneficially owned by FMR's wholly-owned subsidiary, Fidelity
Management and Research Company, and 272,000 shares were beneficially
owned by Fidelity International Limited ("FIL"). Approximately 47% of the
voting stock of FIL is owned by Mr. Johnson and members of his immediate
family. Mr. Johnson, Ms. Johnson, members of their family and associated
trusts form a controlling group with respect to FMR. Mr. Johnson serves as
Chairman of FMR and FIL. As a result of such common ownership and control,
FMR may be deemed to be a beneficial owner of the shares owned by FIL. FMR
disclaims beneficial ownership of the 272,000 shares beneficially owned by
FIL.
VOTE REQUIRED
The 13 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 the holders of a majority of all outstanding
shares entitled to vote is necessary for the adoption of the amendments to the
Company's 1989 Long-Term Incentive Plan. 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 the shareholder proposal.
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 Mellon
Shareholders Services, L.L.C., 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 shareholder proposal. However, abstentions are
considered in determining the numbers of votes required to attain a majority of
the outstanding shares in connection with the proposal to amend the 1989
Long-Term Incentive Plan. Because this proposal requires the affirmative vote of
a majority of all outstanding shares entitled to vote for approval, an
abstention will have the same legal effect as a vote against such proposal.
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 all of
management's proposals 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, the shareholder proposal is
"non-discretionary," and brokers who have received no instructions from their
clients do not have discretion to vote on this item. Such "broker non-votes"
will not be considered as votes cast in determining the outcome of the
shareholder proposal.
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<PAGE>
SHAREHOLDERS ENTITLED TO VOTE
Only shareholders of record at the close of business on March 4, 1996 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 4, 1996, 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.
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)
----------------- ----------------- ----------------
Daniel F. Akerson.................... 10,000 333
Anne L. Armstrong.................... 1,500 9,074
Edwin L. Artzt....................... 2,000 333
William G. Bowen..................... 3,600 6,793
David M. Culver...................... 9,609 713
Charles W. Duncan Jr................. 52,060 9,074
Harvey Golub......................... 303,005 765,575
Beverly Sills Greenough.............. 2,000 4,513
F. Ross Johnson...................... 14,000 9,074
Vernon E. Jordan Jr.................. 1,752 9,074
Henry A. Kissinger................... 2,400 9,074
Drew Lewis........................... 15,000 9,074
Aldo Papone.......................... 39,145 3,373
Frank P. Popoff...................... 6,420 1,093
All current Directors and
Executive Officers
as a group (33 individuals) (4).... 1,279,257 2,865,943
- -------------
(1) The number of shares owned by Mr. Golub and all current directors and
executive officers as a group includes 672 and 39,358 shares held in their
respective employee benefit plan accounts as of February 20, 1996.
In addition to the share amounts shown in this column, the following
directors have invested all or a portion of their directors' retainers in
Company Common Share Equivalent Units under the Deferred Compensation Plan
for Directors described on page 11. As of December 31, 1995 the number of
share equivalent units credited was as follows: Mr. Akerson--1,210 units;
Mrs. Armstrong--6,521 units; Mr. Duncan--21,272 units; Mr. Jordan--12,355
units; and Dr. Kissinger--8,090 units.
5
<PAGE>
The number of common shares shown includes 2,000 shares held by a trust of
which Mr. Popoff is a trustee, 1,100 shares held by a trust of which an
executive officer is co-trustee and 432 shares owned by children of such
executive officer. The number of common shares shown does not include
shares as to which the nominees and all current directors and executive
officers 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, 445 shares held by a trust of which Mr.
Golub's wife is the sole trustee, 2,927 shares owned by a child of Mr.
Golub, and 29,872 shares disclaimed by all current directors and executive
officers.
(2) The number of shares owned by Mr. Golub and all current directors and
executive officers as a group includes 132,505 and 658,692 shares,
respectively, of restricted stock as to which 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 2003.
(3) Shares shown include common shares subject to stock options and common
shares issuable upon conversion of convertible debentures. Mr. Golub and
all current directors and executive officers as a group hold debentures
that are convertible into 11,810 and 22,641 shares, respectively.
(4) The Company's current directors and executive officers as a group
beneficially owned approximately 4.1 million of the Company's common
shares as of March 4, 1996, representing approximately 0.9 percent of the
Company's outstanding common shares.
SHARE OWNERSHIP GUIDELINES FOR DIRECTORS
The Board of Directors believes that as a matter of governance each
director should acquire and maintain a meaningful investment in the Company.
Accordingly, the Board of Directors has observed since February 1994 a voluntary
share ownership guideline of 10,000 Company shares or share equivalents for each
director, such number of shares to be acquired over a five-year period
commencing February 1994 or on the date of such director's first election to the
Board, whichever is later.
6
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SECURITY OWNERSHIP OF NAMED EXECUTIVES
The following table sets forth, as of March 4, 1996, 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 1995 (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.
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 (%)
- ---- ------------------- ------------------ ---------
H. Golub............. 303,005 765,575 0.22
K. I. Chenault....... 104,752 374,710 0.10
G. L. Farr........... 75,000 -0- 0.02
J. S. Linen.......... 154,440 391,102 0.11
D. R. Hubers......... 47,311 134,331 0.04
- -------------
(1) The number of shares owned by Messrs. Golub, Chenault, Linen and Hubers
includes 672, 4,930, 7,308 and 215 shares held in their respective
employee benefit plan accounts as of February 20, 1996.
The number of common shares shown does not include shares as to which
Messrs. Golub and Chenault have disclaimed beneficial ownership, as
follows: 445 shares held by a trust of which Mr. Golub's wife is the sole
trustee, 2,927 shares owned by a child of Mr. Golub, and 14,342 shares
held by Mr. Chenault's wife outright or as trustee or custodian for their
children. 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 children.
(2) The number of shares owned by Messrs. Golub, Chenault, Farr, Linen and
Hubers includes 132,505, 87,765, 75,000, 42,195 and 17,334 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
and Chenault hold debentures that are convertible into 11,810 and 3,980
shares, respectively.
7
<PAGE>
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 13
director nominees, only Mr. Golub is an employee of the Company or a subsidiary.
There are currently six standing committees of the Board of Directors.
Committee memberships, the number of committee meetings held during 1995 and the
functions of those committees are described below.
AUDIT COMMITTEE
The current members of the Audit Committee are Charles W. Duncan Jr.
(Chairman), Edwin L. Artzt, William G. Bowen, 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
employees of the Company and its subsidiaries around the world, and receives
reports as to compliance with the Code. 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 1995 the Audit Committee met seven times.
COMPENSATION AND BENEFITS COMMITTEE
The current members of the Compensation and Benefits Committee are Frank
P. Popoff (Chairman), Anne L. Armstrong, Edwin L. Artzt, F. Ross Johnson and
Vernon E. Jordan Jr.
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.
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<PAGE>
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 Employee Benefits Administration
and Benefit Plans Investment Committees on their activities.
During 1995 the Compensation and Benefits Committee met eight times.
COMMITTEE ON DIRECTORS
The current members of the Committee on Directors are Vernon E. Jordan Jr.
(Chairman), Anne L. Armstrong, David M. Culver and Charles W. Duncan Jr.
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.
The Committee also considers candidates who are recommended by
shareholders in accordance with the early notification and other requirements
set forth on page 43. Any shareholder who wishes to recommend a candidate for
election to the Board should submit such recommendation to the Secretary of the
Company.
During 1995 the Committee on Directors met twice.
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 Frank P. Popoff.
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 1995.
FINANCE COMMITTEE
The current members of the Finance Committee are David M. Culver
(Chairman), F. Ross Johnson, Henry A. Kissinger, Drew Lewis and Aldo Papone.
9
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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 1995 the Finance Committee met three times.
PUBLIC RESPONSIBILITY COMMITTEE
The current members of the Public Responsibility Committee are William G.
Bowen (Chairman), Daniel F. Akerson, Beverly Sills Greenough and Aldo Papone.
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 1995 the Public Responsibility Committee met three times.
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 recently amended its Retirement Plan for Non-Employee
Directors (the "Retirement Plan"). Pursuant to the amendment, non-employee
directors elected to the Board after March 31, 1996 for the first time are not
eligible to participate in the Retirement Plan. The Retirement Plan is an
unfunded, non-qualified plan that covers directors of the Company whose Board
service began on or prior to March 31, 1996 and who are not current or former
employees of the Company or its subsidiaries. Under the Retirement Plan, 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 is payable for a period of years equal to the number of
10
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full years of service as a director or until death occurs, whichever is earlier.
In addition, the Retirement Plan provides discretion for the Board to grant
benefits to any current non-employee director who does not otherwise qualify for
a benefit under the Retirement Plan, although no such discretionary grants have
been made and none are contemplated.
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 1995 seven
non-employee directors purchased such insurance.
The Company maintains a Deferred Compensation Plan for Directors under
which directors may defer all or a portion of their annual 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 amount payable in cash which is designed to replicate the value of an
investment in an American Express common share, including reinvested dividends.
During 1995 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 five directors participate in the plan, and
their accumulated Common Share Equivalent Units are shown in footnote (1) on
page 5.
In 1993 the shareholders of the Company approved a 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 on the date of each annual meeting of shareholders at which the
director is elected or re-elected. Under the 1993 Plan 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 24, 1995 each of the 13 then incumbent non-employee directors (12 of whom
are also current nominees for re-election as directors) received options to
purchase 1,000 shares at an exercise price of $34.81 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 expects to receive a $1 million death benefit, or $500,000
in the case of such advisors. The Company in turn expects to 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.
11
<PAGE>
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 AEB's Audit Committee and $750 for attendance
at each committee meeting.
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
1995 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 1995 under the TRS agreement. These
arrangements are expected to continue in 1996. In 1995 the Company paid
Kissinger Associates, Inc., of which Dr. Kissinger is chairman, $100,000 for
consulting and international advisory services.
Dr. Kissinger is retiring as a director of the Company on April 22, 1996
pursuant to the Board's mandatory retirement policies for directors. At that
time Dr. Kissinger's directors fees will cease and his consulting arrangements
will also terminate. However, in order to continue to benefit from Dr.
Kissinger's advice and involvement on behalf of the Company's businesses, the
Board of Directors has offered, and Dr. Kissinger has accepted, a position as
Advisor to the Board, effective May 1, 1996, for which he will be paid $100,000
on an annual basis.
ELECTION OF DIRECTORS
An entire Board of Directors, consisting of 13 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 1995 the Board of Directors met 10 times and each of the current
directors attended at least 75 percent of the meetings of the Board and of the
Board committees on which the director served.
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 serve 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.
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<PAGE>
The following information is provided with respect to the nominees for
directorships. Italicized wording indicates principal occupation.
DANIEL F. AKERSON Director since 1995 Age 48
CHAIRMAN AND CHIEF EXECUTIVE OFFICER, NEXTEL COMMUNICATIONS, INC., an
international digital wireless communications company, March 1996 to present;
General Partner, Forstmann Little & Co., an investment banking firm, 1994 to
March 1996; 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 1995;
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; Director, General
Instrument Corporation; Member, Board of Directors, the Business School of the
College of William and Mary.
ANNE L. ARMSTRONG Director since 1983 Age 68
CHAIRMAN OF THE BOARD OF TRUSTEES, CENTER FOR STRATEGIC AND INTERNATIONAL
STUDIES, a non-profit public policy institution, 1987 to present; former
Chairman, President's Foreign Intelligence Advisory Board; former United States
Ambassador to Great Britain and Northern Ireland; Director, General Motors
Corporation, Halliburton Company, Boise Cascade Corporation and Glaxo Wellcome
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 65
CHAIRMAN OF THE EXECUTIVE COMMITTEE, THE PROCTER & GAMBLE COMPANY, a worldwide
consumer products company, 1995 to present, Chairman of the Board and Chief
Executive Officer, 1990 to 1995; Director, Delta Air Lines, Inc., GTE
Corporation, Teradyne, Inc. and Barilla S.p.A.; Member, The Business Council.
WILLIAM G. BOWEN Director since 1988 Age 62
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; Member, Board of
Overseers, TIAA-CREF.
DAVID M. CULVER Director since 1980 Age 71
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.; 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.
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<PAGE>
CHARLES W. DUNCAN JR. Director since 1981 Age 69
CHAIRMAN, DUNCAN INTERESTS, 1985 to present; Director, American Express Bank
Ltd., Chemical Banking Corporation, The Coca-Cola Company, Newfield Exploration
Company, PanEnergy Corp, Texas Commerce Bank, N.A., United Technologies
Corporation and The Robert A. Welch Foundation; Member, International Advisory
Board, Elf Aquitaine; Chairman of the Board of Governors, Rice University;
Member, Council on Foreign Relations.
HARVEY GOLUB Director since 1990 Age 57
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
to present; Chief Executive Officer, American Express Financial Corporation
(previously known as IDS Financial Corporation), a national financial planning,
insurance and investment advisory firm, 1984 to 1991; 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 Committee for the Arts and the Humanities and The Business
Roundtable.
BEVERLY SILLS GREENOUGH Director since 1990 Age 66
CHAIRMAN, LINCOLN CENTER FOR THE PERFORMING ARTS, 1994 to present; Managing
Director, Metropolitan Opera, 1991 to present; former General Director and
President, New York City Opera; Director, Time Warner Inc., Human Genome
Sciences, Inc., Lincoln Center Theater, Hospital for Special Surgery, National
Multiple Sclerosis Society and the Harvard Partners Council.
F. ROSS JOHNSON Director since 1986 Age 64
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 60
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, Ford Foundation and Howard University; Member, Board of Governors,
Joint Center for Political and Economic Studies.
14
<PAGE>
DREW LEWIS Director since 1986 Age 64
CHAIRMAN AND CHIEF EXECUTIVE OFFICER, UNION PACIFIC CORPORATION, a
transportation company, 1987 to present; Chairman of the Board, Union Pacific
Resources Group Inc., an energy company, 1995 to present; Director, Ford Motor
Company, AT&T Corp., FPL Group, Inc. and Gannett Co., Inc.
ALDO PAPONE Director since 1990 Age 63
SENIOR ADVISOR, AMERICAN EXPRESS COMPANY, 1991 to present; former Chairman and
Chief Executive Officer, American Express Travel Related Services Company, Inc.;
Director, American Express Bank Ltd., Hyperion Software Corporation, Springs
Industries, Inc., Body Shop International, Hospital for Special Surgery and The
National Corporate Theatre Fund.
FRANK P. POPOFF Director since 1990 Age 60
CHAIRMAN OF THE BOARD, THE DOW CHEMICAL COMPANY, a producer of chemicals and
chemical products, 1995 to present, Chairman and Chief Executive Officer, 1992
to 1995, President and Chief Executive Officer, 1987 to 1992; Director, U S
WEST, Inc. and Chemical Financial Corporation; Member, Indiana University School
of Business Dean's Advisory Council, Chemical Manufacturers Association, and
The Business Council.
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
<PAGE>
-- 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 responsibilities. For Mr. Golub, the multiple is
five times his base salary. Restricted stock awards do not count toward
fulfilling the requirement.
Section 162(m) of the U.S. Internal Revenue Code of 1986, as amended (the
"Code"), limits the Company's tax deduction to $1 million per year (the "Million
Dollar Cap") for certain compensation paid in a given year to the Chief
Executive Officer ("CEO") and the four highest compensated executives other than
the CEO named in the proxy statement (the "covered executives"). The Code and
regulations issued under the Code exclude from the Million Dollar Cap
compensation 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. 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. In
accordance with the technical requirements of the Million Dollar Cap, the Board
of Directors is requesting shareholder approval of amendments to the Company's
1989 Long-Term Incentive Plan to set forth the goals upon which
performance-based compensation may be based and certain maximum limits for
awards. These amendments, which are described beginning on page 34, must be
approved by the Company's shareholders at the 1996 Annual Meeting in order to
preserve the Company's tax deduction for future performance-based compensation
paid under the plan.
EXECUTIVE OFFICER COMPENSATION FOR 1995
Executive officer compensation for 1995 included base salary, annual
incentive awards and long-term incentive awards. The Committee established base
salary, annual incentive and long-term incentive award reference points for each
executive officer position based on job responsibilities and a review of 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. For 1995 compensation
purposes a comparative group of over 50 companies was selected with the help of
an outside compensation consultant and includes selected companies in the
Standard & Poor's 500 Index and the Standard & Poor's Financials. Actual awards
16
<PAGE>
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 and 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 1995 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 a promotion or other job change or where warranted by special
circumstances.
For 1995 bonuses, the Committee established an annual incentive target for
each executive officer with reference to the 50th and 65th percentiles of
compensation for comparable jobs in the comparative group and the relative
responsibilities of the positions. For the named executives and certain other
executive officers, bonuses were paid pursuant to 1995 annual incentive awards
which were structured to meet the requirements for exclusion from the Million
Dollar Cap. Each 1995 annual incentive 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 1995 return on equity ("ROE") and
1995 growth in earnings per share from continuing operations. The Committee
retained the discretion to adjust the formula-driven award values downward after
certifying that the performance goals had been met. The final values of the 1995
annual incentive awards were based upon the Committee's assessment of the
executive's contribution to results in the following areas (weighted
approximately 50%, 25% and 25%, respectively): 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);
and employee satisfaction (as indicated, for example, by the Company's employee
value survey results). The Committee exercised its judgment in determining each
executive officer's final award value, 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). The
final values under the 1995 annual incentive awards granted to the named
executives were above target, ranging from 1.1 to approximately 1.55 times
target. The 1995 bonuses for executive officers who did not participate in the
1995 annual incentive awards were determined in accordance with guidelines that
ranged from 0 to 200% of target based upon performance in the shareholder,
customer and employee areas described above.
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 1995 such long-term compensation consisted of Performance Grant-VI
awards ("PG-VI 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-VI 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
17
<PAGE>
points for these awards within the range of the 50th to 65th percentiles of
compensation for comparable jobs in the comparative group, except that the
reference points may fall outside the range to reflect relative job
responsibilities. In 1995 the Committee granted awards for the named executives
that were consistent with award reference points. The size and grant value of
actual awards were determined by the Committee after reviewing the 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-VI awards are long-term performance awards with two components
valued and payable at the end of the January 1995 to December 1997 performance
period. The value of one component is based on achievement of specified Company
or business unit targets for cumulative earnings (or earnings per share) and
average return on equity. The value of the second component is 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 1998. 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 values of the awards.
Non-qualified 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 the grant. Executives are expected under Company policy to hold
shares acquired through stock option exercises to meet the aformentioned stock
ownership guidelines, 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 1995 the Committee
granted a restricted stock award to Mr. Chenault in recognition of his special
contributions and appointment as Vice Chairman. In addition, the Committee
approved a hiring bonus and other compensation for Mr. Farr to replace
compensation opportunities lost upon termination of employment with his prior
employer, including long-term incentive awards (reflected in the Summary
Compensation Table on page 21 and the Long-Term Incentive Plans-Awards Table on
page 25). Of the foregoing awards, the Company expects that compensation derived
from restricted stock awards granted to Messrs. Chenault and Farr and
Performance Grant IV and V awards granted to Mr. Farr will be subject to the
Million Dollar Cap. 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.
For each of 1994, 1995 and 1996 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 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
18
<PAGE>
treasury note falls below or rises above specified levels. 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 Code. Deferred amounts are linked to Company performance until paid out.
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER FOR 1995
In February 1996 the Committee awarded Mr. Golub $1,860,000 as payout of
his 1995 incentive award. The formula-derived maximum value of the award was
determined based on the Company ROE for 1995 of 21.7% and growth in Company
earnings per share from continuing operations of 15.9% for 1995. The Committee
certified that these performance goals had been satisfied. In determining the
actual award, the Committee assessed Company performance in 1995, Mr. Golub's
personal role in achieving that performance, and the economic and competitive
environment in which that performance was achieved.
In reviewing Mr. Golub's performance and determining compensation, the
Committee took the following achievements into consideration:
-- Total shareholder return ("TSR") from price appreciation and paid
dividends of 42.8%, from year-end 1994 to year-end 1995. This compared
to a TSR of 37.5% for the Standard & Poor's ("S&P") 500 Index, 53.8%
for the S&P Financials and 36.9% for the Dow Jones Industrial Average
(which includes companies in both the S&P 500 Index and the S&P
Financials).
-- Increase in Earnings per Share of 15.9% from continuing operations, and
ROE of 21.7%. Record earnings were achieved overall, as well as in the
TRS and American Express Financial Advisors ("AEFA") segments. The
Company continued to maintain a strong balance sheet in 1995, with
increases in capital surplus and tangible book value per share.
-- Revenue growth of 11% overall, including 12.5% by TRS and 12.9% by
AEFA. The Company continued to develop and invest in growth areas,
including product extensions and co-branding (e.g., Delta(R)
SkyMiles(TM) Credit Card from American Express and Hilton(R) OptimaSM
Card), stored value products, online distribution channels (e.g.,
ExpressNetSM available on America Online) and new domestic and
international markets.
-- Enhancements to customer service and value propositions for customers
in a number of areas. The Company expanded the industry-leading
Membership MilesSM program through the launch of Membership RewardsSM
for Cardmembers, combining rewards for airlines, hotels and retail
establishments. The Company installed a new systems technology platform
which is intended to enable the Company to significantly reduce the
amount of time needed to develop and launch new products. The Company
made progress in increasing merchant coverage of American Express(R)
Cards, including major signings of important new merchants. In
addition, AEFA introduced new investment products and services and
formed several alliances with banks to provide financial planning and
other products to customers of the banks.
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<PAGE>
-- Significant progress in implementing the second phase of reengineering
to improve customer service, reduce cycle time and lower costs relative
to other companies providing similar products and services. Future
annual savings from these efforts are expected to provide opportunities
for reinvestment to strengthen the franchise and achieve long-term
financial targets. Key reengineering efforts included consolidation of
U.S. Card operations and the creation of single, company-wide staff
functions and shared resource units.
-- Sustained employee satisfaction levels on the annual, worldwide Values
Survey. These results were attained notwithstanding the restructuring
and reengineering in many parts of the Company.
The Committee also took into account disappointing financial results at
American Express Bank, a decline in market share in TRS' core Card business,
lack of productivity growth by financial advisors at AEFA, TRS' product
development process that remained relatively slow, and the Company's cost
structure that remained relatively high.
Overall, the Company made good progress in 1995 to implement its strategy
for reestablishing American Express as a growth company and achieving its vision
of becoming the world's most respected service brand. Mr. Golub, along with the
Office of the Chief Executive and other top management, led the further
implementation of the corporate brand strategy first articulated in 1994 and the
transition to a "one Company" structure with business units served by
company-wide staff functions. In recognition of these achievements, Mr. Golub's
1995 incentive award was 1.55 times the target value established for such award.
In February 1995 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 at fair market value at the date of grant and a PG-VI
award with a grant value of $1,000,000. The stock option becomes exercisable
over three years. The PG-VI award earns value as described on pages 25-26 and
vests and is payable 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 Performance Grant-IV ("PG-IV")
awards granted in May 1993 ended in December 1995. As described on page 22, the
Committee amended the original PG-IV award to create two awards, one relating to
the 1993 performance period and the other relating to the 1994-95 performance
period, to meet the requirements of the Million Dollar Cap. The Committee
certified the results against the earnings and ROE goals of the awards and
approved a total payout of $2,603,660 for Mr. Golub. The payout reflects
adjustments to take into account unusual events, including the spin-off of
Lehman Brothers Holdings Inc. ("Lehman"), gains and losses from dispositions,
accounting changes and restructuring results.
COMPENSATION AND BENEFITS COMMITTEE
Frank P. Popoff, Chairman
Anne L. Armstrong
Edwin L. Artzt
F. Ross Johnson
Vernon E. Jordan Jr.
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<TABLE>
The following table shows, for the fiscal years ending December 31, 1995,
1994 and 1993, the cash and other compensation paid or accrued and certain
long-term awards made to the named executives for services in all capacities.
<CAPTION>
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION LONG-TERM COMPENSATION
------------------------------ ---------------------------------
AWARDS(4) PAYOUTS
--------------------- ----------
OTHER RESTRICTED LONG-TERM
NAME AND PRINCIPAL ANNUAL STOCK OPTIONS/ INCENTIVE ALL OTHER
POSITION AT COMPENSA- AWARDS SARS PAYOUTS COMPENSA-
DECEMBER 31, 1995 YEAR SALARY($) BONUS($)(2) TION($)(3) ($)(5) (# SHARES) ($)(6) TION($)(7)
---------------- ---- -------- ---------- ---------- ---------- -------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
H. Golub............. 1995 $876,923 $1,860,000 $250,017 0 200,000 $2,603,660 $378,344
Chairman and Chief 1994 800,000 2,040,000 236,729 0 228,093 1,799,872 167,474
Executive Officer 1993 776,923 1,850,000 106,086 $3,390,000 456,166 907,842 228,822
K.I. Chenault........ 1995 532,692 930,000 202,986 680,000 110,000 1,545,909 177,399
Vice Chairman 1994 475,000 785,000 -- 442,498 79,829 1,008,132 69,643
1993 443,269 625,000 -- 475,000 79,829 84,752 44,718
G.L. Farr............ 1995(1) 359,615 930,000 137,620 1,728,150 160,000 520,741 962,503
Vice Chairman 1994 -- -- -- -- -- -- --
1993 -- -- -- -- -- -- --
J.S. Linen........... 1995 550,000 605,000 192,995 0 50,000 1,432,015 421,068
Vice Chairman 1994 550,000 850,000 190,733 0 62,723 1,360,226 142,879
1993 550,000 660,000 55,307 197,750 62,723 393,870 181,846
D.R. Hubers.......... 1995 421,154 650,000 55,119 0 70,000 1,174,027 149,787
President and Chief 1994 400,000 660,000 -- 0 79,829 705,175 79,823
Executive Officer- 1993 346,923 450,000 -- 468,272 49,037 261,126 65,964
American Express
Financial Corporation
</TABLE>
- -------------
(1) Reflects compensation starting May 1, 1995, the date Mr. Farr commenced
employment with the Company.
(2) 1995 bonuses were paid pursuant to 1995 incentive awards described on page
17.
(3) Amounts reported in this column for 1995 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 $58,304 for the payment of related
taxes) and personal travel expenses of $82,097; for Mr. Chenault, local
travel allowance of $84,661 (plus $71,684 for the payment of related
taxes); for Mr. Farr, local travel allowance of $56,441 (plus $46,179 for
the payment of related taxes); for Mr. Linen, local travel allowance of
$84,661 (plus $71,684 for the payment of related taxes); and for Mr.
Hubers, flexible perquisite allowance of $35,000 and personal travel
expenses of $16,243.
(4) Stock-based awards issued under the 1979 and 1989 Long-Term Incentive
Plans and outstanding prior to the Lehman spin-off were adjusted in May
1994 by a factor of approximately 1.1404 to preserve the economic value of
the awards. The numbers of shares underlying grants of restricted stock,
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<PAGE>
stock options and the exercise prices of stock options are shown in the
tables on pages 21 through 24 as adjusted for the spin-off.
(5) 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, 1995 and their fair market value based on the
per share closing price of $41.375 on December 29, 1995 were as follows:
NUMBER OF VALUE ON
NAME RESTRICTED SHARES DECEMBER 31, 1995
----- --------------- ----------------
H. Golub.................... 97,505 $4,034,269
K.I. Chenault............... 62,765 2,596,902
G.L. Farr................... 50,000 2,068,750
J.S. Linen.................. 42,195 1,745,818
D.R. Hubers................. 20,755 858,738
Dividends are payable on the restricted shares to the extent and on the
same date as dividends are paid on 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. In 1995 Mr. Farr was awarded 50,000 shares of restricted stock
which provided for vesting in equal installments on the first two
anniversaries of the date of grant.
(6) Includes payouts of a PG-IV award granted to Mr. Farr when he joined the
Company in May 1995 and PG-IV awards amended in May 1994 ("Amended PG-IV"
awards) originally granted to the other named executives in May 1993. Each
PG-IV award consisted of two components. Sixty percent of the target value
of each PG-IV award was allocated to a Financial Incentive component,
which was valued based on cumulative earnings and return on equity targets
for the business segments of the Company or for the Company on a
consolidated basis for the period January 1993 to December 1995. Forty
percent was allocated to Stock Incentive Units, which were valued based on
the Company's average share price during the 60 trading days prior to
February 26, 1996.
22
<PAGE>
PG-IV awards granted to the named executives other than Mr. Farr were
split in 1994 into two awards in order to satisfy the Company's policy of
excluding compensation from the Million Dollar Cap where the Company's
compensation objectives would still be met. The first award covered the
1993 performance period and the second award covered the 1994-95
performance period. The value of the PG-IV awards and the Amended PG-IV
awards was adjusted by the Committee to take into account unusual events,
including the Lehman spin-off, gains and losses from dispositions,
accounting changes and restructuring activities, and additional
adjustments were made for Mr. Chenault and one other executive officer to
take into account contributions to AEQL and reengineering results.
(7) Amounts reported under "All Other Compensation" for 1995 include the
dollar value of the following:
<TABLE>
<CAPTION>
EMPLOYER
CONTRIBUTIONS
UNDER ABOVE-MARKET PAYMENTS IN
PAYMENTS PROFIT SHARING, EARNINGS ON VALUE OF CONNECTION WITH
UNDER CAPITAL SAVINGS AND DEFERRED SPLIT-DOLLAR COMMENCEMENT
NAME PARTNERS I AND II RELATED PLANS COMPENSATION LIFE INSURANCE OF EMPLOYMENT
----- ----------------- -------------- ------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
H. Golub................. $225,494 $27,373 $58,507 $66,970 --
K.I. Chenault............ 126,566 28,432 825 21,576 --
G.L. Farr................ -0- -0- -0- 62,503 $900,000
J.S. Linen............... 348,423 22,808 17,603 32,234 --
D.R. Hubers.............. 84,378 23,971 6,779 34,609 --
</TABLE>
Capital Partners I and Capital Partners II are limited partnerships
established by Lehman in 1985 and 1988, respectively. Pursuant to these
partnerships, senior officers were offered the opportunity to invest in a
portfolio of high risk investments. An affiliate of Lehman is the general
partner and invested most of the capital of the partnerships. Amounts
reported reflect income distributions and distributions related to the
liquidation of assets.
The amount shown for Mr. Farr in the column "Payments in Connection with
Commencement of Employment" includes a hiring bonus and an amount to
replace certain compensation opportunities lost upon termination of
employment with his previous employer. See "Board Compensation Committee
Report on Executive Compensation--Executive Officer Compensation for 1995"
above.
<TABLE>
The following table contains information concerning the grant of
nonqualified stock options in tandem with stock appreciation rights (SARs) in
1995 to the named executives:
OPTION/SAR GRANTS IN 1995
<CAPTION>
INDIVIDUAL GRANTS (1)
----------------------------------------------------------
NUMBER OF % OF TOTAL
SECURITIES OPTIONS/SARS
UNDERLYING GRANTED TO GRANT DATE
OPTIONS/SARS EMPLOYEES EXERCISE PRICE PRESENT
NAME GRANTED (#) IN 1995 ($/SH) EXPIRATION DATE VALUE ($)(2)
---- ------------ ------------ ------------- -------------- -----------
<S> <C> <C> <C> <C> <C>
H. Golub...................... 200,000 3.4% $34.000 2/27/05 $2,146,000
K.I. Chenault................. 110,000 1.9 34.000 2/27/05 1,180,300
G.L. Farr..................... 160,000 2.7 34.563 5/1/05 1,649,600
J.S. Linen.................... 50,000 0.8 34.000 2/27/05 536,500
D.R. Hubers................... 70,000 1.2 34.000 2/27/05 751,100
</TABLE>
- -------------
(1) Stock options were granted in February 1995 to Messrs. Golub, Chenault,
Linen and Hubers and in May 1995 to Mr. Farr. Options become exercisable
in cumulative annual installments of 33 1/3% 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% of the
23
<PAGE>
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
then 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 the market value of the
Company's common shares at a future date exceeds the exercise price. In
addition to the stock prices at grant and the exercise prices, which are
identical, and the ten-year term of each option, the following assumptions
for modeling were used to calculate the values shown for options granted
in February and May 1995, respectively: expected dividend yield (3.59% and
3.49%-- the historic average yield for the most recent 60 months prior to
the grant dates), expected stock price volatility (.2623 and .2436--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 (7.74% and 7.24%-- 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 1995 and unexercised
options and SARs held as of the end of 1995:
<TABLE>
AGGREGATED OPTION/SAR EXERCISES IN 1995 AND
YEAR-END 1995 OPTION/SAR VALUES
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING IN-THE-MONEY
UNEXERCISED OPTIONS/SARS OPTIONS/SARS
AT DECEMBER 31, 1995 AT DECEMBER 31, 1995(1)
------------------------ ---------------------------
SHARES
ACQUIRED VALUE
ON EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
NAME (#) ($) (#) (#) ($) ($)
----- --------- ------- ---------- ------------ ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
H. Golub................. 161,939 $2,303,267 730,815 504,112 $12,845,616 $6,340,943
K.I. Chenault............ 5,702 86,220 307,454 189,831 5,137,034 2,035,643
G.L. Farr................ 0 0 0 160,000 0 1,089,920
J.S. Linen............... 41,055 630,789 380,898 112,724 6,446,220 1,364,327
D.R. Hubers.............. 30,335 497,404 130,004 139,567 2,047,585 1,570,231
</TABLE>
- -------------
(1) Based on the $41.375 closing price of the Company's common shares on the
New York Stock Exchange on December 29, 1995.
24
<PAGE>
<TABLE>
The following table sets forth information concerning the grant of
long-term incentive plan awards in 1995 to the named executives:
LONG-TERM INCENTIVE PLANS -- AWARDS IN 1995
<CAPTION>
ESTIMATED FUTURE PAYOUTS
UNDER NON-STOCK PRICE-BASED COMPONENT(1)
--------------------------------------
DOLLAR VALUE($)/ PERFORMANCE
NAME NUMBER OF UNITS(1) PERIOD THRESHOLD ($) TARGET ($) MAXIMUM ($)
----- ----------------- ----------- ----------- --------- ------------
<S> <C> <C> <C> <C> <C>
H. Golub.........PG-VI $600,000 Financial Incentive 1995-97 $450,000 $900,000 $2,700,000
13,109 Stock Incentive Units 1995-97 -- -- --
- -----------------------------------------------------------------------------------------------------------
K.I. Chenault....PG-VI $360,000 Financial Incentive 1995-97 270,000 540,000 1,620,000
7,865 Stock Incentive Units 1995-97 -- -- --
- -----------------------------------------------------------------------------------------------------------
G.L. Farr........PG-VI $360,000 Financial Incentive 1995-97 270,000 540,000 1,620,000
7,865 Stock Incentive Units 1995-97 -- -- --
PG-V $240,000 Financial Incentive 1994-96 120,000 240,000 720,000
5,155 Stock Incentive Units 1994-96 -- -- --
PG-IV $120,000 Financial Incentive 1993-95 60,000 120,000 360,000
3,271 Stock Incentive Units 1993-95 -- -- --
- -----------------------------------------------------------------------------------------------------------
J.S. Linen.......PG-VI $285,000 Financial Incentive 1995-97 213,750 427,500 1,282,500
6,227 Stock Incentive Units 1995-97 -- -- --
- -----------------------------------------------------------------------------------------------------------
D.R. Hubers......PG-VI $285,000 Financial Incentive 1995-97 213,750 427,500 1,282,500
6,227 Stock Incentive Units 1995-97 -- -- --
- -----------------------------------------------------------------------------------------------------------
</TABLE>
(1) Reflects PG-VI awards granted to the named executives in February and May
1995 for the January 1995 to December 1997 performance period. Also
reflects a PG-IV award and Performance Grant-V ("PG-V") award granted in
May 1995 to Mr. Farr for the January 1993 to December 1995 and January
1994 to December 1996 performance periods, respectively. Mr. Farr's PG-IV
award was paid out as described on page 22.
Performance Grant 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 Performance Grant award contains the two components
shown in this table, Financial Incentive and Stock Incentive Units
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 1998
25
<PAGE>
for PG-VI awards, February 1997 for PG-V awards and February 1996 for
PG-IV awards. Minimum performance levels for cumulative earnings and
return on equity are required for the Stock Incentive Units of the PG-VI
awards to have any value. The Committee has the discretion to make
adjustments upward or downward for Mr. Farr's PG-IV and PG-V awards and
downward only for executive officers' PG-VI awards to the sum of the value
of both components based on its assessment of Company, business unit and
individual performance.
PG-VI awards granted to the Company's executive officers were structured
to satisfy requirements for deductibility of "performance-based"
compensation under the Million Dollar Cap. Regulations applicable to the
Million Dollar Cap permit the value produced by these goals to be adjusted
downward only. The threshold, target and maximum estimated future payouts
for the Financial Incentive component of each PG-VI award were established
as multiples of the dollar grant value of the component to provide the
Committee with flexibility to adjust downward the values produced by both
components of the award and still maintain the deductibility of the award
payments. 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 1995-97
performance period.
PERFORMANCE GRAPH
The graph on the following page 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 S&P 500 Index and the S&P 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, 1990 and the reinvestment
of all dividends. On May 31, 1994 the Company distributed to shareholders all of
the common stock of Lehman owned by it as a special dividend. The graph accounts
for this distribution as though it were paid in cash and reinvested in common
shares of the Company.
26
<PAGE>
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 1990 1991 1992 1993 1994 1995
- ---- ---- ---- ---- ---- ---- ----
American
Express $100.00 $103.57 $129.88 $166.99 $187.73 $268.03
S&P 500
Index $100.00 $130.34 $140.25 $154.32 $156.42 $214.99
S&P
Financials $100.00 $150.55 $185.63 $206.11 $198.97 $306.16
27
<PAGE>
PENSION BENEFITS
The Company maintains the American Express Retirement Plan (the
"Retirement Plan"), which provides benefits for eligible employees. Through June
30, 1995 the Retirement Plan was structured as a traditional, defined benefit
plan. Effective July 1, 1995, the present value of accrued benefits under the
Retirement Plan was converted to a cash balance formula. In addition, the IDS
Retirement Plan, another traditional defined benefit plan maintained by American
Express Financial Corporation, was merged effective July 1, 1995 into the
Retirement Plan and the benefits under the IDS plan were similarly converted.
Under the cash balance formula, each participant has an account, for
record keeping purposes only, to which credits are allocated each payroll period
based upon a percentage (the "Applicable Percentage") of the participant's base
salary plus bonus paid in the current pay period ("Pensionable Earnings"). The
Applicable Percentage is determined by the age and years of service of the
participant with the Company and its affiliates as of the end of the current
calendar year. The following table shows the Applicable Percentage used to
determine credits at the age and years of service indicated.
SUM OF AGE PLUS
YEARS OF SERVICE APPLICABLE PERCENTAGE
---------------- ----------------------
Less than 35 2.50%
35-44 3.25
45-59 4.25
60-74 5.75
75-89 8.00
90 or more 10.00
As of January 1, 1996 the sum of age plus years of service for Messrs.
Golub, Chenault, Farr, Linen and Hubers was 70, 60, 56, 80 and 85, respectively.
In addition, all balances in the accounts of participants earn a fixed
rate of interest which is credited annually. The interest rate for a particular
year is based on the average of the daily five-year U.S. Treasury Note yields
for the previous October 1 through November 30. The minimum interest rate is 5
percent. The maximum rate is 10 percent or the annual maximum interest rate set
by the U.S. government for determining lump sum values, whichever is less. For
July-December, 1995, the interest rate was 6.96% and for 1996 the interest rate
is 5.78%.
At retirement or other termination of employment, an amount equal to the
vested balance then credited to the account is payable to the participant in the
form of an immediate or deferred lump sum or annuity for the entire benefit
under the Plan. Participants may choose a separate form of payment of the
portion of the benefit accrued before July 1, 1995 if the individual
participated in the Retirement Plan or the IDS Retirement Plan before July 1,
1995. Annuity payment options available before July 1, 1995 are available for
this portion of the benefit.
The table below sets forth the estimated annual benefit payable to each of
the individuals named in the Summary Compensation Table as a single life annuity
at age 65 under the Retirement Plan and the American Express Supplemental
Retirement Plan (the "Supplement Retirement Plan"). The Supplemental Retirement
28
<PAGE>
Plan is an unfunded, non-qualified deferred compensation arrangement that
primarily provides benefits that cannot be payable under a qualified plan like
the Retirement Plan because of the maximum limitations imposed on such plans by
the Code. The projections contained in the table are based on the following
assumptions: 1) employment until age 65 at base salaries in effect at December
31, 1995 with no increase in salary, 2) annual bonuses equal to the average
bonus over the last five years (1991 through 1995) for Messrs. Golub, Linen and
Chenault; estimated 1996 bonus for Mr. Farr; and the average of 1994 and 1995
bonuses for Mr. Hubers, 3) interest credits at the actual rates, 6.96% for 1995
and 5.78% for 1996, and the minimum rate of 5% for 1997 and later years, and 4)
the conversion to a straight life annuity at normal retirement age based on an
interest rate of 7% and the 1983 Group Annuity Mortality table, which sets forth
generally accepted life expectancies.
Prior to May 1, 1985 the Company maintained the American Express Funded
Pension Plan (the "Funded Pension Plan"), which was terminated effective April
30, 1985. In accordance with applicable federal law, all benefits under the
Funded Pension Plan accrued to the date of termination became fully vested and
nonforfeitable. Paid-up annuities were purchased from an insurance company to
cover vested accrued benefits, except for nominal amounts of vested accrued
benefits distributed in cash. Messrs. Linen and Chenault received past service
credit for the periods during which they were covered by the Funded Pension Plan
for purposes of determining the Applicable Percentage. The table sets forth
separately the annual benefit payable by the insurance company as a single life
annuity at age 65 to Messrs. Linen and Chenault.
<TABLE>
<CAPTION>
RETIREMENT PLAN AND ANNUAL BENEFITS
SUPPLEMENTAL RETIREMENT PLAN PAYABLE BY
EXECUTIVE OFFICER ESTIMATED ANNUAL BENEFITS INSURANCE COMPANY TOTAL ANNUAL BENEFITS
- --------------- --------------------------- ------------------ ------------------
<S> <C> <C> <C>
H. Golub................... $ 360,258 $0 $360,258
K.I. Chenault.............. 373,069 5,747 378,816
G. L. Farr................. 81,018 0 81,018
J.S. Linen................. 634,375 65,508 699,883
D.R. Hubers................ 260,586 0 260,586
</TABLE>
At the time of Mr. Golub's employment by the Company in 1983, the Company
entered into a separate unfunded, non-qualified 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 Retirement Plan and the
Supplemental Retirement Plan effective November 1, 1978. The arrangement
includes an additional five years of service above his actual service with the
Company (five years) and American Express Financial Corporation (seven years) in
order to compensate him for benefits he forfeited on termination of his previous
employment. For purposes of this arrangement Mr. Golub's opening cash balance
account value and the ongoing Applicable Percentage were calculated based upon
an additional five years of service. The Company will pay to Mr. Golub an amount
on an unfunded basis to the extent of any difference between such calculation
and amounts he is eligible to receive under the Retirement Plan and Supplemental
Retirement Plan based on his actual years of service under these Plans.
29
<PAGE>
The Committee approved an unfunded, non-qualified 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. 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.
In 1995 the Committee approved an unfunded, non-qualified arrangement for
Mr. Farr. The arrangement provides for an additional service credit of five
years upon the completion of five years of actual service. At the end of five
years of service, eligibility for pension benefits and the value of pension
benefits will be determined using a hire date five years prior to actual date of
hire. The Company will pay to Mr. Farr an amount on an unfunded basis to the
extent of any difference between such calculation and amounts he is eligible to
receive under the Retirement Plan and Supplemental Retirement Plan based on his
actual years of service under these plans.
SEVERANCE AND CHANGE IN CONTROL ARRANGEMENTS
During 1993 the 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, or in the event of a termination by mutual agreement, 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 customers or 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, 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 the above 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
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
30
<PAGE>
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 bonuses paid to the
officer for the two years prior to a change in control. 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 Supplemental Retirement
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 Supplemental Retirement 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 Performance Grant awards under the 1989 Plan would immediately vest
and a pro rata amount would be paid based on an award period ending on 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
Centurion Bank for balances on the Optima Card and may be similarly indebted to
other subsidiaries of the Company during 1996. 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
31
<PAGE>
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 Card for charges for
goods and services and pay TRS fees when the Card is used and may enter into
joint marketing arrangements from time to time. TRS provides Corporate Card and
travel services to, and sells American Express(R) 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 Rewards program and receives payments
from TRS in connection with such participation. The Company and its subsidiaries
also engage in banking, finance, advisory, 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 1995 the Company sold put options on its common shares, including 2.55
million options with a weighted average strike price of $38.91 per share which
were sold to a firm in which Berkshire has a substantial equity position. The
Company received premium payments of $4.71 million for these options. In
addition, during 1995 the Company purchased an aggregate 1.6 million of its
common shares at an average per share price of $39.71 pursuant to the exercise
of put options previously sold to such firm. Further, in early 1996 the Company
entered into a transaction with such firm in order to hedge a portion of its
position in shares of First Data Corporation common stock. Pursuant to this
transaction, the Company purchased 2,530,000 put options with a weighted average
strike price of $66.36 and sold 2,530,000 call options with a weighted average
strike price of $70.34. The Company paid a net premium of approximately
$3,300,000 in connection with this transaction.
During 1995, in connection with its ongoing program of repurchasing
Company shares, the Company purchased a total of 180,000 Company common shares
from Fidelity Capital Markets, a subsidiary of FMR. The average price paid per
share was $39.09, reflecting the prevailing open market prices at the time of
purchase. The Company also paid a brokerage commission of four cents per share.
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
32
<PAGE>
buying Company common shares at fair market value from the Company or in 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 175 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
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 6.25 percent per annum. During 1995 Messrs. Linen and Hubers had a
maximum amount outstanding under SPAP of $479,008 and $205,318, respectively. As
of March 4, 1996 Mr. Hubers' indebtedness was the same, and Mr. Linen had repaid
his loan in full. For all executive officers as a group, the maximum aggregate
amount outstanding during 1995 under SPAP was $3,146,977.92, and as of March 4,
1996 the aggregate amount outstanding was $1,764,449.
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.
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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 1996. 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 1996 is ratified and approved.
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 or a predecessor firm 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 $9.9 million for the firm's 1995 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.
PROPOSAL TO APPROVE AMENDMENTS TO THE COMPANY'S
1989 LONG-TERM INCENTIVE PLAN
In April 1989 the Company's shareholders approved the 1989 Long-Term
Incentive Plan (the "1989 Plan") and authorized 30 million shares for issuance
thereunder. In April 1993 the shareholders approved an additional 23.5 million
shares for issuance under the 1989 Plan. In addition, in 1994 the Board
increased the share reserve under the 1989 Plan to reflect the adjustments to
awards outstanding at the time of the Lehman spin-off to preserve the economic
value of the outstanding awards. As of March 4, 1996 approximately 7.8 million
shares remained available for issuance in connection with future grants.
On February 26, 1996 the Board of Directors amended the 1989 Plan, subject
to shareholder approval, to:
-- Authorize 23.7 million additional shares for future awards. These
additional shares represent approximately 4.9% of the Company's
outstanding common shares as of the date of this Proxy Statement. The
Board of Directors believes that this additional share reserve is
necessary to continue to provide competitive long-term incentive awards
to key employees that are linked to the creation of shareholder value.
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-- Specify performance criteria and limits for certain award grants and
payouts. These amendments are intended to meet the technical
requirements of the Million Dollar Cap and will enable the Company to
continue to deduct for tax purposes certain compensation paid to the
Company's chief executive officer ("CEO") and the four highest
compensated executives other than the CEO named in the proxy statement
(the "covered executives"). The amendments are not intended to result
in compensation above the level that would otherwise be provided
without the amendments.
The full text of the 1989 Plan, with the proposed amendments, is attached
to this Proxy Statement as Exhibit A. The principal features of the 1989 Plan
and the proposed amendments are described below, but such description is
qualified in its entirety by reference to the text. The amendments will not
become effective unless shareholder approval is obtained.
As part of its previously announced share repurchase program, the Company
currently intends to continue its practice of minimizing the dilutive effect of
the 1989 Plan and other stock-based programs through the acquisition of shares
to offset share issuances. Since September 1, 1994 the Company has purchased
43.2 million common shares and is currently authorized to purchase an additional
16.8 million common shares.
1989 PLAN DESCRIPTION
The primary objective of the 1989 Plan is to advance the interests of the
Company and its shareholders by providing incentives to key employees and
certain other individuals who perform services for the Company and its
affiliates ("Participants"), including those who contribute significantly to the
strategic and long-term performance objectives and growth of the Company and its
affiliates.
The 1989 Plan is administered by the Compensation and Benefits Committee
of the Board of Directors (the "Committee"), which is comprised exclusively of
non-employee directors. The 1989 Plan provides for the granting of stock
options, stock appreciation rights, restricted stock, performance grants and
other awards deemed by the Committee to be consistent with the purposes of the
1989 Plan (collectively or individually, "Awards"). Certain Awards under the
1989 Plan may be paid in cash, common shares, other Company securities (such as
debentures, preferred stock, warrants, convertible securities and other
securities issued by the Company or an affiliate ("Other Company Securities"))
or other property as determined by the Committee. The Committee has exclusive
discretion to select the Participants to whom Awards will be granted and to
determine the type, size and terms of each Award, and to make all other
determinations which it deems necessary or desirable in the interpretation and
administration of the 1989 Plan. The Committee has the authority to administer,
construe and interpret the 1989 Plan, and its decisions are final, binding and
conclusive.
Common shares and Other Company Securities that are equity securities
issued under the 1989 Plan may be newly issued shares, treasury shares,
reacquired shares or any combination thereof. Awards denominated solely in
common shares (such as shares of restricted stock or stock options) will
initially be counted against the plan maximum upon grant of the Award based upon
the maximum number of common shares underlying the Award. Other Company
Securities that are convertible into or exchangeable for common shares will be
counted against the maximum at the date of grant based upon the maximum number
of common shares that may be issued upon conversion or exchange. Other Company
Securities that are equity securities and not convertible into or exchangeable
for common shares will be counted against the maximum at the date of grant based
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on the number of shares issued. If any common shares or Other Company Securities
subject to repurchase or forfeiture rights are reacquired by the Company or if
any Award is cancelled, terminates, expires unexercised or is paid in
consideration other than common shares or Other Company Securities, the common
shares or Other Company Securities which were issued, would otherwise have been
issuable, or which were otherwise underlying the Award will become available for
new Awards. In addition, common shares or Other Company Securities withheld by
or tendered to the Company in connection with the payment of the exercise price
of an Award or the satisfaction of tax withholding obligations will be available
for issuance under new Awards.
AWARDS UNDER THE 1989 PLAN.
STOCK OPTIONS. A stock option ("Option"), which may be a non-qualified or
an incentive stock option, is the right to purchase a specified number of common
shares at a price ("Option Price") fixed by the Committee. The Option Price paid
to the Company may be no less than the fair market value of the underlying
common shares on the date of grant. As a consequence Options benefit the
Participant only when a rising stock price benefits all common shareholders.
Options are not transferable during the Participant's lifetime and will
generally expire not later than ten years after the date on which they are
granted. Options become exercisable at such times and in such installments as
the Committee shall determine. Payment of the Option Price must be made in full
at the time of exercise in cash, by tendering to the Company common shares
having a fair market value equal to the Option Price, or by other means that the
Committee deems appropriate.
No Option may be exercised unless the holder has been, at all times during
the period from the date of grant through the date of exercise, employed by or
performing services for the Company or one if its affiliates, provided that the
Committee may determine that such exercise may be made for certain periods
following the date on which a Participant ceases to be employed by or performing
services for the Company or one of its affiliates by reason of a period of
Related Employment (as defined in the 1989 Plan), retirement, disability or
death.
STOCK APPRECIATION RIGHTS. A stock appreciation right ("SAR") may be
granted alone or in tandem with Options or other Awards. Upon exercise of an
SAR, the holder must surrender the SAR and surrender unexercised any related
Option or other Award, and the holder will receive, at the election of the
Committee, cash, common shares, Other Company Securities or other consideration
equal in value to (or, in the discretion of the Committee, less than) the
difference between the exercise price or Option Price per share and the fair
market value per share on the last business day preceding the date of exercise,
multiplied by the number of shares subject to the SAR or Option or other Award.
A Participant to whom an Award of an Option or SAR is made has no rights as a
shareholder with respect to any common shares issuable pursuant to any such
Option or SAR until the date of issuance of a share certificate or the posting
of an uncertificated book entry memo position on the records maintained by the
Company's transfer agent and registrar, as the case may be, with respect to such
shares upon payment of the Option Price or settlement of the SAR.
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RESTRICTED STOCK. A restricted stock Award is an award of common shares
which are subject to a restriction against transfer (except in the case of
death) for a restricted period specified by the Committee. In the event a
Participant's employment with the Company and its affiliates terminates prior to
the end of the restricted period (except by reason of Related Employment), the
Company has the option to cancel all or a portion of the shares. Prior to the
expiration of the restricted period, a Participant who has received a restricted
stock Award has the right to vote and to receive dividends on the shares subject
to the Award.
PERFORMANCE GRANTS. Performance grants ("Performance Grants") are awards
whose final value, if any, is determined by the degree to which specified
performance objectives are achieved during a specified period, subject to such
adjustments as the Committee may approve based on relevant factors. Performance
objectives are established by the Committee and may be based upon specified
Company, business unit, Participant and/or other performance objectives. The
Committee may make such adjustments in the computation of any performance
measure as it deems appropriate. The maximum value of an Award may be a fixed
dollar amount, an amount that varies from time to time based on the value of a
common share, or an amount that is determinable from other criteria specified by
the Committee.
Payment under an Award may vest over a period of time after the final value is
determined.
Performance Grants may be awarded alone or in conjunction with other
Awards. The Committee will generally determine the value of a Performance Grant
as soon as practicable after the end of the performance period or may determine
value based upon a portion of the performance period upon earlier termination of
the Participant's employment or performance of services including by reason of
death, disability or retirement. The Committee may, however, determine the value
of the Performance Grant and pay it out at any time during the performance
period.
The rights of a Participant in a Performance Grant are provisional and may
be cancelled or paid in whole or in part if the Participant's continuous
employment with, or performance of services for, the Company and its affiliates
terminates during the performance period, except termination by reason of a
period of Related Employment.
Payment of an Award such as a Performance Grant may be made in cash,
common shares, Other Company Securities or other property or a combination
thereof as determined by the Committee. Deferred payments may be made in
installments with a return calculated on the basis of one or more investment
equivalents, as determined by the Committee in its discretion.
OTHER PROVISIONS
Under the 1989 Plan, if there is any change in the outstanding common
shares by reason of any stock split, stock dividend, combination, subdivision or
exchange of shares, recapitalization, merger, consolidation, reorganization or
other extraordinary or unusual event, the Committee may direct that appropriate
changes be made in the number or kind of securities that may be issued under the
1989 Plan and in the terms of outstanding Awards. As described above, the
Committee adjusted outstanding Awards to preserve the economic value of the
Awards following the spin-off of Lehman. The Committee has the discretion to
make appropriate changes in some or all Awards, consistent with the purposes of
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the 1989 Plan, and under certain circumstances to make appropriate upward or
downward adjustments in Awards (e.g., based upon job changes or transfers
between units of the Company), without the consent of Award holders.
Generally, a Participant's rights under the 1989 Plan may not be assigned
or transferred (except in the event of death). The Committee may permit a
Participant to pay taxes required to be withheld with respect to an Award in any
appropriate manner, including, without limitation, by the surrender to the
Company of common shares owned by such person.
The expenses of the 1989 Plan are borne by the Company and participating
affiliates. Approximately 6,000 persons are eligible to receive Awards under the
1989 Plan. The 1989 Plan will terminate on April 23, 1999 unless extended for up
to an additional five years by action of the Board of Directors of the Company.
The Board of Directors may amend the 1989 Plan for any purpose consistent with
the goals of the 1989 Plan, but no such amendment shall be effective unless and
until the same is approved by shareholders of the Company where the absence of
shareholder approval would adversely affect the compliance of the 1989 Plan with
Rule 16b-3 under the Securities Exchange Act of 1934 or other applicable law or
regulation.
THE PROPOSED AMENDMENTS
ADDITIONAL SHARES. Because of the limited number of remaining shares, the
Board of Directors believes it is appropriate at this time to authorize
additional shares for future awards. The 23.7 million shares for which approval
is sought represent approximately 4.9% of the Company's outstanding common
shares as of the date of this Proxy Statement. The awards provided by the 1989
Plan are designed to align executive and shareholder interests and to enable the
Company to attract, motivate and retain experienced and highly qualified
individuals.
MILLION DOLLAR CAP. As described on page 16 of this Proxy Statement, the
Million Dollar Cap limits the Company's tax deduction to $1 million per year for
certain compensation paid to each of the Company's covered executives. This
limitation does not apply to "performance-based compensation." Options and SARs
may qualify as performance-based compensation if shareholders approve a maximum
limit on the number of shares underlying such awards that may be granted to any
Participant over a specified period. Other Awards may qualify as
performance-based compensation if payment under such Awards is made (i) on
account of the achievement of one or more objective performance goals
established by a compensation committee consisting exclusively of two or more
outside directors (such as the Committee), (ii) pursuant to certain terms
approved by shareholders, including the maximum amount payable to any individual
and performance goals to be used, and (iii) following certification by such a
compensation committee that the performance goals and other material conditions
precedent to payment have been satisfied. Consistent with the Company's policy
described on page 16, from time to time the Committee may grant Awards under the
1989 Plan which do not qualify as performance-based compensation, in which case
the compensation paid under these Awards is subject to the Million Dollar Cap.
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Since the Million Dollar Cap became effective, the Company has been
operating under transition rules that do not require shareholder approval of
maximum limits and performance standards for Awards to be treated as
performance-based compensation. However, this transition period will end with
shareholder approval of additional shares for the 1989 Plan. Accordingly, the
Board of Directors is seeking shareholder approval of amendments to the 1989
Plan to permit the Company to continue to deduct for tax purposes compensation
paid to covered executives under awards that qualify as performance-based
compensation ("Qualifying Awards").
The amendments provide that two types of Qualifying Awards may be granted
under the 1989 Plan. The first type is Options and SARs. Commencing with
calendar year 1996, the maximum number of common shares underlying Options and
SARs that may be granted to any Participant in any calendar year is limited to
500,000, subject to anti-dilution adjustments as provided in the 1989 Plan. This
limitation is required for Options and SARs issued under the 1989 Plan to
qualify as performance-based compensation.
The second type includes Performance Grants and any other Award (other
than Options and SARs) whose payment is conditioned upon the attainment of
specific amounts of or changes in one or more of the following performance
objectives: revenues, earnings, shareholders' equity, return on equity, assets,
return on assets, capital, return on capital, book value, economic value added,
operating margins, cash flow, shareholder return, expenses or market share. The
Committee may require that payment of this kind of Qualifying Award be subject
to other conditions, such as completion of a period of service, even if the
performance objectives specified in the Award are satisfied. In addition, the
Committee shall have the discretion, by Participant and by Award, to reduce (but
not to increase) some or all of the amount that would otherwise be payable under
the Qualifying Award upon satisfaction of the performance objectives and other
conditions. In making such determination, the Committee may take into account
such factors as it determines are appropriate, including but not limited to
Company, business unit and individual performance. Since the Million Dollar Cap
became effective, the Committee has granted annual incentive awards and various
Performance Grant awards (such as PG-VI) that qualify as performance-based
compensation. These types of awards are described on pages 17-18 and 25-26 of
this Proxy Statement.
Under all Qualifying Awards of the second type, in any one calendar year:
(i) no Participant may be paid cash, common shares, Other Company Securities or
other property (other than shares of Restricted Stock) or any combination of the
foregoing with a value (as determined by the Committee) in excess of $6.5
million and (ii) no Participant may receive more than 100,000 shares of
Restricted Stock, subject to anti-dilution adjustments as provided in the 1989
Plan. For purposes of the foregoing, the amount paid or received in any calendar
year under a Qualifying Award is deemed to be the value earned under such award
based upon the attainment of performance objectives and any downward
adjustments, as determined by the Committee, as of the date of Committee
determination. These limitations apply only to Qualifying Awards granted on and
after the date of the 1996 Annual Meeting. Amounts paid pursuant to Awards
granted prior to that date will not be counted toward or subject to such limits.
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The maximum amounts described above do not increase the total amount of
compensation that may be paid under the 1989 Plan. Nor are they designed to
provide any compensation to any Participant above the level that otherwise would
be provided without the amendments. The maximum levels established by the
amendments are designed to preserve flexibility and have been established at
levels that will enable the Company to comply with the technical provisions of
the Million Dollar Cap and preserve the deductibility of performance-based
compensation paid to the covered executives. The tax benefits derived from such
deductions preserve corporate assets and benefit the Company and its
shareholders.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF OPTIONS
Tax counsel for the Company has advised that under current law certain of
the federal income tax consequences to Participants and their employers of
Options granted under the 1989 Plan should generally be as set forth in the
following summary. (For purposes of this discussion, the term "employer" shall
be deemed to include the employer of an employee optionee and the taxpayer for
whom a non-employee optionee performs services.)
An employee to whom an incentive Option which qualifies under Section 422
of the U.S. Internal Revenue Code of 1986, as amended (the "Code"), is granted
will not recognize income at the time of grant or exercise of such Option. No
federal income tax deduction will be allowable to the employee's employer upon
the grant or exercise of such Option. However, upon the exercise of an incentive
Option, special alternative minimum tax rules apply for the employee. When the
employee sells such shares more than one year after the date of transfer of such
shares and more than two years after the date of grant of such Option, the
employee will normally recognize a long-term capital gain or loss equal to the
difference, if any, between the sales price of such shares and the Option
exercise price. If the employee does not hold such shares for this period, when
the employee sells such shares, the employee will recognize ordinary
compensation income and possibly capital gain or loss in such amounts as are
prescribed by the Code and regulations thereunder. Subject to applicable
provisions of the Code and regulations thereunder, including Section 162(m) of
the Code, the employee's employer will generally be entitled to a federal income
tax deduction in the amount of such ordinary compensation income.
An individual to whom a non-qualified Option (which is treated as an
option for federal income tax purposes) is granted will not recognize income at
the time of grant of such Option. When such optionee exercises such
non-qualified Option, the optionee will recognize ordinary compensation income
equal to the difference, if any, between the Option Price paid and the fair
market value, as of the date of Option exercise, of the shares the optionee
receives. The tax basis of such shares to such optionee will be equal to the
Option Price paid plus the amount includable in the optionee's gross income, and
the optionee's holding period for such shares will commence on the day on which
the optionee recognized taxable income in respect of such shares. Subject to
applicable provisions of the Code and regulations thereunder, including those
under Section 162(m) of the Code, the employer of such optionee will generally
be entitled to a federal income tax deduction in respect of non-qualified
Options in an amount equal to the ordinary compensation income recognized by the
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optionee. Any compensation includable in the gross income of an employee in
respect of a non-qualified Option will be subject to appropriate federal income
and employment taxes.
The discussion set forth above does not purport to be a complete analysis
of all potential tax consequences relevant to recipients of Options or their
employers or to describe tax consequences based on particular circumstances and
does not address Awards other than Options. It is based on federal income tax
law and interpretational authorities as of the date of this proxy statement,
which are subject to change at any time.
ACCORDINGLY, YOUR BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE FOLLOWING
RESOLUTION:
RESOLVED, that, effective as of April 22, 1996, the amendments to the
Company's 1989 Long-Term Incentive Plan described in the Company's Proxy
Statement dated March 11, 1996 are approved.
SHAREHOLDER PROPOSALS
Management receives proposals during the year from shareholders, some of
which may be either implemented by management or withdrawn by the proponent
after review and discussion and therefore need not be presented to shareholders
in the proxy statement.
PROPOSAL RELATING TO CERES PRINCIPLES
A proposal to endorse the CERES Principles was filed by the American
Baptist Home Mission Society and other religious groups. The proponents have
agreed to withdraw the proposal from this year's proxy material in exchange for
the Company's commitment to maintain its dialogue with the proponents in an
effort to seek common ground on this issue. A representative of the CERES
Principles is expected to attend the Company's Annual Meeting and speak on
behalf of the Principles.
PROPOSAL RELATING TO DIRECTORS' RETIREMENT BENEFITS
A proposal to repeal directors' retirement benefits submitted by William
Steiner, 4 Radcliff Drive, Great Neck, New York 11024, was withdrawn in
consideration of the Company's decision to not grant benefits under the
Retirement Plan for Non-Employee Directors to future non-employee directors.
PROPOSAL RELATING TO CHANGE-IN-CONTROL ARRANGEMENTS
A proposal relating to future compensation arrangements contingent upon a
change in control submitted by Kenneth Steiner, 14 Stoner Avenue, Suite 2-M,
Great Neck, New York 11021, was withdrawn following a discussion concerning
management's views regarding change-in-control compensation arrangements.
PROPOSAL RELATING TO POLITICAL NON-PARTISANSHIP
The Company received a proposal from Mrs. Evelyn Y. Davis, Watergate
Office Building, 2600 Virginia Avenue, N.W., Suite 215, Washington, D.C. 20037,
asking that the Company affirm its political non-partisanship by avoiding such
practices as having supervisors furnish political contribution cards of a single
political party to employees, bundling individual employee contributions,
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requesting employees to issue contribution checks blank as to payee,
distributing one party's cards at management meetings and placing a
preponderance of one party's cards at employee mail stations.
The Company agrees that the foregoing practices are potentially coercive
and prohibits such practices. The Company feels that employees should be free to
support the candidates or parties of their choice in an atmosphere free from
undue influence. In light of the Company's agreement with the proposal, the
proponent withdrew the proposal.
Other resolutions from shareholders, such as the one 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.
SHAREHOLDER PROPOSAL
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."
SHAREHOLDERS' REASONS IN SUPPORT OF PROPOSAL:
"Continued very strong support along the lines we suggest were shown at
the last annual meeting when 32%, approximately 3,500 owners of 122,434,626
shares, were cast in favor of this proposal. The vote against included 3,619
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 CERES 10 points. The 11th should be, in our opinion, having cumulative
voting and ending stagger systems of electing directors.
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"When Alaska became a state it took away cumulative voting over our
objections. The Valdez oil spill might have been prevented if environmental
directors were elected through cumulative voting. Also, the huge derivative
losses might have been prevented with cumulative voting.
"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 and 1995 they
raised their dividend. In the recent Lockheed-Martin merger they put in that if
any one has 40% of the shares cumulative voting would apply. We believe that
American Express should follow these examples.
"If you agree, please mark your proxy FOR; if you disagree mark AGAINST.
NOTE: PROXY OR PROXIES NOT MARKED WILL BE VOTED AGAINST THIS RESOLUTION."
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 many 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 beholden to the group's narrow interests, thereby
introducing the likelihood of factionalism and discord within the Board that may
undermine its ability to work effectively on behalf of the interests of all of
the shareholders. The present system of voting utilized by the Company and by
most leading corporations prevents the `stacking' of votes behind potentially
partisan directors. The present system thus promotes the election of a more
effective Board in which each director represents the shareholders as a whole.
Avoidance of the destructive potential of cumulative voting is key to the
Company's goal of promoting shareholder value. The size and diversity of the
Company require a cohesive group of directors able to work together effectively
for the benefit of all shareholders.
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
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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. These 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.
A copy of the full text of the By-Law provisions discussed above may be
obtained by writing to the Secretary of the Company.
The Company's 1997 Annual Meeting of Shareholders will be held on April
28, 1997. 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 12, 1996.
CERTAIN FILINGS
Under SEC rules relating to the reporting of changes of beneficial
ownership of Company securities, reports relating to the following transactions
were not timely filed due to inadvertence: three reports pertaining to six share
transactions by the wife of Michael P. Monaco, an executive officer, under the
Company's employee benefit plans; and one report pertaining to shares acquired
in December 1990 by Mr. Bowen. Upon discovery of these oversights all of these
share transactions were correctly reported.
DIRECTORS AND OFFICERS LIABILITY INSURANCE
The Company has purchased a directors and officers liability insurance
policy from Aetna Casualty and Surety Company which provides coverage for
directors and elected and appointed officers of the Company and its subsidiaries
in certain situations in which 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. The Company has also
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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, 1995. 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 in which the Company is not
permitted to provide indemnification. The annualized premiums for these policies
were approximately $2.3 million in 1995. Each major subsidiary pays its
proportionate share of the premium. The current policies are due to expire on
March 31, 1996, and similar coverage is expected to be renewed.
The Company has also obtained an insurance policy, dated March 31, 1995,
from National Union Fire Insurance Company of Pittsburgh which 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
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, 1995. The
annualized premium for these policies in 1995 was approximately $260,000.
In accordance with the indemnification provisions of the Company's
By-Laws, in 1995 and early 1996 the Company advanced approximately $18,000 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 33 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 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 22, 1996. 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 10285-5005. 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
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EXHIBIT A
AMERICAN EXPRESS COMPANY
1989 LONG-TERM INCENTIVE PLAN
[Sentences or paragraphs containing proposed amendments
appear in bold-face type.]
1. PURPOSE. The purpose of the 1989 Long-Term Incentive Plan (the "Plan")
is to advance the interests of American Express Company (the "Company") and its
shareholders by providing incentives to certain key employees of the Company and
its affiliates and to certain other key individuals who perform services for
these entities, including those who contribute significantly to the strategic
and long-term performance objectives and growth of the Company and its
affiliates.
2. ADMINISTRATION. The Plan shall be administered solely by the
Compensation and Benefits Committee (the "Committee") of the Board of Directors
(the "Board") of the Company, as such Committee is from time to time
constituted, or any successor committee the Board may designate to administer
the Plan. If at any time Rule 16b-3 or any successor rule ("Rule 16b-3") under
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), so permits
without adversely affecting the ability of the Plan to comply with the
conditions for exemption from Section 16 of the Exchange Act (or any successor
provision) provided by Rule 16b-3, the Committee may delegate the administration
of the Plan in whole or in part, on such terms and conditions, and to such
person or persons as it may determine in its discretion, as it relates to
persons not subject to Section 16 of the Exchange Act (or any successor
provision). THE MEMBERSHIP OF THE COMMITTEE OR SUCH SUCCESSOR COMMITTEE SHALL BE
CONSTITUTED, AND THE COMMITTEE'S DELEGATION OF ADMINISTRATION SHALL BE LIMITED,
SO AS TO COMPLY AT ALL TIMES WITH THE APPLICABLE REQUIREMENTS OF RULE 16B-3 AND
TO PERMIT THE AWARD OF "PERFORMANCE-BASED COMPENSATION" UNDER SECTION 162(M) OF
THE INTERNAL REVENUE CODE OF 1986, AS AMENDED, AND THE REGULATIONS THEREUNDER
("SECTION 162(M)"). No member of the Committee shall be eligible or have been
eligible within one year prior to his appointment to receive awards under the
Plan ("Awards") or to receive awards under any other plan, program or
arrangement of the Company or any of its affiliates if such eligibility would
cause such member to cease to be a "disinterested person" under Rule 16b-3;
provided that if at any time Rule 16b-3 so permits without adversely affecting
the ability of the Plan to comply with the conditions for exemption from Section
16 of the Exchange Act (or any successor provision) provided by Rule 16b-3, one
or more members of the Committee may cease to be "disinterested persons."
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The Committee has all the powers vested in it by the terms of the Plan set
forth herein, such powers to include exclusive authority (except as may be
delegated as permitted herein) to select the key employees and other key
individuals to be granted Awards under the Plan, to determine the type, size and
terms of the Award to be made to each individual selected, to modify the terms
of any Award that has been granted, to determine the time when Awards will be
granted, to establish performance objectives, to make any adjustments necessary
or desirable as a result of the granting of Awards to eligible individuals
located outside the United States and to prescribe the form of the instruments
embodying Awards made under the Plan. The Committee is authorized to interpret
the Plan and the Awards granted under the Plan, to establish, amend and rescind
any rules and regulations relating to the Plan, and to make any other
determinations which it deems necessary or desirable for the administration of
the Plan. The Committee (or its delegate as permitted herein) may correct any
defect or supply any omission or reconcile any inconsistency in the Plan or in
any Award in the manner and to the extent the Committee deems necessary or
desirable to carry it into effect. Any decision of the Committee (or its
delegate as permitted herein) in the interpretation and administration of the
Plan, as described herein, shall lie within its sole and absolute discretion and
shall be final, conclusive and binding on all parties concerned. The Committee
may act only by a majority of its members in office, except that the members
thereof may authorize any one or more of their members or any officer of the
Company to execute and deliver documents or to take any other ministerial action
on behalf of the Committee with respect to Awards made or to be made to Plan
participants. No member of the Committee and no officer of the Company shall be
liable for anything done or omitted to be done by him, by any other member of
the Committee or by any officer of the Company in connection with the
performance of duties under the Plan, except for his own willful misconduct or
as expressly provided by statute. Determinations to be made by the Committee
under the Plan may be made by its delegates.
3. PARTICIPATION. (a) AFFILIATES. If an Affiliate (as hereinafter defined)
of the Company wishes to participate in the Plan and its participation shall
have been approved by the Board upon the recommendation of the Committee, the
board of directors or other governing body of the Affiliate shall adopt a
resolution in form and substance satisfactory to the Committee authorizing
participation by the Affiliate in the Plan with respect to its key employees or
other key individuals performing services for it. As used herein, the term
"Affiliate" means any entity in which the Company has a substantial direct or
indirect equity interest, as determined by the Committee in its discretion.
An Affiliate participating in the Plan may cease to be a participating
company at any time by action of the Board or by action of the board of
directors or other governing body of such Affiliate, which latter action shall
be effective not earlier than the date of delivery to the Secretary of the
Company of a certified copy of a resolution of the Affiliate's board of
directors or other governing body taking such action. If the participation in
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the Plan of an Affiliate shall terminate, such termination shall not relieve it
of any obligations theretofore incurred by it under the Plan, except as may be
approved by the Committee.
(b) PARTICIPANTS. Consistent with the purposes of the Plan, the Committee
shall have exclusive power (except as may be delegated as permitted herein) to
select the key employees and other key individuals performing services for the
Company and its Affiliates who may participate in the Plan and be granted Awards
under the Plan. Eligible individuals may be selected individually or by groups
or categories, as determined by the Committee in its discretion. No non-employee
director of the Company or any of its Affiliates shall be eligible to receive an
Award under the Plan.
4. AWARDS UNDER THE PLAN. (a) TYPES OF AWARDS. Awards under the Plan may
include, but need not be limited to, one or more of the following types, either
alone or in any combination thereof: (i) "Stock Options," (ii) "Stock
Appreciation Rights," (iii) "Restricted Stock," (iv) "Performance Grants" and
(v) any other type of Award deemed by the Committee in its discretion to be
consistent with the purposes of the Plan (including, but not limited to, Awards
of or options or similar rights granted with respect to unbundled stock units or
components thereof, and Awards to be made to participants who are foreign
nationals or are employed or performing services outside the United States).
Stock Options, which include "Nonqualified Stock Options" and "Incentive Stock
Options" or combinations thereof, are rights to purchase common shares of the
Company having a par value of $.60 per share and stock of any other class into
which such shares may thereafter be changed (the "Common Shares"). Nonqualified
Stock Options and Incentive Stock Options are subject to the terms, conditions
and restrictions specified in Paragraph 5. Stock Appreciation Rights are rights
to receive (without payment to the Company) cash, Common Shares, other Company
securities (which may include, but need not be limited to, unbundled stock units
or components thereof, debentures, preferred stock, warrants, securities
convertible into Common Shares or other property, and other types of securities
including, but not limited to, those of the Company or an Affiliate, or any
combination thereof ("Other Company Securities")) or property, or other forms of
payment, or any combination thereof, as determined by the Committee, based on
the increase in the value of the number of Common Shares specified in the Stock
Appreciation Right. Stock Appreciation Rights are subject to the terms,
conditions and restrictions specified in Paragraph 6. Shares of Restricted Stock
are Common Shares which are issued subject to certain restrictions pursuant to
Paragraph 7. Performance Grants are contingent awards subject to the terms,
conditions and restrictions described in Paragraph 8, pursuant to which the
participant may become entitled to receive cash, Common Shares, Other Company
Securities or property, or other forms of payment, or any combination thereof,
as determined by the Committee.
(B) MAXIMUM NUMBER OF SHARES THAT MAY BE ISSUED. THERE MAY BE ISSUED UNDER
THE PLAN (AS RESTRICTED STOCK, IN PAYMENT OF PERFORMANCE GRANTS, PURSUANT TO THE
EXERCISE OF STOCK OPTIONS OR STOCK APPRECIATION RIGHTS, OR IN PAYMENT OF OR
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PURSUANT TO THE EXERCISE OF SUCH OTHER AWARDS AS THE COMMITTEE, IN ITS
DISCRETION, MAY DETERMINE) AN AGGREGATE OF NOT MORE THAN 81,300,358* COMMON
SHARES AND OTHER COMPANY SECURITIES, SUBJECT TO ADJUSTMENT AS PROVIDED IN
PARAGRAPH 15. For purposes of this Paragraph 4(b), Other Company Securities
shall be counted against the maximum number of Common Shares as required by Rule
16b-3. Common Shares and, to the extent they constitute equity securities, Other
Company Securities issued pursuant to the Plan may be either authorized but
unissued shares, treasury shares, reacquired shares or any combination thereof.
Unless prohibited by Rule 16b-3, any Common Shares or Other Company Securities
subject to repurchase or forfeiture rights that are reacquired by the Company
pursuant to such rights or any Common Shares or Other Company Securities
previously counted against the maximum number of shares set forth above in
respect of any Award that is cancelled, terminated or expires unexercised in
whole or in part will be available for issuance under new Awards. In addition,
to the extent not prohibited by Rule 16b-3, any Common Shares or Other Company
Securities withheld by or tendered to the Company in connection with the payment
of the exercise price of an Award or the satisfaction of the tax withholding
obligations upon the exercise or vesting of an Award will be available for
issuance under new Awards.
(c) RIGHTS WITH RESPECT TO COMMON SHARES AND OTHER SECURITIES.
(i) Unless otherwise determined by the Committee in its discretion,
a participant to whom an Award of Restricted Stock has been made (and any
person succeeding to such a participant's rights pursuant to the Plan)
shall have, after issuance of a certificate or the entry on behalf of a
participant of an uncertificated book position on the records of the
Company's transfer agent and registrar for the number of Common Shares
awarded and prior to the expiration of the Restricted Period or the
earlier repurchase of such Common Shares as herein provided, ownership of
such Common Shares, including the right to vote the same and to receive
dividends or other distributions made or paid with respect to such Common
Shares (provided that such Common Shares, and any new, additional or
different shares, or Other Company Securities or property, or other forms
of consideration which the participant may be entitled to receive with
respect to such Common Shares as a result of a stock split, stock
dividend or any other change in the corporate or capital structure of the
Company, shall be subject to the restrictions hereinafter described as
determined by the Committee in its discretion), subject, however, to the
options, restrictions and limitations imposed thereon pursuant to the
Plan. Notwithstanding the foregoing, a participant with whom an Award
agreement is made to issue Common Shares in the future shall have no
rights as a shareholder with respect to Common Shares related to such
agreement until issuance of a certificate to him.
- -------------
* Of this number, as of the date of this Proxy Statement approximately
49.76 million shares have been utilized, and approximately 31.54 million shares
are available for future grants pursuant to the Plan assuming shareholder
approval of the proposed Plan amendments on April 22, 1996.
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(ii) Unless otherwise determined by the Committee in its discretion,
a participant to whom a grant of Stock Options, Stock Appreciation
Rights, Performance Grants or any other Award is made (and any person
succeeding to such a participant's rights pursuant to the Plan) shall
have no rights as a shareholder with respect to any Common Shares or as a
holder with respect to other securities, if any, issuable pursuant to any
such Award until the date of the issuance of a stock certificate to him
or the entry on his behalf of an uncertificated book position on the
records of the Company's transfer agent and registrar for such Common
Shares or other instrument of ownership, if any. Except as provided in
Paragraph 15, no adjustment shall be made for dividends, distributions or
other rights (whether ordinary or extraordinary, and whether in cash,
securities, other property or other forms of consideration, or any
combination thereof) for which the record date is prior to the date such
stock certificate or other instrument of ownership, if any, is issued.
5. STOCK OPTIONS. The Committee may grant Stock Options either alone, or
in conjunction with Stock Appreciation Rights, Performance Grants or other
Awards, either at the time of grant or by amendment thereafter; provided that an
Incentive Stock Option may be granted only to an eligible employee of the
Company or its parent or subsidiary corporation. Each Stock Option (referred to
herein as an "Option") granted under the Plan shall be evidenced by an
instrument in such form as the Committee shall prescribe from time to time in
accordance with the Plan and shall comply with the following terms and
conditions, and with such other terms and conditions, including, but not limited
to, restrictions upon the Option or the Common Shares issuable upon exercise
thereof, as the Committee, in its discretion, shall establish:
(a) The option price may be equal to or greater than the fair market value
of the Common Shares subject to such Option at the time the Option is granted,
as determined by the Committee; provided, however, that in the case of an
Incentive Stock Option granted to such an employee who owns stock representing
more than ten percent of the voting power of all classes of stock of the Company
or of its parent or subsidiary (a "Ten Percent Employee"), such option price
shall not be less than 110% of such fair market value at the time the Option is
granted; but in no event will such option price be less than the par value of
such Common Shares.
(b) The Committee shall determine the number of Common Shares to be
subject to each Option. The number of Common Shares subject to an outstanding
Option may be reduced on a share-for-share or other appropriate basis, as
determined by the Committee, to the extent that Common Shares under such Option
are used to calculate the cash, Common Shares, Other Company Securities or
property, or other forms of payment, or any combination thereof, received
pursuant to exercise of a Stock Appreciation Right attached to such Option, or
to the extent that any other Award granted in conjunction with such Option is
paid.
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(c) The Option may not be sold, assigned, transferred, pledged,
hypothecated or otherwise disposed of, except by will or the laws of descent and
distribution, and shall be exercisable during the grantee's lifetime only by
him. Unless the Committee determines otherwise, the Option shall not be
exercisable for at least six months after the date of grant, unless the grantee
ceases employment or performance of services before the expiration of such
six-month period by reason of his disability as defined in Paragraph 12 or his
death.
(d) The Option shall not be exercisable:
(i) in the case of any Incentive Stock Option granted to a Ten
Percent Employee, after the expiration of five years from the date it is
granted, and, in the case of any other Option, after the expiration of ten
years from the date it is granted. Any Option may be exercised during such
period only at such time or times and in such installments as the
Committee may establish;
(ii) unless payment in full is made for the shares being acquired
thereunder at the time of exercise; such payment shall be made in such
form (including, but not limited to, cash, Common Shares, or any
combination thereof) as the Committee may determine in its discretion; and
(iii) unless the person exercising the Option has been, at all times
during the period beginning with the date of the grant of the Option and
ending on the date of such exercise, employed by or otherwise performing
services for the Company or an Affiliate, or a corporation, or a parent or
subsidiary of a corporation, substituting or assuming the Option in a
transaction to which Section 425(a) of the Internal Revenue Code of 1986,
as amended or any successor statutory provision thereto (the "Code"), is
applicable, except that
(A) in the case of any Nonqualified Stock Option, if such person shall
cease to be employed by or otherwise performing services for the Company or an
Affiliate solely by reason of a period of Related Employment as defined in
Paragraph 14, he may, during such period of Related Employment, exercise the
Nonqualified Stock Option as if he continued such employment or performance of
service; or
(B) if such person shall cease such employment or performance of services
by reason of his disability as defined in Paragraph 12 or early, normal or
deferred retirement under an approved retirement program of the Company or an
Affiliate (or such other plan or arrangement as may be approved by the
Committee, in its discretion, for this purpose) while holding an Option which
has not expired and has not been fully exercised, such person, at any time
within three years (or such other period determined by the Committee) after the
date he ceased such employment or performance of services (but in no event after
the Option has expired), may exercise the Option with respect to any shares as
to which he could have exercised the Option on the date he ceased such
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employment or performance of services, or with respect to such greater number of
shares as determined by the Committee; or
(C) if any person to whom an Option has been granted shall die holding an
Option which has not expired and has not been fully exercised, his executors,
administrators, heirs or distributees, as the case may be, may, at any time
within one year (or such other period determined by the Committee) after the
date of death (but in no event after the Option has expired), exercise the
Option with respect to any shares as to which the decedent could have exercised
the Option at the time of his death, or with respect to such greater number of
shares as determined by the Committee.
(e) In the case of an Incentive Stock Option, the amount of aggregate fair
market value of Common Shares (determined at the time of grant of the Option
pursuant to subparagraph 5(a) of the Plan) with respect to which incentive stock
options are exercisable for the first time by an employee during any calendar
year (under all such plans of his employer corporation and its parent and
subsidiary corporations) shall not exceed $100,000.
(f) It is the intent of the Company that Nonqualified Stock Options
granted under the Plan not be classified as Incentive Stock Options, that the
Incentive Stock Options granted under the Plan be consistent with and contain or
be deemed to contain all provisions required under Section 422A and the other
appropriate provisions of the Code and any implementing regulations (and any
successor provisions thereof), and that any ambiguities in construction shall be
interpreted in order to effectuate such intent.
6. STOCK APPRECIATION RIGHTS. The Committee may grant Stock Appreciation
Rights either alone, or in conjunction with Stock Options, Performance Grants or
other Awards, either at the time of grant or by amendment thereafter. Each Award
of Stock Appreciation Rights granted under the Plan shall be evidenced by an
instrument in such form as the Committee shall prescribe from time to time in
accordance with the Plan and shall comply with the following terms and
conditions, and with such other terms and conditions, including, but not limited
to, restrictions upon the Award of Stock Appreciation Rights or the Common
Shares issuable upon exercise thereof, as the Committee, in its discretion,
shall establish:
(a) The Committee shall determine the number of Common Shares to be
subject to each Award of Stock Appreciation Rights. The number of Common Shares
subject to an outstanding Award of Stock Appreciation Rights may be reduced on a
share-for-share or other appropriate basis, as determined by the Committee, to
the extent that Common Shares under such Award of Stock Appreciation Rights are
used to calculate the cash, Common Shares, Other Company Securities or property
or other forms of payment, or any combination thereof, received pursuant to
exercise of an Option attached to such Award of Stock Appreciation Rights, or to
the extent that any other Award granted in conjunction with such Award of Stock
Appreciation Rights is paid.
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(b) The Award of Stock Appreciation Rights may not be sold, assigned,
transferred, pledged, hypothecated or otherwise disposed of, except by will or
the laws of descent and distribution, and shall be exercisable during the
grantee's lifetime only by him. Unless the Committee determines otherwise, the
Award of Stock Appreciation Rights shall not be exercisable for at least six
months after the date of grant, unless the grantee ceases employment or
performance of services before the expiration of such six-month period by reason
of his disability as defined in Paragraph 12 or his death.
(c) The Award of Stock Appreciation Rights shall not be exercisable:
(i) in the case of any Award of Stock Appreciation Rights that are
attached to an Incentive Stock Option granted to a Ten Percent Employee,
after the expiration of five years from the date it is granted, and, in
the case of any other Award of Stock Appreciation Rights, after the
expiration of ten years from the date it is granted. Any Award of Stock
Appreciation Rights may be exercised during such period only at such time
or times and in such installments as the Committee may establish;
(ii) unless the Option or other Award to which the Award of Stock
Appreciation Rights is attached is at the time exercisable; and
(iii) unless the person exercising the Award of Stock Appreciation
Rights has been at all times during the period beginning with the date of
the grant thereof and ending on the date of such exercise, employed by or
otherwise performing services for the Company or an Affiliate, except that
(A) in the case of any Award of Stock Appreciation Rights (other than
those attached to an Incentive Stock Option), if such person shall cease to be
employed by or otherwise performing services for the Company or an Affiliate
solely by reason of a period of Related Employment as defined in Paragraph 14,
he may, during such period of Related Employment, exercise the Award of Stock
Appreciation Rights as if he continued such employment or performance of
services; or
(B) if such person shall cease such employment or performance of services
by reason of his disability as defined in Paragraph 12 or early, normal or
deferred retirement under an approved retirement program of the Company or an
Affiliate (or such other plan or arrangement as may be approved by the
Committee, in its discretion, for this purpose), while holding an Award of Stock
Appreciation Rights which has not expired and has not been fully exercised, such
person may, at any time within three years (or such other period determined by
the Committee) after the date he ceased such employment or performance of
services (but in no event after the Award of Stock Appreciation Rights has
expired), exercise the Award of Stock Appreciation Rights with respect to any
shares as to which he could have exercised the Award of Stock Appreciation
Rights on the date he ceased such employment or performance of services, or with
respect to such greater number of shares as determined by the Committee; or
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(C) if any person to whom an Award of Stock Appreciation Rights has been
granted shall die holding an Award of Stock Appreciation Rights which has not
expired and has not been fully exercised, his executors, administrators, heirs
or distributees, as the case may be, may, at any time within one year (or such
other period determined by the Committee) after the date of death (but in no
event after the Award of Stock Appreciation Rights has expired), exercise the
Award of Stock Appreciation Rights with respect to any shares as to which the
decedent could have exercised the Award of Stock Appreciation Rights at the time
of his death, or with respect to such greater number of shares as determined by
the Committee.
(d) An Award of Stock Appreciation Rights shall entitle the holder (or any
person entitled to act under the provisions of subparagraph 6(c)(iii)(C) hereof)
to exercise such Award or to surrender unexercised the Option (or other Award)
to which the Stock Appreciation Right is attached (or any portion of such Option
or other Award) to the Company and to receive from the Company in exchange
therefor, without payment to the Company, that number of Common Shares having an
aggregate value equal to (or, in the discretion of the Committee, less than) the
excess of the fair market value of one share, at the time of such exercise, over
the exercise price (or Option Price, as the case may be) per share, times the
number of shares subject to the Award or the Option (or other Award), or portion
thereof, which is so exercised or surrendered, as the case may be. The Committee
shall be entitled in its discretion to elect to settle the obligation arising
out of the exercise of a Stock Appreciation Right by the payment of cash or
Other Company Securities or property, or other forms of payment, or any
combination thereof, as determined by the Committee, equal to the aggregate
value of the Common Shares it would otherwise be obligated to deliver. Any such
election by the Committee shall be made as soon as practicable after the receipt
by the Committee of written notice of the exercise of the Stock Appreciation
Right. The value of a Common Share, Other Company Securities or property, or
other forms of payment determined by the Committee for this purpose shall be the
fair market value thereof on the last business day next preceding the date of
the election to exercise the Stock Appreciation Right, unless the Committee, in
its discretion, determines otherwise.
(e) A Stock Appreciation Right may provide that it shall be deemed to have
been exercised at the close of business on the business day preceding the
expiration date of the Stock Appreciation Right or of the related Option (or
other Award), or such other date as specified by the Committee, if at such time
such Stock Appreciation Right has a positive value. Such deemed exercise shall
be settled or paid in the same manner as a regular exercise thereof as provided
in subparagraph 6(d) hereof.
(f) No fractional shares may be delivered under this Paragraph 6, but in
lieu thereof a cash or other adjustment shall be made as determined by the
Committee in its discretion.
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7. RESTRICTED STOCK. Each Award of Restricted Stock under the Plan shall
be evidenced by an instrument in such form as the Committee shall prescribe from
time to time in accordance with the Plan and shall comply with the following
terms and conditions, and with such other terms and conditions as the Committee,
in its discretion, shall establish:
(a) The Committee shall determine the number of Common Shares to be issued
to a participant pursuant to the Award, and the extent, if any, to which they
shall be issued in exchange for cash, other consideration, or both.
(b) Common Shares issued to a participant in accordance with the Award may
not be sold, assigned, transferred, pledged, hypothecated or otherwise disposed
of, except by will or the laws of descent and distribution, or as otherwise
determined by the Committee, for such period as the Committee shall determine,
from the date on which the Award is granted (the "Restricted Period"). The
Company will have the option to repurchase the shares subject to the Award at
such price as the Committee shall have fixed, in its discretion, when the Award
was made or amended thereafter, which option will be exercisable (i) if the
participant's continuous employment or performance of services for the Company
and its Affiliates shall terminate for any reason, except solely by reason of a
period of Related Employment as defined in Paragraph 14, or except as otherwise
provided in subparagraph 7(c), prior to the expiration of the Restricted Period,
(ii) if, on or prior to the expiration of the Restricted Period or the earlier
lapse of such repurchase option, the participant has not paid to the Company an
amount equal to any federal, state, local or foreign income or other taxes which
the Company determines is required to be withheld in respect of such shares, or
(iii) under such other circumstances as determined by the Committee in its
discretion. Such repurchase option shall be exercisable on such terms, in such
manner and during such period as shall be determined by the Committee when the
Award is made or as amended thereafter. Each certificate for Common Shares
issued pursuant to a Restricted Stock Award shall bear an appropriate legend
referring to the foregoing repurchase option and other restrictions and to the
fact that the shares are partly paid, shall be deposited by the awardholder with
the Company, together with a stock power endorsed in blank, or shall be
evidenced in such other manner permitted by applicable law as determined by the
Committee in its discretion. Any attempt to dispose of any such Common Shares in
contravention of the foregoing repurchase option and other restrictions shall be
null and void and without effect. If Common Shares issued pursuant to a
Restricted Stock Award shall be repurchased pursuant to the repurchase option
described above, the participant, or in the event of his death, his personal
representative, shall forthwith deliver to the Secretary of the Company the
certificates for the Common Shares awarded to the participant, accompanied by
such instrument of transfer, if any, as may reasonably be required by the
Secretary of the Company. If the repurchase option described above is not
exercised by the Company, such option and the restrictions imposed pursuant to
the first sentence of this subparagraph 7(b) shall terminate and be of no
further force and effect.
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(c) If a participant who has been in continuous employment or performance
of services for the Company or an Affiliate since the date on which a Restricted
Stock Award was granted to him shall, while in such employment or performance of
services, die, or terminate such employment or performance of services by reason
of disability as defined in Paragraph 12 or by reason of early, normal or
deferred retirement under an approved retirement program of the Company or an
Affiliate (or such other plan or arrangement as may be approved by the Committee
in its discretion, for this purpose) and any of such events shall occur after
the date on which the Award was granted to him and prior to the end of the
Restricted Period of such Award, the Committee may determine to cancel the
repurchase option (and any and all other restrictions) on any or all of the
Common Shares subject to such Award; and the repurchase option shall become
exercisable at such time as to the remaining shares, if any.
8. PERFORMANCE GRANTS. The Award of a Performance Grant ("Performance
Grant") to a participant will entitle him to receive a specified amount
determined by the Committee (the "Actual Value"), if the terms and conditions
specified herein and in the Awards are satisfied. Each Award of a Performance
Grant shall be subject to the following terms and conditions, and to such other
terms and conditions, including but not limited to, restrictions upon any cash,
Common Shares, Other Company Securities or property, or other forms of payment,
or any combination thereof, issued in respect of the Performance Grant, as the
Committee, in its discretion, shall establish, and shall be embodied in an
instrument in such form and substance as is determined by the Committee:
(a) The Committee shall determine the value or range of values of a
Performance Grant to be awarded to each participant selected for an Award and
whether or not such a Performance Grant is granted in conjunction with an Award
of Options, Stock Appreciation Rights, Restricted Stock or other Award, or any
combination thereof, under the Plan (which may include, but need not be limited
to, deferred Awards) concurrently or subsequently granted to the participant
(the "Associated Award"). As determined by the Committee, the maximum value of
each Performance Grant (the "Maximum Value") shall be: (i) an amount fixed by
the Committee at the time the Award is made or amended thereafter, (ii) an
amount which varies from time to time based in whole or in part on the then
current value of a Common Share, Other Company Securities or property, or other
securities or property, or any combination thereof or (iii) an amount that is
determinable from criteria specified by the Committee. Performance Grants may be
issued in different classes or series having different names, terms and
conditions. In the case of a Performance Grant awarded in conjunction with an
Associated Award, the Performance Grant may be reduced on an appropriate basis
to the extent that the Associated Award has been exercised, paid to or otherwise
received by the participant, as determined by the Committee.
(b) The award period ("Award Period") in respect of any Performance Grant
shall be a period determined by the Committee. At the time each Award is made,
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the Committee shall establish performance objectives to be attained within the
Award Period as the means of determining the Actual Value of such a Performance
Grant. The performance objectives shall be based on such measure or measures of
performance, which may include, but need not be limited to, the performance of
the participant, the Company, one or more of its subsidiaries or one or more of
their divisions or units, or any combination of the foregoing, as the Committee
shall determine, and may be applied on an absolute basis or be relative to
industry or other indices, or any combination thereof. The Actual Value of a
Performance Grant shall be equal to its Maximum Value only if the performance
objectives are attained in full, but the Committee shall specify the manner in
which the Actual Value of Performance Grants shall be determined if the
performance objectives are met in part. Such performance measures, the Actual
Value or the Maximum Value, or any combination thereof, may be adjusted in any
manner by the Committee in its discretion at any time and from time to time
during or as soon as practicable after the Award Period, if it determines that
such performance measures the Actual Value or the Maximum Value, or any
combination thereof, are not appropriate under the circumstances.
(c) The rights of a participant in Performance Grants awarded to him shall
be provisional and may be cancelled or paid in whole or in part, all as
determined by the Committee, if the participant's continuous employment or
performance of services for the Company and its Affiliates shall terminate for
any reason prior to the end of the Award Period, except solely by reason of a
period of Related Employment as defined in Paragraph 14.
(d) The Committee shall determine whether the conditions of subparagraph
8(b) or 8(c) hereof have been met and, if so, shall ascertain the Actual Value
of the Performance Grants. If the Performance Grants have no Actual Value, the
Award and such Performance Grants shall be deemed to have been cancelled and the
Associated Award, if any, may be cancelled or permitted to continue in effect in
accordance with its terms. If the Performance Grants have an Actual Value and:
(i) were not awarded in conjunction with an Associated Award, the
Committee shall cause an amount equal to the Actual Value of the
Performance Grants earned by the participant to be paid to him or his
beneficiary as provided below; or
(ii) were awarded in conjunction with an Associated Award, the
Committee shall determine, in accordance with criteria specified by the
Committee (A) to cancel the Performance Grants, in which event no amount
in respect thereof shall be paid to the participant or his beneficiary,
and the Associated Award may be permitted to continue in effect in
accordance with its terms, (B) to pay the Actual Value of the Performance
Grants to the participant or his beneficiary as provided below, in which
event the Associated Award may be cancelled or (C) to pay to the
participant or his beneficiary as provided below, the Actual Value of only
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a portion of the Performance Grants, in which event all or a portion of
the Associated Award may be permitted to continue in effect in accordance
with its terms or be cancelled, as determined by the Committee.
Such determination by the Committee shall be made as promptly as
practicable following the end of the Award Period or upon the earlier
termination of employment or performance of services, or at such other time or
times as the Committee shall determine, and shall be made pursuant to criteria
specified by the Committee.
Payment of any amount in respect of the Performance Grants which the
Committee determines to pay as provided above shall be made by the Company, as
promptly as practicable after the end of the Award Period or at such other time
or times as the Committee shall determine, and may be made in cash, Common
Shares, Other Company Securities or property, or other forms of payment, or any
combination thereof or in such other manner, as determined by the Committee in
its discretion. Notwithstanding anything in this Paragraph 8 to the contrary,
the Committee may, in its discretion, determine and pay out the Actual Value of
the Performance Grants at any time during the Award Period.
9. DEFERRAL OF COMPENSATION. The Committee shall determine whether or not
an Award shall be made in conjunction with deferral of the participant's salary,
bonus or other compensation, or any combination thereof, and whether or not such
deferred amounts may be
(i) forfeited to the Company or to other participants, or any
combination thereof, under certain circumstances (which may include, but
need not be limited to, certain types of termination of employment or
performance of services for the Company and its Affiliates),
(ii) subject to increase or decrease in value based upon the
attainment of or failure to attain, respectively, certain performance
measures and/or
(iii) credited with income equivalents (which may include, but need
not be limited to, interest, dividends or other rates of return) until the
date or dates of payment of the Award, if any.
9A. QUALIFYING AWARDS. THE COMMITTEE MAY, IN ITS SOLE DISCRETION, GRANT AN
AWARD TO ANY PARTICIPANT WITH THE INTENT THAT SUCH AWARD QUALIFIES AS
"PERFORMANCE-BASED COMPENSATION" UNDER SECTION 162(M) (A "QUALIFYING AWARD").
THE PROVISIONS OF THIS PARAGRAPH 9A AS WELL AS ALL OTHER APPLICABLE PROVISIONS
OF THE PLAN NOT INCONSISTENT WITH THIS PARAGRAPH 9A SHALL APPLY TO ALL
QUALIFYING AWARDS ISSUED UNDER THE PLAN. QUALIFYING AWARDS SHALL BE OF THE TYPE
SET FORTH IN SUBPARAGRAPH (A) OR (B) BELOW.
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(A) QUALIFYING AWARDS MAY BE ISSUED AS STOCK OPTIONS AND STOCK
APPRECIATION RIGHTS. COMMENCING WITH CALENDAR YEAR 1996, THE NUMBER OF COMMON
SHARES UNDERLYING ALL OPTIONS AND STOCK APPRECIATION RIGHTS THAT MAY BE GRANTED
TO ANY PARTICIPANT WITHIN ANY CALENDAR YEAR SHALL BE LIMITED TO 500,000, SUBJECT
TO ADJUSTMENT AS PROVIDED IN PARAGRAPH 15. THE FOREGOING LIMITATION SHALL BE
SUBJECT TO THE LIMITATION SET FORTH IN PARAGRAPH 4(B).
(B)(I) QUALIFYING AWARDS (OTHER THAN STOCK OPTIONS AND STOCK APPRECIATION
RIGHTS) MAY BE ISSUED AS PERFORMANCE GRANTS AND ANY OTHER AWARD WHOSE PAYMENT IS
CONDITIONED UPON THE ACHIEVEMENT OF THE PERFORMANCE OBJECTIVES DESCRIBED IN THIS
SUBPARAGRAPH. AMOUNTS EARNED UNDER SUCH AWARDS SHALL BE BASED UPON THE
ATTAINMENT OF PERFORMANCE OBJECTIVES ESTABLISHED BY THE COMMITTEE IN ACCORDANCE
WITH SECTION 162(M). SUCH PERFORMANCE OBJECTIVES MAY VARY BY PARTICIPANT AND BY
AWARD AND SHALL BE BASED UPON THE ATTAINMENT OF SPECIFIC AMOUNTS OF, OR CHANGES
IN ONE OR MORE OF THE FOLLOWING: REVENUES, EARNINGS, SHAREHOLDERS' EQUITY,
RETURN ON EQUITY, ASSETS, RETURN ON ASSETS, CAPITAL, RETURN ON CAPITAL, BOOK
VALUE, ECONOMIC VALUE ADDED, OPERATING MARGINS, CASH FLOW, SHAREHOLDER RETURN,
EXPENSES OR MARKET SHARE. THE FOREGOING OBJECTIVES MAY BE APPLICABLE TO THE
COMPANY AS A WHOLE, ONE OR MORE OF ITS SUBSIDIARIES, DIVISIONS, BUSINESS UNITS
OR BUSINESS LINES, OR ANY COMBINATION OF THE FOREGOING, AND MAY BE APPLIED ON AN
ABSOLUTE BASIS OR BE RELATIVE TO OTHER COMPANIES, INDUSTRIES OR INDICES OR BE
BASED UPON ANY COMBINATION OF THE FOREGOING. IN ADDITION TO THE PERFORMANCE
OBJECTIVES THE COMMITTEE MAY ALSO CONDITION PAYMENT OF ANY SUCH AWARD UPON THE
ATTAINMENT OF CONDITIONS, SUCH AS COMPLETION OF A PERIOD OF SERVICE,
NOTWITHSTANDING THAT THE PERFORMANCE OBJECTIVE OR OBJECTIVES SPECIFIED IN THE
AWARD ARE SATISFIED. THE COMMITTEE SHALL HAVE THE DISCRETION, BY PARTICIPANT AND
BY AWARD, TO REDUCE (BUT NOT TO INCREASE) SOME OR ALL OF THE AMOUNT THAT WOULD
OTHERWISE BE PAYABLE UNDER THE AWARD BY REASON OF THE SATISFACTION OF THE
PERFORMANCE OBJECTIVES SET FORTH IN THE AWARD. IN MAKING ANY SUCH DETERMINATION,
THE COMMITTEE IS AUTHORIZED TO TAKE INTO ACCOUNT ANY SUCH FACTOR OR FACTORS IT
DETERMINES ARE APPROPRIATE, INCLUDING BUT NOT LIMITED TO COMPANY, BUSINESS UNIT
AND INDIVIDUAL PERFORMANCE.
(II) UNDER ALL AWARDS GRANTED PURSUANT TO THIS SUBPARAGRAPH (B), IN ANY
ONE CALENDAR YEAR: (A) NO PARTICIPANT MAY BE PAID CASH, COMMON SHARES, OTHER
COMPANY SECURITIES OR OTHER PROPERTY (OTHER THAN SHARES OF RESTRICTED STOCK) OR
ANY COMBINATION OF THE FOREGOING WITH A VALUE (AS DETERMINED BY THE COMMITTEE)
IN EXCESS OF $6.5 MILLION AND (B) NO PARTICIPANT MAY RECEIVE MORE THAN 100,000
SHARES OF RESTRICTED STOCK, SUBJECT TO ADJUSTMENT TO THE EXTENT PROVIDED IN
PARAGRAPH 15. FOR PURPOSES OF THE FOREGOING, THE AMOUNT PAID OR RECEIVED IN ANY
CALENDAR YEAR UNDER A QUALIFYING AWARD DESCRIBED IN THIS SUBPARAGRAPH (B) SHALL
BE DEEMED TO BE THE VALUE EARNED UNDER SUCH AWARD BASED UPON THE ATTAINMENT OF
PERFORMANCE OBJECTIVES AND ANY DOWNWARD ADJUSTMENTS, AS DETERMINED BY THE
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COMMITTEE, AS OF THE DATE OF THE DETERMINATION. THE LIMITATIONS CONTAINED IN
THIS SUBPARAGRAPH (B)(II) SHALL APPLY ONLY TO QUALIFYING AWARDS GRANTED ON AND
AFTER APRIL 22, 1996. AMOUNTS PAID PURSUANT TO AWARDS GRANTED UNDER THE PLAN
PRIOR TO APRIL 22, 1996 SHALL NOT BE COUNTED TOWARD OR SUBJECT TO SUCH LIMITS.
10. DEFERRED PAYMENT OF AWARDS. The Committee may specify that the payment
of all or any portion of cash, Common Shares, Other Company Securities or
property, or any other form of payment, or any combination thereof, under an
Award shall be deferred until a later date. Deferrals shall be for such periods
or until the occurrence of such events, and upon such terms, as the Committee
shall determine in its discretion. Deferred payments of Awards may be made by
undertaking to make payment in the future based upon the performance of certain
investment equivalents (which may include, but need not be limited to,
government securities, Common Shares, other securities, property, or
consideration, or any combination thereof), together with such additional
amounts of income equivalents (which may be compounded and may include, but need
not be limited to, interest, dividends or other rates of return, or any
combination thereof) as may accrue thereon until the date or dates of payment,
such investment equivalents and such additional amounts of income equivalents to
be determined by the Committee in its discretion.
11. AMENDMENT OF AWARDS UNDER THE PLAN. The terms of any outstanding Award
under the Plan may be amended from time to time by the Committee in its
discretion in any manner that it deems appropriate (including, but not limited
to, acceleration of the date of exercise of any Award and/or payments
thereunder); provided that no such amendment shall adversely affect in a
material manner any right of a participant under the Award without his written
consent, unless the Committee determines in its discretion that there have
occurred or are about to occur significant changes in the participant's
position, duties or responsibilities, or significant changes in economic,
legislative, regulatory, tax, accounting or cost/benefit conditions which are
determined by the Committee in its discretion to have or to be expected to have
a substantial effect on the performance of the Company, or any subsidiary,
affiliate, division or department thereof, on the Plan or on any Award under the
Plan.
12. DISABILITY. For the purposes of this Plan, a participant shall be
deemed to have terminated his employment or performance of services for the
Company and its Affiliates by reason of disability, if the Committee shall
determine that the physical or mental condition of the participant by reason of
which such employment or performance of services terminated was such at that
time as would entitle him to payment of monthly disability benefits under the
Company's Long Term Disability Benefit Plan, or, if the participant is not
eligible for benefits under such plan, under any similar disability plan of the
Company or an Affiliate in which he is a participant. If the participant is not
eligible for benefits under any disability plan of the Company or an Affiliate,
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he shall be deemed to have terminated such employment or performance of services
by reason of disability if the Committee shall determine that his physical or
mental condition would entitle him to benefits under the Company's Long Term
Disability Benefit Plan if he were eligible therefor.
13. TERMINATION OF A PARTICIPANT. For all purposes under the Plan, the
Committee shall determine whether a participant has terminated employment by or
the performance of services for the Company and its Affiliates; provided,
however, that transfers between the Company and an Affiliate or between
Affiliates, and approved leaves of absence shall not be deemed such a
termination.
14. RELATED EMPLOYMENT. For the purposes of this Plan, Related Employment
shall mean the employment or performance of services by an individual for an
employer that is neither the Company nor an Affiliate, provided that (i) such
employment or performance of services is undertaken by the individual at the
request of the Company or an Affiliate, (ii) immediately prior to undertaking
such employment or performance of services, the individual was employed by or
performing services for the Company or an Affiliate or was engaged in Related
Employment as herein defined and (iii) such employment or performance of
services is in the best interests of the Company and is recognized by the
Committee, in its discretion, as Related Employment for purposes of this
Paragraph 14. The death or disability of an individual during a period of
Related Employment as herein defined shall be treated, for purposes of this
Plan, as if the death or onset of disability had occurred while the individual
was employed by or performing services for the Company or an Affiliate.
15. DILUTION AND OTHER ADJUSTMENTS. In the event of any change in the
outstanding Common Shares of the Company by reason of any stock split, stock
dividend, split-up, split-off, spin-off, recapitalization, merger,
consolidation, rights offering, reorganization, combination or exchange of
shares, a sale by the Company of all or part of its assets, any distribution to
shareholders other than a normal cash dividend, or other extraordinary or
unusual event, if the Committee shall determine, in its discretion, that such
change equitably requires an adjustment in the terms of any Award or the number
of Common Shares available for Awards, such adjustment may be made by the
Committee and shall be final, conclusive and binding for all purposes of the
Plan.
16. DESIGNATION OF BENEFICIARY BY PARTICIPANT. A participant may name a
beneficiary to receive any payment in which he may be entitled in respect of any
Award under the Plan in the event of his death, on a written form to be provided
by and filed with the Committee, and in a matter determined by the Committee in
its discretion. The Committee reserves the right to review and approve
beneficiary designations. A participant may change his beneficiary from time to
time in the same manner, unless such participant has made an irrevocable
designation. Any designation of beneficiary under the Plan (to the extent it is
valid and enforceable under the applicable law) shall be controlling over any
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other disposition, testamentary, or otherwise, as determined by the Committee in
its discretion. If no designated beneficiary survives the participant and is
living on the date on which any amount becomes payable to such participant's
beneficiary, such payment will be made to the legal representatives of the
participant's estate, and the term "beneficiary" as used in the Plan shall be
deemed to include such person or persons. If there is any question as to the
legal right of any beneficiary to receive a distribution under the Plan, the
Committee in its discretion may determine that the amount in question be paid to
the legal representatives of the estate of the participant, in which event the
Company, the Board and the Committee and the members thereof will have no
further liability to anyone with respect to such amount.
17. FINANCIAL ASSISTANCE. If the Committee determines that such action is
advisable, the Company may assist any person to whom an Award has been granted
in obtaining financing from the Company under the American Express 1983 Stock
Purchase Assistance Plan (or other program of the Company, or one of its
Affiliates approved pursuant to applicable law), or from a bank or other third
party, on such terms as are determined by the Committee, and in such amount as
is required to accomplish the purposes of the Plan, including, but not limited
to, to permit the exercise of an Award, the participation therein, and/or the
payment of any taxes in respect thereof. Such assistance may take any form that
the Committee deems appropriate, including, but not limited to, a direct loan
from the Company or an Affiliate, a guarantee of the obligation by the Company
or an Affiliate, or the maintenance by the Company or an Affiliate of deposits
with such bank or third party.
18. MISCELLANEOUS PROVISIONS.
(a) No employee or other person shall have any claim or right to be
granted an Award under the Plan. Determinations made by the Committee under the
Plan need not be uniform and may be made selectively among eligible individuals
under the Plan, whether or not such eligible individuals are similarly situated.
Neither the Plan nor any action taken hereunder shall be construed as giving any
employee or other person any right to continue to be employed by or perform
services for the Company or any Affiliate, and the right to terminate the
employment of or performance of services by any participant at any time and for
any reason is specifically reserved.
(b) No participant or other person shall have any right with respect to
the Plan, the Common Shares reserved for issuance under the Plan or in any
Award, contingent or otherwise, until written evidence of the Award shall have
been delivered to the recipient and all the terms, conditions and provisions of
the Plan and the Award applicable to such recipient (and each person claiming
under or through him) have been met.
(c) Except as may be approved by the Committee where such approval shall
not adversely affect compliance of the Plan with Rule 16b-3 under the Exchange
Act, a participant's rights and interest under the Plan may not be assigned or
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transferred, hypothecated or encumbered in whole or in part either directly or
by operation of law or otherwise (except in the event of a participant's death)
including, but not by way of limitation, execution, levy, garnishment,
attachment, pledge, bankruptcy or in any other manner; provided, however, that
any Option or similar right (including, but not limited to, a Stock Appreciation
Right) offered pursuant to the Plan shall not be transferable other than by will
or the laws of descent and distribution and shall be exercisable during the
participant's lifetime only by him.
(d) No Common Shares, Other Company Securities or property, other
securities or property, or other forms of payment shall be issued hereunder with
respect to any Award unless counsel for the Company, shall be satisfied that
such issuance will be in compliance with applicable federal, state, local and
foreign legal, securities exchange and other applicable requirements.
(e) It is the intent of the Company that the Plan comply in all respects
with Rule 16b-3 under the Exchange Act, that any ambiguities or inconsistencies
in construction of the Plan be interpreted to give effect to such intention and
that if any provision of the Plan is found not to be in compliance with Rule
16b-3, such provision shall be deemed null and void to the extent required to
permit the Plan to comply with Rule 16b-3.
(f) The Company and its Affiliates shall have the right to deduct from any
payment made under the Plan any federal, state, local or foreign income or other
taxes required by law to be withheld with respect to such payment. It shall be a
condition to the obligation of the Company to issue Common Shares, Other Company
Securities or property, other securities or property, or other forms of payment,
or any combination thereof, upon exercise, settlement or payment of any Award
under the Plan, that the participant (or any beneficiary or person entitled to
act) pay to the Company, upon its demand, such amount as may be requested by the
Company for the purpose of satisfying any liability to withhold federal, state,
local or foreign income or other taxes. If the amount requested is not paid, the
Company may refuse to issue Common Shares, Other Company Securities or property,
other securities or property, or other forms of payment, or any combination
thereof. Notwithstanding anything in the Plan to the contrary, the Committee
may, in its discretion, permit an eligible participant (or any beneficiary or
person entitled to act) to elect to pay a portion or all of the amount requested
by the Company for such taxes with respect to such Award, at such time and in
such manner as the Committee shall deem to be appropriate (including, but not
limited to, by authorizing the Company to withhold, or agreeing to surrender to
the Company on or about the date such tax liability is determinable, Common
Shares, Other Company Securities or property, other securities or property, or
other forms of payment, that would otherwise be distributed, or have been
distributed, as the case may be, pursuant to such Award to such person, having a
fair market value equal to the amount of such taxes).
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(g) The expenses of the Plan shall be borne by the Company. However,
if an Award is made to an individual employed by or
performing services for an Affiliate,
(i) if such Award results in payment of cash to the participant, such
Affiliate shall pay to the Company an amount equal to such cash payment;
and
(ii) if the Award results in the issuance by the Company to the
participant of Common Shares, Other Company Securities or property, other
securities or property, or other forms of payment, or any combination
thereof, such Affiliate shall pay to the Company an amount equal to the
fair market value thereof, as determined by the Committee, on the date
such shares, Other Company Securities or property, other securities or
property, or other forms of payment, or any combination thereof, are
issued (or, in the case of the issuance of Restricted Stock or of Common
Shares, Other Company Securities or property, or other securities or
property, or other forms of payment subject to transfer and forfeiture
conditions, equal to the fair market value thereof on the date on which
they are no longer subject to applicable restrictions), minus the amount,
if any, received by the Company in respect of the purchase of such Common
Shares, Other Company Securities or property, other securities or property
or other forms of payment, or any combination thereof.
(h) The Plan shall be unfunded. The Company shall not be required to
establish any special or separate fund or to make any other segregation of
assets to assure the payment of any Award under the Plan, and the rights to the
payment of Awards shall be no greater than the rights of the Company's general
creditors.
(i) By accepting any Award or other benefit under the Plan, each
participant and each person claiming under or through him shall be conclusively
deemed to have indicated his acceptance and ratification of, and consent to, any
action taken under the Plan by the Company, the Board or the Committee or its
delegates.
(j) Fair market value in relation to Common Shares, Other Company
Securities or property, other securities or property or other forms of payment
of Awards under the Plan, or any combination thereof, as of any specific time
shall mean such value as determined by the Committee in accordance with
applicable law.
(k) The masculine pronoun includes the feminine and the singular includes
the plural wherever appropriate.
(l) The appropriate officers of the Company shall cause to be filed any
reports, returns or other information regarding Awards hereunder or any Common
Shares issued pursuant hereto as may be required by Section 13 or 15(d) of the
Exchange Act (or any successor provision) or any other applicable statute, rule
or regulation.
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(m) The validity, construction, interpretation, administration and effect
of the Plan, and of its rules and regulations, and rights relating to the Plan
and to Awards granted under the Plan, shall be governed by the substantive laws,
but not the choice of law rules, of the State of New York.
19. PLAN AMENDMENT OR SUSPENSION. The Plan may be amended or suspended in
whole or in part at any time and from time to time by the Board, but no
amendment shall be effective unless and until the same is approved by
shareholders of the Company, where the failure to obtain such approval would
adversely affect the compliance of the Plan with Rule 16b-3 under the Exchange
Act and with other applicable law. No amendment of the Plan shall adversely
affect in a material manner any right of any participant with respect to any
Award theretofore granted without such participant's written consent, except as
permitted under Paragraph 11.
20. PLAN TERMINATION. This Plan shall terminate upon the earlier of the
following dates or events to occur:
(a)upon the adoption of a resolution of the Board terminating the Plan; or
(b) ten years from the date the Plan is initially approved and adopted by
the shareholders of the Company in accordance with Paragraph 21 hereof,
provided, however, that the Board may, prior to the expiration of such ten-year
period, extend the term of the Plan for an additional period of up to five years
for the grant of Awards other than Incentive Stock Options. No termination of
the Plan shall materially alter or impair any of the rights or obligations of
any person, without his consent, under any Award theretofore granted under the
Plan, except that subsequent to termination of the Plan, the Committee may make
amendments permitted under Paragraph 11.
21. SHAREHOLDER ADOPTION. The Plan shall be submitted to the shareholders
of the Company for their approval and adoption at a meeting to be held on or
before June 30, 1989, or at any adjournment thereof. The Plan shall not be
effective and no Award shall be made hereunder unless and until the Plan has
been so approved and adopted. The shareholders shall be deemed to have approved
and adopted the Plan only if it is approved and adopted at a meeting of the
shareholders duly held by vote taken in the manner required by the laws of the
State of New York.
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DIRECTIONS TO THE 1996 AMERICAN EXPRESS COMPANY
ANNUAL MEETING OF SHAREHOLDERS
American Express Company's world headquarters, site of the Company's 1996
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 vehicular traffic.
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 southerly on the Westside Highway in lower Manhattan, orienting
toward the twin towers of the World Trade Center. Enter the World Financial
Center, which is across the Westside Highway from the towers, by turning west on
Murray Street. Proceed to the main entrance of the American Express building,
located on the south side of Vesey Street slightly to the west of the Westside
Highway.
PROXY
AMERICAN EXPRESS COMPANY
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE COMPANY
FOR ANNUAL MEETING ON APRIL 22, 1996
The undersigned hereby appoints Michael P. Monaco, Louise M. Parent and Stephen
P. Norman, or any of them, proxies or proxy, with full power of substitution, to
vote all common shares of American Express Company which the undersigned is
entitled to vote at the Annual Meeting of Shareholders to be held at the
executive offices of the Company, 200 Vesey Street, 26th Floor, New York, New
York 10285, on April 22, 1996 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., D. Lewis, A. Papone,
F.P. Popoff.
(COMMENTS/ADDRESS CHANGE)
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(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 dated and signed on other side)
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FOLD AND DETACH HERE.
NOTICE TO PARTICIPANTS IN ONE OR MORE OF THE FOLLOWING EMPLOYEE PLANS:
-- American Express Incentive Savings Plan
-- IDS DVP Savings Plan
-- IDS DVP Retirement Plan
This proxy card indicates the number of whole shares credited to your account(s)
in one or more of the above listed plans as of February 20, 1996. The shares
credited to your account(s) in the plans will be voted according to your voting
instructions indicated on this card if American Express Trust Company, the
Trustee of the plans, receives such instructions in a timely manner.
To be received in a timely manner, Chemical Mellon Shareholder Services, L.L.C.,
which is acting on behalf of and at the direction of the Trustee, must receive
your proxy card for tabulation by April 17, 1996.
If the Trustee does not receive your voting instructions in a timely manner,
your shares held in the above listed plan(s) will be voted by the Trustee, on a
plan-by-plan basis, in the same proportion as the Trustee has received timely
voting instructions on other shares held in such plan(s).
<PAGE>
[LOGO OF AMERICAN EXPRESS]
Please mark your
votes as indicated in
this example. [X]
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,
2 AND 3 AND AGAINST PROPOSAL 4.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEMS 1, 2 AND 3.
WITHHOLD
FOR ALL FROM ALL
NOMINEES NOMINEES
Item 1 - Election of Directors. [ ] [ ]
FOR the slate, except vote WITHHELD
from the following nominee(s):
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FOR AGAINST ABSTAIN
Item 2 - Selection of
Ernst & Young LLP as
Independent Auditors. [ ] [ ] [ ]
Item 3 - Approval of Amendments
to 1989 Long-Term
Incentive Plan. [ ] [ ] [ ]
THE BOARD OF DIRECTORS RECOMMENDS
A VOTE AGAINST ITEM 4.
FOR AGAINST ABSTAIN
Item 4 - Shareholder proposal
relating to cumulative
voting. [ ] [ ] [ ]
I plan to attend meeting. [ ]
COMMENTS/ADDRESS CHANGE
(Please mark this box if you
have written comments/address
change on the reverse [ ]
side.)
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.
FOLD AND DETACH HERE.
