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:
[X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss. 240.14a-11(c) or ss. 240.14a-12
American Express Company
(Name of Registrant as Specified In Its Charter)
- -------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement if other than Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies.
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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 state 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.
1) Amount Previously Paid:
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2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
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4) Date Filed:
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AMERICAN EXPRESS COMPANY
200 VESEY STREET PRELIMINARY COPY
NEW YORK, NEW YORK 10285
[LOGO] --------------------------------------------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held April 28, 1997
--------------------------------------------------------------
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 28, 1997 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 1997;
3. To vote upon a proposal to amend and restate the Company's Certificate
of Incorporation to eliminate obsolete material;
4. 5. 6. and 7. To consider and vote upon four shareholder proposals
relating to cumulative voting, executive compensation, the CERES Principles and
charitable giving, respectively, each of which the Board of Directors opposes;
and
To transact such other business as may properly come before the meeting.
By Order of the Board of Directors:
STEPHEN P. NORMAN
SECRETARY
March 12, 1997
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.
<PAGE>
[LOGO] AMERICAN EXPRESS COMPANY
200 VESEY STREET
NEW YORK, NEW YORK 10285
March 12, 1997
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 28, 1997, and any adjournment of the
meeting. A copy of the notice of the meeting is attached. This proxy statement
and form of proxy are first being mailed to shareholders on or about March 12,
1997.
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 10, 1997,
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 be
followed by the respective plan trustees in voting the shares credited to these
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, because all comments from shareholders made on the
proxy cards will be forwarded to management, the votes of the commenting
shareholders may be revealed.
<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 in the proxy
statement,
FOR ratification of the selection of Ernst & Young LLP as independent
auditors for 1997,
FOR the amendment and restatement of the Company's Certificate of
Incorporation,
AGAINST the shareholder proposal relating to cumulative voting,
AGAINST the shareholder proposal relating to executive compensation,
AGAINST the shareholder proposal relating to the CERES Principles, and
AGAINST the shareholder proposal relating to charitable contributions.
In the event a shareholder specifies a different choice on the proxy, his
or her shares will be voted in accordance with the specification that is made.
The closing price of the Company's common shares on March __, 1997, as
reported by the New York Stock Exchange Composite Transactions Tape, was $______
per share.
The Company's 1996 Annual Report has been mailed to shareholders in
connection with this solicitation. A COPY OF THE COMPANY'S 1996 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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THE SHARES VOTING
The only voting securities of the Company are common shares, of which
there were ____ shares outstanding as of March 10, 1997, 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
NAMES AND ADDRESSES EXPRESS COMMON SHARES PERCENT OF
OF BENEFICIAL OWNERS BENEFICIALLY OWNED CLASS (%)
------------------------ --------------------- ---------
Warren E. Buffett, 49,456,900 (1) 10._%
Berkshire Hathaway Inc.
and subsidiaries
1440 Kiewit Plaza
Omaha, Nebraska 68131
Edward C. Johnson 3d, 47,689,240 (2) 10._%
Abigail P. Johnson and
FMR Corp.
82 Devonshire Street
Boston, Massachusetts 02109
- -------------
(1) Reflects shares beneficially owned as of December 31, 1996, 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 41.8% of the
outstanding shares of Berkshire. As a result of such ownership and control,
Mr. Buffett may be deemed to be the beneficial owner of shares beneficially
owned by Berkshire.
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, 1996, according to a
statement on Schedule 13G filed with the SEC. According to such Schedule
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13G, beneficial ownership was held as follows: sole dispositive power--FMR
Corp. ("FMR"), Mr. Johnson and Ms. Johnson - 47,682,740 shares; sole
voting power--FMR - 3,474,751 shares, Mr. Johnson - 5,393 shares, and Ms.
Johnson - 0 shares; shared dispositive and shared voting power--FMR and
Mr. Johnson - 5,000 shares and Ms. Johnson - 0 shares. Of the shares
shown, 42,365,609 shares were beneficially owned by FMR's wholly-owned
subsidiary, Fidelity Management and Research Company, and 275,400 shares
were beneficially owned by Fidelity International Limited ("FIL"). Mr.
Johnson and members of the Johnson family form a controlling group with
respect to FMR. Approximately 47% of the voting stock of FIL is owned by a
partnership controlled by Mr. Johnson and members of his family. Mr.
Johnson serves as Chairman of FMR and FIL. As a result of such common
ownership and control, FMR may be deemed to be a beneficial owner of the
shares owned by FIL. FMR disclaims beneficial ownership of the 275,400
shares beneficially owned by FIL.
VOTE REQUIRED
The 12 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 amendment and restatement of the
Company's Certificate of Incorporation. 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 proposals.
METHOD OF COUNTING VOTES
Each common share is entitled to one vote. Votes will be counted and
certified by the Inspectors of Election, who are employees of ChaseMellon
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 proposals. However, abstentions are
considered in connection with the proposal to amend and restate the Company's
Certificate of Incorporation. Because this proposal requires the affirmative
vote of a majority of all outstanding shares entitled to vote for approval, an
abstention on this proposal will have the same effect as a vote against the
proposal. Votes withheld in connection with one or more of the nominees for
director will not be counted as votes cast for those nominees.
The New York Stock Exchange has informed the Company that all of
management's proposals are considered "discretionary" items. This means that
brokerage firms may vote in their discretion on behalf of their clients if their
clients have not furnished voting instructions at least fifteen days prior to
the date of the shareholders' meeting. However, each of the shareholder
proposals is "non-discretionary," and brokers who have received no instructions
from their clients do not have discretion to vote on these items. Such "broker
non-votes" will not be considered as votes cast in determining the outcome of
the shareholder proposals.
4
<PAGE>
SHAREHOLDERS ENTITLED TO VOTE
Only shareholders of record at the close of business on March 10, 1997
will be entitled to vote at the Annual Meeting of Shareholders.
SECURITY OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth, as of March 10, 1997, common shares of the
Company owned 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 listed below has sole voting and investment
power with respect to the shares shown. The table also shows the common share
equivalent units held by directors under the Directors' Deferred Compensation
Plan described on page ___.
<TABLE>
<CAPTION>
NUMBER OF COMMON SHARES
AMERICAN EXPRESS WHICH MAY BE
NAMES OF DIRECTORS COMMON ACQUIRED WITHIN COMMON SHARE
AND NOMINEES SHARES OWNED (1)(2) 60 DAYS (3) EQUIVALENTS (4)
- ------------------ ----------------- ----------------- -----------------
<S> <C> <C> <C>
Daniel F. Akerson............... 10,000 999 2,564
Anne L. Armstrong............... 4,921 6,699 7,978
Edwin L. Artzt.................. 4,300 699 --
William G. Bowen................ 5,880 5,559 --
David M. Culver................. 10,322 1,046 --
Charles W. Duncan, Jr........... 54,341 7,839 23,929
Harvey Golub.................... 345,420 896,057 --
Beverly Sills Greenough......... 3,140 4,419 --
F. Ross Johnson................. 14,000 10,120 --
Vernon E. Jordan, Jr............ 3,847 6,699 12,593
Drew Lewis...................... 20,000 1,597 --
Aldo Papone..................... 21,572 4,419 --
Frank P. Popoff................. 6,420 2,139 --
All current Directors and
Executive Officers as a --------- --------- --------
group (33 individuals) (4).... 1,328,501 3,182,649 47,064
- -------------
(1) The number of shares owned by Mr. Golub and all current directors and
executive officers as a group includes 717 and 36,178 shares held by
executive officers in their respective employee benefit plan accounts as of
February __, 1997.
The number of common shares shown includes 2,000 shares held by a trust of
which Mr. Popoff is a trustee. The number of common shares shown also
includes 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 as a group have
disclaimed beneficial ownership, as follows: 400 shares owned by the wife
of Mr. Culver, 2,018 shares held by a trust of which Mr. Culver is a
co-trustee, 6,060 shares held by Duncan Investors Ltd. of which Mr. Duncan
5
<PAGE>
is a partner, 5,855 shares held by a trust of which Mr. Golub's wife is
the sole trustee, 2,970 shares owned by a child of Mr. Golub, and 32,675
shares disclaimed by all current directors and executive officers as a
group.
(2) The number of shares owned by Mr. Golub and all current directors and
executive officers as a group includes 95,441 and 437,392 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 these restricted shares 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 4.5 million of the Company's common
shares as of February __, 1997, representing approximately [___] percent
of the Company's outstanding common shares.
</TABLE>
-------------
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
<PAGE>
SECURITY OWNERSHIP OF NAMED EXECUTIVES
The following table sets forth, as of March 10, 1997, 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 1996 (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.
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.............. 345,420 896,057 0.26
K. I. Chenault........ 157,869 273,637 0.09
G. L. Farr............ 65,576 143,332 0.04
J. S. Linen........... 166,341 403,529 0.12
D. R. Hubers.......... 52,917 138,804 0.04
- -------------
(1) The number of shares owned by Messrs. Golub, Chenault, Farr, Linen and
Hubers includes 717,5,121,145, 7,650 and 252 shares held in their
respective employee benefit plan accounts as of February __,1997.
The number of common shares shown does not include shares as to which
Messrs. Golub and Chenault have disclaimed beneficial ownership, as
follows: 5,855 shares held by a trust of which Mr. Golub's wife is the sole
trustee, 2,970 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 95,441, 70,659, 50,000, 19,387 and 10,492 restricted
shares, respectively, as to which the holders possess sole voting power,
but no investment power, during the restricted period. Restrictions on the
sale or transfer of these restricted shares 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 12
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 1996 and the
functions of those committees are described below.
AUDIT COMMITTEE
The current members of the Audit Committee are Charles W. Duncan, Jr.
(Chairman), Daniel F. Akerson, Edwin L. Artzt, William G. Bowen 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 1996 the Audit Committee met five 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
Beverly Sills Greenough.
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
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programs and appraises senior management's performance. The Committee is
authorized to hire and regularly consult with independent compensation advisors.
The Committee represents the Board in discharging its responsibilities
with respect to the Company's employee pension, savings and welfare benefit
plans. It appoints the members of management who serve on the Employee Benefits
Administration Committee and the Benefit Plans Investment Committee, which are
responsible, respectively, for the administration of the plans of the Company
and for the custody and management of assets of those plans that are funded. The
Committee receives periodic reports from the Employee Benefits Administration
and Benefit Plans Investment Committees on their activities.
During 1996 the Compensation and Benefits Committee met five 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 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 1996 the Committee on Directors met two times.
EXECUTIVE COMMITTEE
The current members of the Executive Committee are Harvey Golub (Chairman),
William G. Bowen, David M. Culver, Charles W. Duncan, Jr., Vernon E. Jordan, Jr.
and 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 1996.
9
<PAGE>
FINANCE COMMITTEE
The current members of the Finance Committee are David M. Culver
(Chairman), Daniel F. Akerson, F. Ross Johnson, Drew Lewis and Aldo Papone.
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 1996 the Finance Committee met three times.
PUBLIC RESPONSIBILITY COMMITTEE
The current members of the Public Responsibility Committee are William G. Bowen
(Chairman), Beverly Sills Greenough, Vernon E. Jordan, Jr. 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 1996 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.
In March 1996 the Company 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, nonqualified plan that covers directors of the Company whose Board
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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
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 1996 six
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 1996 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 __.
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, as of 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 22, 1996 each of the 12 then incumbent non-employee directors
(11 of whom are also current nominees for re-election as directors) received
options to purchase 1,000 shares at an exercise price of $47.50 per share.
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 maintains 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
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
11
<PAGE>
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.
Messrs. Duncan and Papone serve as directors of American Express Bank Ltd.
("AEB"), for which each receives an annual retainer of $25,000 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"). During 1996 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 1996 under the TRS agreement. These
arrangements are expected to continue in 1997. Mr. Jordan is a senior partner of
Akin, Gump, Strauss, Hauer & Feld, L.L.P. which provided legal services to the
Company in 1996 at customary and usual rates. This firm may also provide legal
services in 1997.
ELECTION OF DIRECTORS
An entire Board of Directors, consisting of 12 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. Mr. Culver is retiring as a director of the
Company on April 28, 1997 pursuant to the Board's mandatory retirement policies.
During 1996 the Board of Directors met 9 times and each of the current
directors attended more than 75 percent of the meetings of the Board and of the
Board committees on which the director served.
Unless authority to vote is withheld, the persons specified in the
enclosed proxy intend to vote for the following nominees, all of whom have
consented to being named in this proxy statement and to serving if elected.
Although management knows of no reason why any nominee would be unable to serve,
the persons designated as proxies reserve full discretion to vote for another
person in the event any nominee is unable to serve.
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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., a domestic
and 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; Member, Board of
Directors, the Business School of the College of William and Mary.
ANNE L. ARMSTRONG Director since 1983 Age 69
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, Council on Foreign
Relations.
EDWIN L. ARTZT Director since 1994 Age 66
CHAIRMAN OF THE EXECUTIVE COMMITTEE AND DIRECTOR OF 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 63
PRESIDENT, THE ANDREW W. MELLON FOUNDATION, a not-for-profit corporation engaged
in philanthropy, 1988 to present; former President, Princeton University;
Director, Merck, Inc. and Reader's Digest Association Inc.; Member, Board of
Trustees, Denison University; Member, Board of Overseers, TIAA-CREF.
CHARLES W. DUNCAN, JR. Director since 1981 Age 70
CHAIRMAN, DUNCAN INTERESTS, 1985 to present; Director, American Express Bank
Ltd., The Coca-Cola Company, Newfield Exploration Company, PanEnergy
Corporation, United Technologies Corporation and The Robert A. Welch Foundation;
Member, International Advisory Board, Elf Aquitaine; Former Chairman of the
Board of Governors, Rice University; Member, Council on Foreign Relations.
13
<PAGE>
HARVEY GOLUB Director since 1990 Age 58
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, Chairman and Chief Executive Officer, American Express
Travel Related Services Company, Inc., 1991 to present; Director, American
Express Bank Ltd. and Campbell Soup Company; Candidate for election, Dow Jones &
Company, Inc.; Director, The New York and Presbyterian Hospitals, Inc.; Member,
Board of Trustees, Carnegie Hall, New York City Partnership, New York Chamber of
Commerce and Industry and United Way of New York City; Member, President's
Commission for the Arts and the Humanities and The Business Roundtable.
BEVERLY SILLS GREENOUGH Director since 1990 Age 67
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. and Lincoln Center Theater; Member, President's Task Force on the
Arts.
F. ROSS JOHNSON Director since 1986 Age 65
CHAIRMAN AND CHIEF EXECUTIVE OFFICER, RJM GROUP, a management advisory and
investment firm, 1989 to present; Director, Power Corporation of Canada, Archer
Daniels Midland Company, Midland Financial Corp., and Noma Industries Ltd.;
former Chairman, Economic Club of New York; Retired Chairman, RJR/Nabisco, Inc.
VERNON E. JORDAN, JR. Director since 1977 Age 61
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., Revlon Group, Inc., Ryder Systems,
Inc., Sara Lee Corporation and Union Carbide Corporation; Trustee, Ford
Foundation and Howard University.
DREW LEWIS Director since 1986 Age 65
FORMER CHAIRMAN AND CHIEF EXECUTIVE OFFICER, UNION PACIFIC CORPORATION, a
transportation company, January 1997 to present; Chairman and Chief Executive
Officer, 1987 through December 1996; Director, Ford Motor Company, Lucent
Technologies Inc., FPL Group, Inc., Gulfstream Corp., Gannett Co., Inc., and
Union Pacific Resources Group Inc.
ALDO PAPONE Director since 1990 Age 64
SENIOR ADVISOR, AMERICAN EXPRESS COMPANY, 1991 to present; Retired 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.
14
<PAGE>
FRANK P. POPOFF Director since 1990 Age 61
CHAIRMAN OF THE BOARD, THE DOW CHEMICAL COMPANY, a producer of chemicals and
chemical products, 1992 to present, Chief Executive Officer, 1987 to 1995,
Director, U S WEST, Inc., United Technologies Corp. and Chemical Financial
Corporation; Member, Indiana University Foundation, 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 are to:
o Attract, motivate and retain the highest quality executives.
o Align their financial interests with those of the Company's long-term
investors.
o Inspire 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:
o Focus participants on high priority goals to increase shareholder
value.
o 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.
o Encourage behaviors that exemplify the Company's core Values relating
to customers, quality of performance, employees, integrity, teamwork
and good citizenship.
o 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.
o Increase executive stock ownership to promote a proprietary interest
in the success of the Company.
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<PAGE>
EXECUTIVE OFFICER COMPENSATION
Executive officer compensation includes base salary, annual incentive and
long-term incentive awards. The Committee establishes reference points for each
of these elements of compensation for every executive officer position. The
reference points are compensation guidelines that reflect job responsibility
levels within the Company, the need to attract, retain and reward executive
talent and external market practices. For 1996, a comparative group of
approximately 50 companies was selected with the help of an outside compensation
consultant. This sample includes selected major corporations in the Standard &
Poor's 500 Index and the Standard & Poor's Financials that compete with the
Company in its primary lines of business or for executive talent, or are of
comparable size and scope of operations. Market data on comparable jobs from
this sample, including the 50th through 75th percentile pay levels, are taken
into consideration in establishing reference points and other compensation
guidelines. In setting reference points, the Committee may put more emphasis on
one or more of the considerations mentioned above (for example, relative job
responsibility levels are especially important if reliable closely matched
market data are not available for jobs.) Accordingly, reference points may be
established at levels within, higher or lower than the 50th to 75th percentile
range of the comparative group. Actual compensation is based on the Committee's
subjective assessment of Company or business unit performance and individual
performance under applicable programs as described below.
Executive officer base salary merit increases were based upon individual
performance and the executive's salary in relation to the reference point
established for the executive's position. In 1996, the Committee continued the
practice of extending the time interval between merit increases to 18 months or
longer, except in the case of a promotion or other job change or where warranted
by special circumstances.
For 1996, annual incentives were paid to the named executive officers and
certain other executives pursuant to 1996 awards which specify maximum award
amounts for Company performance levels. The award value is determined on a
formula basis by application of a performance grid that measures the Company's
1996 return on equity ("ROE") and 1996 growth in earnings per share. (In each
case, these amounts exclude gains associated with the disposition of First Data
Corporation stock and a restructuring charge.) The Committee retained the
discretion to adjust the formula-derived amounts downward after certifying that
the performance goals set forth in the grid had been met.
The Committee exercised its discretion to determine the final value of
each 1996 incentive award. The Committee assessed performance against goals and
leadership performance, with each of these two categories weighted equally. The
goal category included an evaluation of the following performance areas (weighed
50%, 25% and 25%, respectively): increase in shareholder value (e.g.,
shareholder return, earnings growth and return on equity), customer satisfaction
(e.g., customer satisfaction measures, client retention and growth in products
and services) and employee satisfaction (e.g., the Company's employee values
survey results). The leadership category was evaluated based on the Committee's
subjective judgment of leadership performance, including such factors as
innovation, strategic vision, marketplace orientation, customer focus,
collaboration and change management. The named executive officers were awarded
final values ranging from 1.26 to 1.76 times target. For 1996, annual incentive
16
<PAGE>
awards for executive officers who did not participate in the 1996 annual
incentive awards program were determined in accordance with guidelines which
range from 0 to approximately 200% of target based on the goal and leadership
performance 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 1996, the Company's long-term compensation program consisted of
Portfolio Grant-VII awards ("PG-VII awards") and ten-year stock option grants.
The size and grant value of actual awards were determined by the Committee after
reviewing the individual's annual performance, the size of previous awards and
relative contributions. The number or value of stock options currently held by
an executive is not taken into account in determining the number of stock
options granted. The awards were consistent with established reference points.
The PG-VII awards are long-term performance awards with two components and
are payable at the end of a three-year performance period commencing in January
1996 and ending in December 1998. One component is valued based on achievement
of specified Company or business unit targets for cumulative earnings (or
earnings per share) and average ROE . The second component is valued based on
the Company's average daily share price for the 60-trading-day period prior to
the date of the Committee's meeting in February 1999. For certain executive
officers, minimum performance levels for cumulative earnings (or earnings per
share) and average 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, after
certifying that the performance goals have been met.
Nonqualified stock option awards were granted to link 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. The Company has never repriced stock option awards.
The Committee in its judgment may also grant restricted stock, stock
options or other long-term incentive awards to selected individuals for
performance not recognized by the annual long-term programs. In addition, the
Committee may grant long-term incentive awards or bonuses to recognize special
individual contributions or job promotions, to attract new hires from outside
the Company or in the case of other special circumstances. The Committee may
also accelerate vesting of awards in cases where the circumstances warrant. In
1996, six executive officers, including Messrs. Golub, Chenault and Farr,
received restricted stock awards. The Committee made these awards to provide a
stock-based retention incentive, and determined the size of the awards based on
its subjective assessment of individual performance and leadership. In addition,
four executive officers hired from the outside received, as applicable, cash
payments, stock options, restricted stock awards and/or Portfolio Grants to
17
<PAGE>
offset amounts forfeited from previous employers, and to start their
participation in the Company's performance incentive programs.
The Committee's policy is to structure compensation awards for executive
officers that will be consistent with the requirements of Section 162(m) of the
U.S. Internal Revenue Code of 1986. Section 162(m) limits the Company's tax
deduction to $1 million per year for certain compensation paid in a given year
to the Chief Executive Officer and the four highest compensated executives other
than the CEO named in the proxy statement. According to the Code and
corresponding regulations, compensation that is based on attainment of
pre-established, objective performance goals and complies with certain other
requirements will be excluded from the $1 million dollar deduction limitation.
The Company's policy is to structure compensation awards for covered executives
that will be fully deductible where doing so will further the purposes of the
Company's executive compensation programs. However, the Committee also considers
it important to retain flexibility to design compensation programs that
recognize a full range of performance criteria important to the Company's
success, even where compensation payable under such programs may not be fully
deductible. The Company expects that compensation derived from the 1996 annual
incentive, Portfolio Grant-VII (other than those granted to new hires) and stock
option awards will be excluded from the deduction limitation of Section 162(m)
and, therefore, will be fully deductible by the Company. The Company also
expects that the compensation derived from the future vesting of restricted
stock grants to Messers. Golub, Chenault and Farr may be subject to this
limitation.
The Company's executive officers also participate in pension, incentive
savings, perquisite, deferred compensation and stock ownership programs. Since
1994, the Committee has adopted an annual Pay for Performance Deferral Program.
The program permits participants to defer compensation up to a maximum of one
times base salary each year. Deferral bookkeeping accounts are established for
each participating employee and credited or debited annually with "interest"
equivalents according to a schedule based on the Company's ROE as reported in
the annual report. Deferred balances are debited or reduced in value if the
annual ROE is zero or less for a given year. The Committee may adjust the ROE
schedule for major accounting changes, significant changes to the Company's ROE
objectives or if the annual rate of return on a 5-year Treasury note becomes
less than 4% or greater than 8%. The Committee may delay payments under the
program until they are fully deductible under Section 162(m).
Approximately 175 senior officers are required to comply with stock
ownership targets. The ownership levels are equal to a multiple of an officer's
base salary on January 1994 or a date following the officer's hire or promotion
date. The applicable multiples range from one times to five times base salary,
depending on job responsibilities. For Mr. Golub, the multiple is five times his
base salary. Restricted stock which has not vested and stock options which have
not been exercised do not count toward fulfilling the requirement. Executives
are expected to hold stock acquired under the long term program for application
toward their stock ownership guidelines except in the case of stock used for the
payment of taxes or stock used to finance the cost of an option exercise.
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<PAGE>
CHIEF EXECUTIVE OFFICER COMPENSATION
In 1996, Mr. Harvey Golub, Chairman and CEO, earned an annualized base
salary of $900,000, which was effective in February 1995. Pursuant to the
Committee's practice of extending the time interval between executive officer
merit increases, he did not receive an increase in 1996.
At its February 1997 meeting, the Committee awarded Mr. Golub $1,980,000
as payout of his 1996 incentive award which was 1.65 times the reference point
established for the award. As described on page 16, the maximum award value was
derived from a formula based on the Company's 1996 ROE of 23.0% and growth in
earnings per share of 14.8% (both values exclude the gain from the disposition
of First Data Corporation stock and the restructuring charge). The Committee
certified that these performance goals had been satisfied. In determining the
actual award, the Committee assessed Company performance in 1996, 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 in 1996 and determining compensation,
the Committee took the following achievements into consideration:
-- Total shareholder return ("TSR") from price appreciation and paid
dividends of 39.8% from year-end 1995 to year-end 1996. This compared
to a TSR of 22.9% for companies in the Standard & Poor's ("S&P") 500
Index, 35.1% for the S&P Financials and 28.8% for the Dow Jones
Industrial Average (which includes companies in both the S&P 500 Index
and the S&P Financials).
-- Net operating income of $1.74 billion, which was the highest in the
Company's history and an increase of 11.2% over 1995. This growth
includes an 18% increase in net income for American Express Financial
Advisors ("AEFA") and a 13% increase in net operating income for Travel
Related Services.
-- Growth in earnings per share of 14.8% and ROE of 23.0% (values exclude
the gain from the disposition of First Data Corporation stock and the
restructuring charge), the fourth consecutive year in which the Company
met or exceeded its long term financial targets.
-- The development of a number of new products, services and business
lines tailored to specific customer segments including the launch of
American Express Financial Direct and the expansion of the services
available to small and large businesses.
-- Opening of the American Express Card network to banks and other
issuers, as well as the introduction of new proprietory and network
card products in the United States and several other countries. The
Company also successfully challenged the policies proposed by VISA to
block member banks from issuing American Express Cards in Europe and
the Latin America/Caribbean and Asia/Pacific regions.
-- Strengthening the Company's international business and forging
alliances and joint ventures with partners in key markets around the
world.
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<PAGE>
The Committee also took into account some disappointments, including
overall revenue growth that was below long-term targets; the inability to regain
market share in the Company's core card business; a cost structure that is still
too high; weak financial results at American Express Bank; and continued
competitive pressures in all of the Company's businesses.
Overall, the Company continued to make good progress towards implementing
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 other members of the Office of the Chief Executive and
other senior executives, has performed an integral role in identifying and
developing opportunities for significant growth in financial services and
international markets as well as opening the American Express Card network.
In 1996, the Committee granted Mr. Golub long-term incentive awards
consisting of a 10-year non-qualified stock option to purchase 200,000 common
shares at fair market value at the date of grant and a PG-VII award with a grant
value of $1,000,000. The stock option becomes exercisable in cumulative annual
installments of 33 1/3% over three years. The PG-VII award earns value as
described on page 17 and is payable after three years. These awards were
consistent with the award reference points established by the Committee as
described above. The Committee also granted Mr. Golub a special restricted stock
award of 35,000 shares. The award vests in equal installments on the second and
fourth anniversary of the grant date.
The three-year performance period for Portfolio Grant V awards granted in
February 1994 ended in December 1996. This award was structured to meet the
requirements for excluding compensation from the million dollar deduction
limitation. At its February 1997 meeting, the Committee certified the results
against cumulative earnings per share and average ROE goals of the awards, as
well as the average stock price at the end of the period. The Committee approved
a total payout of $2,593,906 for Mr. Golub. The payout reflects adjustments
approved by the Committee under the terms of the award to take into account
three-year financial results and unusual events (including restructuring
activities, the Lehman spin-off, gains and losses from dispositions and
accounting changes).
COMPENSATION AND BENEFITS COMMITTEE
Frank P. Popoff, Chairman
Anne L. Armstrong
Edwin L. Artzt
Beverly Sills Greenough
F. Ross Johnson
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The following table shows, for the fiscal years ending December 31, 1996,
1995 and 1994, the cash and other compensation paid or accrued and certain
long-term awards made to the named executives for services in all capacities.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM COMPENSATION
------------------------------- -----------------------------------
AWARDS(4) PAYOUTS
--------------------- ----------
OTHER RESTRICTED LONG-TERM
NAME AND PRINCIPAL ANNUAL STOCK OPTIONS/ INCENTIVE ALL OTHER
POSITION AT COMPENSA- AWARDS SARS PAYOUTS COMPENSA-
DECEMBER 31, 1996 YEAR SALARY($) BONUS($)(2) TION($)(3) ($)(5) (# SHARES) ($)(6) TION($)(7)
---------------- ---- -------- ---------- ---------- -------- -------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
H. Golub............. 1996 $900,000 $1,980,000 $246,634 $1,618,750 200,000 $ 2,593,906 $324,882
Chairman and Chief 1995 876,923 1,860,000 250,017 0 200,000 2,603,660 378,344
Executive Officer 1994 800,000 2,040,000 236,729 0 228,093 1,799,872 167,474
K.I. Chenault........ 1996 550,000 990,000 188,152 1,156,250 110,000 1,129,532 109,717
Vice Chairman 1995 532,692 930,000 202,986 680,000 110,000 1,545,909 177,399
1994 475,000 785,000 -- 442,498 79,829 1,008,132 69,643
G.L. Farr............ 1996 550,000 950,000 175,446 1,156,250 110,000 1,037,551 60,737
Vice Chairman 1995(1)359,615 930,000 137,620 1,728,150 160,000 520,741 962,503
1994 -- -- -- -- -- -- --
J.S. Linen........... 1996 550,000 695,000 184,032 0 50,000 1,426,596 233,878
Vice Chairman 1995 550,000 605,000 192,995 0 50,000 1,432,015 421,068
1994 550,000 850,000 190,733 0 62,723 1,360,226 142,879
D.R. Hubers.......... 1996 425,000 750,000 72,445 0 70,000 1,177,982 112,568
President and Chief 1995 421,154 650,000 55,119 0 70,000 1,174,027 149,787
Executive Officer- 1994 400,000 660,000 -- 0 79,829 705,175 79,823
American Express
Financial Corporation
- -------------
(1) Reflects compensation starting May 1, 1995, the date Mr. Farr commenced
employment with the Company.
(2) 1996 bonuses were paid pursuant to 1996 incentive awards described on
page 16.
(3) Amounts reported in this column for 1996 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 $46,429 for the payment of
related taxes) and personal travel expenses of $93,084; for Mr. Chenault,
local travel allowance of $84,661 (plus $55,159 for the payment of related
taxes); for Mr. Farr, local travel allowance of $84,661 (plus $55,159 for
the payment of related taxes); for Mr. Linen, local travel allowance of
$84,661 (plus $55,159 for the payment of related taxes) and for Mr.
Hubers, flexible perquisite allowance of $35,000 and personal travel
expenses of $16,050.
(4) Stock-based awards issued under the 1979 and 1989 Long-Term Incentive
Plans and outstanding prior to the 1994 spin-off of Lehman Brothers
Holdings Inc. ("Lehman") 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, stock options and
the exercise prices of stock options shown in the tables on pages 21
through 24 have been adjusted for the spin-off.
</TABLE>
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<PAGE>
(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, 1996 and their fair market value based on the
per share closing price of $56.50 on December 31, 1996 were as follows:
NUMBER OF VALUE ON
NAME RESTRICTED SHARES DECEMBER 31, 1996
- ----- ----------------- -----------------
H. Golub............... 95,441 $5,392,417
K.I. Chenault.......... 75,791 4,282,192
G.L. Farr.............. 50,000 2,825,000
J.S. Linen............. 27,940 1,578,610
D.R. Hubers............ 13,913 786,085
Dividends are payable on the restricted shares to the extent and on the
same date as dividends are paid on Company common shares. 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.
In 1996 Messrs. Golub, Chenault and Farr were awarded 35,000, 25,000 and
25,000 shares, respectively, of restricted stock which provided for
vesting in equal installments on the second and fourth anniversary of the
date of grant.
(6) Includes payout of a PG-V award granted to Mr. Farr when he joined the
Company in May 1995.
Each PG-V award consisted of two components. Sixty percent of the target
value of each PG-V 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 1994 to December 1996. 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 24, 1997. PG-V awards granted to the named executives (other than
Mr. Farr) were structured to satisfy requirements for deductibility of
"performance-based" compensation under the million dollar deduction
limitation. The value of the PG-V award was adjusted by the Committee to
take into account three-year financial results and unusual events
(including restructuring activities, the Lehman spin-off, gains and losses
from dispositions and accounting changes).
(7) Amounts reported under "All Other Compensation" for 1996 include the
dollar value of the following:
EMPLOYER
PAYMENTS CONTRIBUTIONS ABOVE- VALUE OF
UNDER UNDER PROFIT MARKET SPLIT-
CAPITAL SHARING, EARNINGS ON DOLLAR
PARTNERS SAVINGS AND DEFERRED LIFE
I AND II RELATED PLANS COMPENSATION INSURANCE
-------- ------------- ------------ ---------
H. Golub ............... $ 86,800 $ 65,502 $128,431 $ 44,149
K.I. Chenault .......... 39,930 46,840 772 22,175
G.L. Farr .............. 0 13,415 0 47,322
J.S. Linen ............. 121,668 48,131 31,673 32,406
D.R. Hubers ............ 26,620 37,005 17,298 31,645
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<PAGE>
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 following table contains information concerning the grant of
nonqualified stock options in tandem with stock appreciation rights (SARs) in
1996 to the named executives:
<TABLE>
<CAPTION>
OPTION/SAR GRANTS IN 1996
INDIVIDUAL GRANTS (1)
---------------------------------------------------------
NUMBER OF % OF TOTAL
SECURITIES OPTIONS/SARS
UNDERLYING GRANTED TO GRANT DATE
OPTIONS/SARS EMPLOYEES EXERCISE PRICE PRESENT
NAME GRANTED (#) IN 1996 ($/SH) EXPIRATION DATE VALUE $(2)
------ ------------- ----------- ------------ --------------- ------------
<S> <C> <C> <C> <C> <C>
H. Golub...................... 200,000 2.8% $46.25 2/26/06 $2,292,000
K.I. Chenault................. 110,000 1.5 46.25 2/26/06 1,260,600
G.L. Farr..................... 110,000 1.5 46.25 2/26/06 1,260,600
J.S. Linen.................... 50,000 0.7 46.25 2/26/06 573,000
D.R. Hubers................... 70,000 1.0 46.25 2/26/06 802,200
- -------------
(1) Stock options were granted in February 1996 to Messrs. Golub, Chenault,
Farr, Linen and Hubers. Options become exercisable in cumulative annual
installments of 33 1/3 percent per year on each of the first three
anniversaries of the grant date. These options were granted in tandem with
SARs. SARs can be exercised only in very limited circumstances, such as
when the option is about to expire, when the participant retires, or, for
executive officers, when the related stock option becomes fully
exercisable and then only to the extent of 50% of the underlying shares.
Upon exercise of an SAR, the holder may receive cash, common shares or
other consideration equal in value to (or, at the discretion of the
Committee, less than the value of) the difference between the option price
and the fair market value of the Company's common shares, and the
appropriate portion or all of the related stock option is then cancelled.
Upon termination or exercise of any stock option, any tandem SAR
automatically terminates.
(2) These values were calculated as of the grant date using a variation of the
Black-Scholes option pricing model. The model is a complicated
mathematical formula premised on immediate exercisability and
transferability of the options, which are not features of the Company's
options granted to executive officers and other employees. The values
shown are theoretical and do not necessarily reflect the actual values the
recipients may eventually realize. Any actual value to the officer or
other employee will depend on the extent to which market value of the
Company's 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 seven-year term of each option, the following
assumptions for modeling were used to calculate the values shown: expected
dividend yield (3.1% - the historic average yield for the most recent 60
months prior to the grant dates), expected stock price volatility (.23% -
the most recent volatility for the month-end stock prices of the Company's
23
<PAGE>
common shares for the 60 months prior to the grant dates), and risk-free
rate of return (5.9%-equal to the yield on a zero-coupon seven year bond
on the option grant dates). The assumptions and the calculations used for
the model were provided by an independent consulting firm and are
consistent with the assumptions for reporting stock option valuations in
the Company's Annual Report to Shareholders.
</TABLE>
The following table sets forth information for the named executives
regarding the exercise of stock options and/or SARs during 1996 and unexercised
options and SARs held as of the end of 1996:
AGGREGATED OPTION/SAR EXERCISES IN 1996 AND
YEAR-END 1996 OPTION/SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING IN-THE-MONEY
UNEXERCISED OPTIONS/SARS OPTIONS/SARS
SHARES AT DECEMBER 31, 1996 AT DECEMBER 31, 1996(1)
ACQUIRED VALUE -------------------------- ---------------------------
ON EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
NAME (#) ($) (#) (#) ($) ($)
- ----- ----------- -------- ----------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
H. Golub................. 119,744 $2,984,861 905,821 409,362 $28,346,843 $7,370,617
K.I. Chenault............ 50,862 1,232,922 360,164 209,944 10,944,784 3,592,633
G.L. Farr................ 0 0 53,332 216,668 1,169,944 3,467,476
J.S. Linen............... 50,178 1,136,212 389,202 104,242 12,433,434 1,902,969
D.R. Hubers.............. 45,616 1,105,754 150,678 143,277 4,288,069 2,582,625
- -------------
(1) Based on the $56.50 closing price of the Company's common shares on the New York Stock Exchange on December 31, 1996.
</TABLE>
24
<PAGE>
The following table sets forth information concerning long-term incentive
plan awards made in 1996 to the named executives:
LONG-TERM INCENTIVE PLANS -- AWARDS IN 1996
<TABLE>
<CAPTION>
ESTIMATED FUTURE PAYOUTS
PERFORMANCE UNDER NON-STOCK PRICE-BASED COMPONENT(1)
DOLLAR VALUE($)/ --------------------------------------
NAME NUMBER OF UNITS PERIOD(1) THRESHOLD ($) TARGET ($) MAXIMUM ($)
- ----- --------------- --------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C>
H. Golub........PG-VII $600,000 Financial Incentive 1996-98 $450,000 $900,000 $2,700,000
9,282 Stock Incentive Units 1996-98 -- -- --
- ------------------------------------------------------------------------------------------------------------
K.I. Chenault...PG-VII $360,000 Financial Incentive 1996-98 270,000 540,000 1,620,000
5,569 Stock Incentive Units 1996-98 -- -- --
- ------------------------------------------------------------------------------------------------------------
G.L. Farr.......PG-VII $360,000 Financial Incentive 1996-98 270,000 540,000 1,620,000
5,569 Stock Incentive Units 1996-98 -- -- --
- ------------------------------------------------------------------------------------------------------------
J.S. Linen......PG-VII $285,000 Financial Incentive 1996-98 213,750 427,500 1,282,500
4,409 Stock Incentive Units 1996-98 -- -- --
- ------------------------------------------------------------------------------------------------------------
D.R. Hubers.....PG-VII $285,000 Financial Incentive 1996-98 213,750 427,500 1,282,500
4,409 Stock Incentive Units 1996-98 -- -- --
- ------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Reflects PG-VII awards granted to the named executives in February 1996
for the January 1996 to December 1998 performance period.
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 1999.
Minimum performance levels for cumulative earnings and return on equity
are required for the Stock Incentive Units of the PG-VII awards to have
any value. The Committee has the discretion to make adjustments downward
only to the sum of the value of both components based on its assessment of
Company, business unit and individual performance.
PG-VII awards granted to the Company's executive officers, except for
awards to two executive officers not named in the table who joined the
Company in the latter half of 1996, 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
25
<PAGE>
threshold, target and maximum estimated future payouts for the Financial
Incentive component of each PG-VII 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 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 1996-98 performance period.
26
<PAGE>
PERFORMANCE GRAPH
The graph below compares the cumulative total shareholder return on the
common shares of the Company for the last five fiscal years with the cumulative
total return on the 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, 1991 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.
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.]
Value of Investment
- --------------------------------------------------------------------------------
Year-End Data 1991 1992 1993 1994 1995 1996
------------- ---- ---- ---- ---- ---- ----
American Express ... $100.00 $125.40 $161.20 $181.30 $258.80 $361.80
S&P 500 Index ...... $100.00 $107.60 $118.40 $120.00 $165.00 $202.70
S&P Financials ..... $100.00 $123.30 $136.90 $132.20 $203.40 $274.70
- --------------------------------------------------------------------------------
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
American Express 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, 1997 the sum of age plus years of service for Messrs.
Golub, Chenault, Farr, Linen and Hubers was 72, 62, 58, 82 and 87, 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
1996 the interest rate was 5.78%, and is 6.13% for 1997.
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 a predecessor 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 "Supplemental Retirement Plan"). The Supplemental
28
<PAGE>
Retirement 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, 1996 with no increase in salary; 2) annual bonuses equal to the
average bonus over the last five years (1992 through 1996) for Messrs. Golub,
Linen and Chenault; the 1996 bonus for Mr. Farr, and the average of 1994, 1995
and 1996 bonuses for Mr. Hubers; 3) interest credits at the actual rates, 6.96%
for 1995, 5.78% for 1996, and 6.13% for 1997, and the minimum rate of 5% for
1998 and later years; and 4) the conversion to a straight life annuity at normal
retirement age is 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................... $378,890 0 $378,890
J.S. Linen................. 640,386 65,508 705,894
K.I. Chenault.............. 420,119 5,747 425,866
G.L. Farr.................. 102,251 0 102,251
D.R. Hubers................ 265,846 0 265,846
</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 (which includes an
additional five years of service above his actual service with the Company (six
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.
In 1995 the Compensation and Benefits 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
29
<PAGE>
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 Compensation and Benefits Committee and the Board of
Directors adopted a uniform policy for severance arrangements applicable to
senior management (including the named executives) of the Company, effective
January 1, 1994. In addition, in 1994 the Committee and the Board adopted
certain arrangements applicable to senior management and other employees that
would be effective upon a change in control of the Company.
Under the severance policy, in the event that the Company terminates the
employment of participating officers for reasons generally other than
misconduct, 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 officer, the amount of
severance will equal two years' base salary at the then current rate and two
times the amount of bonus approved for 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 resigns for good reason or is
terminated by the Company for reasons generally other than willful misconduct or
conviction of a felony (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 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 certain events
relating to 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
30
<PAGE>
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 to participants under the
Company's 1979 and 1989 Long-Term Incentive Plans (other than certain options
issued outside of the U.S.) would immediately vest. If either of the Termination
Conditions is met, outstanding Portfolio Grant awards 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 1997. Such indebtedness is in the
ordinary course of the Company's business, is substantially on the same terms,
including interest rates, as those prevailing at the time for comparable
transactions with other persons, and does not involve a more than normal risk of
collectibility or present other features unfavorable to the Company. The Company
and its subsidiaries and affiliates, in the ordinary course of business, may
have individuals in their employ who are related to executive officers or
directors of the Company. These individuals are compensated commensurate with
their duties. In addition, such executive officers, directors and associates may
engage in transactions in the ordinary course of business involving other goods
and services provided by the Company and its subsidiaries, such as travel,
insurance and investment services, on terms similar to those extended to
employees of the Company generally.
In the ordinary course of business, the Company and its subsidiaries
maintain various arm's-length relationships with Berkshire Hathaway Inc.
("Berkshire"), FMR Corp. or companies in which they have substantial equity
31
<PAGE>
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 a number of these companies and receives fees 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, foreign exchange,
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 1996 the Company entered into a transaction with a firm in which
Berkshire has a substantial equity position to hedge a portion of its position
in shares of First Data Corporation common stock. 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 to this firm a net premium of approximately $3,300,000 upon
entering into the transaction and approximately $19,988,000 upon settlement of
the transaction.
During 1996, in connection with its ongoing program of repurchasing
Company shares, the Company purchased a total of 195,000 Company common shares
from Fidelity Capital Markets, a subsidiary of FMR. The average price paid per
share was $44.59, 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
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 __) 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 1996 Mr. Hubers had a maximum amount
outstanding under SPAP of $205,318. As of March 10, 1997 Mr. Hubers'
indebtedness was the same. For all executive officers as a group, the maximum
aggregate amount outstanding during 1996 under SPAP was $493,982, and as of
March 10, 1997 the aggregate amount outstanding was the same.
Shareholder derivative actions were brought in 1990 and 1991 in state and
federal court against the then current directors, certain former directors and
32
<PAGE>
certain former officers and employees of the Company. The state court action
alleged 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. The
federal court actions were dismissed and the state court actions were settled.
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 1997. 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 1997 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 $10.5 million for the firm's 1996 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 AMEND AND RESTATE THE COMPANY'S
CERTIFICATE OF INCORPORATION
On February 24, 1997 the Board of Directors of the Company approved and
recommended for submission to shareholders an amendment to the Company's
Certificate of Incorporation to delete the provisions relating to three series
of preferred stock which are no longer outstanding. The amendment also updates
the address of the Company's principal executive offices. The purpose of the
amendment and restatement is solely to streamline and simplify the Company's
Certificate of Incorporation in a single certificate that supersedes the current
certificate and all subsequent amendments.
The Company's Certificate of Incorporation currently contains the terms of
three series of preferred stock, all of which have been redeemed or converted
into common stock since their issuance and are no longer outstanding. The terms
of each series are contained in lengthy certificates of amendment which were
added to the Company's Certificate of Incorporation at the time of issuance. The
Company's Certificate of Incorporation currently contains over 45 pages of this
obsolete material which the proposed amended and restated Certificate of
33
<PAGE>
Incorporation would eliminate. It would not, however, change any of the existing
rights or powers of shareholders or the capitalization of the Company. Nor would
it change the ability of the Board to create and issue additional series of
preferred stock in the future without shareholder approval.
A copy of the proposed amended and restated Certificate of Incorporation
appears as Exhibit A to this proxy statement.
ACCORDINGLY, YOUR BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE FOLLOWING
RESOLUTION:
RESOLVED, that the Company's Certificate of Incorporation be amended and
restated substantially as set forth in Exhibit A to the Company's Proxy
Statement dated March 12, 1997, and that the Chairman, any Vice Chairman, any
Executive Vice President and the Secretary of the Company be and they hereby are
authorized to execute and file a Restated Certificate of Incorporation of the
Company pursuant to the Business Corporation Law of the State of New York and to
do all acts and things necessary in connection therewith.
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.
Other resolutions from shareholders, such as the ones presented below, are
regarded by management as being not in the best interests of the Company and its
shareholders, and are presented to the shareholders for a vote.
SHAREHOLDER PROPOSAL 1
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."
"Continued strong support along the lines we suggest were shown at the
last annual meeting when 25.1%, approximately 3,250 owners of 81,456,870 shares,
were cast in favor of this proposal. The vote against included approximately
3,316 unmarked proxies.
A California law 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. 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
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on banking boards. In many cases authorities come in after and say the director
or directors were not qualified. We were delighted to see the SEC has finally
taken action to prevent bad directors from being on boards of public companies.
The SEC should have hearings to prevent such persons becoming directors before
they harm investors.
We think cumulative voting is the answer to find new directors for various
committees. Some recommendations have been made to carryout the CERES 10 points.
The 11th, in our opinion, should be having cumulative voting and ending
staggered boards.
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. The huge derivative losses
might have also been prevented with cumulative voting.
Many successful corporations have cumulative voting. Example, Pennzoil
defeated Texaco in that famous case. Ingersoll-Rand also having cumulative
voting won two awards. FORTUNE magazine ranked it 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." In 1994
and 1995 they raised their dividend.
Lockheed-Martin, as well as VWR Corporation now have a provision that if
anyone has 40% of the shares, cumulative voting applies, which does in the
latter company.
In 1995 American Premier adopted cumulative voting. Alleghany Power System
tried to take away cumulative voting, as well as put in a stagger system, and
stockholders defeated it, showing stockholders are interested in their rights.
If you agree, please mark your proxy for this resolution; otherwise it is
automatically cast against it, unless you have marked to abstain".
YOUR BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST THIS PROPOSAL FOR THE
FOLLOWING REASONS:
Similar proposals with respect to cumulative voting have been presented by
the proponent at 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 is one of those issues that has the appearance of
fairness, but in reality would serve the interests of special interest groups.
It would make it possible for such a group to elect one or more directors
beholden to the group's narrow interests. This would introduce the likelihood of
factionalism and discord within the Board and 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.
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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.
SHAREHOLDER PROPOSAL 2
Mrs. Evelyn Y. Davis, Watergate Office Building, 2600 Virginia Avenue, N.
W., Suite 215, Washington, D.C. 20037, record owner of 148 common shares, had
advised the Company that she plans to introduce the following resolution:
RESOLVED: "That the shareholders recommend that the Board take the
necessary step that American Express specifically identify by name and corporate
title in all future proxy statements those executive officers, not otherwise so
identified, who are contractually entitled to receive in excess of $250,000
annually as a base salary, together with whatever other additional compensation
bonuses and other cash payments were due them."
REASONS: "In support of such proposed Resolution it is clear that the
shareholders have a right to comprehensively evaluate the management in the
manner in which the Corporation is being operated and its resources utilized."
"At present only a few of the most senior executive officers are so identified,
and not the many other senior executive officers who should contribute to the
ultimate success of the Corporation." "Through such additional identification
the shareholders will then be provided an opportunity to better evaluate the
soundness and efficacy of the overall management."
"If you AGREE, please mark your proxy FOR this proposal".
YOUR BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST THIS PROPOSAL FOR THE
FOLLOWING REASONS:
The Company believes that the foregoing proposal serves no useful purpose.
It is not the Company's practice to grant employment contracts to its executive
officers. No current executive officer has an employment contract and the
Company has no present intention to grant them in the future. This is because
the Company believes that the jobs of executive officers should be dependent
upon performance and not secured by employment contracts.
Moreover, the Company believes that the compensation disclosure
requirements of the Securities and Exchange Commission ("SEC") are sufficiently
comprehensive and detailed to provide shareholders with the information they
need to make informed investment and voting decisions. Going forward, the
Company will look to the SEC rather than to the proponent for guidance on what
is meaningful disclosure in the area of executive compensation.
SHAREHOLDER PROPOSAL 3
The Ministers and Missionaries Benefit board of the American Baptist
Churches, the American Baptist Foreign Mission Society and the American Baptist
Home Mission Society, located at P.O. Box 851, Valley Forge, PA 19482, together
holding 57,800 shares, have advised the Company that they plan to introduce the
following proposal: WHEREAS WE BELIEVE:
Responsible implementation of a sound, credible environmental policy
increases long-term shareholder value by raising efficiency, decreasing clean-up
costs, reducing litigation, and enhancing public image and product
attractiveness;
Adherence to public standards for environmental performance gives a
company greater public credibility than standards created by industry alone. For
maximum credibility and usefulness, such standards should specifically meet the
concerns of investors and other stakeholders;
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Companies are increasingly being expected by investors to do meaningful,
regular, comprehensive and impartial environmental reports. Standardized
environmental reports enable investors to compare performance over time. They
also attract investment from investors seeking companies which are
environmentally responsible and which minimize risk of environmental liability.
WHEREAS:
The Coalition for Environmentally Responsible Economies (CERES) - which
includes shareholders of this Company; public interest representatives, and
environmental experts - consulted with corporations to produce the CERES
Principles as comprehensive public standards for both environmental performance
and reporting. Fifty-four companies, including Sun [Sunoco], General Motors,
H.B. Fuller, Polaroid, and Bethlehem Steel, have endorsed these principles to
demonstrate their commitments to public environmental accountability.
Fortune-500 endorsers say that benefits of working with CERES are public
credibility; `value-added' for the company's environmental initiatives;
In endorsing the CERES Principles, a company commits to work toward:
1. Protection of the biosphere 6. Safe products and services
2. Sustainable natural resource use 7. Environmental restoration
3. Waste reduction and disposal 8. Informing the public
4. Energy Conservation 9. Management commitment
5. Risk reduction 10. Audits and reports
[Full text of the CERES Principles, and accompanying CERES Report Form
obtainable from CERES, 711 Atlantic Avenue, Boston, MA 02110, tel; (617)
451-0927]
CERES is distinguished from other initiatives for corporate environmental
responsibility, in being (1) a successful model of shareholder relations; (2) a
leader in public accountability through standardized environmental reporting;
and (3) a catalyst for significant and measurable environmental improvement
within firms.
RESOLVED: Shareholders request the Company to endorse the CERES Principles
as a part of its commitment to be publicly accountable for its environmental
impact.
SUPPORTING STATEMENT
Many investors support this resolution. Those sponsoring similar
resolutions at various companies have portfolios totaling $75 billion. The
number of public pension funds and foundations supporting this resolution
increases every year. The objectives are: standards for environmental
performance and disclosure; methods for measuring progress toward these goals;
and a format for public reporting of progress. We believe this is comparable to
the European Community regulation for voluntary participation in verified and
publicly-reported eco-management and auditing, and fully compatible with ISO
14000 certification.
Your vote FOR this resolution will encourage scrutiny of our Company's
environmental policies and reports and adherence to standards upheld by
management and stakeholders alike.
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YOUR BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST THIS PROPOSAL FOR THE
FOLLOWING REASONS:
Management has had several meetings with representatives of CERES. These
meetings were constructive and informative, management agrees with the
sentiments underlying the proponents' proposal, that is, that corporations
should conduct their businesses as responsible stewards of the environment.
However, management recommends a vote against the proposal because it believes
that the environmental practices and principles followed by the Company
adequately address the environmental issues raised by the CERES Principles and
effectively demonstrate the Company's commitment to sound environmental
practices. The Company's policies relating to management of corporate facilities
and the operation of the Company's businesses mandate a number of the same
safeguards, recycling programs, emission controls, energy conservation,
hazardous materials reduction and other steps contemplated by CERES. In
addition, there are fees and expenses involved in joining the CERES
organization. Accordingly, the Company feels that endorsement of the CERES
Principles would be largely redundant and not add value to the Company's
shareholders.
SHAREHOLDER PROPOSAL 4
Mr. Thomas Strobhar of 4165 Meadowcroft Road, Dayton, Ohio 45429, owner of
100 shares, intends to present the following resolution:
"WHEREAS, corporate charitable contributions should serve to enhance
shareholder value.
WHEREAS, the company makes contributions to groups that engage in
controversial activities.
WHEREAS, support of these groups has resulted in consumer boycotts of the
company's products and services. These boycotts have possibly negatively
impacted sales, earnings, and ultimately shareholder value.
THEREFORE, be it resolved that the Shareholders request the Board of
Directors of the corporation to refrain from making any charitable
contributions. Money normally allocated for such purposes could be distributed
in a special "charitable" dividend payable to the individual owners of the
company. It could be suggested they give it to the charity of their choice."
SUPPORTING STATEMENT
Charitable giving is most beneficial to society when it is done by
individuals and not by corporate entities or the federal government.
Shareholders entrust their money to American Express to get a good return, not
to see it given to someone else's favorite charity. Gifts to the
abortion-performing group, Planned Parenthood, or groups promoting same sex
marriages can produce large amounts of bad will toward the company. Let's hear
it for choice - the choice of individual shareholders to decide where their
money should be given.
YOUR BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST THIS PROPOSAL FOR THE
FOLLOWING REASONS:
Management disagrees with the proponent's assertion that corporate
entities should not make charitable grants. Management believes that corporate
support of deserving charitable causes is not only a worthwhile end in itself
but is a means of furthering the Company's business interests. In recent years,
the Company has conducted several successful marketing programs related to
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charitable causes, such as the recent "Share our Strength" campaign. These
programs have directly benefitted the Company through increased use of the
American Express Card and by promoting the economic and social stability of the
communities in which we conduct business.
In addition to depriving the Company of the bottom-line benefits of
charitable contributions, the proposal is also impractical to implement. In
1996, the Company distributed $22 million worldwide, approximately 1.4% of the
Company's net after-tax income of $1.6 billion. If a $22 million dividend were
declared on the Company's approximately 475 million outstanding shares, the
special charitable dividend would come to approximately 21.5(cent) per share, an
impracticably small amount for most individuals to redistribute effectively to
charities of their choice.
* * * *
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 called for a date that is
not within 30 days before or after such anniversary date, notice must be
received not later than the tenth day following the earlier of the date the
Company's notice of the meeting is first given or announced publicly. With
respect to a special meeting called to elect directors because the election of
directors is not held on the date fixed for the annual meeting, a shareholder
must deliver notice not later than the tenth day following the earlier of the
date that the Company's 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 1998 Annual
Meeting of Shareholders will be held on April 27, 1998. 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, 1997.
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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
purchased excess coverage from Lloyd's, Aetna Casualty and Surety Company,
Reliance Insurance Company, CNA Insurance Company, Zurich Insurance Company,
Federal Insurance Company and A.C.E. Insurance Company (Bermuda) Ltd. The
inception date of these policies is March 31, 1996. 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 $1.7 million in 1996. Each major subsidiary pays its
proportionate share of the premium. The current policies are due to expire on
March 31, 1997, and similar coverage is expected to be renewed.
The Company has also obtained an insurance policy, dated March 31, 1996,
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, 1996. The
annualized premium for these policies in 1996 was approximately $151,200.
In accordance with the indemnification provisions of the Company's
By-Laws, in 1996 and early 1997 the Company advanced approximately $50,000 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 ___ 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.
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We encourage all shareholders to attend the Annual Meeting of Shareholders
on April 28, 1997. 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
CERTIFICATE OF INCORPORATION
OF
AMERICAN EXPRESS COMPANY
UNDER SECTION 402
OF THE BUSINESS CORPORATION LAW
--------------------
SECTION 1. NAME
The name of the corporation is "AMERICAN EXPRESS COMPANY."
SECTION 2. PURPOSES
The purposes for which the corporation is formed are:
1. To continue to conduct and carry on the business heretofore conducted
and carried on by American Express Company.
2. To engage in any lawful act or activity for which corporations may be
organized under New York Business Corporation Law, and in furtherance of the
foregoing purposes to exercise all powers now or hereafter granted or permitted
by law, including, without limitation, the powers specified in the New York
Business Corporation Law.
Notwithstanding the foregoing, the corporation will not engage in any acts
or activities requiring the consent or approval of any state official,
department, board, agency or other body without such consent or approval first
being obtained.
SECTION 3. OFFICE
The office of the corporation within the State of New York is to be
located in the City and County of New York.
SECTION 4. AUTHORIZED SHARES
1. The aggregate number of shares of all classes which the corporation
shall have the authority to issue is 1,220,000,000 shares, consisting of
20,000,000 preferred shares of the par value of $1.66 2/3 each and 1,200,000,000
common shares of the par value of $.60 each.
2. No holder of common shares or of preferred shares of any series shall
have any preemptive or preferential right to purchase or subscribe to any shares
of any class or series of the corporation, whether now or hereafter authorized,
or to any obligations or other securities convertible into or exchangeable for
shares of the corporation or carrying options or rights to purchase shares of
any class or series whatsoever, nor any right of subscription to any thereof,
other than such, if any, as the Board of Directors in its discretion may, from
time to time, determine or as may be specified in any certificate of amendment
of this certificate of incorporation, and at such price or prices and at such
rate or rates as the Board of Directors may from time to time fix pursuant to
the authority conferred by the provisions of this Section 4; and any shares or
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obligations or other securities which the Board of Directors may determine to
offer for subscription to the holders of shares may, as the Board shall
determine, be offered exclusively either to the holders of preferred shares or
any one or more series thereof or to the holders of common shares, or partly to
the holders of preferred shares or any one or more series thereof and partly to
the holders of common shares, and in such case in such proportions as between
such classes and series as the Board of Directors in its discretion may
determine.
3. Subject to the foregoing, the designations and the relative rights,
preferences and limitations of the shares of each class, and the authority
hereby vested in the Board of Directors of the corporation to establish and to
fix the numbers, designations and relative rights, preferences and limitations
of series of preferred shares, are as follows:
a. The preferred shares may be issued from time to time by the Board of
Directors in one or more series and, subject only to the provisions of
this Section 4 and the limitations prescribed by law, the Board of
Directors is expressly authorized, prior to issuance, in the resolution
or resolutions providing for the issue of, or providing for a change in
the number of, shares of any particular series, and by filing a
certificate of amendment pursuant to the Business Corporation Law of
the State of New York, to establish or change the number of shares to
be included in each such series and to fix the designation and relative
rights, preferences and limitations of the shares of each such series.
The authority of the Board of Directors with respect to each series
shall include, but not be limited to, determination of the following:
(1) the distinctive serial designation of such series and the number
of shares constituting such series (provided that the aggregate
number of shares constituting all series of preferred shares
shall not exceed the aggregate number of preferred shares
authorized above);
(2) the times at which and the conditions under which dividends
shall be payable on shares of such series, the annual dividend
rate thereon, whether dividends shall be cumulative and, if so,
from which date or dates, and the status of such dividends as
participating or non-participating;
(3) whether the shares of such series shall be redeemable and, if
so, the terms and conditions of such redemption, including the
date or dates upon and after which such shares shall be
redeemable, and the amount per share payable in case of
redemption, which amount may vary under different conditions and
at different redemption dates;
(4) the obligation, if any, of the corporation to retire shares of
such series pursuant to a sinking fund or redemption or purchase
account;
(5) whether the shares of such series shall be convertible into, or
exchangeable for, shares of any other class or classes or shares
of any series of any class, and, if so, the terms and conditions
of such conversion or exchange, including the price or prices or
the rate or rates of conversion or exchange and the terms of
adjustment thereof, if any;
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(6) whether the shares of such series shall have voting rights, in
addition to the voting rights otherwise provided in this
certificate of incorporation or by law, and, if so, the terms of
such voting rights;
(7) the rights of the shares of such series in the event of
voluntary or involuntary liquidation, dissolution or winding
up of the affairs of the corporation; and
(8) any other relative rights, preferences and limitations of such
series.
b. All preferred shares shall be of equal rank with each other regardless
of series. In case the stated dividends and the amounts payable on
liquidation are not paid in full, the preferred shares of all series
shall share ratably in the payment of dividends including
accumulations, if any, in accordance with the sums which would be
payable on such shares if all dividends were declared and paid in full,
and in any distribution of assets other than by the way of dividends in
accordance with the sums which would be payable in such distribution if
all sums payable were discharged in full.
The preferred shares of any one series shall be identical with each other
in all respects except as to the dates from which cumulative dividends, if any,
thereon shall be cumulative.
c. Subject to the rights of the preferred shares, dividends may be paid
upon the common shares as and when declared by the Board of Directors
out of any funds legally available therefor.
d. Upon any liquidation, dissolution or winding up of the affairs of the
corporation (which shall not be deemed to include a consolidation or
merger of the corporation, or the sale of all or substantially all of
the corporation's assets, into, with or to any other corporation or
corporations), whether voluntary or involuntary, and after the holders
of the preferred shares shall have been paid in full the amounts, if
any, to which they respectively shall be entitled or provision for such
payment shall have been made, the remaining net assets of the
corporation shall be distributed pro rata to the holders of the common
shares.
e. So long as any preferred shares of any series are outstanding,
(1) Whenever dividends payable on the preferred shares of any series
shall be in arrears in an aggregate amount at least equal to six
full quarterly dividends (which need not be consecutive) on such
series, the holders of the outstanding preferred shares of all
series shall have the special right, voting separately as a
single class, to elect two directors of the corporation, at the
next succeeding annual meeting of shareholders (and at each
succeeding annual meeting of shareholders thereafter until such
right shall terminate as hereinafter provided), and, subject to
the terms of any outstanding series of preferred shares, the
holders of the common shares and the holders of one or more
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series of preferred shares then entitled to vote shall have the
right, voting as a single class, to elect the remaining
authorized number of directors.
At each meeting of shareholders at which the holders of the preferred
shares of all series shall have the special right, voting separately as a
single class, to elect directors as provided in this paragraph e, the
presence in person or by proxy of the holders of record of one-third of
the total number of the preferred shares of all series then issued and
outstanding shall be necessary and sufficient to constitute a quorum of
such class for such election by such shareholders.
Each director elected by the holders of the preferred shares of all
series shall hold office until the annual meeting of shareholders next
succeeding his election and until his successor, if any, is elected by
such holders and qualified or until his death, resignation or removal in
the manner provided in the by-laws of the corporation; provided, however,
that notwithstanding any provision in the by-laws, a director elected by
the holders of the preferred shares of all series may be removed only by
such holders if such removal is without cause.
In case any vacancy shall occur among the directors elected by the
holders of the preferred shares of all series such vacancy may be filled
for the unexpired portion of the term by vote of the single remaining
director theretofore elected by such shareholders, or his successor in
office, or, if such vacancy shall occur more than 90 days prior to the
first anniversary of the next preceding annual meeting of shareholders, by
the vote of such shareholders given at a special meeting of such
shareholders called for the purpose.
Whenever all arrears of dividends on the preferred shares of all
series shall have been paid and dividends thereon for the current
quarterly period shall have been paid or declared and provided for, the
right of the holders of the preferred shares of all series to elect two
directors as provided in this paragraph e shall terminate at the next
succeeding annual meeting of shareholders, but subject always to the same
provisions for the vesting of such special right, voting separately as a
single class, to elect two directors in the case of any future arrearages
of the kind and amount described in this paragraph e.
(2) The consent of the holders of at least two-thirds of the
outstanding preferred shares, given in person or by proxy, at a
special or annual meeting of shareholders called for the
purpose, at which the holders of the preferred shares of all
series shall vote separately as a single class, shall be
necessary for effecting the authorization of any class of shares
ranking prior to the preferred shares as to dividends or upon
liquidation, dissolution or winding up, or an increase in the
authorized amount of any class of shares so ranking prior to the
preferred shares, or the authorization of any amendment of the
certificate of incorporation or the by-laws of the corporation
so as to affect adversely the relative rights, preferences or
limitations of the preferred shares; provided, however, that, if
any such amendment shall affect adversely the relative rights,
preferences or limitations of one or more, but not all, of the
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series of preferred shares then outstanding, the consent of the
holders of at least two-thirds of the outstanding preferred
shares of the several series so affected shall be required in
lieu of the consent of the holders of at least two-thirds of the
outstanding preferred shares of all series.
(3) In any case in which the holders of the preferred shares shall
be entitled to vote separately as a single class pursuant to the
provisions hereof or pursuant to law, each holder of preferred
shares of any series shall be entitled to one vote for each such
share held.
SECTION 5. AGENT FOR PROCESS
The secretary of state is designated as agent of the corporation upon whom
process against it may be served, and the post office address to which the
secretary of state shall mail a copy of any process against the corporation
served upon him is, American Express Company, 200 Vesey Street, New York, New
York 10285.
SECTION 6. SHAREHOLDER VOTE
Every holder of common shares of record shall be entitled at every meeting
of shareholders to one vote for each common share standing in his name on the
record of shareholders. Holders of each series of preferred shares shall be
entitled to vote in accordance with the provisions of this certificate relating
to such series.
SECTION 7. AMENDMENTS
The corporation reserves the right to amend, alter, change or repeal any
provision herein contained in the manner now or hereafter prescribed by
applicable law, and all rights conferred hereunder upon shareholders of the
corporation are granted subject to this reservation.
SECTION 8. LIABILITY OF DIRECTORS
No director shall be personally liable to the corporation or any
shareholder for damages for any breach of duty as a director, except for (a) the
liability of any director if a judgment or other final adjudication adverse to
him establishes that (i) his acts or omissions were in bad faith or involved
intentional misconduct or a knowing violation of law or (ii) he personally
gained in fact a financial profit or other advantage to which he was not legally
entitled or (iii) his acts violated Section 719 of the New York Business
Corporation Law, or (b) the liability of any director for any act or omission
prior to the adoption of this Section 8. Any repeal or modification of this
Section 8 by the shareholders of the corporation shall not, unless otherwise
required by law, adversely affect any right or protection of a director existing
at the time of such repeal or modification with respect to acts or omissions
occurring prior to such repeal or modification. If the New York Business
Corporation Law is amended after approval by the shareholders of this Section 8
to authorize corporate action further eliminating or limiting the personal
liability of directors, then the liability of a director of the corporation
shall be eliminated or limited to the fullest extent permitted by the New York
Business Corporation Law, as amended from time to time.
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DIRECTIONS TO THE 1997 AMERICAN EXPRESS COMPANY
ANNUAL MEETING OF SHAREHOLDERS
American Express Company's world headquarters, site of the Company's 1997
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 located on the southwestern tip of
Manhattan. It is connected to the World Trade Center by two pedestrian
overpasses and is also accessible at street level by automobile.
BY SUBWAY
Take any of the several subway lines (A, C, E, N, R or the 1, 2, 3, 4, 5
or 9 trains) that stop at or near the World Trade Center. Walk from the World
Trade Center across the Westside Highway (also known as West Street) via one of
the two pedestrian overpasses. The American Express building is on the north
side of the Winter Garden in the World Financial Center.
BY AUTOMOBILE OR TAXICAB
Proceed 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 directly across the Westside Highway from the towers, by
turning west on either Murray Street or Vesey Street. Proceed to the main
entrance of the American Express building, located at the corner of Vesey Street
and the Westside Highway.
<PAGE>
PRELIMINARY COPY
AMERICAN EXPRESS COMPANY
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
THE COMPANY FOR ANNUAL MEETING ON APRIL 28, 1997
The undersigned hereby appoints Richard K. Goeltz, 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 28, 1997 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.
(COMMENTS/ADDRESS CHANGE)
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Election of Directors. Nominees:
D.F. Akerson, A.L. Armstrong, E.L. Artzt,
W.G. Bowen, C.W. Duncan, Jr., H. Golub,
B. Sills Greenough, F.R. Johnson,
V.E. Jordan, Jr., D. Lewis, A. Papone,
F.P. Popoff.
(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 EMPLOYEES PARTICIPATING IN THE AMERICAN EXPRESS INCENTIVE SAVINGS
PLAN:
This proxy card indicates the number of whole shares credited to your account in
the American Express Incentive Savings Plan (ISP) as of February 21, 1997. The
shares credited to your account in ISP will be voted according to your voting
instructions indicated on this card if American Express Trust Company, the
Trustee of the ISP, receives such instructions in a timely manner.
To be received in a timely manner, ChaseMellon 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 11, 1997.
If the Trustee does not receive your voting instructions in a timely manner,
your shares held in the ISP will be voted by the Trustee, in the same proportion
as the Trustee has received timely voting instructions on other shares held in
ISP.
<PAGE>
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
proposals 4, 5, 6 and 7.
Please mark your votes as indicated in
this example. /x/
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEMS 1, 2 AND 3.
Item 1 - Election of Directors.
/ /FOR ALL NOMINEES / /WITHHOLD FROM ALL NOMINEES
FOR the slate, except vote WITHHELD from the following nominee(s):
Item 2 - Selection of Ernst & Young LLP as Independent Auditors.
/ /FOR / /AGAINST / /ABSTAIN
Item 3 - Amendment and Restatement of the Company's Certificate of
Incorporation.
/ /FOR / /AGAINST / /ABSTAIN
THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST ITEM 4, 5, 6 AND 7.
Item 4 - Shareholder proposal #1 relating to cumulative voting.
/ /FOR / /AGAINST / /ABSTAIN
Item 5 - Shareholder proposal #2 relating to executive compensation
/ /FOR / /AGAINST / /ABSTAIN
Item 6 - Shareholder proposal #3 relating to CERES principles.
/ /FOR / /AGAINST / /ABSTAIN
Item 7 - Shareholder proposal #4 relating to charitable contributions.
/ /FOR / /AGAINST / /ABSTAIN
I plan to attend meeting. / /
COMMENTS/ADDRESS CHANGE
(Please mark this box if you have written comments/address change on the reverse
side.) / /
SIGNATURE(S) DATE
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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.
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FOLD AND DETACH HERE.
