DEF 14A 1 amex_def14a.htm DEFINITIVE PROXY STATEMENT

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

SCHEDULE 14A

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

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

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

AMERICAN EXPRESS COMPANY

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

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  No fee required.
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2016
AMERICAN EXPRESS COMPANY

 

 

 

 

 

 

PROXY STATEMENT

 



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

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

     
WHEN
Monday, May 2, 2016
9:00 a.m. Eastern Time
 

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

RECORD DATE
Close of business on March 4, 2016
       ITEMS OF BUSINESS
To vote on the following proposals:
 
1.     Election of directors proposed by our Board of Directors for a term of one year, as set forth in this proxy statement
   
2. Ratification of appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm for 2016
 
  3. Advisory resolution to approve executive compensation
 
4. Approval of the American Express Company 2016 Incentive Compensation Plan
 
5. Five shareholder proposals if properly presented at the meeting
 
6. Such other business that may properly come before the annual meeting
       

Carol V. Schwartz
Secretary
March 21, 2016

Important notice regarding the availability of proxy materials for the 2016 annual meeting to be held on May 2, 2016:

Our proxy statement and annual report are available online at http://ir.americanexpress.com*. We will mail to certain shareholders a notice of internet availability of proxy materials, which contains instructions on how to access these materials and vote online. We expect to mail this notice and to begin mailing our proxy materials on or about March 22, 2016.

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

2016 PROXY STATEMENT | 03



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PROXY SUMMARY AND VOTING ROADMAP

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

   
ITEM 1
 
   

ELECTION OF DIRECTORS FOR A TERM OF ONE YEAR

The Board recommends a vote FOR each of these Director nominees

You are being asked to elect 13 directors. Each of our current directors is standing for reelection. The Board has also nominated Ralph de la Vega to stand for election. Each of the nominees is standing for election to hold office until the next annual meeting of shareholders and until his or her successor is duly elected and qualified. Detailed information about each nominee’s background, skills and expertise can be found starting on page 15.

   

American Express Committees
Name      Age      Director
Since
     Other Public Boards     AC     CB     IT     NG     PR     R
Charlene Barshefsky 65 2001 The Estée Lauder Companies Inc.
Senior International Partner, Starwood Hotels & Resorts Worldwide, Inc.
WilmerHale Intel Corporation
Ursula M. Burns 57 2004 Exxon Mobil Corporation
Chairman and CEO, Xerox Corporation
Xerox Corporation
Kenneth I. Chenault 64 1997 International Business Machines Corporation (IBM)
Chairman and CEO, The Procter & Gamble Company
American Express Company
Peter Chernin 64 2006 Pandora Media, Inc.
Founder and CEO, Twitter, Inc.
Chernin Entertainment, LLC
Ralph de la Vega 64
Vice Chairman of AT&T Inc. and
CEO of Business Solutions &
International, AT&T
Anne L. Lauvergeon 56 2013 Rio Tinto Plc
Chairman and Chief Executive Officer, Airbus Group
A.L.P. SAS Suez Environnement
Michael O. Leavitt 65 2015 HealthEquity, Inc.
Founder and Chairman, Medtronic, Inc.
Leavitt Partners, LLC
Theodore J. Leonsis 60 2010 Groupon, Inc.
Chairman and CEO, Monumental
Sports & Entertainment, LLC
Richard C. Levin 68 2007
Chief Executive Officer,
Coursera
Samuel J. Palmisano 64 2013 Exxon Mobil Corporation
Former Chairman,
President and CEO, IBM
Daniel L. Vasella 62 2012 PepsiCo, Inc.
Honorary Chairman and Former XBiotech
Chairman and CEO, Novartis AG
Robert D. Walter, 70 2002 Nordstrom, Inc.
Lead Independent Director YUM! Brands, Inc.
Founder and Former Chairman and
CEO, Cardinal Health, Inc.
Ronald A. Williams 66 2007 The Boeing Company
Former Chairman and CEO, Johnson & Johnson
Aetna, Inc. Envision Healthcare                                                

      AC – Audit and Compliance       NG – Nominating and Governance        – Member
  CB – Compensation and Benefits   PR – Public Responsibility    – Chair
IT – Innovation and Technology   R – Risk

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

DIRECTOR ATTENDANCE

During 2015, our Board met 10 times and committees in the aggregate met 35 times. (The number of individual committee meetings is presented on pages 30 and 31.) All directors attended 75 percent or more of the meetings of the Board and Board committees on which they served in 2015.

All of our directors were present at the 2015 annual meeting. Our Board encourages all its members to attend the annual meetings but understands there may be situations that prevent such attendance.

BOARD HIGHLIGHTS

Upon election of the Board’s nominees at the annual meeting, the Board will have the following characteristics: 
 
 

BOARD ORGANIZATION

Committee structures are in place to enable a deep focus on key areas such as oversight of risk management and compliance, the integrity of our financial statements and system of internal control over financial reporting, our executive compensation program and practices, our technology and data capabilities and digital innovation, our corporate governance and our public responsibility. The Board as a whole maintains its focus on the most impactful matters such as strategy development and execution, succession planning and evolving business developments.

BOARD EXPERTISE AND SKILLS

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

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

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PROXY SUMMARY AND VOTING ROADMAP
Ratification of Appointment of PricewaterhouseCoopers LLP for 2016

MAJORITY VOTING STANDARD FOR DIRECTOR ELECTIONS

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

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

CORPORATE GOVERNANCE HIGHLIGHTS

12 out of 13 of our director nominees are independent 
Strong lead independent director role 
Diverse board 
Regular board refreshment and mix of tenure of directors 
Non-management executive sessions led by lead independent director at each regular board meeting
Board agenda includes multi-day strategy sessions
Key management and rising talent reviewed at an annual talent review board meeting
Risk aware culture overseen by a separate Risk Committee of the Board
Annual election of directors
Majority voting for directors
25 percent of shareholders can call special meetings
Active shareholder engagement
Significant share ownership requirements for senior executives
Annual board and committee performance evaluations
Ongoing board succession planning
Director access to experts and advisors, internal and external

   
ITEM 2
   

RATIFICATION OF APPOINTMENT OF PRICEWATERHOUSECOOPERS LLP FOR 2016

The Board recommends a vote FOR this item

The Audit and Compliance Committee reappointed PricewaterhouseCoopers LLP as our independent registered public accounting firm for 2016. We are asking you to ratify this appointment. PwC has been our independent auditor since 2005. Information about the committee’s appointment of PwC and PwC fees for 2015 and 2014 is presented on page 40.

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

   

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

   
ITEM 3
   

ADVISORY RESOLUTION TO APPROVE EXECUTIVE COMPENSATION (SAY ON PAY)

The Board recommends a vote FOR this item

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

   

2015 PERFORMANCE

Our performance in 2015 reflected both the strength of our business and the headwinds we have been managing throughout the year. Results for the year benefited from healthy loan growth, strong card acquisitions, excellent credit performance, disciplined operating expense control and the benefits of our strong capital position. Despite these results, our billed business growth and revenue growth did not meet our expectations set at the start of the year, and our reported EPS was below our 2014 results. We were also challenged by several factors. First, the cumulative impact from the initial increased costs associated with early renewals of certain of our co-brand relationships and the end of our relationship with Costco in Canada negatively impacted our results. Second, the U.S. dollar continued to strengthen as the year progressed. Third, our decision to increase spending on growth initiatives for the year, consistent with the elevated levels of 2014, further pressured our 2015 earnings. Fourth, the economic, regulatory, and competitive environments all became even more challenging as the year progressed. Further information on our 2015 performance can be found on pages 46 and 47.

TOTAL DIRECT COMPENSATION (TDC) FOR OUR CEO FOR 2015 PERFORMANCE

In January 2016, after taking into account the company’s performance and evaluating Mr. Chenault’s leadership contributions, the Compensation and Benefits Committee (Compensation Committee) awarded Mr. Chenault TDC1 of $18,525,000 for performance year 2015, 26 percent lower than his 2014 TDC and 16 percent below target.

Within Mr. Chenault’s total TDC for performance year 2015:

Annual Incentive Award (AIA) was 51 percent below 2014 AIA and 40 percent below 2015 target AIA
 

AIA earned was paid in restricted stock units (RSUs) instead of cash and a portion of these RSUs are subject to retention requirements until after retirement
 

A significant portion (almost 89 percent) of Mr. Chenault’s 2015 TDC is deferred and tied to future performance
 

Therefore, Mr. Chenault’s realizable compensation could be lower or higher than TDC awarded depending on our future performance
 

The pay for performance linkage is illustrated on page 49 which shows that Mr. Chenault’s realizable compensation is about 29 percent lower than his TDC for the previous three performance years

CEO Total Direct Compensation Mix


Our Compensation Discussion and Analysis is on pages 43-59 and our Summary Compensation Table, other tables and narrative discussion are on pages 60-73.

(1) Total Direct Compensation (TDC) is salary, Annual Incentive Award earned for the prior year, and long-term incentives granted that are tied to future performance.

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PROXY SUMMARY AND VOTING ROADMAP
Approval of the American Express Company 2016 Incentive Compensation Plan

   
ITEM 4
 

   

APPROVAL OF THE AMERICAN EXPRESS COMPANY 2016 INCENTIVE COMPENSATION PLAN

The Board recommends a vote FOR this item

We are asking you to approve the American Express Company 2016 Incentive Compensation Plan (2016 Plan), which provides for the granting of short- and long-term equity and cash incentive compensation awards. The primary objective of the 2016 Plan is to promote shareholder value and the future success of American Express by providing appropriate retention and performance incentives to employees and other individuals.

   

SHARE REQUEST INFORMATION

As of the record date, approximately 30 million shares remain authorized for issuance and unused under the existing American Express Company 2007 Incentive Compensation Plan (2007 Plan). If approved by shareholders, the 2016 Plan will replace the 2007 Plan and no new awards will be granted under the 2007 Plan.

We are requesting 17.5 million shares to be authorized for issuance under the 2016 Plan. Based on our historical burn rate, we expect this share request to be sufficient for plan awards for up to the next five years. We believe both our historical burn rate and the size of our share request reflect responsible granting practices. In response to shareholder feedback, we have reduced the number of shares we are requesting (as compared to the 2007 Plan) so that we may return to shareholders and request approval for any additional shares we may need on a more frequent basis.

KEY HIGHLIGHTS

The 2016 Plan continues many of the good governance practices and features of the 2007 Plan but has been updated to reflect evolving practices and address feedback from shareholders. Set forth below are key features of the 2016 Plan:

Provides for a minimum one-year vesting period for all equity-based awards (subject to certain limited carve outs)
 

Limits the number of shares or cash amounts that can be awarded to an individual employee in a year
 

Limits the value of equity-based awards that can be granted to a non-employee director in a year
 

Provides for recycling of shares back to the plan pool only in the event of forfeiture or cancellation and otherwise prohibits recycling of shares
 

Prohibits direct or indirect repricing of underwater stock options without shareholder approval
 

Provides for double-trigger vesting on a change in control unless an acquirer does not assume outstanding awards
 

Provides the opportunity for awards to qualify as “performance-based compensation” under Section 162(m) of the Internal Revenue Code

Please see “Item 4” beginning on page 74 for a summary of the 2016 Plan. The full text of the 2016 Plan is attached to this proxy statement as Exhibit A.

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PROXY SUMMARY AND VOTING ROADMAP
Five Shareholder Proposals (If Properly Presented)

   
ITEMS 
5-9
   

FIVE SHAREHOLDER PROPOSALS
(IF PROPERLY PRESENTED)

The Board recommends a vote AGAINST each item

You will have the opportunity to vote on five shareholder proposals, if properly presented at the annual meeting. The text of these proposals, the proponents’ statements in support and our responses are set forth beginning on page 83.

   

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TABLE OF CONTENTS

3 NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
4 PROXY SUMMARY AND VOTING ROADMAP
11-37 CORPORATE GOVERNANCE AT AMERICAN EXPRESS
           11         ITEM 1 Election of Directors for a Term of One Year
11 Board Composition
15 Our Director Nominees
22 Our Board’s Independence
22 Our Corporate Governance Framework
24 Our Board’s Role and Responsibilities, Structure and Processes
28 Shareholder Engagement
30 Board Committees
32 Compensation of Directors
33 Director and Officer Liability Insurance
34 Certain Relationships and Transactions
36 Corporate Responsibility at American Express
38-41 AUDIT COMMITTEE MATTERS
38 ITEM 2 Ratification of Appointment of Independent Registered Public Accounting Firm
40 PricewaterhouseCoopers LLP Fees and Services
41 Report of the Audit and Compliance Committee
42-73 EXECUTIVE COMPENSATION
42 ITEM 3 Advisory Resolution to Approve Executive Compensation (Say On Pay)
43 Compensation Discussion and Analysis
58 Report of the Compensation and Benefits Committee
60 Summary Compensation Table
63 Grants of Plan-Based Awards
64 Outstanding Equity Awards at Fiscal Year-End 2015
66 Option Exercises and Stock Vested in 2015
67 Retirement Plan Benefits
68 Nonqualified Deferred Compensation
70 Potential Payments Upon Termination or Change in Control (CIC)
74-82 AMERICAN EXPRESS COMPANY 2016 INCENTIVE COMPENSATION PLAN
74 ITEM 4 Approval of American Express Company 2016 Incentive Compensation Plan
74 Purpose and Importance of the 2016 Plan
75 2016 Plan Terms
82 Equity Compensation Plans
83-93 SHAREHOLDER PROPOSALS
83 ITEM 5 Shareholder Proposal Relating to Annual Disclosure of EEO-1 Data
86 ITEM 6 Shareholder Proposal Relating to Report on Privacy, Data Security and Government Requests
88 ITEM 7 Shareholder Proposal Relating to Action by Written Consent
89 ITEM 8 Shareholder Proposal Relating to Lobbying Disclosure
92 ITEM 9 Shareholder Proposal Relating to Independent Board Chairman
94 STOCK OWNERSHIP INFORMATION
96 OTHER INFORMATION
101 ANNEX A—INFORMATION REGARDING NON-GAAP FINANCIAL MEASURES
102 EXHIBIT A—AMERICAN EXPRESS COMPANY 2016 INCENTIVE COMPENSATION PLAN
114 LOCATION OF THE 2016 ANNUAL MEETING

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CORPORATE GOVERNANCE AT AMERICAN EXPRESS



 
 
ITEM
1
 
       

ELECTION OF DIRECTORS FOR A TERM OF ONE YEAR

Our Board of Directors currently has 12 members. Each current director is standing for reelection. The Board is also nominating Ralph de la Vega for election. Each nominee is standing for election to hold office until the next annual meeting of shareholders and until his or her successor is duly elected and qualified. Our Board has appointed Jeffrey Campbell, Laureen Seeger, Carol Schwartz and Richard Starr as proxies to vote your shares on your behalf. The proxies intend to vote for the election of each of the 13 candidates nominated by the Board unless you indicate otherwise on your proxy or voting instruction form or when you vote by telephone or internet. Each of the candidates nominated by the Board has consented to being named in this proxy statement and serving as a director if elected. However, if any nominee is not able to serve, the Board can either nominate a different person or reduce the size of the Board of Directors. If the Board nominates another individual, the persons named as proxies may vote for that nominee.

ITEM 1 RECOMMENDATION: Our Board of Directors recommends a vote FOR the election of the nominees listed on pages 15 – 21 as directors.

   

 
 

BOARD COMPOSITION

ONGOING BOARD SUCCESSION PLANNING

Our Board, acting through its Nominating and Governance Committee, seeks to maintain a board that as a whole possesses the objectivity and the mix of skills and experiences to provide effective oversight and guidance to management in the context of an evolving business environment and our long-term strategy. We look for individuals who have established records of significant accomplishment in leading large, complex global businesses and organizations, experience in areas relevant to our success and strategy, financial expertise, and governance experience. Ongoing board refreshment maintains an appropriate mix of skills and provides fresh perspectives while leveraging the institutional knowledge and historical perspective of our longer-tenured directors.

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

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

Attributes of Individual Nominees:

The committee looks for individuals who have established records of significant accomplishment in leading global businesses and large, complex organizations.
 

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

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

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

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

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

IDENTIFYING AND ADDING NEW DIRECTORS

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

1

    

Collect Candidate Pool

   
 
Independent Directors
Independent Search Firms
Shareholders

2

 

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

3

 

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

4

 

Outcome
Five new directors (including Mr. de la Vega) added since 2012:

 
1 woman
2 non-U.S. directors
Former and current CEOs
Digital, mobile, consumer, financial, investment, and M&A experience
Senior government experience
Global business leaders

The committee is authorized to and uses a professional search firm to help identify, evaluate and conduct due diligence on potential director candidates. Mr. de la Vega, who is being proposed for election to the Board, was identified as a potential candidate by the search firm. Using a search firm allows the committee to make sure it is conducting a broad search and is looking at a diverse pool of potential candidates. The committee also seeks to maintain an ongoing list of potential candidates.

The committee considers all shareholder recommendations for director candidates and applies the same standards in considering candidates submitted by shareholders as it does in evaluating other candidates. Shareholders can recommend candidates by writing to the committee in care of the company’s Secretary, whose contact information is on page 28. Shareholders who wish to submit nominees for election at an annual or special meeting of shareholders should follow the procedure described on page 97.

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

2015 Board of Directors

BOARD DIVERSITY

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

Upon election of the Board's nominees at the annual meeting, the Board will have the following characteristics:

●●●●●●●●●●●●●
3 of 13 female
●●●●●●●●●●●●●
4 of 13 minorities
●●●●●●●●●●●●●
2 of 13 resident outside of U.S.

BOARD TENURE

We have added 5 new directors since 2012 (including Mr. de la Vega). Upon election of the Board’s nominees at the annual meeting, the average tenure of our non-management directors will be 7.2 years. We believe that new directors add fresh perspectives and longer-serving directors provide continuity and institutional knowledge. We have a mandatory retirement age of 72 which provides for continued board refreshment in addition to turnover that occurs when directors leave board service prior to the mandatory retirement age.

SKILLS AND EXPERIENCES OF OUR BOARD

The skills and experiences of our director nominees are presented below.

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

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

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

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

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

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

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CORPORATE GOVERNANCE AT AMERICAN EXPRESS
Our Director Nominees

OUR DIRECTOR NOMINEES

INDIVIDUAL QUALIFICATIONS, SKILLS AND EXPERIENCES

In determining the slate of nominees and whether to seek one or more new candidates, the committee considers the size of the Board, the tenure of our directors, their skills, backgrounds, and experiences and the diversity of the Board. We indicate below the principal occupation and other information about the backgrounds and experiences of each nominee, including the specific qualifications, experience, skills and expertise considered by the Nominating and Governance Committee as relevant to the nominee’s candidacy as a director.

    

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

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

 The continued relevance of each of their skills, qualifications and experience

 The mix of skills and experiences and the diversity of the Board

 The Board’s effectiveness in exercising independence of thought, challenging and providing guidance to management


          
 

CHARLENE BARSHEFSKY

Director since  2001 Age  65
 

Senior International Partner, WilmerHale

 

Other Public
Directorships

The Estée Lauder Companies Inc.
Starwood Hotels & Resorts Worldwide, Inc.
Intel Corporation

Specific qualifications, experience, skills and expertise:

Senior leadership and government experience
Legal and public policy expertise
Global business experience and expertise dealing with foreign governments
Public company governance experience
 

Other Directorships
in past five years

 
 

American Express
Committees

Innovation and Technology
Public Responsibility, Chair

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

Ambassador Barshefsky brings to the Board a combination of high-level U.S. government service, experience as a strategic advisor to numerous U.S. and international companies with respect to their international businesses, experience with foreign governments, and broad legal and public policy expertise, as well as her public company director experience. Through her government and private experience, Ambassador Barshefsky also has substantial experience relating to conducting business in China and other emerging markets.

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CORPORATE GOVERNANCE AT AMERICAN EXPRESS
Our Director Nominees

          
 

URSULA M. BURNS

Director since 2004 Age 57
 

Chairman and Chief Executive Officer,
Xerox Corporation

 

Other Public
Directorships

Exxon Mobil Corporation
Xerox Corporation

Specific qualifications, experience, skills and expertise:

Global business leader
Core business, strategy and operating expertise
Senior management and leadership skills
Technology development and financial expertise
Public company governance experience
 

Other Directorships
in past five years

 
 

American Express
Committees

Compensation and Benefits
Risk

Chairman and Chief Executive Officer, Xerox Corporation, a global company engaged in business processes and document management, since May 2010; Chief Executive Officer and director since July 2009; President and director, April 2007-July 2009; and Senior Vice President and President, Business Group Operations, January 2003-April 2007. Ms. Burns is a trustee of the Ford Foundation and of the Massachusetts Institute of Technology and serves as director of FIRST (For Inspiration and Recognition of Science and Technology), National Academy Foundation, and the U.S. Olympic Committee. In March 2010, President Barack Obama appointed Ms. Burns as Vice Chair of the President’s Export Council.

Ms. Burns has extensive senior management, operating, and leadership experience through her business career at Xerox. Ms. Burns brings to the Board core business and leadership skills, her perspective as a current CEO of a technology-driven global company, experience in driving innovation, technology development, and business expansion, as well as public company director and public policy experience.

          
 

KENNETH I. CHENAULT

Director since 1997 Age 64
 

Chairman and Chief Executive Officer,
American Express Company

 

Other Public
Directorships

IBM
The Procter & Gamble Company

Specific qualifications, experience, skills and expertise:

Company CEO’s unique perspective and insights, including in respect of our businesses, relationships, competitive and financial positioning, senior leadership, strategic opportunities and challenges, and innovation and digital transformation
Core business and operating expertise as chief executive officer of a global business
Expertise in payments, network, digital, mobile and technology innovation and brand and marketing, and senior management and leadership skills
Public company governance experience
 

Other Directorships
in past five years

 
 

American Express
Committees

None


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

Mr. Chenault brings the unique perspective of the company’s Chief Executive Officer, expertise in the payments, network, and travel businesses, relationships in the United States and internationally with the company’s customers, suppliers, and business partners, deep knowledge of the company’s industry, competitive developments, and executive talent, and the ability to lead the company in a rapidly changing digital economy, as well as public company director experience, to his leadership of the Board.

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CORPORATE GOVERNANCE AT AMERICAN EXPRESS
Our Director Nominees

          
 

PETER CHERNIN

Director since 2006 Age 64
 

Founder and CEO, Chernin Entertainment

 

Other Public
Directorships

Pandora Media, Inc.
Twitter, Inc.

Specific qualifications, experience, skills and expertise:

Core business, strategy, operating, financial and M&A experience
Senior management and leadership expertise
Expertise in online and mobile markets, media, social networking and other new technologies
Public company governance experience
 

Other Directorships
in past five years

 
 

American Express
Committees

Compensation and Benefits
Nominating and Governance, Chair

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

Mr. Chernin brings to the Board extensive senior leadership, financial and management experience, and his experience in building industry-leading businesses, developing innovative and forward-thinking approaches, and expanding traditional businesses in online and digital markets, as well as core business skills and public company director experience.

          
 

RALPH DE LA VEGA

Director Nominee Age 64
 

Vice Chairman of AT&T Inc. and CEO of Business Solutions and International, AT&T

 

Other Public
Directorships

None

Specific qualifications, experience, skills and expertise:

Core business, strategy and operating experience
Senior management and leadership skills
Digital, mobile and technology experience
Global business leader
Audit oversight experience
 

Other Directorships
in past five years

New York Life Insurance Company
 

American Express
Committees

 

Vice Chairman of AT&T Inc. and CEO of Business Solutions and International, AT&T, since February 2016. Mr. de la Vega leads AT&Ts integrated Business Solutions group (both mobile and IP services), which serves more than 3.5 million business customers in 200 countries and territories, and nearly all the Fortune 1000 firms globally, and AT&T’s Mexican wireless business and DIRECTV Latin America, which was part of AT&T’s 2015 acquisition of DIRECTV. Mr. de la Vega was President and Chief Executive Officer, AT&T Mobile and Business Solutions, August 2014 to February 2016; President and Chief Executive Officer of AT&T Mobility, 2007 to 2014, and prior thereto, the Chief Operating Officer of Cingular Wireless and President of BellSouth Latin America. Mr. de la Vega is a director of New York Life Insurance Company, where he is chair of the Audit Committee and a member of the Governance and Insurance & Operations Committees. He also serves on the boards of the Georgia Aquarium, Morehouse College and Junior Achievement Worldwide. He is Chairman of the All-Markets Initiatives for the Boy Scouts of America. Mr. de la Vega has received numerous awards recognizing his leadership, including the Global Innovation Award from the Goizueta Business School at Emory University. He is the author of the book “Obstacles Welcome: Turn Adversity to Advantage in Business and Life.”

Mr. de la Vega brings to the Board extensive executive, management and leadership experience, including in delivering integrated solutions to customers that are first and foremost mobile. He possesses in-depth knowledge of the mobile communications industry, has deep international experience, particularly in Latin America, and has valuable insight in digital and mobile technology developments, as well as a deep commitment throughout his career to diversity in the work place.

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CORPORATE GOVERNANCE AT AMERICAN EXPRESS
Our Director Nominees

          
 

ANNE L. LAUVERGEON

Director since 2013 Age 56
 

Chairman and Chief Executive Officer, A.L.P. SAS

 

Other Public
Directorships

Rio Tinto plc
Suez Environnement
Airbus Group

Specific qualifications, experience, skills and expertise:

Core business, strategy and operating expertise
Senior management and leadership skills
Global perspective and international business experience
Public company governance experience
 

Other Directorships
in past five years

Total S.A.
Vodafone Group Plc.
GDF Suez S.A.
 

American Express
Committees

Audit and Compliance
Public Responsibility

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

Ms. Lauvergeon has a diverse and internationally focused background, including in government, business and not for profit endeavors. She has extensive senior management, operating and leadership experience through her business career including as CEO of AREVA. Ms. Lauvergeon brings to the Board core business, strategy development and leadership skills, global and European perspective, large international network, experience leading in a highly regulated, transforming industry, focus on innovation and sustainability, and public company director experience.

          
 

MICHAEL O. LEAVITT

Director since 2015 Age 65
 

Founder and Chairman, Leavitt Partners

 

Other Public
Directorships

HealthEquity, Inc.
Medtronic, Inc.

Specific qualifications, experience, skills and expertise:

Senior executive, administrative, and government experience, including as former Governor of Utah and United States Secretary of Health and Human Services
Government and public policy and financial expertise
Core management and leadership skills
Public company governance experience
 

Other Directorships
in past five years

 
 

American Express
Committees

Audit and Compliance
Innovation and Technology

Founder and Chairman, Leavitt Partners, LLC, a health care consulting firm, since 2009. Chairman of Leavitt Equity Partners, a private equity fund, formed in 2009. Prior to that, Governor Leavitt was the United States Secretary of Health and Human Services from 2005 to 2009; Administrator of the Environmental Protection Agency from 2003 to 2005; and Governor of Utah from 1993 to 2003.

Governor Leavitt brings to the Board extensive management and leadership experience, including serving as the Governor of Utah, a large state with a diverse body of constituents, appointments to positions with the U.S. government, where he oversaw and advised on issues of national concern, and overseeing Leavitt Partners’ work advising clients and making investments in the health care sector. Governor Leavitt has decades of leadership experience with valuable knowledge of the governmental regulatory environment and governance.

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CORPORATE GOVERNANCE AT AMERICAN EXPRESS
Our Director Nominees


          
 

THEODORE J. LEONSIS

 Director since  2010 Age  60
 

Chairman and Chief Executive Officer, Monumental
Sports & Entertainment

 

Other Public
Directorships

Groupon, Inc.

 Specific qualifications, experience, skills and expertise:

Core business, strategy and operating expertise
Internet pioneer and entrepreneur
Expertise in identifying business opportunities and driving new strategies based on changing technologies, social media, digital marketing and the internet
Brand and marketing expertise
 

Other Directorships
in past five years

Nutrisystem
Alcatel-Lucent
 

American Express
Committees

Innovation and Technology, Chair
Public Responsibility

Chairman and Chief Executive Officer, Monumental Sports & Entertainment, LLC, a sports and entertainment company that owns the NBA’s Washington Wizards, NHL’s Washington Capitals, WNBA’s Washington Mystics, and the Verizon Center in Washington, D.C., since 1999. Mr. Leonsis is also a Vice Chairman Emeritus of AOL LLC, a leading global ad-supported Web company, since December 2006. Mr. Leonsis held a number of executive positions with AOL from September 1994 to December 2006, most recently as Vice Chairman and President, AOL Audience Business. He is also a filmmaker, an author, and a director of several private internet and technologies companies and educational institutions. Mr. Leonsis was Chairman of Revolution Money, Inc., which American Express acquired in January 2010. In November 2011, Mr. Leonsis co-founded Revolution Growth II, LP, a “speed-up capital” fund to invest in technology-enabled businesses. In 2015, Mr. Leonsis co-founded Revolution Growth III, LP, a similar fund to invest in and build innovative, high-growth businesses.

Mr. Leonsis is an acknowledged innovator and internet entrepreneur. He brings to the Board experience in digital businesses, innovative approaches, and his experiences identifying business opportunities and driving new strategies based on changing technologies, social media and the internet.


          
 

RICHARD C. LEVIN

 Director since  2007 Age  68
 

Chief Executive Officer, Coursera

 

Other Public
Directorships

None

 Specific qualifications, experience, skills and expertise:

Recognized leader of American higher education
Distinguished economist, with expertise in economic theory, statistical analysis, modeling and analyzing economic trends
Leader in U.S.-China cooperation through his development of extensive relationships between Yale University and China
Educational innovator, thought leader and recipient of numerous awards and honors
 

Other Directorships
in past five years

C-3 Energy
 

American Express
Committees

Public Responsibility
Risk

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

Mr. Levin brings to the Board his experience and vision in leading Yale University, one of the world’s most prestigious institutions of higher education, involvement in a wide range of international initiatives at Yale University, expertise in economics, statistics, and analysis, experiences in innovation as CEO of Coursera, and public company director and public policy experience.

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CORPORATE GOVERNANCE AT AMERICAN EXPRESS
Our Director Nominees


          
 

SAMUEL J. PALMISANO

 Director since  2013 Age  64
 

Former Chairman, President and Chief Executive Officer, IBM

 

Other Public
Directorships

Exxon Mobil Corporation

 Specific qualifications, experience, skills and expertise:

Digital, mobile and technology experience, including as a thought leader on issues facing companies today such as cybersecurity and becoming a global integrated enterprise
Core business, strategy and operating expertise
Financial and M&A experience and senior management and leadership skills, including experience driving the transformation of a global, complex technologies business
Public company governance expertise
 

Other Directorships
in past five years

IBM
 

American Express
Committees

Compensation and Benefits
Nominating and Governance

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

Mr. Palmisano has extensive senior management, operating and leadership experience through his business career at IBM. Mr. Palmisano brings to the Board experience and skills in driving change and innovation, business transformation, developing leaders, strategy development and other core business and leadership skills, as well as his public company director experience, focus on the study of contemporary corporations and globalization, and work in the area of cybersecurity.


          
 

DANIEL L. VASELLA

 Director since  2012 Age  62
 

Honorary Chairman and Former Chairman and
Chief Executive Officer, Novartis AG

 

Other Public
Directorships

PepsiCo, Inc.
XBiotech

 Specific qualifications, experience, skills and expertise:

Core business, strategy and operating expertise, including financial, investment and M&A experience
Senior management and leadership skills
Global business leader and experience in developing and executing business strategy in rapidly changing markets
Public company governance experience and audit and risk oversight experience
 

Other Directorships
in past five years

Novartis AG
 

American Express
Committees

Audit and Compliance, Chair
Nominating and Governance
Risk

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

Dr. Vasella has extensive senior management, operating and leadership experience through his business career at Novartis. Dr. Vasella brings to the Board core business and leadership skills, global marketing experience, and experience leading a highly regulated, global business in rapidly changing markets, as well as public company director experience.

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CORPORATE GOVERNANCE AT AMERICAN EXPRESS
Our Director Nominees


          
 

ROBERT D. WALTER

 Director since  2002 Age  70
 

Founder and Former Chairman and Chief Executive
Officer, Cardinal Health

 

Other Public
Directorships

Nordstrom, Inc.
YUM! Brands, Inc.

 Specific qualifications, experience, skills and expertise:

Core business, strategy and operating expertise
Senior management and leadership skills
Finance, investment and M&A experience
Expertise in business development and business integrations
Public company governance experience
 

Other Directorships
in past five years

 
 

American Express
Committees

Compensation and Benefits, Chair
Innovation and Technology
Nominating and Governance

Founder and Former Chairman and Chief Executive Officer, Cardinal Health, Inc., a company that provides products and services supporting the health care industry. Mr. Walter retired from Cardinal Health in June 2008. Prior to his retirement, he served as Executive Director, November 2007-June 2008; Executive Chairman of the Board, April 2006-November 2007; and Chairman and Chief Executive Officer, 1979-April 2006. Mr. Walter is a former director of Battelle Memorial Institute.

Mr. Walter brings to the Board his business acumen and financial, investment, core business and leadership skills developed as the founder and chief executive officer of a global Fortune 100 company, a successful entrepreneur and investor, as well as public company director and governance experience.


          
 

RONALD A. WILLIAMS

 Director since  2007 Age  66
 

Former Chairman and Chief Executive Officer, Aetna

 

Other Public
Directorships

The Boeing Company
Johnson & Johnson
Envision Healthcare

 Specific qualifications, experience, skills and expertise:

Core business, strategy and operating experience
Senior management and leadership skills
Audit and risk oversight experience
Financial and risk management expertise, digital, mobile and technology experience, and experience in creating innovation through information technology
Public company governance experience
 

Other Directorships
in past five years

 
 

American Express
Committees

Audit and Compliance
Compensation and Benefits
Risk, Chair

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

Mr. Williams brings to the Board his extensive management, operations, and business experience leading in a rapidly changing and highly regulated industry, focus on innovation through information technology, leadership, financial, risk management and core business skills, and public company director experience.

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CORPORATE GOVERNANCE AT AMERICAN EXPRESS
Our Board's Independence

OUR BOARD’S INDEPENDENCE

12 of our 13 director nominees are independent.

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

Based on our guidelines, the Board determined in February 2016 that all of the Board’s director nominees other than Mr. Chenault are independent.

Ambassador Barshefsky is a partner at the law firm of WilmerHale. Ambassador Barshefsky does not provide any legal services to American Express, and she does not receive any compensation from the firm that is generated by or related to our payments to WilmerHale. The Nominating and Governance Committee determined based on fees paid to the firm over the past three years that WilmerHale does not perform substantial legal services for the company on a regular basis. The fees and expenses paid to WilmerHale represented less than one percent of the firm’s annual revenue in each of the past three years, and represented less than 0.1 percent of American Express’ revenue in each such year. Further, the Nominating and Governance Committee reviewed the nature of American Express’ engagement of WilmerHale and the services rendered, including the expertise and relevant experience of the firm and the specific partners engaged to work on the matters for which we have engaged the firm, and determined that Ambassador Barshefsky’s service on American Express’ Board should not impair American Express’ ability to engage WilmerHale when American Express determines such engagements to be appropriate. The Committee is satisfied that WilmerHale, when engaged for legal work, is chosen by American Express’ legal group on the basis of the directly relevant factors of experience, expertise, and efficiency. After considering the fees and expenses paid and being briefed on the policies and procedures that WilmerHale has instituted to confirm that Ambassador Barshefsky has no professional involvement or financial interest in American Express’ dealings with the firm, the Committee determined and recommended to the Board that American Express’ professional engagement of WilmerHale does not impair Ambassador Barshefsky’s independence.

OUR CORPORATE GOVERNANCE FRAMEWORK

CORPORATE GOVERNANCE PRINCIPLES

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

COMMITMENT TO INTEGRITY AND TRUST

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

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

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CORPORATE GOVERNANCE AT AMERICAN EXPRESS
Our Corporate Governance Framework

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

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

Corporate Governance Principles
 

Charters for each of the six standing Board committees
 

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

Our Code of Business Conduct for Members of our Board
 

Whistleblower Policy

Director Stock Ownership

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

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

OUR BOARD’S ROLE AND RESPONSIBILITIES, STRUCTURE AND PROCESSES

HOW OUR BOARD ENGAGES IN CEO AND KEY EXECUTIVE SUCCESSION PLANNING

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

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

HOW WE MANAGE RISK

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

There are several internal management committees, including the Enterprise-wide Risk Management Committee (ERMC), chaired by our Chief Risk Officer, which oversee risks. The ERMC is the highest-level management committee to oversee all firm-wide risks. It maintains the enterprise-wide risk appetite framework and monitors compliance with limits and escalations defined in it. The ERMC oversees implementation of risk policies across the company with approval by the appropriate Board committee. The ERMC reviews key risk exposures, trends and concentrations, significant compliance matters, economic capital and Basel capital trends, and provides guidance on the steps to monitor, control and report major risks. The ERMC is responsible for risk governance, risk oversight and risk appetite for all risks which include Individual Credit Risk, Institutional Credit Risk, Operational Risk, Compliance Risk, Reputational Risk, Market Risk, Asset Liability Management (ALM) Risk, Liquidity Risk, Model Risk, and Strategic and Business Risk.

HOW OUR BOARD OVERSEES RISK MANAGEMENT

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

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

The risk management roles and responsibilities of these committees are:

Risk Committee

Provides oversight on risk policies, risk appetite and our performance against goals. Approves our ERM policy along with its sub-policies governing individual credit risk, institutional credit risk, market risk, liquidity risk, operational risk, reputational risk and asset/liability risk, as well as policies governing the launch of new products and services, third-party management, and resolution planning. Our ERM policy:
Defines our risk appetite - the authorized risk limits to control exposures well within our risk capacity even under stressed forward-looking scenarios.
Defines our governance over risk taking and oversight processes.
Establishes principles for risk taking in the aggregate and for each risk type, and is supported by a comprehensive system for monitoring limits, escalation triggers and assessing control programs.
Reviews and concurs in the appointment, replacement, performance and compensation of our Chief Risk Officer.
Receives regular updates from the Chief Risk Officer on key risks, transactions and exposures.
Reviews our credit risk profile, credit risk performance, trends and risk management capabilities.
Reviews enterprise-wide operational risk trends, events and capabilities, with an emphasis on compliance, fraud, legal, process or control failures, information security, and privacy, as well as trends in market, funding, liquidity and reputational risks.
Provides oversight of our compliance with Basel capital and liquidity standards and its Internal Capital Adequacy Assessment Process, including its Comprehensive Capital and Review (CCAR) submissions, and resolution planning.
   
Audit and Compliance Committee

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

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

 

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

OUR BOARD LEADERSHIP

Our Board believes that its leadership structure promotes an effective board that supports and challenges management appropriately. Our Board is led by a combination of Mr. Chenault, Chairman and Chief Executive Officer, and Mr. Robert Walter, our Lead Independent Director, supplemented by active committee chairs and independent-minded, skilled and committed directors.

Our Nominating and Governance Committee evaluates the effectiveness of our Board as part of the annual board evaluation process. The committee believes that Mr. Chenault’s leadership as Chairman (in particular his knowledge of our business, his transparency, openness and responsiveness to feedback, and his ability to draw on the resources and expertise of the Board to make sure that all directors actively contribute to the discussion) has promoted board focus on the most impactful areas, effective board challenge and responsible decision-making. Coupled with this, Mr. Walter’s role and responsibilities are robust, and he devotes significant time to his position. He has a deep knowledge of our company and history and the trust and confidence of the Board that he will appropriately represent the directors’ views, present feedback to management and monitor that the feedback is appropriately addressed. Mr. Walter was reelected Lead Independent Director in February 2016 by the independent directors upon the recommendation of the Nominating and Governance Committee. He has served in this role since 2011.

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


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

OUR NON-MANAGEMENT DIRECTOR EXECUTIVE SESSIONS

Executive sessions of non-management directors, led by our Lead Independent Director, enable the Board to discuss matters, such as strategy, CEO and senior management performance and compensation, succession planning and board effectiveness without management present. Our non-management directors meet in executive session at each regularly scheduled board meeting, including at least one executive session of independent directors only. Any director may request additional executive sessions of non-management or independent directors. During 2015, our non-management directors met in executive session at seven meetings, one of which sessions included independent directors only.

OUR BOARD EVALUATION PROCESS

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

Our Board evaluations cover the following areas:

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

The Nominating and Governance Committee annually discusses what format to use for the board evaluation. The Board has been satisfied with the format of using a written evaluation questionnaire, where responses are collated without being attributed to individual directors, followed by discussion by the Board and individual committees in non-management executive sessions.

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CORPORATE GOVERNANCE AT AMERICAN EXPRESS
Shareholder Engagement

The table below summarizes our Board Evaluation process.

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

Format is reviewed by the Nominating and Governance Committee.

We have used a questionnaire that is tailored to address the significant processes that drive board effectiveness.

The questionnaire elicits discussion through open-ended questions.

      The company’s Secretary summarizes the responses, showing trends since the prior year and written comments, which are shared with the Board and committee members. Responses are not attributed to specific individuals to promote candor.       The Chairman of the Nominating and Governance Committee and each committee chair lead discussions of the Board and each committee, using the questionnaire as a guide. Management is not present. Committee chairs report on their evaluations to the full Board.

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


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

 
     

SHAREHOLDER ENGAGEMENT

HOW YOU MAY COMMUNICATE WITH OUR BOARD

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

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

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

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

In addition, you may raise a shareholder concern in a confidential or anonymous manner, by contacting our Office of the Ombudspersons at our headquarters or by telephone to 1-800-297-1010. An ombudsperson will refer the concern to the Chair of the Audit and Compliance Committee, who will see that the matter is properly investigated.

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CORPORATE GOVERNANCE AT AMERICAN EXPRESS
Shareholder Engagement

OUR BOARD’S COMMITMENT TO SHAREHOLDER ENGAGEMENT

Why We Engage

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

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

How We Engage

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

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

Added performance vesting to our annual restricted stock unit grant
Required our CEO to retain a portion of shares granted until after retirement
Made changes to our executive compensation peer group
Enhanced the process our Compensation Committee uses to determine CEO compensation and clarified the CEO’s target and maximum incentive opportunities
Enhanced our website disclosures on political contributions and diversity
Enhanced our proxy disclosures
Amended our governance principles to limit the number of public company boards on which our directors may serve
Designed our 2016 Incentive Compensation Plan to reflect evolving shareholder preferences
 
Secretary and Chief Governance Officer
We engage with governance representatives of our major shareholders, through in-person meetings and conference calls that occur during and outside of the proxy season. Members of the corporate governance, investor relations and executive compensation groups discuss, among other matters, company performance, emerging governance practices generally and specifically as regards our company, the reasons behind a shareholder’s voting decisions at prior meetings, and our executive compensation practices.
 
 

Board Involvement
Our Lead Independent Director has participated in joint IR and governance engagements with several of our largest shareholders, we make our Lead Independent Director available for engagement as requested by large shareholders, and we deliver our shareholders’ views and specific feedback to our directors.


Since January 2015, we have engaged with investors representing over 45 percent of shares outstanding.

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CORPORATE GOVERNANCE AT AMERICAN EXPRESS
Board Committees

BOARD COMMITTEES

BOARD COMMITTEE RESPONSIBILITIES

Audit and Compliance Committee

                     

Members:
Anne L. Lauvergeon
Michael O. Leavitt
Daniel L. Vasella (Chair)
Ronald A. Williams

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

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

Meetings in Fiscal Year 2015: 12

 

RESPONSIBILITIES:
Assist the Board in its oversight of the integrity of our financial statements and financial reporting processes, internal and external auditing, including the qualifications and the independence of the independent registered public accounting firm and the performance of the company’s internal audit services function, the integrity of our systems of internal control over financial reporting, and legal and regulatory compliance. The committee has established procedures for the receipt, retention and treatment, on a confidential basis, of complaints we receive regarding accounting, internal accounting controls or auditing matters and the confidential, anonymous submission by our employees of concerns regarding questionable accounting or auditing matters. The committee also receives and discusses reports from management regarding significant reported ethics violations under our code of conduct and other corporate governance policies. The committee meets regularly in executive session with management, the company’s General Auditor, the company’s independent registered public accounting firm, and the company’s Chief Compliance & Ethics Officer. The duties of the committee with respect to oversight of our financial reporting process are described in the committee’s report on page 41 under Report of the Audit and Compliance Committee.

 
 

Compensation and Benefits Committee

                     

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

Independence:
Each member of the committee is independent

Meetings in Fiscal Year 2015: 5

 

RESPONSIBILITIES:
Oversight responsibility for the compensation of our executive officers and designated key employees, including the applicable compensation plans and arrangements, as well as our employee benefit plans. The committee may delegate certain of its responsibilities to one or more committee members or to designated senior executives or committees in accordance with applicable laws, regulations and plan requirements. As part of this oversight responsibility, among other duties, the committee is responsible for approving an overall compensation philosophy and strategy for the company and its executive officers, including the selection of performance measures aligned with our business strategy, and for reviewing our compensation practices so that they do not encourage imprudent risk taking. The committee is also responsible for evaluating potential conflicts of interest with respect to its advisors. The processes and procedures by which the committee considers and determines Named Executive Officer compensation are described in the Compensation Discussion and Analysis.

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

 
 

Innovation and Technology Committee

                     

Members:
Charlene Barshefsky
Michael O. Leavitt
Theodore J. Leonsis (Chair)
Robert D. Walter

Meetings in Fiscal Year 2015: 3

 

RESPONSIBILITIES:
The Innovation and Technology Committee was established by the Board to assist in its oversight of strategic innovation and technology. Among other matters, the committee reviews our technology strategy and technology transformation initiatives, product innovations, digital strategy, and metrics on innovation, digital developments and technology progress.

 
 

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CORPORATE GOVERNANCE AT AMERICAN EXPRESS
Board Committees

Nominating and Governance Committee

                     

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

Independence:
Each member of the committee is independent

Meetings in Fiscal Year 2015: 5

 

RESPONSIBILITIES:
Considers and recommends candidates for election to the Board; advises the Board on director compensation; oversees the annual performance evaluations of the Board and Board committees; advises the Board on corporate governance and board leadership; administers our Related Person Transaction Policy and oversees the company’s management succession process. The committee also discusses feedback from shareholders regarding our governance practices and advises on our shareholder engagement practices.

 
 

Public Responsibility Committee

                     

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

Meetings in Fiscal Year 2015: 3

 

RESPONSIBILITIES:
The Board established the Public Responsibility Committee in recognition of the importance of issues that affect the communities in which we work and the public interest in general. The committee reviews legislation and regulation affecting us, our philanthropic programs, our political action committee and corporate political contributions, our government relations activities, other policies affecting the communities in which we operate and our environmental programs.

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

 
 

Risk Committee

                     

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

Independence:
Each member of the committee is independent

Meetings in Fiscal Year 2015: 7

 

RESPONSIBILITIES:
Assists the Board in its oversight of: the company’s enterprise-wide risk management framework; the policies and procedures established by management to identify, assess, measure and manage the risks facing the company; management’s execution of capital management; and liquidity planning. The committee meets regularly in executive session with the company’s Chief Risk Officer. The charter of the committee provides that the Chief Risk Officer has express authority to communicate directly at any time with the chair of the committee about any significant risk matter involving the company. Please see “How our Board Oversees Risk Management” on page 24 for a fuller description of the activities of the committee.

 
 

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CORPORATE GOVERNANCE AT AMERICAN EXPRESS
Compensation of Directors

COMPENSATION OF DIRECTORS

The Nominating and Governance Committee reviews director compensation. Our objectives are to compensate our directors in a manner that attracts and retains highly qualified directors and aligns the interests of our directors with those of our long-term shareholders. In 2014, the committee engaged an independent compensation advisory firm, Semler Brossy Consulting Group, to assist the committee in its review of the competitiveness and structure of the company’s non-management director compensation. This review included a benchmark of our director compensation against the 20 companies, including financial institutions and other peers, that our Compensation Committee examines as a source of benchmarking data when examining the competitiveness of our executive compensation practices. The committee recommended an increase in director compensation, effective January 1, 2015. The committee did not change the form of director compensation.

The following table provides information on the 2015 compensation of non-management directors who served for all or a part of 2015. We also reimburse directors for reasonable out-of-pocket expenses attendant to their board service.

Name Fees Earned or
Paid in Cash
($)(1)
Stock Awards
($)(2)
All Other
Compensation
($)(3)
Total
($)
   Charlene Barshefsky                    $ 115,000                  $ 165,000                   $ 57,538        $  337,538   
Ursula M. Burns $ 125,000 $ 165,000 $ 64,946 $ 354,946
Peter Chernin   $ 130,000 $ 165,000 $ 32,858 $ 327,858
Anne L. Lauvergeon $ 120,000 $ 165,000 $ 7,997 $ 292,997  
Michael O. Leavitt $ 90,000 $ 165,000 $ 1,596 $ 256,596
Theodore J. Leonsis $ 115,000   $ 165,000 $ 16,425   $ 296,425
Richard C. Levin $ 120,000 $ 165,000 $ 36,569 $ 321,569
Samuel J. Palmisano $ 110,000 $ 165,000 $ 8,610 $ 283,610
  Steven S Reinemund $ 60,000 $ $ 12,872 $ 72,872
Daniel L. Vasella $ 160,000 $ 165,000   $ 16,402 $ 341,402
Robert D. Walter $ 160,000 $ 165,000 $ 58,296 $ 383,296
Ronald A. Williams $ 165,000 $ 165,000 $ 59,281 $ 389,281

(1) Annual Retainers. For service in 2015, we paid non-management directors an annual retainer of $95,000 for board service and an additional annual retainer of $20,000 to members (including the Chairs) of the Audit and Compliance and Risk Committees, $10,000 to members (including the Chair) of the Compensation and Benefits Committee, and $5,000 to members (including the Chairs) of the Innovation and Technology, Nominating and Governance, and Public Responsibility Committees. We also paid an annual retainer to the Chair of each of the Board committees as follows: Audit and Compliance, Compensation and Benefits, Nominating and Governance and Risk, $20,000; Innovation and Technology and Public Responsibility, $10,000. We pay no fees for attending meetings, but the annual retainer for board service of $95,000 is reduced by $20,000 if a director does not attend at least 75 percent of the aggregate board and committee meetings on which he or she serves. Our Lead Independent Director also receives an annual retainer of $25,000 (provided that if he or she is also the Chair of the Nominating and Governance Committee, the Lead Independent Director will not receive the annual retainer for service as chair of that committee).
 
All the non-management directors other than Mr. Reinemund deferred all or a portion of their 2015 retainers into a cash account, a share equivalent unit account, or both, under the deferred compensation plan described below in footnote 2.
 
Mr. Reinemund retired from board service effective May 11, 2015.
 
(2) Share Equivalent Unit Plan. To align our non-management directors’ annual compensation with shareholder interests, each non-management director is credited with common share equivalent units (SEUs) upon election or reelection at each annual meeting of shareholders. Each SEU reflects the value of one common share. Directors receive additional SEUs as dividend equivalents on the units in their accounts. SEUs do not carry voting rights and must be held at least until a director ends his or her service. Each SEU is payable in cash equal to the then value of one common share at the time of distribution to the director. On May 11, 2015, the date of last year’s annual meeting, each non-management director elected to the Board was credited with SEUs having a value of $165,000, which consisted of 2,119 SEUs, based on the market price of our common shares for the 15 trading days immediately preceding such date. We report in this column the aggregate grant date fair value of these SEUs in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718, Compensation – Stock Compensation.

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CORPORATE GOVERNANCE AT AMERICAN EXPRESS
Director and Officer Liability Insurance

Deferred Compensation Plan for Directors. Non-management directors may defer the receipt of up to 100 percent of their annual cash retainer fees into either: (1) a cash account in which amounts deferred will be credited at the rate of 120 percent of the applicable federal long-term rate for December of the prior year, and/or (2) their SEU account. Under either alternative, directors will receive cash payments and will not receive shares upon payout of their deferrals.

The balance in directors’ SEU accounts at December 31, 2015 is set forth in the table below. These amounts represent the aggregate number of SEUs granted under the Share Equivalent Unit Plan for all years of service as a director, additional units credited as a result of the reinvestment of dividend equivalents, and, for directors who participated in the SEU option under our deferred compensation plan for directors, retainer amounts deferred into their SEU account and dividend equivalents thereon.

       Name       Number of SEUs   
C. Barshefsky 53,735
U.M. Burns 61,564
P. Chernin 31,099
A.L. Lauvergeon 9,291  
M.O. Leavitt 3,346
T.J. Leonsis 16,979  
R.C. Levin 27,165
  S.J. Palmisano 8,860
S.S Reinemund   0
D.L. Vasella 12,745
R.D. Walter 47,093
R.A. Williams 49,362

(3) Insurance. We provide our non-management directors with group term life insurance coverage of $50,000. The group life insurance policy is provided to the directors on a basis generally available to all company employees. This column includes the premium paid for such coverage.
 
Dividend Equivalents. Dividend equivalents are reinvested in additional units for all directors based upon total SEUs held at the time of company quarterly dividend payment dates. This column includes the fair market value of the dividend equivalents received by the directors during 2015 in these amounts: Amb. Barshefsky $57,492; Ms. Burns $64,900; Mr. Chernin $32,811; Ms. Lauvergeon $7,950; Gov. Leavitt $1,565; Mr. Leonsis $16,378; Mr. Levin $28,522; Mr. Palmisano $8,564; Mr. Reinemund $12,856; Dr. Vasella $11,356; Mr. Walter $50,250; and Mr. Williams $51,235.
 
Directors’ Charitable Award Program. We maintain a Directors’ Charitable Award Program for directors elected prior to July 1, 2004. To fund this program, we purchased joint life insurance on the lives of participating directors, including Mr. Chenault. The death benefit of $500,000 funds a donation to a charitable organization that the director recommends. The Company paid no premiums in 2015.
 
Matching Gift Program. Directors are eligible to participate in the company’s Matching Gift Program on the same basis as company employees. Under this program, the American Express Foundation matches gifts to approved charitable organizations up to $8,000 per calendar year. This column includes the amounts matched with respect to calendar year 2015.

DIRECTOR AND OFFICER LIABILITY INSURANCE

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

Effective from November 30, 2015 to November 30, 2016, this insurance is provided by a consortium of insurers. ACE American Insurance Company is the lead insurer. XL Specialty Insurance Company, Illinois National Insurance Company, Allied World Assurance Company Ltd., Freedom Specialty Insurance Company, Continental Casualty Company, Everest National Insurance Company, American International Reinsurance Company Ltd., Markel Bermuda Ltd., Starr Indemnity and Liability Company, and National

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CORPORATE GOVERNANCE AT AMERICAN EXPRESS
Certain Relationships and Transactions

Liability & Fire Insurance Company provide excess coverage. The program also includes supplemental layers dedicated exclusively to providing coverage for directors and officers when we cannot indemnify them. The supplemental layers are provided by XL Specialty Insurance Company, Zurich American Insurance Company, Federal Insurance Company, Freedom Specialty Insurance Company, Continental Casualty Company, Everest National Insurance Company, U.S. Specialty Insurance Company, Travelers Casualty & Surety Company of America, Starr Indemnity and Liability Company, Allied World Assurance Company Ltd., American International Reinsurance Company Ltd., ACE Bermuda Insurance Ltd., and Lloyd’s of London. We expect to obtain similar coverage upon expiration of the current program. The annual premium for the program is approximately $5.0 million.

CERTAIN RELATIONSHIPS AND TRANSACTIONS

In the course of our ordinary business activities, we engage in transactions, arrangements and relationships with many other entities, including financial institutions and professional organizations. Some of our directors, director nominees, executive officers, greater than 5 percent shareholders, and their immediate family members (each, a Related Person) may be directors, officers, partners, employees or shareholders of these entities. We carry out transactions with these firms on customary terms, and, in many instances, these individuals may not have knowledge of them. To the company’s knowledge, since January 1, 2015, no Related Person has had a material interest in any of our ongoing business transactions or relationships except as described below.

OUR RELATED PERSON TRANSACTION POLICY

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

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

PRE-APPROVED CATEGORIES OF RELATED PERSON TRANSACTIONS

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

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

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

Director and officer insurance payments and indemnification payments made in accordance with the company’s certificate of incorporation or by-laws
 

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

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CORPORATE GOVERNANCE AT AMERICAN EXPRESS
Certain Relationships and Transactions

Transactions with entities at which a Related Person is a director, provided that if the entity is not a partnership, the Related Person, together with all other Related Persons, holds a less than 10 percent equity interest in the entity; or if the entity is a partnership, the Related Person is a limited partner without any other position in the partnership and, together with all other Related Persons, holds a less than 10 percent equity interest in the partnership
 

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

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

Use of the company’s products and services on terms and conditions similar to those available to other customers or employees generally and
 

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


RELATED PARTY TRANSACTIONS

Our executive officers, directors and director nominees may from time to time take out loans from certain of our subsidiaries on the same terms that these subsidiaries offer to the general public. For example, our two U.S. card-issuing banks may extend credit to our directors, director nominees and executive officers under our charge or lending products. All indebtedness from these transactions is in the ordinary course of our business and is on the same terms, including interest rates, in effect for comparable transactions with other people. Such indebtedness involves normal risks of collection and does not have features or terms that are unfavorable to our subsidiaries. Our executive officers, directors and director nominees may also have transactions with us involving other goods and services, such as travel services and investments in deposit products offered by subsidiaries of the company. These transactions are also in the ordinary course of our business, and we provide them on terms that we offer to our customers generally. Occasionally, we may have employees who are related to our executive officers, directors or director nominees. We compensate these individuals in a manner consistent with our practices that apply to all employees. The adult son of Mr. John Hayes, a former executive officer, is employed by the company in a non-executive position, and received compensation in 2015 of between $140,000 and $170,000. The compensation and other terms of employment of Mr. Hayes’ son are determined on a basis consistent with the company’s human resources policies.

Certain executive officers, directors and director nominees are affiliated with companies with which the company has entered into ordinary course business relationships from time to time, including ordinary course merchant relationships pursuant to which these companies accept our charge and credit card products and pay us fees when customers use these cards. From time to time, we may enter into joint marketing or other relationships with one or more of these companies in the ordinary course that encourage customers to apply for and use our cards. We also may provide ordinary course commercial card and bill payments services, or business insights to some of these companies for which these companies pay fees to us. We may engage in other commercial transactions with these companies and pay or receive fees in those transactions. We have a number of similar ordinary course relationships with Berkshire Hathaway Inc., its affiliates and companies in which they have significant investments. We have also purchased insurance products from subsidiaries of Berkshire Hathaway Inc. in the ordinary course of business and on arm’s-length terms.

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CORPORATE GOVERNANCE AT AMERICAN EXPRESS
Corporate Responsibility at American Express

CORPORATE RESPONSIBILITY AT AMERICAN EXPRESS

COMMUNITY

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

Preserve and sustain unique historic places for the future;
 

Develop new nonprofit leaders for tomorrow; and
 

Encourage community service where our employees and customers live and work.



We realize the importance of preserving cultural assets around the world and, over the years, American Express has contributed nearly $60 million to historical preservation-related projects. This support has helped preserve iconic historic sites including George Washington University’s Corcoran Museum (Washington D.C.), the Tenement Museum (New York, NY), the National Heritage Board’s Singapore Riverwalk (Singapore), Colonial Williamsburg (Williamsburg, VA) and Massey Hall (Toronto, Canada).

Recognizing the difference that effective leadership can make, we support programs that help nonprofit groups develop talent within their organizations so they are better prepared to tackle the important issues of today and tomorrow. In 2015, we supported the training of over 6,000 emerging nonprofit leaders through grants to over 100 nonprofit organizations worldwide, totaling over $8 million. Additionally, to provide more opportunities for leadership development globally, we launched Leaderosity.com, an online training platform with the Presidio Institute.

By helping nonprofits increase their capacity to engage the public and our employees as volunteers, we have mobilized hundreds of thousands of volunteers across the globe. These projects address a wide range of causes, including environmental stewardship, access to education, health and wellness, youth mentoring and efforts to supply basic needs in underserved communities. Included in these efforts are the company’s programs that engage our employees in charitable giving and community service.

On an annual basis, our volunteer program—Serve2Gether—engages employees in more than 130,000 hours of company-sponsored volunteer service, and our employee giving campaign—Give2Gether—results in over $10 million in support of over 6,000 charitable organizations in the United States, Canada and India. Through Serve2Gether Consulting, which engages our employees in short-term pro bono consulting projects, we have delivered over 32,000 hours of consulting service valued at over $5 million to nonprofit organizations and social entrepreneurs worldwide.

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

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CORPORATE GOVERNANCE AT AMERICAN EXPRESS
Corporate Responsibility at American Express

ENVIRONMENT

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

Improving the efficiency and environmental profile of our buildings. Thirty percent of our global real estate portfolio is green-building certified, a 150 percent increase from last year. 
 

Increasing the use of renewable energy. Fifty-five percent of the electricity used to power all American Express U.S. operations (including 100 percent of the electricity used to power company headquarters) was carbon-free, a 15 percent increase from the previous year. 
 

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

Engaging employees in our environmental responsibility programs. 
 

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

American Express ranked in the top 10 in the Financials category in the 2015 Newsweek Green Ranking. 
 

The U.S. Environmental Protection Agency recognized American Express as a top user of sustainable energy, naming us No. 48 on its annual National Top 100 list of the largest green power users in the United States.
 

American Express improved its Carbon Disclosure Project score from 86/C to 95/B.
 


Learn More About Corporate Responsibility at American Express
Please visit our corporate website at http://about.americanexpress.com/csr to learn how we are making a difference in our communities.

2016 PROXY STATEMENT | 37



Table of Contents

AUDIT COMMITTEE MATTERS



 
 
ITEM 2
 
       

RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We are asking you to ratify the appointment of PwC for 2016. If shareholders fail to ratify the appointment, the Audit and Compliance Committee will consider it a direction to consider other accounting firms for the subsequent year. One or more representatives of PwC will be present at the meeting, will be given the opportunity to make a statement if he or she desires to do so and will be available to respond to appropriate questions.

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

RESOLVED that the appointment by the Audit and Compliance Committee of the company’s Board of Directors of PricewaterhouseCoopers LLP as independent registered public accounting firm for the company, to audit the accounts of the company and its subsidiaries for 2016, is ratified and approved.

   

 
 

The Audit and Compliance Committee has sole authority to appoint and replace the company’s independent registered public accounting firm, which shall report directly to the committee, and is directly responsible for its compensation and oversight of its work. Each year the committee reviews our accounting firm’s qualifications, performance and independence in accordance with regulatory requirements and guidelines. This includes a review of the firm’s internal quality control procedures, results of its most recent quality control reviews and steps taken to enhance the quality of its audits, and issues raised by recent governmental investigations. The committee reviews auditor independence matters, the firm’s audit strategy for the company, terms of the audit engagement, and the firm’s capabilities and communications to the committee. In February 2016, the committee reappointed PricewaterhouseCoopers LLP (PwC) as our independent registered public accounting firm for the year beginning January 1, 2016. Further, in conjunction with the mandated rotation of the audit firm’s lead engagement partner in 2014, the Chairman of the Audit and Compliance Committee was directly involved in the selection of PwC’s lead engagement partner.

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

The table below shows the actions taken by the Audit and Compliance Committee to support its recommendation.

ACTIONS TAKEN BY THE COMMITTEE TO SUPPORT ITS RECOMMENDATION

   AREAS OF FOCUS                      ACTIONS
 
  

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

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

PwC’s objectivity and
independence
 

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

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

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

PwC’s performance
as auditor

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

Performance of lead
engagement partner
 

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

PwC’s communications
with the committee
 

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

Terms of the engagement
and audit fees
 

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



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AUDIT COMMITTEE MATTERS
PricewaterhouseCoopers LLP Fees and Services

PRICEWATERHOUSECOOPERS LLP FEES AND SERVICES

FEES FOR 2015 AND 2014

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

   Types of Fees       Fiscal 2015            Fiscal 2014   
  Audit Fees $21,844 $21,256
  Audit-Related Fees(1) 3,454 4,553
  Tax Fees 8 137
  All Other Fees 50 65
  Total $25,356 $26,011

(1) PwC performs the audit of the company’s pension plans for Switzerland and Hong Kong where the fees are paid by the respective plan. These fees are not included in Audit-Related Fees since they were not paid by the company. The total fees in 2015 and 2014 for these two audits were $31K and $35K, respectively.

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

POLICY ON PRE-APPROVAL OF SERVICES PROVIDED BY PRICEWATERHOUSECOOPERS LLP

The terms of our engagement of PwC are subject to the pre-approval of the Audit and Compliance Committee. All audit and permitted non-audit services require pre-approval by the committee in accordance with pre-approval procedures established by the committee. In accordance with SEC rules, the committee’s pre-approval procedures have two different approaches to pre-approving audit and permitted non-audit services performed by PwC. Proposed services may be pre-approved pursuant to procedures established by the committee that are detailed as to a particular class of service without consideration by the committee of the specific case-by-case services to be performed if the relevant services are predictable and recurring. We refer to this pre-approval method as “general pre-approval.” If a class of service has not received general pre-approval, the service will require specific pre-approval by the committee before such service is provided by PwC. All services provided by our independent registered public accounting firm have been pre-approved in accordance with these procedures. The procedures require all proposed engagements of PwC for services of any kind to be directed to the company’s Comptroller and then submitted for approval to the committee (or, should a time-sensitive need arise, to its chair) prior to the beginning of any services.

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AUDIT COMMITTEE MATTERS
Report of the Audit and Compliance Committee

OTHER TRANSACTIONS WITH PRICEWATERHOUSECOOPERS LLP

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

REPORT OF THE AUDIT AND COMPLIANCE COMMITTEE

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

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

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

Based on the reviews and discussions referred to above, the Audit and Compliance Committee recommended to the Board of Directors, and the Board has approved, that the company’s audited financial statements be included in the company’s Annual Report on Form 10-K for the year ended December 31, 2015 for filing with the SEC.

AUDIT AND COMPLIANCE COMMITTEE

Daniel L. Vasella, Chairman
Anne L. Lauvergeon
Michael O. Leavitt
Ronald A. Williams

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EXECUTIVE COMPENSATION



 
 
ITEM
3
 
       

ADVISORY RESOLUTION TO APPROVE EXECUTIVE COMPENSATION (SAY ON PAY)

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

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

We engage with shareholders throughout the year, including discussing our compensation program and practices, and we also obtain feedback through this annual say on pay vote. Although this advisory vote is non-binding, the results of this vote and the views expressed by our shareholders in these discussions will inform the Compensation and Benefit Committee’s future decisions about our executive compensation. Our next say on pay vote will occur at the 2017 annual meeting.

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

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

   

 
 

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COMPENSATION DISCUSSION AND ANALYSIS
Executive Compensation

COMPENSATION DISCUSSION AND ANALYSIS

Throughout this Compensation Discussion and Analysis (CD&A) we employ a number of abbreviations or acronyms that refer to specific components of the company’s compensation program. While each term is described in greater detail in the following discussion, a glossary of terms is provided on page 59.

Our Compensation Philosophy

Our pay program is designed to drive sustainable growth, recognize and reward outstanding performance and attract, retain and motivate our leaders in a competitive environment. We believe our compensation program effectively aligns company goals and performance with pay outcomes for executives.

Overall Objectives       Motivate our executives to:
Achieve day-to-day operational excellence
 
Meet short-term goals and strategic milestones while delivering on our longer-term business strategies, so we can continue to build shareholder value
 
Support “Service Profit Chain” goals: engaged employees delivering superior customer service leads to satisfied customers, which in turn produces superior financial results for shareholders

Pay for Performance

Provide a strong link between pay and performance by:

Assessing performance in a balanced, holistic, and multi-faceted manner, including through the use of performance measures that are tied to both financial performance and our strategic initiatives, as well as including risk/control and compliance measures
 
Discouraging imprudent risk taking by avoiding too much emphasis on any one metric or short-term performance
 
Using judgment when making pay decisions, taking into account both what was accomplished and how it was accomplished

Pay Mix Principles

Provide competitive opportunities for pay commensurate with job scope, required competencies and performance by:

Using a mix of some fixed and mostly variable pay components with different time horizons and payout forms (cash and stock) to reward both annual results and sustained performance over the longer-term
 
Deferring a majority of incentive compensation for three or more years
 
Requiring executive officers to have significant outright ownership of company shares

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COMPENSATION DISCUSSION AND ANALYSIS
Executive Compensation

We believe our compensation philosophy aligns the interests of our shareholders and senior executives. Each element of our compensation program has a specific objective and the program is designed to reward annual and sustained performance over the longer-term. We follow the same program for all senior management, but vary pay mix by level to provide more pay for performance considering the seniority of a role. The CEO’s pay structure is also the same, but given his role, the Compensation Committee places more emphasis on long-term and stock-based incentives (see page 48 for how the CEO is compensated). The following table provides information on each element of our program.

Elements of Our 2015 Total Direct Compensation

Compensation
Element
    Performance
Period
Performance Measures What It Does

Base Salary

 

Pay aligned to experience and job scope
Provides competitive fixed pay
 
Balances risk-taking concerns with pay for performance
     

Annual Incentive
Award (AIA)

 

1 Year

Shareholder (e.g., earnings per share (EPS), revenue, return on equity (ROE), and billed business growth)
 
Customer/Strategic and Transformational (e.g., customer satisfaction score, core business growth, international expansion)
 
Employee (e.g., diversity goals, succession planning)
Aligns bonus with individual leadership assessment, business unit, and company performance metrics
 
Evaluates performance against strategic/transformational, and risk/control and compliance goals
 
Paid in cash
 
Historically, all or a portion of CEO’s earned amount is deferred into RSUs to further link pay with future performance
 

Portfolio Grant
Award

3 years
(2016-2018)
Financial metrics* (e.g., EPS)
 
Strategic milestones*
 
Vests 3 years after grant
Payout range is 0-125% of target
 
Ties payout to achievement of specific financial performance targets and strategic milestones
 
Paid in cash
 
Historically, all or a portion of CEO’s earned amount is deferred into RSUs to further link pay with future performance
 

Performance
Restricted-Stock
Unit Award (RSU)

ROE (3-year average)
 
Vests 3 years after grant
Payout range is 0-125% of target; average ROE between 23-27% provides 100% target payout**
 
Ties payout to achievement of ROE performance target
 
Aligns payout with share price
 
Paid in shares
 

Stock Option
Award (SO)

10 Years
(2016-2025)

Stock price
 
Vests 3 years after grant
Aligns payout directly with shareholder value creation
 
Paid in shares

*

The company discloses the specific performance metric goals as well as the performance outcomes of each Portfolio Grant (PG) award at the end of the performance period. Pages 55 and 56 discuss the goals and final results for the PG 2013-15 award granted in 2013. The company does not disclose the goals at the time of the grant because of competitive sensitivity. The Compensation Committee sets annual PG goals in the first quarter of each year. In order to provide more emphasis on financial performance that is likely to drive long-term shareholder value, the Compensation Committee is considering replacing the TSR metric for the PG 2016-18 cycle with other financial metrics.

 
**

Performance RSU payout matrix used for this award is the same as is shown in the 2015 Proxy Statement on page 27.

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COMPENSATION DISCUSSION AND ANALYSIS
Executive Compensation

2015 CEO Performance and Compensation
Review Process

The Compensation Committee follows a rigorous framework to assess performance and determine each Named Executive Officer's (NEO) compensation. Under the framework used to determine the CEO’s Total Direct Compensation (TDC), the Compensation Committee evaluated the CEO’s 2015 performance based on the achievement of pre-determined financial goals, strategic and transformational initiatives, performance relative to our competitors and financial markets, and a risk/control and compliance assessment. The framework uses both qualitative and quantitative factors and is designed to provide a broad and balanced view of performance.

CEO Performance Assessment Framework

Phase 1
Set CEO Goals
     

Phase 2
Set Target Compensation
     

Phase 3
Review CEO Performance
and Set Final TDC

Phase 1—Set CEO Goals
In the first quarter of 2015, the Compensation Committee approved goals related to three key Service Profit Chain constituencies: shareholders, employees, and customers. Goals were established that reflect rigorous financial targets, incorporate significant business metrics, address the importance of employee engagement, diversity, and customer service in creating sustainable value, and drive our future growth.

Shareholder Goals (50%)       Employee Goals (25%)       Customer/Strategic and
Transformational Goals (25%)
Profit / Return (EPS, ROE)
Revenue and Billed Business Growth
Cost Containment (Operating Expense Growth, Lending Write-off Rates)

See page 46.

Succession planning for key roles
Improved workplace culture and diversity
Improved talent management
Validation of programs through external recognition
Accelerate growth in core businesses (e.g., strengthen merchant network)
International expansion (e.g., billed business growth)
Promote growth of new businesses and customer segments (e.g., Loyalty Partner Growth)
Drive growth of our digital and commerce-related businesses (e.g., Express Checkout)

The above Goals are evaluated with consideration of both absolute and peer relative performance as
well as Risk/Control and Compliance Goals.

Phase 2—Set Target Compensation for 2015
In the first quarter of 2015, the Compensation Committee set the CEO’s target compensation for 2015 at $22 million (unchanged from 2014) considering several factors, including prior year compensation and market data. The CEO’s target compensation is tied to achievement of superior performance against robust goals set at the start of each year. The following table details the components of the CEO’s target compensation:

    Target Value    
Compensation Element ($000s)
Base Salary $2,000
Annual Incentive Award $6,625
Portfolio Grant Award $5,125
Performance RSUs* $6,109
Stock Options* $2,141
Total Target Compensation                      $22,000
* The combined equity target value was $8,250,000. Generally, the Compensation Committee grants an equal number of stock options and Performance RSUs. The values for the equity compensation elements are approximated in the table above using the January 26, 2015 stock price and Black-Scholes valuation on that date.

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COMPENSATION DISCUSSION AND ANALYSIS
Executive Compensation

The Compensation Committee could determine to grant 0-125 percent of the target value for each of the compensation elements except Base Salary, depending on the company’s 2015 financial results as well as the Compensation Committee’s assessment of the CEO’s performance against goals. Further, the Compensation Committee's framework allows the Compensation Committee to adjust the final performance score downwards or upwards (but not in excess of the 125 percent maximum) by 5-10 percent to specifically reflect any risk/control and compliance assessments.

Phase 3—Review CEO Performance and Set Final TDC
The compensation decisions made by the Compensation Committee in the first quarter of 2016 were based on a review of 2015 performance, and took into account both the positive achievements in strengthening our business and the areas where we faced headwinds and performance was below target.

Positive achievements in 2015: Healthy loan growth, strong card acquisitions, excellent credit performance, disciplined operating expense control and continued strong capital position
 
Negative developments in 2015: Our 2015 reported EPS was below our 2014 results ($5.56). Our billed business growth and revenue growth did not meet expectations set at the start of the year. Our results were also negatively impacted by the impairment of goodwill and technology, as well as restructuring costs, related to our Enterprise Growth business
 
Headwinds we faced in 2015: Increased costs associated with early renewals of certain of our co-brand relationships, end of our relationship with Costco in Canada, strong U.S. dollar, increased spending on growth initiatives for the year, more challenging external environment

In January 2016, the Compensation Committee reviewed the following results against CEO goals:

   Goal  2015 Performance   
  Shareholder

(50% overall
weighting)

      Actual       Target
 EPS $5.05 (Adjusted $5.382) $5.18-$5.38
 Revenue Growth   4% (Adjusted3) 3% to 4%  
     ROE 24.0% (Adjusted 25.6%2)   25.0% or more
 FX-adjusted Billed Business Growth 6% (FX-adjusted4) 8-9%
 Adjusted Operating Expense Growth5 -2% Less than 3%
 Write-Off Rate 1.4% 1.32 to 1.68%
Other:
More than $5 billion was returned to our shareholders in 2015
Expanded merchant network, adding more than 1.2 million new merchants globally
Processed $1.04 trillion in worldwide billed business (including cards issued by third parties), an increase of 2 percent (6 percent on an FX-adjusted basis over last year4)
Card Member acquisition strategy brought in 7.7 million new cards in the United States proprietary business and we had 117.8 million total worldwide cards-in-force as of December 31, 2015
Lending business grew faster than the market, while we maintained our industry-best credit performance

(2) Adjusted EPS and adjusted ROE are non-GAAP measures and exclude a fourth quarter 2015 $335MM after-tax charge ($419MM pretax) in Enterprise Growth, which was driven primarily by the impairment of goodwill and technology assets in addition to restructuring costs. Management believes adjusted EPS and ROE are useful in evaluating the ongoing operating performance of the company. Please refer to Annex A for reconciliations to EPS and ROE on a GAAP basis.
 
(3) The growth rate of total revenues net of interest expense, adjusted for FX and excluding Business Travel revenues from H1’14 and the gain on the Q4'14 sale of the Concur investment is a non-GAAP measure. Refer to Annex A for a reconciliation.
 
(4) FX-adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into U.S. dollars (i.e., assumes the foreign exchange rates used to determine results for 2015 apply to the period(s) against which such results are being compared), making it easier to compare performance in one period to another period without the variability caused by fluctuations in currency exchange rates. Certain amounts included in the calculation of FX-adjusted revenues and expenses, which constitute non-GAAP measures, are subject to management allocations.
 
(5) The growth rate of adjusted total operating expenses, a non-GAAP measure, excludes restructuring charges in Q2’14 and Q4’14, H1’14 Business Travel operating expenses, Q2’14 Business Travel JV gain and transaction-related costs, Q2’14 AXP Foundation contribution and Q4’15 Enterprise Growth charge from total operating expenses. The reported operating expense growth rate was -3 percent for 2015. Refer to Annex A for a reconciliation of the adjusted growth rate and its components.

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COMPENSATION DISCUSSION AND ANALYSIS
Executive Compensation

Goal    2015 Performance
 

Employee

(25% overall
weighting)

Succession planning for key roles aligned with board expectations; and we incorporated 360° feedback reviews for senior executives
Diversity measures were achieved above target, while talent measures met target expectations
We continued to be recognized as a global Employer of Choice. Recognized in 24 U.S. surveys (including Working Mother, Fortune, and Black Enterprise) and internationally in 10 countries
 

Customer/Strategic
and Transformational

(25% overall
weighting)

 
Customer Service exceeded target (as measured by the “Recommend to a Friend” score)
Expanded merchant coverage through OptBlue initiatives
Grew in international markets, including billings growth on an FX-adjusted basis (excluding Canada) and an increase in international active locations in force
Progress towards expanding Loyalty Partner revenue
Continued expansion of Card Member spending in the everyday category
Utilization of Big Data capabilities to drive value, including establishment of marketing platform
Launch of Express Checkout in U.S. and internationally

Total Shareholder Return*
American Express’ total shareholder return (TSR) was (24%), 26%, and 73% over a period of one-, three-, and five-years, respectively. Over a five-year period, American Express shares outperformed the S&P 500 Financials index, but underperformed as compared to the S&P 500 index.

American Express       S&P 500 Index     S&P Financials Index


*

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

Risk and Performance Discretionary Modifiers
In determining the appropriateness of Mr. Chenault’s TDC, the Compensation Committee considered the above mentioned Shareholder, Employee, and Customer/Strategic and Transformation results as well as the company’s relative performance against our peers (e.g., EPS, TSR, write-off rates). In doing so, the Compensation Committee also reviewed the risk assessment and certification by the Chief Risk Officer that the company’s 2015 results were achieved by taking economic and controlled risk, without taking imprudent risks. In addition to the company’s performance overall, the Compensation Committee also considered Mr. Chenault’s leadership contributions.

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COMPENSATION DISCUSSION AND ANALYSIS
Executive Compensation

2015 CEO Total Direct Compensation (TDC)

After taking into account the company’s performance and evaluating Mr. Chenault’s leadership contributions, the Compensation Committee determined to award him 2015 TDC of $18.525 million–a decrease of 16 percent from his target compensation. Details regarding these pay decisions are outlined below:

             
     

CEO 2015 Total Direct Compensation

     
 
40% below 2015 target
51% below 2014
     
16% below 2015 target
26% below 2014
 
             


In millions:


ANNUAL INCENTIVE AWARD (AIA)           LONG-TERM INCENTIVE AWARD (LTIA)

Almost 89 percent of total TDC is deferred and tied to company performance.


Note Regarding 2015 TDC Decisions and Summary Compensation Table

It is important to recognize that the way the Compensation Committee presents TDC in the preceding chart is different from the SEC-required disclosure in the Summary Compensation Table (SCT) and is not a substitute for the information in that table (shown on page 60). In the chart above, the Stock Options and Performance RSUs are valued under the same methodology used for purposes of SCT disclosure; however, the Compensation Committee makes compensation decisions in the first quarter for performance in respect of the prior year (i.e., 2015 TDC decisions are made in the first quarter of 2016). The SCT disclosure follows the SEC rules that require disclosure of equity awards as compensation for the year when granted. As a result, equity grants in respect of 2015 performance granted in January 2016 will be included in the SCT in next year’s proxy statement while the SCT in this proxy statement includes equity awards granted in 2015 in respect of 2014 performance.

In summary, it is essential to understand that the main difference between the SCT and the chart above is due to the Compensation Committee providing a significant portion of the CEO’s compensation in equity awards and the timing of disclosure related to equity awards.

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COMPENSATION DISCUSSION AND ANALYSIS
Executive Compensation

CEO Pay – Awarded Total Direct Compensation (January 2013 – January 2015) and Realizable Compensation Comparison6

In 2015, our compensation program delivered almost 89 percent of Mr. Chenault’s TDC in the form of incentives that are tied to the company’s future financial, strategic, and stock performance. The chart below is used to demonstrate the strong link between pay outcomes and performance that is provided by the significant deferral of TDC in our compensation program.

In the following chart:

Target Compensation is specified by the Compensation Committee at the start of each year
 

Awarded Total Direct Compensation (Awarded TDC) includes salary, AIA earned and the grant date value of long-term incentives granted in January for performance in the prior year7
 

Realizable Compensation refers to the value in January 2016 of Awarded TDC (Please refer to page 59 for the methodology used to determine Realizable Compensation)

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

January 2013 - January 2015 Awarded TDC (Average)8

January 2013 - January 2015 Realizable Compensation (Average)9


In millions:

 
Realizable Compensation is 29 percent lower than Awarded TDC over the 3-year
period while TSR10 was down 6 percent.

The 29 percent reduction from Awarded TDC to Realizable Compensation is primarily driven by the reduction in the value of long-term incentives granted due to our stock price decline since the time of grant as well as our financial performance being below plan levels.

Other Named Executive Officers’ TDC

To determine compensation for the other NEOs, The Compensation Committee follows a process that is similar to that used for the CEO. In the case of the other NEOs, the CEO first develops recommendations based on his assessment of company and individual performance and our pay mix guidelines.

The following information provides highlights of specific individual and business performance considered in the pay recommendations for the other NEOs. When approving pay decisions for the other NEOs, the Compensation Committee assessed the company’s overall performance as described in the discussion of CEO pay above, individual achievements of each NEO against goals set for such NEO at the start of the year, and each NEO’s leadership over the year. Each NEO’s results were also assessed in the context of a risk/control and compliance rating given to each business unit and staff group.

(6) This analysis is a supplement and is not a substitute for the Summary Compensation Table presented on page 60.
 
(7) See page 34 of the Proxy Statement filed in March 2013 for details on January 2013 Awarded TDC. See page 33 of the Proxy Statement filed in March 2014 for details on January 2014 Awarded TDC. See page 33 of the Proxy Statement filed in March 2015 for details on January 2015 Awarded TDC.
 
(8) January 2013 Awarded TDC - $22 million; January 2014 Awarded TDC - $24.4 million; January 2015 Awarded TDC - $25.1 million. See footnote 7 for additional details.
 
(9) Realizable Compensation is $18.1 million, $16.3 million, and $16.2 million from Awarded TDC in January 2013, January 2014, and January 2015, respectively.
 
(10) The Compensation Committee makes pay decisions at its meeting at the end of each January (covering pay for the prior fiscal year). Cash incentives are paid in the first quarter (following the Compensation Committee meeting date) and long-term incentives are granted soon after awards are approved by the Compensation Committee. Therefore, for the purposes of this analysis, the company’s three-year TSR is calculated from January 31, 2013 to January 31, 2016, and we use the closing share price on January 29, 2016 ($53.50) because that was the last business day of January 2016.

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COMPENSATION DISCUSSION AND ANALYSIS
Executive Compensation

Stephen J. Squeri, Vice Chairman
Mr. Squeri has served as Vice Chairman since July 2015. He is responsible for Global Commercial Payments, the global business-to-business group which consists of the company’s Corporate and Small Business organizations, merchant financing and foreign exchange services businesses. In addition, he oversees Prepaid & Alternative Payments, fee-based services and the Global Services Group, which comprises the company’s shared services functions including global customer care, credit administration, technology, real estate, procurement, financial operations and security. His 2015 achievements included:

Delivered solid financial results in business units he managed including strong expense management
 

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

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

Improved operational efficiency and effectiveness through continued globalization and consolidation of key processes and functions
 

Successfully completed the majority of American Express Global Business Travel Joint Venture separation activities

Jeffrey C. Campbell, Executive Vice President and Chief Financial Officer
Mr. Campbell has served as Executive Vice President and Chief Financial Officer since August 2013. He is responsible for leading the company’s Finance and Corporate Development organizations and representing American Express to the financial community. His 2015 achievements included:

Assisted in achieving operational cost targets aligned with the company’s risk-balanced plan
 

Ensured a strong financial and regulatory reporting control environment
 

Continued to enhance planning processes consistent with regulatory requirements and managed the company’s CCAR and Basel processes to achieve the company’s capital, funding and liquidity plans
 

Effectively communicated the company’s business and financial information to regulatory bodies and the financial community
 

Exhibited leadership that impacted the company’s strategic and financial decisions

Laureen E. Seeger, Executive Vice President and General Counsel
Ms. Seeger has served as Executive Vice President and General Counsel since July 2014. During 2015, she led the Law, Compliance, Government Affairs and Corporate Secretarial functions. Her 2015 achievements included:

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

Supported key business initiatives, including strategic customer agreements and new product launches
 

Continued to strengthen the company's compliance program to achieve outcomes, enhancements and sustainability at levels consistent with regulatory requirements
 

Monitored, advised on, and championed the company's interests with respect to emerging global regulation
 

Vigorously defended the company’s interests in litigation

Douglas E. Buckminster, President, Global Consumer Services
Mr. Buckminster has served as the President, Global Consumer Services Group since October 2015. His 2015 achievements included:

Delivered strong financial results with significant progress in the proprietary issuing, network, and coalition loyalty businesses. Re-signed key co-brand partnerships (e.g., British Airways, Cathay Pacific, Singapore Airlines)
 

Maintained focus on expense management, driving efficiencies, and implementing effective business transformation initiatives
 

Allocated strategic investments in digital capabilities and emerging businesses instrumental to future growth of the franchise
 

Continued Global Network Services growth through record levels of revenue and income. Billings growth was driven by key partnerships in Asia and the UK
 

Led growth in the coalition loyalty business (Loyalty Partner) with strong year-over-year increases in revenue and active collectors, including the launch of an industry-first coalition in the United States

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COMPENSATION DISCUSSION AND ANALYSIS
Executive Compensation

NEOs TDC Decisions ($000s)
The Compensation Committee’s TDC decisions for the NEOs for performance year 2015 are presented in the table below. Overall, January 2016 TDC was lower than the prior year as the 2016 decisions reflected the company’s 2015 financial results. Mr. Squeri’s 2016 TDC also reflected his July 2015 promotion to Vice Chairman and increased responsibilities, and Mr. Buckminster’s 2016 TDC reflected his increased leadership responsibilities and his October 2015 promotion.

S.J. Squeri J.C. Campbell L.E. Seeger D.E. Buckminster
   Base Salary       $ 1,350       $ 1,000       $ 800       $ 700   
AIA $ 2,750 $ 2,850 $ 1,225 $ 1,650
Equity—Performance RSUs*        $ 3,763   $ 2,023 $ 1,619   $ 1,295
  Equity—SOs* $ 887   $ 477 $ 381 $ 305
PG   $ 1,500 $ 1,500   $ 1,100 $ 1,200
TDC             $ 10,250                  $ 7,850           $ 5,125                     $ 5,150
(down 8% from (down 18% from (N/A**) (up 0.5% from
January 2015) January 2015) January 2015)

A majority of these four NEOs’ TDC is tied to future performance of the company, including stock price performance.

NEO Promotions***
In July 2015, Mr. Squeri was promoted to Vice Chairman. In connection with this promotion, Mr. Squeri’s base salary was increased to $1,350,000 (an 8 percent increase from 2014). Additionally, he received a one-time RSU award in the amount of $5,000,000 that will vest three years after date of grant.

In October 2015, Mr. Buckminster was promoted to President of Global Consumer Services. In connection with this promotion, Mr. Buckminster’s base salary was increased to $700,000 (a 17 percent increase from 2014).

Post-Employment Payments to Mr. Gilligan
Mr. Gilligan passed away in May 2015. Payments were made in accordance with plan terms applicable upon an employee’s death. For additional details, refer to Potential Payments Upon Termination or Change in Control (CIC) on pages 70-73.

NEO Offer Letters
Mr. Campbell – In July 2015, Mr. Campbell received a payment of $2,000,000 which reflected the final payment of the sign-on cash award he received that replaced a portion of long-term incentives forfeited at his prior employer as a result of joining the company.

Ms. Seeger – In connection with her employment offer letter, entered into in May 2014, Ms. Seeger is entitled to a total sign-on cash award of $7,900,000 payable over a period of three years (2015-2017) to replace a portion of long-term incentives she forfeited at her prior employer as a result of joining the company. The first of these payments was made in July 2015.

Additional information on these sign-on cash awards is provided on pages 70-73 in the Potential Payments Upon Termination or Change in Control (CIC) table.

* The NEOs received Performance RSUs that are earned based on three-year average (2016-2018) ROE performance. For the total equity awards, an equal number of shares were granted in the form of Performance RSUs and stock options.
 
** Ms. Seeger joined the company in July 2014.
 
*** For additional details, refer to the Summary Compensation Table on page 60, and the Grant of Plan-Based Awards on page 63.

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COMPENSATION DISCUSSION AND ANALYSIS
Executive Compensation

Executive Compensation Practices and Governance

Compensation Committee Governance
The Compensation Committee endeavors to follow good governance practices and is composed solely of independent directors. The Compensation Committee is responsible for our executive officer compensation decisions. The Compensation Committee held five meetings over the course of 2015, all of which ended with executive sessions without management present. The Compensation Committee has retained Semler Brossy Consulting Group (Semler Brossy) as its independent compensation consultant. During 2015, Semler Brossy attended Compensation Committee meetings, including executive sessions and provided compensation advice independent of the company’s management. The Compensation Committee assessed the independence of Semler Brossy pursuant to SEC rules and concluded that their work for the Compensation Committee did not raise any conflicts of interest.

Shareholder Feedback/Consideration of 2015 Advisory Vote on Executive Compensation

We have benefited from shareholder feedback about executive compensation, including feedback given through our say on pay votes for the past seven years. Our say on pay proposal received 96.5 percent support in 2015. At the direction of our Board of Directors, we reach out each year to our largest shareholders to discuss topics including our performance, executive compensation program, proxy disclosures and corporate governance. Since January 2015, we have engaged with investors representing over 45 percent of shares outstanding, and the Chairman of our Compensation Committee has participated in these discussions with several of our largest shareholders. We bring feedback from these discussions to our Board of Directors, including the Compensation Committee and the Nominating and Governance Committee. Over the past few years, shareholder feedback has influenced a number of changes to our executive compensation program, including:

Adding performance vesting to our annual restricted stock unit grant
 

Requiring the CEO to retain a portion of shares granted until after retirement
 

Modifications to our peer group
 

Enhancements to the process the Compensation Committee uses to determine CEO compensation
 

Clarifying the CEO’s target and maximum incentive opportunities


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

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Table of Contents

COMPENSATION DISCUSSION AND ANALYSIS
Executive Compensation

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

 

WHAT WE DO

 

Link pay outcomes to company performance and total shareholder return
 

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

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

Apply sizable stock ownership guidelines for NEOs, including a requirement that the CEO hold a portion of his shares through one year after retirement
 

Discourage imprudent risk taking, including Chief Risk Officer review of goals and results to certify that actual results were achieved without taking imprudent risks
 

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

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

In depth review of CEO’s and NEOs’ goals and performance by an independent Compensation Committee
 

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

Subject cash incentives and equity awards to recoupment and forfeiture provisions
 

Evaluate management succession and leadership development efforts
 

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

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

Include criteria in incentive compensation plans to support tax deductibility for the company
 


 

WHAT WE DO NOT DO

 

No employment contracts with NEOs
 

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

No excise tax gross-ups upon a change in control
 

No repricing of underwater stock options without shareholder approval
 

No individual change in control arrangements
 

Assessing Competitive Positioning
Our pay program is designed to reward achievement of financial and strategic goals and to attract, retain and motivate our leaders in a competitive talent market. The Compensation Committee periodically examines pay practices and pay data for a group of 20 companies as a source of benchmarking data to better understand the competitiveness of our total compensation and its various elements. The benchmarking data is used to assess the competitiveness of compensation but is not used to make specific pay decisions. We do not target a specific percentile or make pay decisions based on market data alone. As a result, performance and retention are the primary drivers of pay levels as opposed to market data.

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Table of Contents

COMPENSATION DISCUSSION AND ANALYSIS
Executive Compensation

How We Select the Company Peers
In selecting the current peer group, the Compensation Committee identified prominent S&P 500 companies, generally with revenue similar in size to ours, which fell into one or more of the following categories:

Financial institutions
 

Iconic global consumer brands
 

Other credit card businesses
 

Technology companies with an emphasis on payments or network systems

The actual number of companies in each category varies, taking into account factors such as revenue size and direct business and talent competitors. The Compensation Committee believes that the companies below continued to be a reasonable group to benchmark competitive practices, and as such, no changes were made to our peers in 2015.

Comparator Group 2015

Bank of America
Bank of New York Mellon
BlackRock
Capital One Financial
Citigroup
Goldman Sachs
JPMorgan Chase
Morgan Stanley
US Bancorp
Wells Fargo

 

Coca-Cola
Colgate Palmolive
Nike
PepsiCo
Walt Disney

 

Discover
MasterCard
Visa

 

Cisco
eBay

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

The following policies and procedures help discourage imprudent risk taking:

Annual risk goals: Our Chief Risk Officer sets annual risk goals for all business units and staff groups at the beginning of each year.
 

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

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

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

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

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

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

Stock ownership and holding requirements: We have robust stock ownership requirements for our CEO and other NEOs (as described on page 57), including the retention of a portion of net shares for one year after stock option exercises and RSU vestings.

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COMPENSATION DISCUSSION AND ANALYSIS
Executive Compensation

Determination of LTIA Payouts for Awards Made In Prior Years

Portfolio Grants Awarded in January 2013 – Payout Based on 2013-2015 Performance
Portfolio Grant awards provide a cash incentive based on achievement of performance metrics over a three-year performance period. Portfolio Grants were awarded in January 2013 for the three-year performance period ending December 2015 (PG 2013-15). In January 2016, the Compensation Committee determined the final payout* for these Portfolio Grant awards at 58.2 percent of target. The performance metrics for PG 2013-15 are shown below along with the results achieved during the period:

Performance Metric & Weighting and Payout Contribution

 
       3-Year Cumulative EPS        Payout as Percentage of Target              
$17.25 125%
  $16.33 100% 13.2%
Payout
Contribution
$15.66   75%  
$15.49   66% Actual  
$14.23 0%
 


 
       TSR vs. S&P 500        Payout as Percentage of Target              
≥5% above index 125%
Equal to index 100% 12.5%
Payout
Contribution
  3% below index 75%
7% below index   42% Actual
9% below index   25%  
< 9% below index 0%
 

 
     Strategic Milestones     
 
Strategic Milestones  Performance Goals      32.5%
Payout Contribution
  Grow Coalition Revenue  $1.165 Billion  
Expand International Business   Overall, at or below
target based on
financial performance
and Compensation
Committee evaluation
Grow Reloadable/Pre-paid value
Attract new and diverse customers  Compensation Committee Judgment
Deliver superior services (measured by
Global "Recommend to a Friend” score)
 

Final Payout as a Percentage of Target 58.2%

* Participants receive 0 percent of the award at threshold level, 100 percent of the award at target level, and 125 percent of the award at maximum level. Payout range for strategic milestones is 0-125 percent and actual payout is based on actual performance against goals as well as the Compensation Committee’s judgment.

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COMPENSATION DISCUSSION AND ANALYSIS
Executive Compensation

The NEOs’ PG 2013-15 grants resulted in the following payouts ($000s):

PG2013-15
     Grant Amount
        PG2013-15
(Q1 2016)
Payout
K.I. Chenault $ 5,125 $ 2,983 *
S.J. Squeri $ 1,325 $ 771
J.C. Campbell $ 1,500   $ 873
L.E. Seeger $ 1,100 $ 640
D.E. Buckminster $ 900 $ 524
* Mr. Chenault's payment was in the form of RSUs granted in January 2016 that vest one year from the grant date; one half of RSUs are payable in shares (net shares must be held until one year after retirement) and the other half are payable in cash.

The grant amounts of PG 2013-15 were included in the Grants of Plan-Based Awards table in the 2014 Proxy Statement. The cash payouts made in February 2016 are included in the Summary Compensation Table on page 60 (non-equity incentive plan compensation for 2015). For Mr. Chenault, the 2016 payout was in the form of RSUs granted in January 2016 that vest one year from the grant date: one half of RSUs are payable after vesting in shares (net shares must be held until one year after retirement) and the other half are payable in cash. Accordingly, the grant amount of these RSUs will be included in the Summary Compensation Table next year in the stock awards column.

Performance RSUs Awarded in January 2013-Vesting Based on 2013-2015 Performance
Performance RSUs vest based on the company’s three-year average ROE (as shown in the following chart). Performance RSUs were awarded in January 2013 for the three-year performance period ending December 2015.

 
        3-Year Average ROE Payout Percent**        
≥30% 125%
  28% 105%
  27%   103.3% Actual  
25%   100%
22% 95%
20% 75%
≥5% 0%
 

** Percent of target shares granted.

Given that average ROE for years 2013-2015 was above target at 27.0 percent (27.8 percent for 2013, 29.1 percent for 2014, and 24.0 percent for 2015), the Compensation Committee awarded a payout of 103.3 percent of target. This resulted in the vesting of the following number of shares for the NEOs:

       Target Number
of Shares
      Shares Vested***
K.I. Chenault 103,786 107,210
S.J. Squeri 33,652 34,762
J.C. Campbell 24,892   25,713
D.E. Buckminster 16,354 16,893
*** In addition to these amounts, deferred dividends were paid on the target number of shares in the first quarter of 2016. Ms. Seeger joined the company in July 2014 and did not receive a January 2013 Performance RSU award.

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Table of Contents

COMPENSATION DISCUSSION AND ANALYSIS
Executive Compensation

Other Policies and Guidelines

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

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

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

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

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

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

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

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

Stock Ownership Guidelines
Our stock ownership guidelines require NEOs to own and maintain a substantial stake in the company. Our NEOs are required to accumulate a target number of shares (i.e., shares owned outright, not including unvested/unearned shares and unexercised stock options), and to retain a portion of the net after-tax shares received upon vesting or exercise of their equity awards as follows:

Holding Requirement
      Target Number of
Shares
      Before Target Met       After Target Met
K.I. Chenault*   500,000   75% of net shares until
target number of
shares is met
  50% of net
shares for
one year
S.J. Squeri 75,000
J.C. Campbell 75,000
L.E. Seeger 25,000
D.E. Buckminster 25,000

* In addition to these requirements, Mr. Chenault is required to hold, one year beyond his retirement from the company, 50 percent of his 2010-2015 year-end AIA and Portfolio Grant payouts delivered in RSUs.

With the exception of Mr. Campbell and Ms. Seeger, who were hired in 2013 and 2014, respectively, all our NEOs own more than the target number of shares. Mr. Chenault beneficially owned 941,716 shares as of December 31, 2015 with an estimated value of $65,496,348 using the company’s closing stock price on the same day.

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Table of Contents

COMPENSATION DISCUSSION AND ANALYSIS
Executive Compensation

Hedging and Pledging Restrictions

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

Post-Employment Compensation

Retirement Benefits
NEOs receive retirement benefits through the following plans:

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

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

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

All retirement benefits are more fully described under Retirement Plan Benefits on page 67 and under Nonqualified Deferred Compensation on pages 68 and 69.

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

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

Change in Control Benefits
The company provides change in control (CIC) benefits to encourage executives to consider the best interests of shareholders by stabilizing any concerns about their own personal financial well-being in the face of a potential CIC of the company. Detailed information is provided under Potential Payments Upon Termination or Change in Control (CIC) on pages 70-73.

Report of the Compensation and Benefits Committee

The Compensation and Benefits Committee has reviewed and discussed the Compensation Discussion and Analysis with management. Based on such review and discussions, the Compensation and Benefits Committee recommended to the Board of Directors, and the Board of Directors approved, that the Compensation Discussion and Analysis be included in this Proxy Statement.

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

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COMPENSATION DISCUSSION AND ANALYSIS
Executive Compensation

Glossary of Key Compensation Terms

NEOs     

Named Executive Officers: refers collectively to the Executive Officers referenced herein and includes Messrs. Chenault, Squeri, Campbell, Buckminster, and Gilligan and Ms. Seeger

TDC

Total Direct Compensation: the sum of base salary, Annual Incentive Awards (AIA), and Long-Term Incentive Awards (LTIA)

AIA

Annual Incentive Award: the company’s annual incentive program that measures Shareholder, Customer, and Employee goals over a one-year period

LTIA

Long-Term Incentive Award: the combination of cash- and equity-based long-term incentives that align with long-term business objectives and shareholder value creation; includes Portfolio Grants (PG), Restricted Stock Units (RSUs), and Stock Options (SOs)

PG

 

Portfolio Grant: cash-denominated, performance-based long-term incentive that measures financial performance and the achievement of strategic milestones, all measured over a three-year period

RSUs

Restricted Stock Units: share denominated long-term incentives. Performance RSUs refer to performance-based long-term incentives that measure ROE performance over a three-year period (also subject to service vesting)

SOs

Stock Options: share-denominated, service-vested long-term incentive that only has value if the company’s share price appreciates above the grant price

CEO Realizable Compensation Methodology

Pay Component        Comments        Methodology11
Salary
Salary for the year
Annual Incentive Award
(Cash denominated)
 
Portion of AIA awarded for the prior performance year
 
Denominated in cash

Annual Incentive Award (RSU denominated)

Portion of AIA awarded for the prior performance year paid in RSUs that vest one year after grant. 50 percent of net shares received upon vesting must be retained until at least one year after retirement
RSUs not subject to retention requirement are valued using the company’s stock price on the vesting date
RSUs subject to retention are valued using the January 29, 2016 closing stock price

Portfolio Grant

January 2013 award vested in January 2016 at 58.2 percent of target and the earned amount was paid in RSUs (see page 55)
January 2014 and January 2015 awards are still outstanding and the potential payout range is 0-125 percent of target based on three-year performance. Based on performance to date, these PGs are likely to be earned well below target
January 2013 award valued at actual payout level
January 2014 and January 2015 awards are valued assuming a 50 percent of target payout12
Performance RSUs
January 2013 award vested in January 2016 at 103.3 percent of target (see page 56)
January 2014 and 2015 awards are still outstanding and the potential payout range is 0-125 percent of target based on three-year performance. Based on performance to date, those Performance RSUs are likely to be earned at target13
January 2013 shares are valued using the company’s stock price on vesting date
January 2014 and January 2015 shares are valued using January 29, 2016 stock price and are valued assuming payout at 100 percent of target
Stock Options
January 2013 exercise price: $59.45
January 2014 exercise price: $86.64
January 2015 exercise price: $83.30
All grants are underwater and accordingly are valued at zero based on January 29, 2016 stock price and exercise price of each option grant

(11)

The Compensation Committee makes pay decisions at its meeting at the end of each January (covering pay for the prior fiscal year). Cash incentives are paid in the first quarter (following the Compensation Committee meeting date) and long-term incentives are granted soon after awards are approved by the Compensation Committee. Therefore, for the purposes of this analysis, outstanding RSUs and stock options are valued using the closing share price on the last business day of January 2016 (January 29, 2016: $53.50) to align with the timing of Compensation Committee decision-making and long-term incentive award vesting.

(12)

Payout range is 0-125 percent of target. Actual payout could be higher or lower than the assumed 50 percent payout based on future performance. See page 27 of the Proxy Statement filed in March 2015 for information on the Portfolio Grant awarded in January 2015. See page 26 of the Proxy Statement filed in March 2014 for information on the Portfolio Grant awarded in January 2014.

(13)

See page 27 of the Proxy Statement filed in March 2015 for information on the Performance RSUs awarded in January 2015 and page 26 of the Proxy Statement filed in March 2014 for information on the Performance RSUs awarded in January 2014.

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Table of Contents

EXECUTIVE COMPENSATION TABLES
Summary Compensation Table

SUMMARY COMPENSATION TABLE

The following Summary Compensation Table (SCT) summarizes the compensation of our NEOs for the year ended December 31, 2015, using the SEC-required disclosure rules. It is important to recognize that 2015 TDC determined by the Compensation Committee is different than amounts disclosed below using the SEC-required disclosure rules. See page 48 for key differences between the SCT and TDC awarded by the Compensation Committee for 2015.

Name    Year    Salary
($)
   Bonus
($)(1)
   Stock
Awards
($)(2)
   Option
Awards
($)(2)
   Non-equity
Incentive Plan
Compensation
($)(3)
   Change in
Pension
Value and
Nonqualified
Deferred
Compensation
Earnings
($)(4)
   All Other
Compensation
($)(5)
      Total
($)
K.I. Chenault 2015 $ 2,000,000 $ 0 $ 16,339,045 $ 2,563,088 $ 0 $ 300,525 $ 785,433 $ 21,988,091
   Chairman and   2014 $ 2,000,000 $ 4,500,000 $ 12,429,114 $ 2,535,762 $ 0 $ 417,925 $ 913,282 $ 22,796,083
   Chief Executive Officer 2013 $ 2,000,000 $ 6,000,000 $ 10,486,267 $ 2,079,871 $ 0 $ 125,658 $ 1,145,624 $ 21,837,420
S.J. Squeri 2015 $ 1,301,154 $ 2,750,000 $ 8,563,819 $ 811,088 $ 771,150 $ 0 $ 359,965 $ 14,557,176
   Vice Chairman 2014 $ 1,250,000 $ 4,150,000 $ 2,275,166 $ 849,774 $ 1,217,850 $ 86,630 $ 376,972 $ 10,206,392
2013 $ 1,250,000 $ 4,150,000 $ 2,500,586 $ 674,386 $ 720,000 $ 0 $ 379,355 $ 9,674,327
J.C. Campbell* 2015 $ 1,000,000 $ 4,850,000 $ 2,147,224   $ 752,688   $ 873,000 $ 0 $ 222,403 $ 9,845,315
   Executive Vice President 2014 $ 1,000,000 $ 6,150,000   $ 1,820,133 $ 679,819 $ 3,177,000 $ 0 $ 240,215 $ 13,067,167
   and Chief Financial Officer 2013 $ 461,538 $ 1,600,000 $ 5,508,922 $ 1,990,889 $ 0 $ 0 $ 907,771 $ 10,469,120
L.E. Seeger 2015 $ 800,000 $ 3,858,000 $ 1,480,824 $ 519,088 $ 640,200   $ 0 $ 157,631 $ 7,455,743
   Executive Vice President
   and General Counsel
D.E. Buckminster 2015 $ 616,538 $ 1,650,000 $ 1,092,146 $ 382,841 $ 523,800 $ 0   $ 194,096 $ 4,459,421
   President, Global Consumer 2014 $ 600,000 $ 2,150,000 $ 982,844 $ 367,092 $ 953,100 $ 66,847 $ 2,883,175 $ 8,003,058
   Services Group
E.P. Gilligan** 2015 $ 669,231 $ 1,225,000 $ 3,276,439 $ 1,148,524 $ 4,390,000 $ 0 $ 688,814 $ 11,398,008
   Former President 2014 $ 1,450,000 $ 4,525,000 $ 2,730,200 $ 1,019,728 $ 1,588,500 $ 224,252 $ 495,668   $ 12,033,348
2013 $ 1,450,000 $ 4,525,000 $ 2,418,842 $ 731,099 $ 1,080,000 $ 0 $ 539,971 $ 10,744,912

*

For Mr. Campbell, 2013 amounts in the table above reflect partial year compensation as he was hired in July 2013.

**

For Mr. Gilligan, 2015 amounts in the table above reflect partial year compensation and payments made in connection with the end of his employment following his death in May 2015.

(1)

The amounts in this column reflect AIA cash payments for annual performance. For Mr. Chenault, his entire 2015 AIA of $3,975,000 was paid in the form of RSUs granted in January 2016 that vest one year from the grant date. One half of these RSUs are payable in cash and the other half are payable in shares (net shares must be held until one year after retirement). For Mr. Campbell and Ms. Seeger, this amount also includes sign-on cash payments of $2,000,000 and $2,633,000, respectively made in accordance with their employment offer letters to replace a portion of long-term incentives forfeited at their prior employer as a result of joining the company. For Mr. Gilligan, in accordance with the plan terms, this amount includes a pro-rated AIA payment for performance year 2015.

(2)

Represents the aggregate grant date fair value of the awards pursuant to FASB ASC Topic 718. Additional details on accounting for stock-based compensation can be found in Note 11 “Stock Plans” to our Consolidated Financial Statements contained in our 2015 Annual Report on Form 10-K.

A significant portion of Mr. Chenault’s total direct compensation is delivered in the form of equity that is deferred. The table below provides detail on the RSUs included in the stock awards column:

2015 2014 2013
Annual RSU award granted in January for performance in the prior year***    $ 7,311,824       $ 6,789,197    $ 6,170,078
Portion of AIA awarded in RSUs in January for performance in the prior year*** $ 3,599,893 $ 1,949,920 $ 2,624,955
Payment of PG award in the form of RSUs. Amount in column reflects the RSUs granted in $ 5,427,328 $ 3,689,997 $ 1,691,234
January with respect to PG awards whose performance periods ended the prior year
TOTAL $ 16,339,045 $ 12,429,114 $ 10,486,267

*** For example, 2015 amount shows RSUs awarded in January 2015 for 2014 performance.
 
With respect to the RSU awards, for Mr. Chenault the amount in the Stock Awards column of the SCT reflects the aggregate value of all the awards set forth in the immediately preceding table, including the target value of his annual RSU award assuming that target performance is achieved against the average ROE target during the three-year performance period ($7,311,824). For all other executives, except for Mr. Squeri for whom the amount in this column also includes the value of awards granted in connection with his promotion ($4,999,995) and a special leadership award granted in January 2015 for his extraordinary results in executing the global business travel joint venture in 2014 ($1,250,000), the amount in the SCT reflects only the target value of their annual RSU awards assuming that target performance is achieved against the average ROE target during the three-year performance period.

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Table of Contents

EXECUTIVE COMPENSATION TABLES
Summary Compensation Table

For each executive’s annual RSU award, the maximum value as of the grant date assuming the highest level of performance will be achieved, is as follows: Messrs. Chenault ($9,139,759), Squeri ($2,892,259), Campbell ($2,684,009), Buckminster ($1,365,120), Gilligan ($4,095,528) and Ms. Seeger ($1,851,000).

 
(3)

For 2015, the amounts in this column reflect the cash payment made to the NEO in respect of payout under the PG2013-15 awards granted in 2013, in accordance with award terms. For Mr. Chenault, the 2015 amount excludes payment of $2,982,750 which was made in the form of RSUs granted in January 2016 that vest one year from the grant date. One-half of these RSUs are payable in cash and the other half are payable in shares (net shares must be held until one year after retirement). For Mr. Gilligan, in accordance with the 2007 Plan, the amount includes payment made with respect to all outstanding PG awards.

 
(4)

The amounts in this column reflect the actuarial increase or decrease in the present value of the NEOs’ benefits under all defined benefit pension plans established by the company.The amounts reflect the impact of changes in interest rates and the NEOs’ changes in age during the year and do not represent any additional benefit to the executive. For Messrs. Squeri, Buckminster and Gilligan, their values were negative $6,721, $8,764 and $208,037, respectively as a result of an increase in the 2015 interest rates used to calculate the present value of their benefits.

 
(5) See the All Other Compensation Table below for additional information.

ALL OTHER COMPENSATION TABLE
 
   Name        Year      Perquisites
and
Other
Personal
Benefits
($)(1)
     Tax Payments/
Reimbursements
($)(2)
     Company
Contributions
to Defined
Contribution
Plans
($)(3)
     Executive Life
Insurance
($)(4)
     Dividends
and Dividend
Equivalents
($)(5)
        Total
($)
  
K.I. Chenault 2015 $ 259,358 $ 0 $ 520,000                $ 6,075 $ N/A $ 785,433
2014 $ 344,795 $ 0 $ 560,000 $ 5,393 $ 3,094 $ 913,282
2013 $ 358,956 $ 0 $ 560,000 $ 4,813 $ 221,855 $ 1,145,624
S.J. Squeri 2015 $ 82,973 $ 0 $ 274,249 $ 2,743 $ N/A $ 359,965
2014 $ 79,989 $ 0 $ 293,750 $ 2,478 $ 755 $ 376,972
2013 $ 79,814 $ 0 $ 293,750 $ 2,313 $ 3,478 $ 379,355
J.C. Campbell 2015 $ 74,663 $ 0 $ 140,000 $ 7,740 $ N/A $ 222,403
2014 $ 82,229 $ 0 $ 153,846 $ 4,140 $ N/A $ 240,215
2013 $ 433,441 $ 472,606 $ 0 $ 1,724 $ N/A $ 907,771
L.E. Seeger 2015 $ 43,645 $ 0 $ 109,846 $ 4,140 $ N/A $ 157,631
D.E. Buckminster 2015 $ 60,909 $ 0 $ 130,778 $ 2,409 $ N/A $ 194,096
2014 $ 789,328 $ 1,950,150 $ 141,000 $ 2,244 $ 453 $ 2,883,175
E.P. Gilligan 2015 $ 106,777 $ 347,898 $ 233,115 $ 1,024 $ N/A $ 688,814
2014 $ 86,151 $ 0 $ 406,000 $ 2,423 $ 1,094 $ 495,668
2013 $ 105,251 $ 0 $ 406,000 $ 2,258 $ 26,462 $ 539,971

(1) See the Perquisites and Other Personal Benefits table below for additional information regarding the components of this column.
 
(2) For Mr. Buckminster, who was on international assignment in London until June 2014 trailing tax equalization payments and/or reimbursements have been made and recorded following termination of his assignment in 2014 to address any foreign tax obligations relating to income received, awarded or earned during his assignment. In 2015, Mr. Buckminster received a net foreign tax credit of approximately $0.6 million relating to payments made by the company on his behalf in previous years, which was returned to the company and is not reflected in the table above. For Mr. Gilligan, the amount shown in this column includes tax equalization payments and/or reimbursements that were made to him in connection with his international assignment in London, which ended in June 2009. These payments and reimbursements are made under a policy that applies to all employees on international assignment and is designed to facilitate these assignments by covering taxes over and above taxes that these employees would have incurred had they remained in their home countries. The payments or reimbursements included in the amount shown that were paid or received in British Pound Sterling were converted to U.S. dollars based on the conversion rate as of the date paid, received or allocated. For Mr. Campbell, the 2013 amount is for tax payments made directly to applicable U.S. federal, state and local authorities for taxable relocation reimbursement and payments made to or on his behalf, which the Internal Revenue Service deems taxable based on the relocation program.
 
(3) This column reports company contributions to the NEOs’ accounts under the company’s Retirement Savings Plan (RSP) and the RRP-RSP Related Account. See pages 67-69 for a further description of the RSP and the RRP-RSP Related Account.
 
(4) This column reports imputed income to the NEO under the company’s executive life insurance program.
 
(5) This column reports dividends and dividend equivalents paid in connection with unvested RSUs awarded to the NEOs under the 2007 Plan. Beginning with awards granted in 2011, dividends and dividend equivalents on unvested RSUs granted to executive officers will be paid only if and when underlying shares vest. For 2015, there are no amounts reflected in this column because all dividends were factored into the grant date fair value of the awards included in the Summary Compensation Table in the year of grant.

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Table of Contents

EXECUTIVE COMPENSATION TABLES
Summary Compensation Table

PERQUISITES AND OTHER PERSONAL BENEFITS
 
   Name        Year      Local and
Other Travel
Benefits
($)(1)
     Personal
Use of
Company
Aircraft
($)(2)
     Flexible
Perquisite
Allowance
($)(3)
     Home
Security
System
($)(3)
     Security
During
Personal
Trips
($)(3)
     International
Assignment
($)(4)
     Other
Benefits
($)(5)
        Total
($)
  
K.I. Chenault 2015 $ 13,089 $ 145,611 $ 35,000 $ 30,570 $ 23,234 N/A $ 11,854 $ 259,358
2014 $ 23,377 $ 181,638 $ 35,000 $ 45,373 $ 19,952 N/A $ 39,455 $ 344,795
2013 $ 19,852 $ 193,676 $ 35,000 $ 32,601 $ 18,841 N/A $ 58,986 $ 358,956
S.J. Squeri 2015 $ 30,000 $ 0 $ 35,000 N/A N/A N/A $ 17,973 $ 82,973
2014 $ 30,000 $ 0 $ 35,000 N/A N/A N/A $ 14,989 $ 79,989
  2013 $ 30,000 $ 0 $ 35,000 N/A N/A N/A $ 14,814 $ 79,814
J.C. Campbell 2015 $ 30,000 $ 0 $ 35,000 N/A N/A N/A $ 9,663 $ 74,663
2014 $ 30,000 $ 3,091 $ 35,000 N/A N/A N/A $ 14,138 $ 82,229
  2013 $ 15,000 $ 0 $ 17,500 N/A N/A N/A $ 400,941 $ 433,441
  L.E. Seeger 2015 $ 0 $ 0 $ 35,000 N/A N/A N/A $ 8,645 $ 43,645
D.E. Buckminster 2015 $ 0 $ 0 $ 35,000 N/A N/A $ 24,021 $ 1,888 $ 60,909
  2014 $ 0 $ 0 $ 35,000 N/A N/A $ 752,358 $ 1,970 $ 789,328
E.P. Gilligan 2015 $ 30,000 $ 0 $ 35,000 N/A N/A $ 41,461 $ 316 $ 106,777
2014 $ 30,000 $ 0 $ 35,000 N/A N/A $ 19,387 $ 1,764 $ 86,151
2013 $ 30,000 $ 11,277 $ 35,000 N/A N/A $ 28,234 $ 740 $ 105,251

(1) For 2015, local and other travel benefits include local travel allowance for Messrs. Squeri, Campbell and Gilligan. For Mr. Chenault, the company’s security policy adopted by the Audit and Compliance Committee of the Board requires him to use for all travel purposes, to the maximum extent practicable, the automobiles and aircraft provided by the company to executives for business travel. The calculation of incremental cost for personal use of company-owned automobiles and aircraft is based on the variable cost to the company of operating the automobiles and aircraft and includes, among other things, fuel costs, maintenance costs, and, in the case of aircraft, the cost of trip-related crew hotels and meals, and landing and ground handling fees. The calculation does not include fixed costs that would have been incurred regardless of whether there was any personal use of the automobiles or aircraft (e.g., purchase costs and depreciation, driver and flight crew fixed salaries and benefits, insurance costs, etc.).
 
(2) Effective January 1, 2010, the company requires reimbursement by Mr. Chenault for incremental cost in excess of $200,000 per year for travel on company aircraft that is deemed by the SEC to be personal use, including use to travel to outside board meetings.
 
(3) The amounts in these columns reflect the perquisite allowance paid to the NEOs. For Mr. Chenault, it includes costs associated with home security and security during personal trips.
 
(4) The amounts shown include expatriate services and allowances in connection with Messrs. Gilligan and Buckminster’s repatriation to the United States, due to their international assignments. The services received by Messrs. Gilligan and Buckminster apply to all employees on international assignment. Services and allowances included in the amounts shown that were paid or received in British Pound Sterling were converted to U.S. dollars based on the conversion rate as of the date paid, received or allocated.
 
(5)

This column reports the total amount of other perquisites and personal benefits provided, none of which individually exceeded the greater of $25,000 or 10 percent of the total amount of all perquisites and other personal benefits reported for the NEO. These other benefits consist of office parking, reimbursement for certain information technology, cost of certain meals from the company’s dining facilities and cost of certain activities associated with NEOs’ spouses accompanying them for a board meeting. In addition to the perquisites and other benefits described in the table and footnotes above, our NEOs also receive occasional secretarial support with respect to personal matters and may, on occasion, use the company’s tickets for sporting and entertainment events for personal rather than business purposes. We incur no incremental cost for the provision of such additional benefits.

For Mr. Chenault, the 2014 amount includes premiums for Director’s Charitable Award Program life insurance.

For Mr. Chenault, the 2013 amount reflects reimbursement by the company of the fee paid by him in connection with a governmental filing required to be made as a result of his being an executive officer and the level of his equity holdings in the company and for Mr. Campbell, the 2013 amount includes taxable relocation reimbursements and payments, excluding tax payments.

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Table of Contents

EXECUTIVE COMPENSATION TABLES
Grants of Plan-Based Awards

GRANTS OF PLAN-BASED AWARDS

The following table provides information on SO, RSU and PG awards granted to each of our NEOs in 2015 under the 2007 Plan.

Award Type
(1)
Grant
Date
Approval
Date


 Estimated Future Payouts under
Non-Equity Incentive Plan Awards
(2)
Estimated Future Payouts under
Equity Incentive Plan Awards
(2)
Exercise
Price or
Base
Price of
Option
Awards
($/sh)(3)
Grant Date
Fair Value
of Stock
and
Option
Awards
($)(4)
   Name                         Threshold
($)
      Target
($)
      Maximum
($)
      Threshold
(#)
      Target
(#)
      Maximum
(#)
              
K.I. Chenault PG2015-17 1/26/15 1/26/15 $ 0 $ 5,125,000 $ 6,406,250
SO 1/26/15 1/26/15 87,777 $ 83.30 $ 2,563,088
RSU 1/26/15 1/26/15 0 87,777 109,721 $ 7,311,824
RSU 1/26/15 1/26/15 108,370 $ 9,027,221
S.J. Squeri PG2015-17 1/26/15 1/26/15 $ 0 $ 1,325,000 $ 1,656,250
SO 1/26/15 1/26/15 27,777 $ 83.30 $ 811,088
RSU 1/26/15 1/26/15 0 27,777 34,721 $ 2,313,824
RSU 1/26/15 1/26/15 15,006 $ 1,250,000
RSU 10/30/15 08/31/15 68,250 $ 4,999,995
J.C. Campbell PG2015-17 1/26/15 1/26/15 $ 0 $ 1,500,000 $ 1,875,000
SO 1/26/15 1/26/15 25,777 $ 83.30 $ 752,688
RSU 1/26/15 1/26/15 0 25,777 32,221 $ 2,147,224
L.E. Seeger PG2015-17 1/26/15 1/26/15 $ 0 $ 1,100,000 $ 1,375,000
SO 1/26/15 1/26/15 17,777 $ 83.30 $ 519,088
RSU 1/26/15 1/26/15 0 17,777 22,221 $ 1,480,824
D.E. Buckminster PG2015-17 1/26/15 1/26/15 $ 0 $ 900,000 $ 1,125,000
SO 1/26/15 1/26/15 13,111 $ 83.30 $ 382,841
RSU 1/26/15 1/26/15 0 13,111 16,388 $ 1,092,146
E.P. Gilligan PG2015-17 1/26/15 1/26/15 $ 0 $ 1,600,000 $ 2,000,000
SO 1/26/15 1/26/15 39,333 $ 83.30 $ 1,148,524
RSU 1/26/15 1/26/15 0 39,333 49,166 $ 3,276,439

(1) PG Awards. These awards link compensation to our financial and strategic performance over a three-year performance period. The goals for the performance period were based 50 percent on financial and stock performance metrics and 50 percent on strategic milestones. The company discloses the specific performance metric goals as well as the performance outcomes of each PG award at the end of the performance period so that shareholders can assess the appropriateness thereof. The company does not disclose the goals at the time of grant because of competitive sensitivity. The potential award payout is determined based on a table of possible performance and earned payout levels, including a cap on the overall earned payout level. The actual payout could be higher or lower than the notional target value based on actual performance.
 
Restricted Stock Units. Except as specified otherwise, RSU awards will vest on the third anniversary of the grant date in an amount determined by performance against the average ROE target during the three-year performance period.
108,370 RSUs granted to Mr. Chenault are in connection with his 2014 AIA and payout of PG2012-14 and will vest on the first anniversary of the grant date subject to the performance hurdle of positive Net Income over the vesting period. One half of these RSUs are payable in cash and the other half are payable in shares (net shares must be held until one year after retirement). Dividend equivalents on RSUs will accrue but will not be paid unless and until the underlying shares vest.
15,006 RSUs granted to Mr. Squeri vest on the second anniversary of the grant date, subject to positive Cumulative Net Income during the vesting period. In addition, 68,250 RSUs granted to Mr. Squeri are in connection with his promotion to Vice Chairman of the company. These RSUs vest on the third anniversary of the grant date, subject to positive Cumulative Net Income over the vesting period.
 
Stock Options. The SOs have a ten-year term and 100 percent of these shares become exercisable on the third anniversary of the grant date, subject to the company achieving positive Cumulative Net Income over the vesting period.
All awards are subject to continuous employment with the company (unless specified otherwise), except awards may vest upon death, disability termination, retirement or, in certain circumstances, in connection with a change in control of the company, as described in the Potential Payments Upon Termination or Change in Control Table.
 
(2) The amounts shown under these columns represent potential aggregate threshold, target and maximum payouts for achievement of threshold, target and maximum performance levels for awards granted. The "threshold" payout is zero, since it represents the level of performance for which no award would be earned. The “target” payout is equal to 100 percent of the NEO’s grant value and represents the amount that may be paid for achieving the target level of performance across all performance goals. The “maximum” payout represents the amount that may be paid for achieving the maximum level of performance across all performance goals, subject to an overall cap on the payout amount.
 
(3) The exercise price of the SOs is the closing price of the company’s common shares on the NYSE on the grant date.
 
(4) Represents the aggregate grant date fair value of the awards pursuant to FASB ASC Topic 718. Additional details on accounting assumptions for stock-based compensation are described in footnote 2 of the Summary Compensation Table.

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Table of Contents

EXECUTIVE COMPENSATION TABLES
Outstanding Equity Awards at Fiscal Year-End 2015

OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END 2015

The following table shows the number of shares covered by exercisable and unexercisable SOs and unvested RSUs granted under the 1998 or the 2007 Incentive Compensation Plans held by our NEOs on December 31, 2015.

Option Awards Stock Awards
   Name    Grant Date       Number of
Securities
Underlying
Unexercised
Options (#)
Exercisable
        Number of
Securities
Underlying
Unexercised
Options (#)
Unexercisable
      Equity
Incentive
Plan
Awards:
Number of
Securities
Underlying
Unexercised
Unearned
Options
(#)
        Option
Exercise
Price
($)
      Option
Expiration
Date
      Number
of Shares
or Units
of Stock
that have
Not Vested
(#)
      Market
Value of
Shares
or Units
of Stock
that have
Not Vested
($)(a)
      Equity
Incentive
Plan Awards:
Number of
Unearned
Shares,
Units, or
other Rights
that have Not
Vested
(#)
        Equity
Incentive
Plan Awards:
Market or
Payout Value
of Unearned
Shares, Units,
or other Rights
that have Not
Vested
($)(a)
  
K.I. Chenault 1/26/2015 87,777 (1)   $ 83.30 1/26/2025 87,777 (b)   $ 6,104,890
1/26/2015 108,370 (e) $ 7,537,134
1/28/2014 78,361 (1) $ 86.64 1/28/2024 78,361 (b) $ 5,450,008
1/29/2013 103,786 (1) $ 59.45 1/29/2023 108,975 (c) $ 7,579,211
1/24/2012 92,779 (2)   30,927 $ 49.23 1/24/2022
1/27/2011 135,981 (2) - $ 44.54 1/27/2021
1/26/2010 650,918 (2) - $ 38.10 1/26/2020
1/29/2009 1,196,888 (2) - $ 16.71 1/29/2019
1/31/2008 625,000 (2) - $ 49.13 1/30/2018
1/31/2008 257,813 (3) - $ 49.13 1/30/2018
S.J. Squeri 10/30/2015 68,250 (d) $ 4,746,788
1/26/2015 27,777 (1) $ 83.30 1/26/2025 27,777 (b) $ 1,931,890
1/26/2015 15,006 (f) $ 1,043,667
1/28/2014 26,260 (1) $ 86.64 1/28/2024 26,260 (b) $ 1,826,383
1/29/2013 33,652 (1) $ 59.45 1/29/2023 35,334 (c) $ 2,457,480
1/29/2013 8,410 (d) $ 584,916
1/24/2012 28,114 (2) 9,372 $ 49.43 1/24/2022
1/27/2011 32,965 (2) - $ 44.54 1/27/2021
1/26/2010 39,370 (2) - $ 38.10 1/26/2020
J.C. Campbell 1/26/2015 25,777 (1) $ 83.30 1/26/2025 25,777 (b) $ 1,792,790
1/28/2014 21,008 (1) $ 86.64 1/28/2024 21,008 (b) $ 1,461,106
7/31/2013 24,892 (4) $ 73.77 7/31/2023 26,136 (c) $ 1,817,759
7/31/2013 49,785 (1) $ 73.77 7/31/2023