DEF 14A 1 axp3463051-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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A heritage built on service and sustained by innovation

We’re a globally integrated payments company that provides customers with access to products, insights and experiences that enrich lives and build business success

Our Vision

Provide the world’s best customer experience every day

Our Mission

Become essential to our customers by providing differentiated products and services to help them achieve their aspirations

 
 

 
 

Your vote is important to us!
Please vote today at www.proxyvote.com



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

Notice of Annual Meeting of Shareholders


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 the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm for 2019

   
3

Advisory resolution to approve executive compensation

   
4

Three shareholder proposals if properly presented at the meeting

   
5

Such other business that may properly come before the meeting


Tangela S. Richter
Corporate Secretary and Chief Governance Officer
March 15, 2019

WHEN
Tuesday, May 7, 2019
9:00 a.m. Eastern Time

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

RECORD DATE
March 11, 2019

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

Detailed information regarding our 2019 annual meeting, including how to cast your vote, can be found in “Other Information” starting on page 91.


Important notice regarding the availability of proxy materials for the 2019 annual meeting to be held on May 7, 2019

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 18, 2019.

* 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.

Cautionary Note Regarding Forward-Looking Statements

This proxy statement contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that are subject to risks and uncertainties. You can identify forward-looking statements by words such as “believe,” “expect,” “anticipate,” “intend,” “plan,” “aim,” “will,” “may,” “should,” “could,” “would,” “likely,” “estimate,” “predict,” “potential,” “continue” or other similar expressions. Actual results may differ from those set forth in the forward-looking statements due to a variety of factors, including those contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018 and the Company’s other filings with the U.S. Securities and Exchange Commission. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date on which they are made. We undertake no obligation to update or revise any forward-looking statements.


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3 Notice of Annual Meeting of Shareholders
5 Executive Summary
9 Corporate Governance at American Express
9 ITEM 1 Election of Directors for a Term of One Year
9 Our Director Nominees
16 Our Board’s Composition
18 Our Board Evaluation Process
20 Our Board Leadership Structure
21 Our Board’s Primary Role and Responsibilities, Structure and Processes
23 Our Board Committees
26 Our Corporate Governance Framework
28 Shareholder Engagement
31 Compensation of Directors
32 Director Stock Ownership
32 Director Trading in Company Securities
33 Director and Officer Liability Insurance
33 Certain Relationships and Transactions
35 The Powerful Backing of American Express: Corporate Social Responsibility
38 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 Executive Compensation
42 ITEM 3 Advisory Resolution to Approve Executive Compensation (Say on Pay)
43 Compensation Discussion and Analysis
64 Report of the Compensation and Benefits Committee
79 Equity Compensation Plans
79 Pay Ratio
80 Shareholder Proposals
80 ITEM 4 Shareholder Proposal Relating to Action by Written Consent
83 ITEM 5 Shareholder Proposal Relating to Deducting the Stock Buyback Impact from Executive Pay
86 ITEM 6 Shareholder Proposal Relating to Gender Pay Equity
89 Stock Ownership Information
90 Section 16(a) Beneficial Ownership Reporting Compliance
91 Other Information
91 Attending the Annual Meeting of Shareholders and Webcast
91 Notice of Business to Come Before the Meeting
92 Additional Voting Information
94 Multiple Shareholders Sharing the Same Address
94 2020 Annual Meeting of Shareholders Information
95 Availability of Form 10-K
96 Annex A—Information Regarding Non-GAAP Financial Measures
98 Location of the 2019 Annual Meeting and How to Get There


4        2019 Proxy Statement


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Executive Summary

Our Strategic Imperatives and 2018 Performance

2018 was a strong year for American Express. We continued the positive momentum from 2017 with broad-based growth across all business lines, anchored in our focus on and investment in the Company’s four strategic imperatives:

Expand leadership in the premium consumer space         Build on our strong position in commercial payments         Strengthen our global, integrated network to provide unique value         Make American Express an essential part of our customers’ digital lives

Business Performance

As our 2018 results show, our investments and strategy for winning in the marketplace are paying off. Our integrated payments model and our unique assets have helped us gain share and scale, which we believe drive sustainable growth. Business performance highlights in 2018 include:

Added 12 million new Card Members;
Grew worldwide spending on our cards by 9%, with particular strength among small- and medium-sized businesses and across international regions;
Increased Card Member loans by 12%;
Added more than 1.5 million new merchant locations in the U.S. for the second year in a row and posted double-digit growth in our international merchant locations;
Saw strong, industry-leading credit performance; and
Continued to control our operating expenses, providing operating leverage and the flexibility to make investments in our brand, customer benefits and digital innovation, with operating expense growth flat year over year.(1)

Financial Results

2018 financial highlights include:

Delivered over $40 billion in revenue, an all-time high;
Total revenue for the year grew by 9%, or 10% after adjusting for foreign exchange translations; (2) the fourth quarter of 2018 marked the sixth consecutive quarter with revenue growth of at least 8%;
Earnings per share (EPS) for the full year 2018 were $7.91, or $7.33 after adjusting for tax items, a 24% increase over the prior year(3); and
Return on equity (ROE) was 33.5% and we increased the dividend by 11% beginning with the third quarter 2018 dividend declaration.

(1) Operating expenses represents salaries and employee benefits, professional services, occupancy and equipment, and other expenses.
(2) Total revenues net of interest expense on an FX-adjusted basis is a non-GAAP measure. FX-adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into U.S. dollars (i.e., assumes the foreign exchange rates used to determine results for the year ended December 31, 2018 apply to the period(s) against which such results are being compared). Management believes the presentation of information on an FX-adjusted basis is helpful to investors by making it easier to compare the Company’s performance in one period to that of another period without the variability caused by fluctuations in currency exchange rates.
(3) The reported diluted EPS growth rate for 2018 was greater than 100% and therefore not meaningful. Adjusted diluted EPS and the related growth rate, excluding the impacts of certain discrete tax benefits in the fourth quarter of 2018 and, for the growth rate, the impacts of the Tax Cuts and Jobs Act (the Tax Act) in the fourth quarter of 2017, are non-GAAP measures. Management believes adjusted diluted EPS is useful in evaluating the ongoing operating performance of the Company. See Annex A for a reconciliation to diluted EPS on a GAAP basis.

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Key 2018 Performance Results

TOTAL REVENUE                   WORLDWIDE BILLED
BUSINESS GROWTH(6)
        SHARE
REPURCHASES

$40.3B

9%/10%(4)
Reported/FX-
adjusted growth

$1.2T

9%

$1.6B

NET INCOME

TOTAL LOANS

DIVIDEND

$6.9B

20%(5)
Adjusted growth

$85.7B

13%

$1.3B

EPS

OPERATING EXPENSES

CAPITAL RETURN
TO STOCKHOLDERS

$7.91/$7.33(5)
Reported/Adjusted

24%(5)
Adjusted growth

$10.9B

0%

$2.9B

How our Compensation Program Supports our Business Strategy

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

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

Say on Pay, Shareholder Engagement and Feedback

We actively seek feedback from our shareholders and other stakeholders throughout the year. In 2018, we met with shareholders representing approximately half of our outstanding shares to discuss executive compensation, corporate governance and related matters. In order to establish a direct line of communication between shareholders and our Board, our Lead Independent Director, Mr. Williams, actively participated in several of these meetings. In light of the disappointing level of support for our 2018 say on pay vote (69.9%), we sought detailed input from shareholders and other stakeholders regarding specific aspects of our compensation programs and certain investor suggestions for program enhancement were

(4) Total revenues net of interest expense on an FX-adjusted basis is a non-GAAP measure. See footnote 2 on page 5 for an explanation of FX-adjusted information.
(5) The reported growth rates for net income and diluted EPS were greater than 100% and therefore not meaningful. Adjusted net income, adjusted diluted EPS and the related growth rates, each excluding the impacts of certain discrete tax benefits in the fourth quarter of 2018 and, for the growth rates, the impacts of the Tax Act in the fourth quarter of 2017, are non-GAAP measures. Management believes adjusted net income and adjusted diluted EPS are useful in evaluating the ongoing operating performance of the Company. See Annex A for a reconciliation to net income and diluted EPS on a GAAP basis.
(6) Billed business represents transaction volumes (including cash advances) on cards and other payment products issued by American Express (proprietary billed business) and cards issued under network partnership agreements with banks and other institutions, including joint ventures (Global Network Services billed business). In-store spending activity within Global Network Services retail cobrand portfolios, from which we earn no revenue, is not included in billed business.

6        2019 Proxy Statement


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discussed with the Compensation and Benefits Committee and the Board of Directors (Board). The Compensation and Benefits Committee approved a number of changes to our compensation program considering this feedback, including the elimination of our Portfolio Grant (long-term cash) program and adding relative measures to our performance share program.

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

Our Board of Directors

We believe that our Board has assembled the right mix of members to provide effective oversight and insightful strategic guidance. We continually review our Board’s composition to identify the skills needed for our Company both in the near term and into the future.

Our Director Nominees

Name Director
Since
Board Committees Other Public Boards
                AC      CB      IT      NG      PR      R        

Charlene Barshefsky, 68
Senior International Partner, WilmerHale

2001 The Estée Lauder
Companies Inc.

John J. Brennan, 64
Chairman Emeritus and Senior Advisor,
The Vanguard Group, Inc.

2017

Peter Chernin, 67
Founder and CEO, Chernin Entertainment, LLC

2006

Ralph de la Vega, 67
Former Vice Chairman, AT&T Inc.

2016 Amdocs

Anne Lauvergeon, 59
Chairman and CEO, A.L.P.

2013 Suez
Koç Holding
Sigfox

Michael O. Leavitt, 68
Founder and Chairman, Leavitt Partners, LLC

2015 Medtronic, Inc.
Theodore J. Leonsis, 63 2010 Groupon, Inc.
Chairman and CEO,
Monumental Sports & Entertainment, LLC

Stephen J. Squeri, 60
Chairman and CEO, American Express Company

2018

Daniel L. Vasella, 65
Honorary Chairman and Former Chairman and CEO,
Novartis AG

2012 PepsiCo, Inc.

Ronald A. Williams, 69
Former Chairman and CEO, Aetna, Inc.

2007 The Boeing Company
Johnson & Johnson

Christopher D. Young, 47
CEO of McAfee, LLC

2018 Snap, Inc.

Chairman       AC   Audit and Compliance       NG   Nominating and Governance
Lead Independent Director CB Compensation and Benefits PR Public Responsibility
Member IT Innovation and Technology R Risk

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Director Nominee Highlights

Gender

2 female

Geographic Location

2 reside outside the U.S.

Ethnicity

3 minorities

Director Independence

10 independent

Diversity of Tenure (Non-Management Directors)

Average
Age
      Average
Tenure
      Years      

63.7

7.0

1-3

7-10

years

years

4-6

>10

 

Diversity of Viewpoints and Experience

Core Business, Operations and Management Expertise

Public Company Governance Experience

               
Senior Management and Leadership Skills

Risk and Audit Oversight Experience

 
Technology and Cybersecurity Experience

Brand and Marketing Expertise

 
Government, Legal and Public Policy Experience

Global Business Experience

 
Financial, Investment and M&A Experience

Financial Literacy



Corporate Governance Highlights

Board Structure and Independence
Strong Lead Independent Director with explicit duties and responsibilities
All directors are independent except the Chairman
Diverse and highly skilled Board that provides a range of viewpoints
Executive sessions led by the Lead Independent Director at each regular in-person board meeting without management present
Executive sessions at committee meetings led by independent committee chairs without management present
Shareholder Rights
Proxy access rights
Annual election of all directors
Majority voting for directors (in uncontested elections)
Shareholders representing at least 25% of outstanding shares are able to call special meetings
Board Oversight
Oversees the Company’s annual business plan and corporate strategy, succession planning and risk management
Monitors the Company’s culture, Code of Conduct and values
Well-executed Chief Executive Officer (CEO) succession plan in 2017-2018 and ongoing Board and senior management succession planning
Annual off-site Board meeting focused on Company strategy
Key management and rising talent reviewed at an annual talent review
Risk-aware culture overseen by a separate Risk Committee of the Board
Director access to experts and advisors, both internal and external
Sound Corporate Governance Practices
Responsive, active and ongoing shareholder engagement
Regular Board and committee refreshment with a range of tenures
Robust Director Code of Conduct
Mandatory retirement age policy for all directors
Annual Board and committee performance evaluations
Comprehensive clawback policy for senior executives
Significant share ownership requirements for senior executives and directors
Strong commitment to Corporate Social Responsibility
Director orientation and continuing education programs

For a detailed discussion of our corporate governance and our directors, please see “Corporate Governance at American Express” beginning on page 9.

8        2019 Proxy Statement


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Corporate Governance at American Express

ITEM
1
Election of Directors for a Term of One Year
Our Board recommends a vote FOR the election of the nominees listed on pages 10-15.

Our Board currently has 13 members. Eleven of our directors are standing for re-election to hold office until the next annual meeting of shareholders or until their successors are duly elected and qualified. Two of our current directors are retiring and not standing for reelection. Our Board has appointed Laureen Seeger, Tangela S. Richter and Kristina V. Fink as proxies to vote your shares on your behalf. The proxies intend to vote for the election of each of the 11 candidates nominated by the Board unless you indicate otherwise on your proxy or voting instruction form or when you vote by telephone or online. Each candidate has consented to being named in this proxy statement and serving as a director, if elected. However, if any nominee is not able to serve, the Board can either nominate a different person or reduce the size of the Board. If the Board nominates another individual, the persons named as proxies may vote for that nominee.

Our Director Nominees

Our director nominees 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 strategy, operations, finance, human capital management and leadership development, compliance, controls and risk management, as well as skills to respond to rapidly evolving business environments and foster innovation and business transformation. In addition, our nominees’ experiences serving on other boards bring valuable knowledge and expertise in the areas of governance, talent management and compensation, financial reporting, risk management and controls and compliance.

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

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American Express Committees
Innovation and Technology (Chair)
Public Responsibility
Risk

Other Public Directorships
The Estée Lauder Companies Inc.

Other Public Directorships in the past five years
Starwood Hotels & Resorts Worldwide, Inc.
Intel Corporation
Charlene Barshefsky
Senior International Partner, WilmerHale
Director since 2001
Independent
Age 68


Career Highlights
Senior International Partner at WilmerHale, where she advises U.S. and international companies on international business transactions, government relations, market access, and foreign government regulation of business and investment
Former U.S. Trade Representative and member of President Clinton’s Cabinet, where she served as chief trade negotiator and principal trade policymaker for the United States, negotiating complex market access, regulatory, and investment agreements with virtually every major country in the world

Specific qualifications, experience, skills and expertise:
High-level government service
Expertise negotiating with foreign governments
Advisor to firms on doing business in international markets
Broad legal and public policy experience
Public company governance

Select Professional and Community Contributions
Trustee, Howard Hughes Medical Institute
Member, Council on Foreign Relations

American Express Committees
Audit and Compliance
Compensation and Benefits
Risk (Chair)

Other Public Directorships in the past five years
General Electric Company
LPL Financial Holdings, Inc.
John J. Brennan
Chairman Emeritus and Senior Advisor,
The Vanguard Group, Inc.
Director since 2017
Independent
Age 64
 


Career Highlights
Chairman emeritus and senior advisor of The Vanguard Group, Inc., a global investment management company
Former CEO, CFO and Chairman of the Board of The Vanguard Group, Inc.
Former Chairman of the Board of Governors of The Financial Industry Regulatory Authority (FINRA), a U.S. financial services industry regulator
Former Chairman of the Financial Accounting Foundation, an overseer of financial accounting and reporting standard-setting boards

Specific qualifications, experience, skills and expertise:
Core business, operations and management
CFO and financial accounting expertise
Risk and audit oversight
Financial industry operations and regulation
Institutional investor perspective

Select Professional and Community Contributions
Chairman, Board of Trustees of the University of Notre Dame
Chairman, Vanguard Charitable Endowment Program
Founding Trustee, King Abdullah University of Science and Technology

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American Express Committees
Compensation and Benefits
Nominating and Governance (Chair)

Other Public Directorships in the past five years
Pandora Media, Inc.
Twitter, Inc.
Peter Chernin
Founder and CEO, Chernin Entertainment, LLC
Director since 2006
Independent
Age 67


Career Highlights
Founder and CEO of Chernin Entertainment, LLC, a film and television production company, and The Chernin Group, LLC, which focuses on strategic opportunities in media, technology and entertainment
Former President, Chief Operating Officer and director of News Corporation
Former Chairman and CEO of the Fox Group, where he oversaw the global operations of the company’s film, television, satellite cable and digital media businesses

Specific qualifications, experience, skills and expertise:
Core business, operations and management
Experience building global media businesses
Digital business development
Brand and marketing expertise
Public company governance

Select Professional and Community Contributions
Co-Chairman and Co-Founder, Malaria No More
Director and Co-chair, Board of Visitors of the University of California, Berkeley
Former Director, Harvard AIDS Initiative

American Express Committees
Audit and Compliance
Compensation and Benefits
Innovation and Technology

Other Public Directorships
Amdocs
Ralph de la Vega
Former Vice Chairman, AT&T Inc.
Director since 2016
Independent
Age 67


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

Specific qualifications, experience, skills and expertise:
Core business, operations and management
Global business leader
Deep experience in Latin America
Digital and mobile technology expertise
Risk and audit oversight

Select Professional and Community Contributions
Board Member, Junior Achievement Worldwide
Former Executive Board Member, Boy Scouts of America
Board Member, Latino Donor Collaborative


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American Express Committees
Audit and Compliance
Public Responsibility

Other Public Directorships
Suez
Koç Holding
Sigfox

Other Public Directorships in the past five years
Airbus Group
Rio Tinto plc
Total S.A.
Vodafone Group Plc.
Anne Lauvergeon
Chairman and CEO, A.L.P.
Director since 2013
Independent
Age 59


Career Highlights
Chairman and CEO of A.L.P., a private French advisory company
Chairman of Sigfox, a French start-up that operates a network dedicated exclusively to the internet of things
Former Partner and Managing Director of Efficiency Capital, an advisory firm that funds technology and natural resources investments
Former Advisor for Economic International Affairs to the French Presidency and Deputy Chief of Staff

Specific qualifications, experience, skills and expertise:
Core business, operations and management
Deep business experience in Europe
Government experience
Public policy experience in sustainability
Public company governance

Select Professional and Community Contributions
Member, United Nations Global Compact Board
Executive Committee Member, World Business Council for Sustainable Development
Chair, Innovation 2030 Commission (France)

American Express Committees
Audit and Compliance
Public Responsibility(Chair)

Other Public Directorships
Medtronic, Inc.

Other Public Directorships in the past five years
HealthEquity, Inc.
Michael O. Leavitt
Founder and Chairman, Leavitt Partners, LLC
Director since 2015
Independent
Age 68


Career Highlights
Founder and Chairman of Leavitt Partners, LLC, a health care consulting firm, and Chairman of Leavitt Equity Partners, a private equity fund
Former U.S. Secretary of Health and Human Services
Former Administrator of the U.S. Environmental Protection Agency
Former Governor of Utah

Specific qualifications, experience, skills and expertise:
Deep government experience
Senior executive and administrative experience
Public policy experience
Regulatory experience
Public company governance

Select Professional and Community Contributions
Former Board Member, Cancer Treatment Centers of America

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American Express Committees
Innovation and Technology
Nominating and Governance
Public Responsibility

Other Public Directorships
Groupon, Inc.
Theodore J. Leonsis
Chairman and CEO, Monumental Sports &
Entertainment, LLC
Director since 2010
Independent
Age 63
 


Career Highlights
Chairman and CEO of Monumental Sports & Entertainment, LLC, a sports, entertainment, media and technology company that owns the NBA’s Washington Wizards, NHL’s Washington Capitals, the WNBA’s Washington Mystics and the Capital One Arena in Washington, D.C.
Former Vice Chairman Emeritus of AOL LLC, a leading global ad-supported Web company
Former Chairman of Revolution Money, Inc., acquired by American Express in January 2010

Specific qualifications, experience, skills and expertise:
Successful innovator and entrepreneur
Core business, operations and management
Expertise in social media and digital trends
Brand and marketing expertise
Public company governance

Select Professional and Community Contributions
Director, College Success Foundation
Chairman, D.C. College Access Program, Inc.
Director, Greater Washington Partnership

Stephen J. Squeri
Chairman and CEO, American Express Company
Director since 2018
Chairman of the
Board since 2018
Age 60


Career Highlights
Chairman and CEO of American Express
Mr. Squeri has held many positions during his 33 years at American Express, including Vice Chairman, Leader of the Business-to-Business group, Group President of Global Corporate Services, Group President of Global Services and Executive Vice President and Chief Information Officer

Specific qualifications, experience, skills and expertise:
Unique perspective as Company CEO
Core business, operations and management
Payments and network industry expertise
Expertise in digital and mobile innovation
Brand and marketing expertise

Select Professional and Community Contributions
Trustee, Valerie Fund
Trustee, Manhattan College
Member, Board of Governors of Monsignor McClancy Memorial High School

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American Express Committees
Audit and Compliance (Chair)
Nominating and Governance
Risk

Other Public Directorships
PepsiCo, Inc.
Daniel L. Vasella
Honorary Chairman and Former Chairman
and CEO, Novartis AG
Director since 2012
Independent
Age 65
 


Career Highlights
Honorary Chairman and former Chairman and CEO of Novartis AG, a company that engages in the research, development, manufacture and marketing of health care products worldwide
Former Chief Operating Officer, Senior Vice President, Head of Worldwide Development and Head of Corporate Marketing at Sandoz Pharma Ltd.

Specific qualifications, experience, skills and expertise:
Core business, operations and management
Finance, investment and M&A experience
Global business leader
Led a highly regulated business
Public company governance

Other Professional and Community Contributions
Member, International Business Leaders Advisory Council for the Mayor of Shanghai
Foreign Honorary Member, American Academy of Arts and Sciences
Trustee, Carnegie Endowment for International Peace

American Express Committees
Compensation and Benefits (Chair)
Nominating and Governance

Other Public Directorships
The Boeing Company
Johnson & Johnson

Other Public Directorships in the past five years
Envision Healthcare
Ronald A. Williams
Former Chairman and CEO, Aetna, Inc.
 
Director since 2007
Lead Independent
Director since 2018
Age 69


Career Highlights
Chairman and CEO, RW2 Enterprises, LLC, where he advises senior corporate executives on the development of strategy and how to achieve transformational leadership grounded in core values
Former Chairman and CEO of Aetna, Inc., a leading diversified health care benefits company
Operating advisor to Clayton, Dubilier & Rice, LLC, a private equity firm

Specific qualifications, experience, skills and expertise:
Core business, operations and management
Finance, risk management and investment expertise
Led a highly regulated business
Experience innovating through information technology
Public company governance

Select Professional and Community Contributions
Trustee, Massachusetts Institute of Technology
Trustee, Committee for Economic Development
Vice Chair, Board of Trustees of the Conference Board
Advisory Board Member, John Hopkins Carey Business School

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American Express Committees
Innovation and Technology
Risk

Other Public Directorships
Snap Inc.

Other Public Directorships in the past five years
Rapid7
Christopher D. Young
CEO, McAfee, LLC
Director since 2018
Independent
Age 47


Career Highlights
CEO of McAfee, LLC, one of the world’s leading independent cybersecurity companies
Former Senior Vice President and General Manager at Intel Security Group where he led the initiative to spin out McAfee
Former Senior Vice President, Security and Government Group at Cisco Systems, Inc. a technology networking company

Specific qualifications, experience, skills and expertise:
Cybersecurity expert
Core business, operations and management
Experience in national security and emergency preparedness
Product development and marketing experience
Public company governance

Select Professional and Community Contributions
Member, President’s National Security Telecommunications Advisory Committee
Director, Cyber Threat Alliance
Former Member, Board of Trustees of Princeton University

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Our Retiring Directors

Richard C. Levin and Samuel J. Palmisano are retiring from our Board at the end of their current terms and, therefore, will not stand for reelection at our annual meeting. We thank Rick and Sam for their dedicated service and wish each of them continued success.

Our Board’s Composition

As illustrated by the above director biographies, our Board is made up of a diverse group of leaders with substantial experience in their respective fields. Ongoing board succession planning along with our mandatory retirement age for directors, assures that the Board continues to maintain an appropriate mix of objectivity, skills and experiences to provide fresh perspectives and effective oversight and guidance to management, while leveraging the institutional knowledge and historical perspective of our longer-tenured directors.

The Nominating and Governance 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 as desired and whether they possess personal attributes and diverse experiences that will contribute to the effective functioning of the Board. While we do not have a specific policy on board diversity, our Corporate Governance Principles provide that the Board should be diverse, engaged and independent. When reviewing potential board nominees, the Nominating and Governance Committee considers the diversity of the Board, including gender and race, and does not discriminate on the basis of ethnicity, sexual orientation, culture or nationality.

Attributes of Director Nominees: What We Look For

Individuals who have established records of significant accomplishment in leading global businesses and large, complex organizations
Individuals who have achieved prominence in their fields and possess skills or significant experience in areas of strategic importance to our business
Individuals who possess integrity, independence, energy, forthrightness, strong analytical skills and the commitment to devote the necessary time and attention to the Company’s affairs
Individuals who demonstrate they have the ability to challenge and stimulate management and exercise sound judgment
Individuals who demonstrate a willingness to work as part of a team in an atmosphere of trust and candor and a commitment to represent the interests of all shareholders rather than those of a specific constituency

Process for Identifying and Adding New Directors

The Nominating and Governance Committee uses a professional search firm to help identify, evaluate and conduct due diligence on potential director candidates. Using a search firm allows the committee to make sure it is conducting a broad search and looking at a diverse pool of potential candidates. The committee also maintains an ongoing list of potential candidates.

The Nominating and Governance Committee considers all shareholder recommendations for director candidates and applies the same standards in considering candidates submitted by shareholders as it does in evaluating all other candidates. Shareholders can recommend candidates by writing to the committee in care of the Company’s Corporate Secretary, whose contact information is on page 30. Shareholders who wish to submit nominees for election at an annual or special meeting of shareholders should follow the procedure described on page 95.

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

STEP     
Collect Candidate Pool
1
Independent search firms
Independent Director recommendations
Shareholder recommendations
STEP

Comprehensive Candidate Review
Potential candidates are comprehensively reviewed and the subject of rigorous discussion during Nominating and Governance Committee meetings and Board meetings.

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

During these meetings, directors assess candidates on the basis of their skills and experience, their personal attributes and their expected contribution to the current mix of competencies and diversity on the Board.
Simultaneous due diligence is conducted, including soliciting feedback from other directors and persons outside the Company.
2
STEP

Recommendation to the Board
The Nominating and Governance Committee presents qualified candidates to the Board for review and approval.

3

Outcome
Four new directors added since 2014:

    
Ethnic and gender diversity
Technology and cybersecurity expertise
Current and former CEOs
Former CFO
    
Senior government and regulatory experience
Global business leaders
M&A experience
Financial and investment experience

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


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Our Board Evaluation Process

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

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

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

Our Board evaluations cover the following areas:

    
Board efficiency and overall effectiveness
Board and committee structure
Satisfaction with the performance of the Chairman
Satisfaction with the performance of the Lead Independent Director
Access to the Lead Independent Director, CEO and other members of senior management
Quality of Board discussions and balance between presentations and discussion
    
Quality and clarity of materials presented to directors
Board and committee information needs
Satisfaction with Board agendas and the frequency and format of meetings and time allocations
Areas where directors want to increase their focus
Board dynamics and culture
Director access to experts and advisors
Satisfaction with the format of the evaluation

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The below summarizes our Board Evaluation process:
  1  
   

Annual Board and Committee Evaluations

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

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

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

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

  2  
   

Summary of the Written Evaluations

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

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

  3  
   

Board and Committee Review

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

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

 

  4  
   

Actions

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

Director orientation program was modified and enhanced;
Management with varying degrees of seniority present to the Board and its committees;
Information and materials regularly provided to directors have been enhanced and evolved to alleviate “information overload” and to enable directors to focus on the key data;
Format of board meetings has been altered to enable more time for director discussion with and without the CEO present;
Number of informal meetings between directors and key executives has been increased;
Director education and presentations on emerging risk areas, industry disruptors and competitors are provided;
Board members with specific subject matter expertise have been added; and
International board members have been added.

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Our Board Leadership Structure

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

Our Board is led by a combination of Mr. Williams, our Lead Independent Director, and Mr. Squeri, our Chairman and CEO, supplemented by engaged committee chairs and independent-minded, skilled and committed directors. Messrs. Squeri and Williams assumed their roles in February and March of 2018, respectively, and have forged a strong and productive working relationship. The Board’s succession planning discussions surrounding their initial appointments included extensive discussions of the Board’s leadership structure. Through that process, the Board determined that continuing with the combined Chairman and CEO structure, in combination with a strong Lead Independent Director, provides the best leadership structure for our Company and creates an environment in which the Board can work effectively and appropriately challenge management.

Our Board recently undertook its annual review of our leadership structure in conjunction with the Nominating and Governance Committee. This review included consideration of the sound and effective leadership provided by Mr. Williams during his tenure as Lead Independent Director as well as the tangible benefits of having a Chairman and CEO with an operational focus and extensive company experience given the global and complex nature of our business. Following thoughtful review and discussion, our Board continues to believe that our current leadership structure allows the Board to focus on key policy and operational issues, provides critical and effective leadership, both internally and externally, and benefits the long-term interests of our shareholders.

Strong Lead Independent Director with Defined Role and Responsibilities

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

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

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

Preside at all meetings of the Board at which the Chairman is not present, including the executive sessions of the independent directors, and apprise the Chairman of the issues considered and decisions reached at those sessions;
Call additional meetings of independent directors as needed;
Lead the Board in putting forth its expectations for “tone at the top”;
Meet regularly with the Chairman and serve as a liaison between the Chairman and the independent directors;
Facilitate effective and candid communication to optimize Board performance;
Advise the Chairman of the Board’s informational needs and review and approve the types of information sent to the Board and Board meeting agendas;
Review and approve the schedule of Board meetings to ensure there is sufficient time for discussion of all agenda items;
Monitor and coordinate with the Chairman on appropriate governance issues and developments; and
Be available as appropriate for consultation and direct communication with major shareholders.

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

Our Board’s Primary Role and Responsibilities

Our Board bears the responsibility for the oversight of management on behalf of our shareholders in order to ensure long-term value creation. In that regard, the primary responsibilities of our Board include (i) oversight of the Company’s annual business plan and corporate strategy, (ii) ongoing succession planning and (iii) risk management.

How our Board Oversees our Annual Business Plan and Corporate Strategy

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

  1     2     3     4    
                                                               
     In-depth review by global business groups         Comprehensive review of Company’s strategic goals         Consolidation of annual business plan         Discussion of Company results relative to the annual business plan

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

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

The entire Board is involved in the critical aspects of the CEO succession planning process, including establishing selection criteria that reflect our business strategies, identifying and evaluating potential internal candidates and making key management succession decisions. Succession 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 meetings and the comprehensive annual talent review. In addition, the Board has developed an emergency CEO succession plan.

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

Additionally, the results of the Company’s Annual Culture (Pulse) Survey are reviewed each year in detail with the Board. The insights provided by this survey help to ensure that the Company is developing future leaders who will positively impact Company culture. We believe that maintaining our strong culture and adhering to our Blue Box Values will ensure that we attract, retain and develop the right talent to lead the Company and successfully execute our corporate strategy.

How our Board Oversees Risk Management

We are committed to Board-level risk management. Our Board monitors our “tone at the top” and risk culture and oversees emerging strategic risks. Risk management is overseen by our Board through three Board committees: Risk, Audit and Compliance, and Compensation and Benefits. Each committee consists entirely of independent directors and provides regular reports to the Board regarding matters reviewed at their committee. The committees meet regularly in private executive sessions with our Chief Risk Officer, Chief Compliance & Ethics Officer, Chief Audit Executive and other senior management with regard to our risk management processes, controls, talent and capabilities.

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Board of Directors

Monitors our “tone at the top” and risk culture and oversees emerging strategic risks. Committee-specific oversight areas are set forth below:

  1
                             

Risk Committee

Provides oversight of our enterprise-wide risk management framework, processes and methodologies. Approves our Enterprise Risk Management (ERM) policy, which covers risk governance, risk oversight and risk appetite, including credit risk, market risk, liquidity risk, operational risk, reputational risk, country risk, model risk, asset-liability management risk and strategic and business risk. Our ERM policy:
Defines the authorized risk limits to control exposures within our risk capacity and risk tolerance, including stressed forward-looking scenarios
Establishes principles for risk taking in the aggregate and for each risk type, and is supported by a comprehensive system for monitoring limits, escalation triggers and assessing control programs
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
Receives reports on cybersecurity and related risks at least twice a year
Reviews our risk profile against the tolerances specified in the Risk Appetite Framework, including significant risk exposures, risk trends in our portfolios and major risk concentrations
Provides oversight of management’s execution of capital management, liquidity planning and resolution planning
Monitors the quality and effectiveness of the Company’s technology security, data privacy and disaster recovery capabilities
  2
                             

Audit and Compliance Committee

Assists the Board in its oversight responsibilities relating to the integrity of our annual and quarterly consolidated financial statements and financial reporting process, internal and external auditing, including the qualifications and independence of the independent registered public accounting firm and the performance of our internal audit services function, and the integrity of our systems of internal control over financial reporting and legal and regulatory compliance
Provides oversight of our Internal Audit Group
Reviews and concurs in the appointment, replacement, performance and compensation of our Chief Audit Executive and approves Internal Audit’s annual audit plan, charter, policies, budget and overall risk assessment methodology
Receives regular updates on the status of the audit plan and results including significant reports issued by Internal Audit and the status of our corrective actions
Reviews and approves our compliance policies, which includes our Compliance Risk Tolerance Statement
Reviews the effectiveness of our Corporate-wide Compliance Risk Management Program
Appoints, replaces, reviews and evaluates the qualifications of the Company’s independent registered public accounting firm
  3
                             

Compensation and Benefits Committee

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

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Board Oversight of Information and Cyber Security

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

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

Governance Highlights
We have a robust Cyber Crisis Response Plan in place which provides a documented framework for handling high severity security incidents and facilitates coordination across multiple parts of the Company.
We deploy a defense-in-depth strategy with multiple layers of controls including embedding security into our technology investments.
We invest in threat intelligence and are active participants in industry and government forums to improve sector cybersecurity defense.
We collaborate with our peers in the areas of threat intelligence, vulnerability management and response and drills.
We perform simulations and drills at both a technical and management level.
We incorporate external expertise and reviews in all aspects of our program.

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

How our Management Oversees Risk

We use our comprehensive 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 risk management committees, including the Enterprise-wide Risk Management Committee (ERMC), chaired by our Chief Risk Officer. The ERMC is the highest-level management committee to oversee all firm-wide risks and is responsible for risk governance, risk oversight and risk appetite. It maintains the enterprise-wide risk appetite framework and monitors compliance with limits and escalations defined in it. The ERMC oversees implementation of risk policies Company-wide. The ERMC reviews key risk exposures, trends and concentrations, significant compliance matters, and provides guidance on the steps to monitor, control and report major risks.

Our Board Committees

Our Board’s current standing committee membership information is listed below. Standing committee membership for 2018 can be found in our 2018 proxy statement filed with the SEC on March 19, 2018. Each member of our standing committees in 2018, including our retiring directors, Messrs. Levin and Palmisano, were independent and fulfilled the requirements applicable to each committee on which they served.

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Board Committee Responsibilities

Audit and Compliance Committee
Role and Responsibilities
Assists the Board in its oversight of the integrity of our consolidated financial statements and related financial reporting processes, and internal and external auditing, including the qualifications and the independence of the independent registered public accounting firm, the performance of the Company’s internal audit services function, the integrity of our systems of internal control over financial reporting, and legal and regulatory compliance. See page 41 under Report of the Audit and Compliance Committee for additional information regarding the duties of the Committee with respect to oversight of our financial reporting process
Appoints, replaces, reviews and evaluates the qualifications of the Company’s independent registered public accounting firm
Oversees the process for the receipt, retention and treatment, on a confidential basis, of complaints we receive regarding accounting, internal accounting controls or auditing matters and the confidential, anonymous submission by our employees of concerns regarding questionable accounting or auditing matters
Reviews and discusses reports from management regarding significant reported ethics violations under our Code of Conduct and other corporate governance policies
Meets regularly in executive session with management, including with the Company’s Chief Compliance & Ethics Officer, the Company’s Chief Audit Executive and the Company’s independent registered public accounting firm

10 Meetings
in 2018

Members
John J. Brennan
Ralph de la Vega
Anne L. Lauvergeon
Michael O. Leavitt
Daniel L. Vasella (Chair)

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

Audit Committee
Financial Expert

Mr. Brennan meets the requirements as defined by SEC rules.


Compensation and Benefits Committee
Role and Responsibilities
Oversees the compensation of our executive officers and designated key employees
Oversees our employee compensation plans and arrangements and employee benefit plans
Approves an overall compensation philosophy and strategy for the Company and its executive officers, including the selection of performance measures that appropriately balance risk with business objectives and the review of our compensation practices so business performance is achieved without taking imprudent or excessive risk
Evaluates potential conflicts of interest with respect to its advisors
The committee may delegate certain of its responsibilities to one or more of its members or to executive officers or designated senior executives, to the extent permissible under its charter, the Company’s bylaws, the terms of the applicable plans, laws, rules, regulations and listing standards, and subject to any limitations imposed by our Board from time to time

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

6 Meetings
in 2018

Members
John J. Brennan
Peter Chernin
Ralph de la Vega
Ronald A. Williams (Chair)

Independence
Each member of the committee is independent.


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Innovation and Technology Committee
Role and Responsibilities
Assists the Board in its oversight of strategic innovation and technology initiatives
Facilitates the Board’s review, discussion and understanding of our digital and technology strategy, our transformation initiatives and our digital product innovations
Reviews metrics on innovation and digital and technology developments and technology progress

3 Meetings
in 2018

Members
Charlene Barshefsky (Chair)
Ralph de la Vega
Theodore J. Leonsis
Christopher D. Young

Independence
Each member of the committee is independent.


Nominating and Governance Committee
Role and Responsibilities
Considers and recommends candidates for election to the Board
Provides oversight of corporate governance matters at the Company consistent with the long-term best interests of the Company and its shareholders
Advises the Board on director compensation
Oversees the annual performance evaluation process for the Board and Board committees, including establishing criteria for evaluating their performance
Advises the Board on corporate governance and Board leadership
Discusses feedback from shareholders regarding governance practices and advises on shareholder engagement practices
Administers the Related Person Transaction Policy
Supports the Board with respect to management succession planning

7 Meetings
in 2018

Members
Peter Chernin (Chair)
Theodore J. Leonsis
Daniel L. Vasella
Ronald A. Williams

Independence
Each member of the committee is independent.


Public Responsibility Committee
Role and Responsibilities
Reviews legislation, regulations and policies affecting us, our philanthropic programs, our political action committee, our corporate political contributions and our government relations activities
Reviews legislation, regulations and policies affecting the communities we serve and our environmental and social programs and practices

Political Engagement Activities
We communicate with policymakers on public policy issues important to the Company. In addition to our advocacy efforts, we participate in the political process through the American Express Political Action Committee (AXP PAC) and through corporate political contributions in those jurisdictions where it is permissible to do so. AXP PAC is funded solely by voluntary employee contributions and does not contribute to presidential campaigns. We maintain comprehensive compliance procedures to ensure that our activities are conducted in accordance with all relevant laws, and management regularly reports to the committee regarding its engagement in the public policy arena and its political contributions. Information regarding our Company’s political activities, including U.S. political contributions, may be found at https://ir.americanexpress.com/CustomPage/Index?KeyGenPage=430313

3 Meetings
in 2018

Members
Charlene Barshefsky
Anne L. Lauvergeon
Michael O. Leavitt (Chair)
Theodore J. Leonsis 

Independence
Each member of the committee is independent.


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Risk Committee
Role and Responsibilities
Assists the Board in its oversight of the Company’s enterprise-wide risk management framework and roles and responsibilities of the three lines of defense, and other risk management policies and procedures established by management to identify, assess, measure and manage key risks facing the Company
Assists the Board in its oversight of management’s execution of capital management, liquidity planning and resolution planning
Monitors the quality and effectiveness of the Company’s information security program
Meets regularly in executive session with the Company’s Chief Risk Officer

Please see How our Board Oversees Risk Management on page 21 for additional information regarding the activities of the committee.

5 Meetings
in 2018

Members
Charlene Barshefsky
John J. Brennan (Chair)
Daniel L. Vasella
Christopher D. Young

Independence
Each member of the committee is independent.

Our Corporate Governance Framework

We have adopted Corporate Governance Principles that, together with the charters of the six standing committees of the Board (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 for employees) and the Code of Business Conduct for Directors, provide our governance framework. Key governance policies and processes also include our whistleblower policy, our comprehensive enterprise-wide risk management program, our commitment to transparent financial reporting and our systems of internal checks and balances. Comprehensive management policies, many of which are approved at the board level, guide the Company’s operations.

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

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

Corporate Governance Principles
Charters for each of the six standing Board committees
Code of Conduct for Employees (which constitutes our code of ethics)
Code of Business Conduct for Members of our Board

Majority Voting Standard for Director Elections

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

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

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Proxy Access

A shareholder or group of no more than 20 shareholders that has owned at least 3% of our common shares for at least three years may nominate directors to our Board and include the nominees in our proxy materials to be voted on at our annual shareholder meeting. The maximum number of shareholder nominees that will be included in our proxy materials with respect to any such annual meeting is the greater of (i) two or (ii) 20% of directors to be elected. A shareholder who seeks to nominate a director or directors to our Board must provide proper notice to the Company’s Corporate Secretary under the terms of our bylaws.

Director Attendance

During 2018, our Board met six times and our committees met 34 times (in the aggregate). All directors attended 75% or more of the meetings of the Board and Board committees on which they served in 2018.

All of our directors serving on our Board at the time of our 2018 annual meeting attended the meeting. Our Board strongly encourages all of its members to attend the annual meeting but understands there may be exigent circumstances.

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

Executive Sessions

Executive sessions of independent directors, led by our Lead Independent Director, enable the Board to discuss matters such as strategy, CEO and senior management performance and compensation, succession planning and board effectiveness without management present. Our independent directors meet in executive session at each regularly scheduled in-person board meeting. Any director may request additional executive sessions of independent directors. During 2018, our independent directors met in executive session at six board meetings.

Our Board’s Size

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

Due to the retirements of Messrs. Levin and Palmisano, 11 of our directors are standing for re-election. We continue to believe that a board of 12-14 directors is the right size for our Company and plan to add new directors to our Board as candidates possessing the attributes we look for are identified.

Our Board’s Independence

10/11 Director Nominees are Independent

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

Based on our guidelines, the Board determined in March 2019 that all of its members in 2018 other than Messrs. Chenault and Squeri, and all of the Board’s director nominees for election at the 2019 annual meeting, other than Mr. Squeri, are independent.

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Ambassador Barshefsky is a partner at the law firm of WilmerHale, an international law firm based in Washington, D.C. From time to time and in the ordinary course of its business, WilmerHale provides legal services to American Express that we consider to be de minimus in nature. Ambassador Barshefsky does not provide any such legal services, and she does not receive any compensation from the firm that is generated by or related to our payments to WilmerHale for such services. The Nominating 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 1% of the firm’s annual revenue in each of the past three years and represented less than 0.1% of American Express’ revenues in each such year. Further, the Nominating 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 and in our best interests. The committee is satisfied that WilmerHale, when engaged for legal work, is chosen by American Express’ legal group on the basis of the directly relevant factors of experience, expertise and efficiency. After considering the foregoing, the committee determined and recommended to the Board that American Express’ professional engagement of WilmerHale does not impair Ambassador Barshefsky’s independence.

Shareholder Engagement

Our Board’s Commitment to Shareholder Engagement

Why We Engage

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

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

Following our 2018 annual meeting, we engaged with shareholders representing approximately half of our outstanding shares on corporate governance, executive compensation and related matters. During these meetings, depending on the investor’s priorities, we discussed and sought direct feedback on a broad number of issues including our CEO transition, company strategy and performance, board composition, and the results of our 2018 Say on Pay Vote. Please see “Shareholder Engagement and Responsiveness to 2018 Say on Pay Vote” starting on page 45, for a detailed discussion of the changes we have made to our executive compensation program in response to this shareholder feedback.

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How We Engage

BOARD INVOLVEMENT

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

OUTCOMES FROM SHAREHOLDER ENGAGEMENT

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

Will not provide office support to future retiring CEOs
Redesigned performance shares to include relative ROE comparison and relative TSR modifier
Eliminated Portfolio Grant (long-term cash) program in 2019 and transitioned target award values to 100% equity tied to Company and stock performance
Enhanced disclosure of goal setting process
Continue to align compensation program with the Company’s strategic priorities
Adopted proxy access
Adopted shareholder right to call special meetings
Made changes to our executive compensation peer group
Simplified our Annual Incentive Award program to be more formulaic and focused on Company performance
Enhanced our website disclosures on political contributions and diversity
Continue to enhance our proxy disclosures
Amended our Corporate Governance Principles to limit the number of public company boards on which our directors may serve
Published the results of the review of our pay programs which found that our U.S. colleagues are compensated equitably, regardless of gender
Updated our Corporate Social Responsibility Report and posted it on our website
Added directors with financial services, cybersecurity and digital backgrounds
     

INVESTOR RELATIONS AND SENIOR MANAGEMENT

We provide institutional investors with many opportunities to provide feedback to our Board and senior management. We participate in:

Formal events
One-on-one meetings
Group meetings throughout the year

To learn more about our engagement, you may visit our investor relations website at http://ir.americanexpress.com.

 

CORPORATE SECRETARY AND CHIEF GOVERNANCE OFFICER

We engage with governance representatives of our major shareholders through in-person meetings and conference calls that occur during and outside of the proxy season. Members of the corporate governance, investor relations and executive compensation groups discuss, among other matters, company performance, emerging governance practices generally and specifically with respect to our Company, the reasons behind a shareholder’s voting decisions at prior meetings, our executive compensation practices and our corporate social responsibility practices.

The following page provides additional details regarding our ongoing engagement process.

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Corporate Governance Engagement Cycle

How to Communicate with our Board

You may communicate with the Board or an individual director by letter, email or telephone, directed in care of the Company’s Corporate Secretary, who will forward your communication to the intended recipient. However, at the discretion of the Corporate Secretary, materials considered to be inappropriate or harassing, unsolicited advertisements, or promotional materials and invitations to conferences may not be forwarded.

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

Tangela S. Richter
Corporate Secretary and Chief Governance Officer
American Express Company
200 Vesey Street
New York, NY 10285
(212) 640-2000
corporatesecretarysoffice@aexp.com

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Compensation of Directors

The Nominating and Governance Committee reviews director compensation and seeks to compensate our directors in a manner that attracts and retains highly qualified directors and aligns the interests of our directors with those of our long-term shareholders. In 2018, 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 competitive benchmarking of our director compensation against the 20 companies that our Compensation and Benefits Committee examines as a reference when examining the competitiveness of our executive compensation practices, as well as the S&P 100 and certain financial institutions. After completing its review, the Nominating and Governance Committee recommended modest increases to our program effective January 1, 2018, in order to better position our program from a competitive standpoint going forward, as described below.

The following table provides information on the 2018 compensation of non-management directors who served for all or a part of 2018. We reimburse directors for reasonable out-of-pocket expenses attendant to their board service.

Name Fees Earned or
Paid in Cash
(1)
Stock
Awards(2)
All Other
Compensation(3)
Total
Charlene Barshefsky             $ 141,055       $ 190,000                 $ 88,948       $ 420,003
John J. Brennan $ 159,083 $ 190,000 $ 7,709 $ 356,792
Ursula M. Burns(4) $ 39,323 $ $ 49,063 $ 88,386
Peter Chernin $ 135,000 $ 190,000 $ 55,013 $ 380,013
Ralph de la Vega $ 128,028 $ 190,000 $ 19,130 $ 337,158
Anne L. Lauvergeon $ 120,000 $ 190,000 $ 27,779 $ 337,779
Michael O. Leavitt $ 136,055 $ 190,000 $ 26,935 $ 352,990
Theodore J. Leonsis $ 112,958 $ 190,000 $ 39,084 $ 342,042
Richard C. Levin(5) $ 120,000 $ 190,000 $ 57,116 $ 367,116
Samuel J. Palmisano(5) $ 110,000 $ 190,000 $ 21,674 $ 321,674
Daniel L. Vasella $ 160,000 $ 190,000 $ 34,777 $ 384,777
Robert D. Walter(4) $ 45,240 $ 14,792 $ 76,872 $ 136,904
Ronald A. Williams $ 154,014 $ 250,208 $ 98,011 $ 502,233
Christopher D. Young(6) $ 96,333 $ 190,000 $ 1,869 $ 288,202
(1)

Annual Retainers. For service in 2018, we paid non-management directors an annual retainer of $95,000 for board service and an additional annual retainer of $20,000 to members of the Audit and Compliance and Risk Committees, $10,000 to members of the Compensation and Benefits Committee and $5,000 to members of the 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, Innovation and Technology, Public Responsibility and Risk, $20,000; Nominating and Governance, $25,000. 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% of his or her aggregate board and committee meetings. Effective March 13, 2018, our Board approved several revisions to the leadership and membership of our standing committees. Each director affected by these changes (Charlene Barshefsky, John J. Brennan, Ralph de la Vega, Michael O. Leavitt, Theodore J. Leonsis, Ronald A. Williams and Christopher D. Young) received corresponding pro-rated fees. In addition, each of our Lead Independent Directors during 2018, Robert D. Walter and Ronald A. Williams received a pro-rated annual retainer of $4,931 and $20,069, respectively.

All non-management directors, except Ursula M. Burns, deferred all or a portion of their 2018 retainers into a cash account, a share equivalent unit (SEU) account, or both, under the deferred compensation plan described below in footnote 2.

(2)

Share Equivalent Unit Plan. To align our non-management directors’ annual compensation with shareholder interests, each non-management director is credited with common SEUs upon election or reelection at each annual meeting of shareholders. Each SEU reflects the value of one common share.

Directors receive additional SEUs as dividend equivalents on the units in their accounts. SEUs do not carry voting rights and must be held at least until a director ends his or her service on the Board. Each SEU is payable in cash equal to the then value of one common share at the time of distribution to the director. On May 7, 2018, the date of last year’s annual meeting, each non-management director elected to the Board was credited with SEUs having a value of $190,000, which consisted of 1,931 SEUs, based on the market price of our common shares for the average of the 15 trading days immediately preceding such date. In addition, each of our Lead Independent Directors during 2018, Robert D. Walter and Ronald A. Williams, received an annual SEU retainer of $14,792 and $60,208, respectively, which consisted of 159 and 603 SEUs, respectively, for the portion of the year when each was in the role, based on the market price of our common shares for the average of the last 10 trading days of such calendar quarter. We report in this column the aggregate grant date fair value of these SEUs in accordance with FASB ASC Topic 718, Compensation – Stock Compensation.


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

The balances in directors’ SEU accounts at December 31, 2018 are set forth in the table below. These amounts represent the aggregate number of SEUs granted under the SEU Plan for all years of service as a director, 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 63,213
J. Brennan 7,311
U.M. Burns
P. Chernin 39,441
R. de la Vega 9,501
A.L. Lauvergeon 21,107
M.O. Leavitt 15,025
T.J. Leonsis 28,972
R.C. Levin 35,310
S.J. Palmisano 16,087
D.L. Vasella 26,257
R.D. Walter 42,491
R.A. Williams 65,341
C.D. Young 2,909
(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 2018 in these amounts: Amb. Barshefsky $88,894, Mr. Brennan $7,655, Ms. Burns $49,063, Mr. Chernin $54,959, Mr. de la Vega $11,076, Ms. Lauvergeon $27,725, Gov. Leavitt $18,881, Mr. Leonsis $39,030, Mr. Levin $49,062, Mr. Palmisano $21,620, Dr. Vasella $34,723, Mr. Walter $68,872, Mr. Williams $89,957, and Mr. Young $1,815.

Directors’ Charitable Award Program. We maintain a Directors’ Charitable Award Program for directors elected prior to July 1, 2004. To fund this program, we purchased joint life insurance on the lives of participating directors. The death benefit of $500,000 funds a donation to a charitable organization that the director recommends. The Company paid no premiums for the policies of non-management directors who served for all or part of 2018.

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 2018.

(4)

Ms. Burns and Mr. Walter retired from our Board on May 7, 2018.

(5)

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

(6)

Mr. Young was elected to our Board effective March 13, 2018.

Director Stock Ownership

Our Corporate Governance Principles provide that non-management directors are required to obtain a personal holding of shares (directly or through SEUs) with a value of $1 million within five years of joining the Board.

Director Trading in Company Securities

As set forth in the Company’s Code of Business Conduct for Members of the Board, directors must pre-clear every transaction in Company securities for themselves, immediate family members, or any family trust with the Corporate Secretary. This includes gifts, transactions in discretionary accounts and non-routine transactions such as optional cash purchases in the Dividend Reinvestment Plan. Additionally, Directors may not engage in short sales or put or call or other hedge transactions in Company shares. Directors may not pledge Company shares (which includes holding shares in a margin account) without prior pre-clearance.

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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, 2018 to November 30, 2019, 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, Markel Bermuda Ltd., American International Reinsurance Company Ltd., Allianz Insurance Company, Starr Indemnity and Liability Company, Everest National Insurance Company, Continental Casualty Company, and Atlantic Specialty 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, ACE American Insurance Company, Zurich American Insurance Company, Illinois National Insurance Company, Continental Casualty Company, U.S. Specialty Insurance Company, American International Reinsurance Company Ltd., Freedom Specialty Insurance Company, Everest National Insurance Company, Allianz Insurance Company, Atlantic Specialty Insurance Company, Allied World Assurance Company, Chubb Bermuda Insurance Ltd., and certain Lloyd’s of London syndicates. We expect to obtain similar coverage upon expiration of the current program. The annual premium for the program is approximately $4.4 million.

Certain Relationships and Transactions

In the ordinary course of our business, we engage in transactions, arrangements and relationships with many other entities, including financial institutions and professional organizations. Some of our directors, director nominees, executive officers, greater than 5% shareholders, and their immediate family members (each, a Related Person) may be directors, officers, partners, employees or shareholders of these entities. We carry out transactions with these entities on customary terms and, in many instances, these Related Persons may not have knowledge of them. To the Company’s knowledge, since January 1, 2018, 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, other than certain pre-approved transactions (described below). The Committee will only approve a transaction if, after reviewing the relevant facts and circumstances, it determines that the transaction is consistent with the best interests of the Company. In the event we become aware of a Related Person Transaction that was not approved under the policy, the Committee will consider the options available, including ratification, revision or termination of the transaction. The policy does not supersede any other company policy or procedure that may apply to any Related Person Transaction, including our Corporate Governance Principles and codes of conduct.

The Company’s Corporate Secretary is responsible for assisting the Nominating 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 when it is impracticable or undesirable to delay a decision on a proposed transaction until the next meeting of the Nominating and Governance Committee, the Chair may review and approve the transaction and then report any approval to the full committee at its next regularly scheduled meeting. If a matter before the Nominating and Governance Committee involves a member of the committee, the member must be recused and may not participate in deliberations or vote on the matter.

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Pre-Approved Categories of Related Person Transactions

The Nominating and Governance Committee has pre-approved certain categories of transactions as being consistent with the best interests of the Company. These categories, which may exceed the proscribed threshold for Related Person Transactions, include but are not limited to director and executive officer compensation, use of Company products and services, transactions involving indebtedness to the Company, certain banking-related transactions, immaterial ordinary course transactions with other entities, charitable contributions and indemnification payments.

Related Party Transactions

Our executive officers and directors may from time to time take out loans from certain of our subsidiaries on the same terms that these subsidiaries offer to the general public. For example, our U.S. card-issuing bank may extend credit to our directors and executive officers under our charge or lending products. All indebtedness from these transactions is in the ordinary course of our business and is on the same terms, including interest rates and collateral, in effect for comparable transactions with other people. Such indebtedness involves normal risks of collection and does not have features or terms that are unfavorable to our subsidiaries. Our executive officers and directors may also 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 sister-in-law of Mr. Squeri, our Chairman and CEO, is employed by the Company in a non-executive position and received compensation in 2018 of between $260,000 and $290,000. The compensation and other terms of employment of Mr. Squeri’s sister-in-law are determined on a basis consistent with the Company’s human resources policies.

Certain executive officers, directors and members of their immediate families are directors, employees or have equity interests in companies with whom the Company has entered into ordinary course business relationships from time to time and with whom the Company may enter into additional ordinary course business relationships. These may include ordinary course merchant acceptance relationships pursuant to which these companies accept our charge and credit card products and pay us fees when their customers use these cards, as well as use of the Company’s cards and financial and other products and services, including extensions of credit, on terms and conditions similar to those available to other customers generally. From time to time, we may enter into joint marketing or other relationships with one or more of these companies in the ordinary course that encourage customers to apply for and use our cards. We also may provide ordinary course commercial card and bill payments services or business insights to some of these companies, for which these companies pay fees to us. We may engage in other commercial transactions with these companies, and pay or receive fees in those transactions. We have a number of similar ordinary course relationships with Berkshire Hathaway Inc. and its subsidiaries. We have also purchased insurance and other products from subsidiaries of Berkshire Hathaway Inc. in the ordinary course of business and on arm’s-length terms.

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The Powerful Backing of American Express: Corporate Social Responsibility

We provide powerful backing to the communities where our customers and colleagues live and work.

Our Approach to Corporate Social Responsibility

Our approach to Corporate Social Responsibility (CSR) is a natural extension of both our mission—to become essential to our customers by providing differentiated products and services to help them achieve their aspirations—and our commitment to doing what is right.

We deliver value for both our business and our communities by investing financial and human resources in ways that address the social, environmental, and economic needs of our communities, customers, colleagues, shareholders, and partners.

We view service through many lenses:

Delivering exceptional products, services, and experiences         Enabling commerce and helping businesses grow         Promoting a culture of respect—one that fosters inclusion and trust         Upholding the highest standard of integrity         Safeguarding our customers’ privacy and data         Making a difference in the communities where we work and live         Helping preserve treasures of the past for future generations to enjoy

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

Strategic CSR Engagement

Our strategy begins by identifying our key stakeholders, then engaging with them to understand the Environmental Social and Governance (ESG) issues that matter to them, and the impact those issues have on our business. We have identified eight key stakeholder groups based on their impact on our business activities:

 
1         Shareholders (including socially responsible investors);       5         Suppliers;
2 Colleagues; 6 Community and nongovernmental organizations;
3 Customers: Card Members, Businesses and Merchants; 7 Sustainability research firms; and
4 Government and regulators; 8 Other financial institutions
 

Our continued engagement with these stakeholders helps ensure we are meeting their expectations and advancing our efforts to operate responsibly.

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Our CSR Governance Structure

Our executive management holds the ultimate responsibility for our CSR progress and success; these leaders review and evaluate ESG key performance indicators and long-term goals within their business units. We have a robust program in place to assess and manage human capital priorities, which we define as talent-related opportunities linked to outcomes. We prioritize employee recruitment and retention, while promoting equal opportunity and ensuring we have a diverse workforce. Information regarding the colleague metric portion of our Company scorecard, which guides us in reporting across talent retention and diversity and inclusion efforts and which are included as metrics in our annual incentive program, is included on page 46. Further, we have mapped the United Nations Sustainable Development Goals to our business initiatives and programs and actively track our progress against these global goals.

At the Board level, the Public Responsibility Committee reviews our CSR program, monitors progress against our goals, and provides guidance on our efforts. Day-to-day, our CSR team works with colleagues throughout the Company to shape our efforts and monitor progress on key ESG issues.

2018 CSR Highlights

       Promoting Responsible Business Practices:       
     
               
                   Maintain the highest standards of ethics and integrity
                                  

24/7
the Amex Ethics Hotline provides a channel in over 200 languages for colleagues, contractors, vendors, and suppliers to raise ethical or compliance concerns.

Each colleague is personally accountable for fulfilling our company’s mission and receives Global Regulatory Learning Enterprise Essential Training.

       Serving Our Colleagues:       
     
               
                   Foster a diverse and inclusive culture
                                  

100%
on the Human Rights Campaign’s Corporate Equality Index score since 2004, based on our policies and practices that support LGBTQ inclusion.

Named to Bloomberg’s Financial Services Gender-Equality Index, based on our efforts to create a work environment that supports gender equality.
                   Support our colleagues’ professional and personal goals
                                  
                  

20 WEEKS
paid parental leave for male and female U.S.-based regular full-time and part-time salaried colleagues.

86%
of our colleagues participated in either a personal or a professional development experience through trainings we offer.

30%
of colleagues had a flexible work arrangement.

       Delivering for Our Customers and Partners:       
    
               
                   Meet the evolving needs of our customer base Support small business growth
Customer satisfaction with our service has increased 20 PERCENT since 2011 based on Card Member feedback.

9th YEAR
Small Business Saturday’s celebration, a day we created to support local businesses.

                   Make our products and services better for society
                   

$93M+
donated from 2010 to 2018 by U.S. Card Members through our Members GiveSM program to benefit charitable causes.

Launched SafeKey®2.0, our next generation online authentication tool that provides an extra layer of security when an American Express Card Member makes an online purchase at a participating merchant.

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Caring for Our Communities:     

 

 
               

Strengthen the communities in which we operate

Engage citizen volunteership

$42M

70

in charitable giving globally, including grants provided by the Company, The American Express Foundation, our Center for Community Development, and gift matching programs.

nonprofits supported by our grants in 2018 engaged 7 million volunteers in about 30 million hours of service.

Empower emerging nonprofit and social leaders

Promote stewardship of historic places

$80M

$70M+

since 2008 to develop more than 100,000 social purpose leaders who are tackling some of society’s most complex issues.

since 1974 in support of historic preservation efforts around the world, helping to preserve more than 620 sites.

   

Managing Our Operations Responsibly:     

 
 
               

Reduce our environmental footprint

50%

ZERO NET

carbon emissions reduction for scope 1 and 2 emissions in 2017 compared to 2011.

carbon emissions for our employee business travel (third-party air, rail, and rental cars) through carbon offsets in 2017.

Commit to responsible sourcing and operations

Engage our colleagues in sustainability

100% OF PAPER

25,000

used in our U.S. direct marketing was certified from sustainably managed forests.

Committed to limiting single-use plastic in our operations.

colleagues participated in our Earth Month activities.

Learn More about CSR at American Express

Please visit our corporate website at http://about.americanexpress.com/corporate-responsibility-reports to learn how we, together with our customers, colleagues and shareholders, are making a difference in our communities.

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Audit Committee Matters

ITEM
2
Ratification of Appointment of Independent Registered Public Accounting Firm
Our Board recommends that you vote FOR the following resolution:

The Audit and Compliance Committee has sole authority to appoint and replace the Company’s independent registered public accounting firm, which reports directly to the Committee, and is directly responsible for its compensation and oversight of its work. The Audit and Compliance Committee conducted its annual evaluation of PricewaterhouseCoopers LLP (PwC) and, after assessing the performance and independence of PwC, the Committee believes that retaining PwC is in the best interests of the Company. The Audit and Compliance Committee reappointed PwC as our independent registered public accounting firm for 2019.

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

RESOLVED, that the appointment by the Audit and Compliance Committee of the Company’s Board of Directors of PricewaterhouseCoopers LLP, as independent registered public accounting firm for the Company, to audit the financial statements of the Company and its subsidiaries for 2019, is hereby ratified and approved.

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

Areas of Focus Actions

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

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 Audit and Compliance Committee has approved a management policy governing the provision of services by PwC.

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, as well as issues raised by recent governmental investigations, if any. Discusses PwC’s quality initiatives and the steps PwC is taking to enhance the quality and efficiency of its audits with the lead engagement partner 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, the resources provided and available at the firm, and the Audit and Compliance 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

The lead engagement partner of PwC is subject to a mandatory five-year rotation period. The Audit and Compliance Committee chair is involved in selecting the lead engagement partner. In preparation for the current lead engagement partner mandatory rotation, which takes effect in 2019, a new lead engagement partner has been selected. During the year, the Audit and Compliance Committee chair meets one-on-one with the lead engagement partner to promote a candid dialogue and the Audit and Compliance Committee meets in executive session with the lead engagement partner to discuss the progress of the audit and any audit issues, deliver Audit and Compliance Committee feedback and discuss any other relevant matters.

PwC’s communications with the Audit and Compliance Committee

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

Terms of the engagement and audit fees

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


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PricewaterhouseCoopers LLP Fees and Services

Fees for 2018 and 2017

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       2018       2017
Audit Fees $ 23,704

 

$ 23,415
Audit-Related Fees(1) 5,181 4,210
Tax Fees 1,002 30
All Other Fees 148 148
TOTAL $ 30,035 $ 27,803
(1)

PwC performs the audit of the Company’s pension plans for Switzerland and Hong Kong where the fees are paid by the respective plan. These fees are not included in Audit-Related Fees since they were not paid by the Company. The total fees for these two audits in each of 2018 and 2017 were $8K and $31K for each year, respectively.

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

Policy on Pre-Approval of Services Provided by PricewaterhouseCoopers LLP

The terms of our engagement of PwC are subject to the pre-approval of the Audit and Compliance Committee. All audit and permitted non-audit services require pre-approval by the Audit and Compliance Committee in accordance with pre-approval procedures established by the Audit and Compliance Committee. In accordance with SEC rules, the Audit and Compliance Committee’s pre-approval procedures have two different approaches to pre-approving audit and permitted non-audit services performed by PwC.

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

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

Other Transactions with PricewaterhouseCoopers LLP

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

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Report of the Audit and Compliance Committee

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

In the performance of its oversight function, the Audit and Compliance Committee has reviewed and discussed with management and PwC the Company’s audited financial statements. The Audit and Compliance Committee also has discussed with PwC the matters required to be discussed by Auditing Standard No. 1301, 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 letters required by applicable requirements of the PCAOB regarding PwC’s communications with the audit committee concerning independence, has discussed with PwC their independence from the Company and its management, and has considered whether PwC’s provision of non-audit services to the Company is compatible with maintaining the firm’s independence.

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

Based on the reviews and discussions referred to above, the Audit and Compliance Committee recommended to the Board that the Company’s audited financial statements be included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018 for filing with the SEC.

AUDIT AND COMPLIANCE COMMITTEE

Daniel L. Vasella, Chair
John J. Brennan
Ralph de la Vega
Anne L. Lauvergeon
Michael O. Leavitt

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Executive Compensation

ITEM
3


Advisory Resolution to Approve Executive Compensation (Say on Pay)



The Board recommends a vote FOR this item.                                                             

 

Pursuant to regulations under Schedule 14A of the Securities Exchange Act of 1934, we are asking you to approve, on an advisory basis, the compensation of the Company’s NEOs disclosed in the CD&A, the compensation tables, notes and narrative in this proxy statement.

Our Board believes that the compensation of our executive officers is aligned with performance, is sensitive to our share price, 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 Benefits Committee’s future decisions about our executive compensation.

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

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Compensation Discussion and Analysis

Our CD&A describes our executive compensation programs and compensation decisions in 2018 for our NEOs, who for 2018 were:

Stephen J. Kenneth I. Jeffrey C. Douglas E. Anna E. Marrs Anré D. Williams
Squeri Chenault Campbell Buckminster President, Global Group President,
Chairman
and CEO(7)
Retired Chairman
and CEO(8)
Chief Financial
Officer
Group President,
Global Consumer
Services Group(9)
Commercial
Services(10)
Global Merchant
and Network
Services(11)

Section Table of Contents



(7) Mr. Squeri succeeded Mr. Chenault as the Chairman and CEO of the Company on February 1, 2018.
(8) Mr. Chenault is included as an NEO because he was the Chairman and CEO of the Company until his retirement on February 1, 2018.
(9) Mr. Buckminster was promoted to Group President, Global Consumer Services Group on February 1, 2018.
(10) Ms. Marrs joined the Company on September 10, 2018.
(11) Mr. Williams was promoted to Group President, Global Merchant and Network Services on February 1, 2018.

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Business, Strategic and Financial Performance

2018 was a strong year. Our results reflected strong performance from our focus on, and investment in, our four strategic imperatives – expand our presence in the premium consumer space, build on our position in commercial payments, strengthen our global, integrated network and make American Express an essential part of our customers’ digital lives. Billings and loan growth reflected momentum across our business and we continued to accelerate revenue growth. We continued to invest in new services and Card Member benefits, new card acquisitions and expanding our merchant network, and we returned a significant amount of capital to our shareholders through our share buyback program and an increase in our dividend. The Compensation and Benefits Committee (CBC) determined the Company’s performance to be significantly above the target levels established in the Company’s performance scorecard, and took this into consideration in assigning annual bonuses for 2018 (see pages 52–53 for additional details).

Performance Highlights

Revenue: $40.3 billion represents an all-time high for the Company. Revenues grew by 9% and FX-adjusted revenues grew 10%(12) for the full year. The fourth quarter of 2018 marked the sixth consecutive quarter with revenue growth of at least 8%.
EPS: Reported earnings per share of $7.91 ($7.33 excluding the impacts of certain discrete tax benefits in the fourth quarter of 2018) are an all-time high for the Company, a 24% year-over-year increase on an adjusted basis.(13)
ROE: Reported ROE of 33.5% (30.9% excluding the impacts of certain discrete tax benefits in the fourth quarter of 2018) reflects strong performance for the Company.(13)
TSR: Our shareholder returns in 2018 outpaced both the S&P Financials and the median of our 20-company compensation peer group.(14)
New Cards: We added 12 million new cards in 2018, up 18% from 2017.
Worldwide Spending: Worldwide spending on our cards increased 9% to a record $1.2 trillion and was strong across business segments and geographies.
Loan Growth: Card Member loans rose 12%.
Merchant Network Growth: We added over 1.5 million new merchant locations in the U.S. for the second year in a row and posted double-digit growth in our international merchant locations.

Executive Compensation Principles and Strategy

Our executive pay program is thoughtful, consistent and continues to align with our Company’s business strategy.

We align pay with Company performance and support a long-term, high performance business model.
We link most of the pay for senior executives to long-term business strategies and key priorities. The CEO’s pay has added emphasis on performance-based incentives (92% of CEO’s target pay), with a substantial stockholding requirement.
We measure performance against challenging goals established before each performance cycle that are aligned with our key business priorities.
We discourage imprudent risk taking by avoiding undue emphasis on any one metric or short-term goal.

These principles have served us well for many years, and we have continued to refine them in response to input from shareholders and regulators, including the Board of Governors of the Federal Reserve System (Federal Reserve).

(12) Total revenues net of interest expense on an FX-adjusted basis is a non-GAAP measure. See footnote 2 on page 5 for an explanation of FX-adjusted information.
(13) The reported diluted EPS growth rate for 2018 was greater than 100% and therefore not meaningful. Adjusted diluted EPS and the related growth rate and adjusted return on average equity, each excluding the impacts of certain discrete tax benefits in the fourth quarter of 2018 and, for the adjusted diluted EPS growth rate, the impacts of the Tax Act in the fourth quarter of 2017, are non-GAAP measures. Management believes adjusted diluted EPS and adjusted ROE are useful in evaluating the ongoing operating performance of the company. See Annex A for reconciliations to diluted EPS and ROE on a GAAP basis.
(14) 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).

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Shareholder Engagement and Responsiveness to 2018 Say on Pay Vote

Important to executing our principles outlined above, we actively seek feedback from our shareholders and other stakeholders. In 2018, we met with shareholders and constituents representing approximately half of our outstanding shares to discuss executive compensation, corporate governance and related matters. In order to establish a direct line of communication between shareholders and our Board, our Lead Independent Director, Mr. Williams, actively participated in several of these meetings with key constituents. In light of the disappointing level of support for our 2018 say on pay vote (69.9%), we sought detailed input from shareholders and other stakeholders regarding specific aspects of our compensation programs. The table below summarizes what we heard and the actions taken by the Company in response.

What we heard       What we did

Support for formulaic Annual Incentive Award (AIA), but some shareholders noted complexity of AIA due to use of multiple scorecards

We simplified our AIA design such that all executives’ annual incentives are now based on a single Company scorecard (as opposed to multiple scorecards as in prior years) to solidify enterprise-wide focus. This change was effective with our January 2018 AIA.

Support for ROE as a Performance Share metric, but questioned rigor of ROE goals under Performance Share plan and preference for relative performance comparison; a few shareholders also suggested use of TSR to further align management and shareholders’ interests

Redesigned Performance Shares to include relative ROE comparison along with a relative TSR modifier that provides target payout when the Company’s ROE outperforms peers’ ROE (see page 48 for more information on Performance Shares). This change was effective with our January 2019 grant cycle.

Portfolio Grant (long-term cash) program is cash-based, complex and not fully formulaic

Eliminated Portfolio Grant program beginning in 2019 and transitioned target award values to 100% equity with three-year vesting tied to Company and stock performance to strengthen alignment with shareholder interests. This simplified the overall program structure and eliminated discretion while continuing to tie compensation to three-year performance. This change was effective with our January 2019 grant cycle.

Preference for disclosure of goals under incentive plans at the start of each performance cycle

Enhanced disclosure of our goal setting process and disclosure of goals at the end of each performance cycle

Interest in role of Human Capital Management metrics under incentive plan

Enhanced disclosure of Human Capital metrics under incentive plan

Concerns with outgoing CEO office support

The CBC has determined that the Company will not provide similar office support to future retiring CEOs. This change is effective for CEOs retiring after 2018. The outgoing CEO compensation reported in this CD&A became payable in connection with Mr. Chenault’s retirement in early 2018

Interest in our process to evaluate Gender Pay Equity

We recently published the results of an independent third-party review of our pay practices on our website, which found that our colleagues in the U.S. are compensated equitably with no evidence of bias, regardless of gender

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Compensation Programs

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

Base Salary    Annual Incentive Award
(AIA)
   Long-Term Incentive Award (LTIA)

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

Performance Measures

Shareholder (55%) (e.g., EPS, Revenue Growth)
Customer (15%) (e.g., Net Promoter Score, Active Locations in Force)
Colleague (15%) (e.g., Diversity and Inclusion Goals)
Strategic Imperatives (15%) (e.g., Expand leadership in the premium consumer space)
    
Performance Shares
(80% of Long-Term Incentive)

Payout range 0-120% of target
Vests in 3 years
Stock Options
(20% of Long-Term Incentive)

Vests in 3 years
Relative ROE and
Relative TSR*
Stock Price Appreciation;
Net Income**
* Details of the applicable payout grid are available on page 48.
** Subject to positive cumulative net income over the vesting period. This performance condition was added considering guidance from the Federal Reserve and is not intended to add an additional performance condition to stock options from a shareholder’s point of view.

Target Pay Mix

The current target pay mix applicable to our NEOs demonstrates alignment with long-term shareholder value creation. CEO compensation is linked to the financial, strategic and operational performance of the Company. The CEO’s target compensation is 92% performance-based, and on average, 89% of NEO compensation is performance-based:

2019 CEO Target Total Direct Compensation Mix


2019 Average NEO Target Total Direct Compensation Mix



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Annual Incentive Award

The AIA is an annual cash-denominated performance-based component of executive compensation designed to recognize Company performance as well as exceptional individual performance. Performance is assessed against measurable goals reviewed and approved by the CBC at the beginning of the year.

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

For 2018, the CBC determined that all executives’ annual incentives would be measured based on the same broad Company scorecard, in contrast to multiple scorecards as in prior years, to solidify an enterprise-wide focus and simplify our program. The Company scorecard is based on the following metrics:

      Company Performance       Weighting       Key Metrics Considered
Annual
Incentive
Award
Shareholder
55%
Revenue Growth, EPS, ROE
Customer
15%
Net Promoter Score, Billings Growth, New Accounts Acquired, Active Locations in Force
Colleague
15%
Talent Retention and Diversity Representation
Strategic Imperatives
15%
Expand leadership in the premium consumer space
Build on our strong position in commercial payments
Strengthen our global, integrated network to provide unique value
Make AXP an essential part of our customers’ digital lives

The AIA is a formulaic program that considers quantitative goals set at the beginning of the fiscal year, along with individual performance, to determine the final payout. The design works as follows for each NEO:

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Long-Term Incentive Award

Our updated LTIA program is intended to be formulaic and link compensation to the achievement of long-term financial objectives. LTIA is awarded in two forms: Performance Shares (80% of award) and Stock Options (20% of award). Each of these incentives aligns NEOs’ interests with those of shareholders and establishes retention incentives through multi-year, performance-based vesting periods. The elements of the Company’s LTIA and their respective features are described in the table below:

Element Key Metrics Features
Performance Shares

     

3-year average ROE as compared to performance peers
Relative TSR compared to the same performance peers as ROE

     

3-year vesting period
Payout tied to 3-year relative performance and stock price performance
0-120% of target shares awarded
Stock Options
Stock price appreciation
3-year vesting period
Must meet net income threshold to be exercisable
10-year term

Performance Shares – Going Forward (January 2019 onward grants)

The new LTIA program aligns with our business objectives and reflects shareholder feedback. Among the feedback we received from investors, we heard support for the use of ROE as a performance measure under our long-term incentives. In addition, some shareholders suggested that the CBC could consider use of relative TSR and relative ROE, to measure both operational and shareholder-based results. The CBC considered this feedback and decided to modify our Performance Share program. Accordingly, the revised program requires top-quartile ROE to be earned at target, and above-target payouts are contingent on TSR performance being in the top third of our peer group. Median ROE performance results in an 80% payout.

AXP Relative ROE Rank       Payout %(1)            

AXP TSR Positioning

     

Adjust Payout

> 90th 120%

67th Percentile or better of
Performance Peer Group

75th 100%

No

50th 80%
25th 50%

< 67th Percentile of
Performance Peer Group

Cap at 100%

< 25th 0%
(1) Straight line interpolation applies if performance is between two points.

Relative ROE performance: As a financial institution with a lending book and considerable fee income, we consider effective returns on capital to be a validation of high performance. Our ROE performance must be at the 75th percentile of our performance peers to provide the target number of shares.

Relative TSR performance: Our TSR performance must be in the top third of our performance peer group for payouts above target, regardless of our ROE performance.

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

 
Bank of America
     
Discover
     
MasterCard
     
Regions Financial
BB&T Corporation
Fifth Third Bancorp
M&T Bank
State Street
BNY Mellon
Goldman Sachs
Morgan Stanley
SunTrust Banks
Capital One Financial
Huntington Bancshares
Northern Trust
U.S. Bancorp
Citigroup
JPMorgan Chase
PayPal
Visa
Citizens Financial Group
KeyCorp
PNC Financial Services Group
Wells Fargo
 

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Perquisites

We provide limited perquisites to support our objective to attract and retain talent for key positions, as well as to address security concerns. For example, we provide a $30,000 local travel allowance for NEOs other than our CEO. For the CEO, the Company’s security policy requires him to use for all travel purposes, to the maximum extent practicable, the automobiles and aircraft provided by the Company for business travel. We also provide an annual cash perquisite allowance of $35,000 for executive officers of the Company.

Post-Employment Compensation

Retirement Benefits

NEOs receive retirement benefits through the following plans:

Retirement Savings Plan (RSP): A qualified 401(k) savings plan available to all eligible U.S. colleagues.
Retirement Restoration Plan (RRP): A U.S. nonqualified savings plan that makes up for 401(k) benefits that would otherwise be lost as a result of contribution limits for qualified plans under U.S. law.
Deferral Plan: Allows U.S. NEOs to defer a portion of their base salary and AIA payout. The annual deferral limit is equal to one times their base salary.
U.K. Stakeholder Pension Plan: Allows eligible colleagues in the United Kingdom to receive a Company contribution up to a capped percentage of base salary.

NEO retirement benefits are more fully described under Retirement Plan Benefits on page 73 and under Nonqualified Deferred Compensation on pages 74 and 75.

Severance: Senior Executive Severance Policy

The CBC must pre-approve severance for an executive officer. Under the Senior Executive Severance Policy, NEOs who are terminated involuntarily (except in cases of misconduct) are eligible to receive cash severance benefits. In 2018, the CBC reduced executive severance benefits from two years of base salary and AIA to one and a half years of base salary and target AIA in consideration of market practices. The Company also provides pro rata AIA payment for the year of termination. LTIAs continue to vest and certain benefits continue during the severance period, unless the executive begins full-time, outside employment. U.S.-based NEOs who are age 65 or older are not eligible for severance unless the CBC specifically approves severance for such an executive.

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

Change in Control Benefits

The Company provides change in control benefits to encourage executives to consider the best interests of shareholders by addressing any concerns about their own personal financial well-being in the face of a potential change in control of the Company. Detailed information is provided under Potential Payments Upon Termination or Change in Control on pages 75–78.

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Compensation Process, Program Governance and Administration

The Company’s compensation governance and administration practices conform with market practices and reinforce our compensation principles.

Compensation Governance Practices

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

Employ robust goal-setting process to align goals with Company strategy
Cash incentives and equity awards subject to recoupment and forfeiture provisions
Clawback provision for cash portion of the CEO’s AIA when AIA is paid in cash
Discourages imprudent risk taking, including Chief Risk Officer’s review of goals and results to confirm that actual results were achieved within the Company’s risk appetite
Maintain significant NEO stock ownership requirements
Cap on NEO AIA payments (187.5% of target for extraordinary performance)
Prohibit executive officers from hedging or pledging company stock
Double-trigger change-in-control provisions
No payment of dividends or dividend equivalents on Performance Shares granted to NEOs until they vest
No excise tax gross-ups upon a change-in-control
No individual change-in-control arrangements
No repricing of options

Evaluating Performance: Selecting Metrics and Setting Targets

The CBC reviews and approves comprehensive performance goals annually and remains actively engaged throughout the year to monitor Company strategy and performance toward goals. The following describes the Company’s process for selecting incentive program metrics and setting challenging yet achievable targets that are aligned with the Company’s strategic direction.

Key Steps in Selecting Incentive Metrics and Setting Targets

    

1

            

2

         

3

    
 
 

Our Board reviews the competitive environment and our business strategy throughout the year, and keeps abreast of regulatory, competitive and technological developments.

   

The CBC reviews and approves final incentive plan metrics and goals early each year.

The CBC remains engaged throughout the year, evaluates annual performance and determines final payout amounts based on the achievement of goals.

Peer Group and Benchmarking

Our pay program is designed to reward achievement of financial and strategic goals and to attract, retain and motivate our leaders in a competitive talent market. The CBC periodically examines pay practices and pay data for a group of 20 companies as a source of benchmarking data to better understand the competitiveness of our compensation program and its various elements. While the benchmarking data is used to assess the competitiveness of our compensation program, it is only one of a number of factors used to make final pay decisions.

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How We Select the Company’s Compensation Peers

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

Comparator Group for 2018

Financial
Institutions
        Iconic Global
Consumer Brands
        Payments &
Technology Businesses
Bank of America               Goldman Sachs Coca-Cola               PepsiCo Cisco               PayPal
BNY Mellon       JPMorgan Chase Colgate-Palmolive Starbucks       Discover Visa
BlackRock Morgan Stanley Nike MasterCard
Capital One Financial U.S. Bancorp
Citigroup Wells Fargo

Compensation Outcomes for 2018

NEOs’ Total Direct Compensation Decisions for 2018 Made in January 2019

The 2018 Compensation Decisions table below reflects the CBC’s compensation decisions with regard to the NEOs’ 2018 performance-based compensation including AIA, Performance Shares and stock options, based on the CBC’s January 2019 assessment of the Company’s and each executive’s performance during 2018. Since the CBC’s pay decisions were made based on these assessments that were conducted after the end of the 2018 fiscal year, some of these values differ from amounts listed in the Summary Compensation Table (on page 66) which shows compensation awarded during 2018.(15)

S.J. Squeri K.I. Chenault J.C. Campbell D.E. Buckminster A.E. Marrs A.D. Williams
2018 Summary Compensation Table
Base Salary    $ 1,500         $ 167      $ 1,000          $ 1,000     $ 757 (16)        $ 850
AIA       $ 5,850       $ 552     $ 5,500 (17)      $ 4,500       $ 1,501 (18)      $ 3,700
Total $ 7,350 $ 719 $ 6,500 $ 5,500 $ 2,258 $ 4,550
2019 Summary Compensation Table
Performance Shares $ 9,760 N/A (19)  $ 3,600 $ 3,840 $ 3,080 $ 3,280
Stock Options $ 2,440 N/A (19)  $ 900 $ 960 $ 770 $ 820
Total $ 12,200 $ 4,500 $ 4,800 $ 3,850 $ 4,100
TDC $ 19,550   $ 719 $ 11,000     $ 10,300 $ 6,108 $ 8,650
(15)

A reconciliation of this table to the Summary Compensation Table is shown on page 65. The amounts shown in this table also differ from those shown in the Pay Decisions table on pages 60-61 because that table reflects changes to NEO target compensation levels used to make pay decisions. In April 2018, Messrs. Campbell, Buckminster and Williams received additional equity awards ($500,000, $1 million, and $1 million, respectively) considering a number of factors, such as a change in role, additional responsibilities, and the level of compensation provided by our peers for similar roles. These amounts are not included in the table above because they are adjustments to their target compensation level, as shown on pages 60-61.

(16)

Ms. Marrs is based in our London office and is paid in pounds sterling. Her base salary is £580,000. This amount was converted into U.S. dollars using an exchange rate of 0.766, the average daily rate from August 2018 through October 2018 as published by AIRINC, a third-party data provider. This conversion rate is also used for converting other compensation paid to Ms. Marrs and reported in the Summary Compensation Table.

(17)

To comply with regulatory guidance that at least 50% of incentive compensation be deferred, $600,000 of Mr. Campbell’s 2018 AIA was paid in the form of RSUs granted in January 2019. Mr. Campbell’s AIA figure in the above table does not reflect this adjustment. These RSUs are payable three years after the grant date and continued employment through the end of the three-year period is not required to receive these RSUs. Further, to satisfy regulatory guidance, the payout of these RSUs is subject to the Company achieving positive cumulative net income in 2019-2021.

(18)

Ms. Marrs received her target AIA of £1,150,000 in February 2019 for performance year 2018 under the terms of her offer letter. This award was converted into U.S. dollars using the 0.766 exchange rate described above. Under the Company’s Detrimental Conduct Policy, this amount is subject to clawback if Ms. Marrs leaves the Company within two years of payments to join a competitor or engages in conduct that is detrimental to the Company. The same clawback feature applies to all other NEOs and is discussed further on page 63.

(19)

The CBC did not grant Mr. Chenault any long-term incentive specifically in relation to his retirement or service in 2018. See pages 59-60 for additional information.


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2018 Annual Incentive Awards

2018 Company Performance Outcomes

For 2018, the CBC reviewed Company performance and determined that performance was significantly above target, and approved the Company performance multiplier at 130% of target above target but below the maximum multiplier of 150% under the Company’s formulaic plan.

PERFORMANCE MULTIPLIER – COMPANY

In determining the Company portion of the Performance Multiplier at 130%, the CBC evaluated the following results against the performance objectives approved for all NEOs by the CBC at the beginning of 2018. Goals approved by the CBC at the start of the year were consistent with the full-year guidance that the Company provided publicly in January 2018. The Company’s four strategic imperatives, first shared in October 2017 and reiterated during the Company’s March 2018 Investor Day presentation, also formed the basis for the AIA compensation. For 2018, achieving CBC-approved goals would result in a 100% payout. For each metric, the goals serve as a midpoint for a range of outcomes that could result in a higher or lower payout. The high end of the range represents challenging growth levels set by the CBC. In 2018, actual results exceeded the high end of the range, resulting in a 130% payout.

Shareholder (55%) 2018 Target 2018 Actual Performance 2017 Actual Performance
Revenue Growth (FX-adjusted)       8%       10% (20)        4% (20) 
EPS $7.10 $7.33 (21)  $5.89 (22) 
ROE 25% 31% (21)  25% (22) 

Customer (15%)

Net Promotor Score
Above target; 280 basis points above 2017
Billings Growth (FX-adjusted)

6%

9%

4%

New Accounts Acquired
Goal achieved above target level
Active Locations in Force
  Added more than 1.5 million new merchant locations in the U.S. for the second year in a row and posted double-digit growth in our international merchant locations

Colleague (15%)

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

Strategic Imperatives (15%)

2018 Results

Leading in the Premium Consumer Space
10% U.S. billings growth
17% International Proprietary Consumer billings growth
Increase in U.S. billings share(23) and U.S. lending share(24)

Our 2018 results reinforce our view that Card Members appreciate the unique benefits and services we provide. We took the following actions in 2018 to further support Card Member spending and borrowing needs going forward:

Further enhanced our range of benefits for Gold and Platinum Card Members across a number of regions in the world, including the U.S., India, Mexico, Hong Kong, Australia, Singapore and Japan.
Grew and expanded our key strategic partnerships with Delta Airlines, Marriott and Hilton.
(20)

Total revenues net of interest expense on an FX-adjusted basis is a non-GAAP measure. See footnote 2 on page 5 for an explanation of FX-adjusted information. Reported revenue growth was 9% and 4% for fiscal years 2018 and 2017, respectively.

(21)

2018 adjusted diluted EPS and 2018 adjusted ROE, both excluding the impacts of certain discrete tax benefits in the fourth quarter of 2018, are non-GAAP measures. See Annex A for reconciliations to diluted EPS and ROE on a GAAP basis.

(22)

2017 adjusted diluted EPS and 2017 adjusted ROE, both excluding the impacts of the Tax Act charge of $2.6 billion in the fourth quarter of 2017, are non-GAAP measures. See Annex A for reconciliations to diluted EPS and ROE on a GAAP basis.

(23)

Source: AXP internal data and The Nilson Report, Issue 1147 “Market Shares of Purchase Volume on U.S. General Purpose Cards 2018” with Change in Basis Points vs. 2018, Credit Cards Only.

(24)

Source: AXP internal data and NY Fed Q4’ 18 Household Debt and Credit Report, Credit Card Debt Balance.


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Powering Commercial Payments
    
#1 U.S. Small Business Issuer by volume(25)
AXP is largest global commercial card issuer(26)
American Express Global Commercial Services serves 63% of the 2018 FORTUNE Global 500®(27)
10% U.S. Small & Medium Enterprise (SME) billings growth
21% International SME billings growth
Our continued investments in commercial payments are one of the key reasons that small and medium-sized businesses continue to be one of our fastest-growing customer segments worldwide. Actions in 2018 include:
Added customized benefits on our Business Gold and Platinum Cards
Formed a partnership with Amazon that includes a new cobranded small business card and gives our mutual customers greater control and line-by-line visibility into their online purchases
Strengthening Our Network
More than 1.5 million new merchant locations added in U.S.
Double-digit growth in international merchant locations
We have furthered our progress toward achieving virtual parity in merchant coverage with Visa and Mastercard in the U.S. and expanding our merchant network internationally. Key contributing factors toward goals include:
Our continued targeted marketing efforts, including our Small Business Saturday and Shop Small Campaigns
Our ongoing pursuit of future opportunities, which for 2018 notably includes our preparatory approval from the People’s Bank of China to begin building a network to process domestic currency transactions through a joint venture in mainland China
Becoming Digitally Essential
70% of new Consumer and SME Card Members acquired through digital channels
82% of active Card Members engage with us digitally(28)
More customers are engaging with us through mobile channels, and our app – ranked highest in customer satisfaction among mobile credit card apps in the U.S., according to a 2018 study by J.D. Power – gives us new ways to serve our customers in a world that is becoming digital at an accelerated pace.
We have taken further action in 2018 to ensure we continue to provide our customers with innovative tools:
Expanded our partnership with PayPal
Experimented with blockchain, artificial intelligence and other advanced technologies in many areas of our business
Drove innovation through partnerships, acquisitions and enhancements to our own digital platforms
Company Performance Multiplier Score 130%

Based on strong 2018 performance, the CBC approved the 130% performance multiplier under the Company score portion of the plan.

(25) Source: AXP internal data and The Nilson Report, Issue 1134 “Top U.S. Commercial Card Issuers, Table: Small Business Credit Cards, 2017 Purchase Volume.”
(26) Source: Euromonitor International Limited; Consumer Finance 2019ed, by commercial credit and charge card payment value, 2017 data.
(27) As determined by an analysis conducted by American Express Global Commercial Services. FORTUNE® and FORTUNE Global 500® are registered trademarks of Time Inc. and are used under license. FORTUNE® and Time Inc. are not affiliated with, and do not endorse products or services of, American Express.
(28) Card Members with spend >0 and at least one website or mobile app visit for the month of December 2018.

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PERFORMANCE MULTIPLIER – INDIVIDUAL

In determining the Individual portion of the AIA multiplier for the NEOs, the CBC has discretion to modify awards downward or upward to differentiate and reward leadership performance. For 2018, factors considered in determining the appropriate individual multiplier for the NEOs included leadership through the Company’s CEO transition and demonstrating the Company’s enumerated leadership behaviors (Setting the Agenda, Bringing Others With You and Doing It the Right Way). The maximum individual performance multiplier for leadership performance is 125%.

Summary of NEO AIA for 2018

The following table summarizes the actual AIA earned by each NEO for the 2018 performance year based on the achievement of goals detailed above (in thousands).

Name         Target AIA         x         Company Multiplier         x         Individual Multiplier                 Actual AIA
S.J. Squeri           $ 4,500           130%      (29)            $ 5,850
K.I. Chenault $ 6,625 (30)  (30)  $ 552 (30) 
J.C. Campbell $ 3,500 130% 120% $ 5,500 (31) 
D.E. Buckminster $ 2,812 (32)  130% 125% $ 4,500
A.E. Marrs $ 1,501 (33)  (34)  (34)  $ 1,501
A.D. Williams $ 2,430 (32)  130% 115% $ 3,700

Settlement of LTIA granted in January 2016

Portfolio Grant Awarded in January 2016 (Vesting Based on 2016-2018 Performance)

The Portfolio Grant (PG) is a program with three-year performance cycles. Under the program, management is assessed and rewarded for performance against a combination of financial objectives (three-year EPS and three-year Revenue) and results against specific strategic milestones that indicate success in positioning the Company for the future. The CBC selected the three-year EPS and three-year Revenue metrics because management believes a strong correlation exists between performance on these financial measures and increases in total shareholder value.

(29) The CBC decided not to apply an individual multiplier to Mr. Squeri’s AIA but instead reward his 2018 performance through long-term incentive awards.
(30) The Company provided our retired CEO, Mr. Chenault, with an AIA of $552,083 for 2018, which represents his pro-rated target AIA for January 2018 while he was still the Company’s Chairman and CEO. This amount was paid in February 2019.
(31) To comply with regulatory guidance that at least 50% of incentive compensation be deferred, $600,000 of Mr. Campbell’s 2018 AIA was paid in the form of RSUs granted in January 2019. Mr. Campbell’s AIA figure in the above table does not reflect this adjustment. These RSUs are payable three years after the grant date and continued employment is not required to receive these RSUs. Further, to satisfy regulatory guidance, the payout of these RSUs is subject to the Company achieving positive cumulative net income in 2019-21.
(32) Messrs. Buckminster’s and Williams’ AIA reflect the increase in their target AIA as a result of their promotions in February 2018. Mr. Buckminster’s target AIA was $2.2 million before promotion and $2.9 million after promotion. Mr. Williams’ target AIA was $1.6 million before promotion and $2.55 million after promotion. Per Company policy, each of these 2018 AIAs was pro-rated considering their time in various roles.
(33) Ms. Marrs works out of our London office and is paid in pounds sterling. Ms. Marrs received her target AIA of £1,150,000 in February 2019 for performance year 2018 under the terms of her offer letter. This award was converted into U.S. dollars using the exchange rate of 0.766 described above. Under the Company’s Detrimental Conduct Policy, this amount is subject to clawback if Ms. Marrs leaves the Company within two years of payments to join a competitor or engages in conduct that is detrimental to the Company. This same clawback feature applies to all other NEOs and is discussed further on page 63.
(34) Not applicable considering guaranteed payout at target under her offer terms.

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PG goals are rigorous and meaningful performance is required for awards to pay out at target levels, as demonstrated by historical payout levels:

PG Award Payout History (as a % of Target)

2012–2014 2013–2015 2014–2016 2015–2017 2016–2018
105.9%           58.2%           60%           79%           124%

Based on its assessment of performance against the targeted metrics as described in the following sections, the CBC determined that 2016-2018 performance targets were achieved at the maximum level for most objectives and set the payout for the 2016-2018 cycle at 124% - above target. The following sections explain the scoring and rationale for this determination:

THREE-YEAR CUMULATIVE EPS (30% OF PORTFOLIO GRANT)

The target goal established at the beginning of the three-year cycle was cumulative earnings of $17.30 per share, a level of earnings consistent with the Company’s business plan and management expectations at the start of the performance period. The goal is based on a Plan that reflected the end of the Costco relationship and related sale of the Costco cobrand portfolio in June 2016, and plans for the management team to identify new sources of earnings. The Plan was also the basis for earnings guidance provided for 2016 and 2017 during the fourth quarter 2015 earnings call in January 2016 and for 2017 during the March 2016 Investor Day. Actual performance in both 2016 and 2017 was a positive indicator of performance beyond management’s initial expectations.

The EPS targets include share repurchases, given that a primary objective of the Company and the Board is to create shareholder value and optimize long-term financial returns. As part of this, each year management proposes a capital plan that allocates capital to support business growth, both organically and through acquisition, ensures that the Company maintains target capital levels, and returns capital to shareholders in the form of dividends and share repurchases. As a bank holding company, the Company is subject to capital requirements imposed by the Federal Reserve and its capital plan must be compliant with standards prescribed by the Federal Reserve. The capital plan is reviewed by the Company’s Board, which has ultimate oversight responsibility for capital planning and is in the best position to make informed decisions regarding the Company’s capital adequacy and capital actions, including capital distributions.

On a GAAP basis, cumulative earnings were $16.53 per share; however, the CBC deemed it appropriate to consider adjustments to the Company’s reported results when determining the payout for this factor to exclude the following positive and negative amounts to account for the impact of events that were not contemplated when setting goals at the start of 2016. The CBC considered these adjustments appropriate so that management does not benefit or get penalized by one-time events.

Reduced 2018 reported EPS by $1.55 to exclude the impacts of (1) certain discrete tax benefits in the fourth quarter of 2018, and (2) the lower tax rates as a result of the 2017 Tax Act.
Increased 2017 reported EPS by $2.90 to exclude the impact of the Tax Act charge of $2.6 billion in the fourth quarter of 2017.
Increased 2016 reported EPS by $0.28 to exclude the impact of $266 million after-tax restructuring charges ($410 million pre-tax).

On an adjusted basis, the Company earned $18.16 per share over the time period, which would correspond to a 121% payout against target for this factor.(35)

(35) See Annex A for a reconciliation to EPS on a GAAP basis.

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Results Needed for Potential Payout Three-Year Outcome 2018 Achievement
Three-year EPS % Earned $18.16(36)  121%  
$18.30 125%
$17.30 100%
$16.46 75%
$13.46 0%

Note: If the three-year EPS is between two points, straight-line interpolation will be applied.

2018 REVENUE (20% OF PORTFOLIO GRANT)

The target goal established at the beginning of the three-year cycle was to achieve $34 billion revenue in 2018, which incorporates a level of revenue growth consistent with the Company’s long-term business plan and management’s expectations at the start of the performance period. No payout would be earned on this factor for performance below a 2018 revenue total of $30.12 billion. The maximum payout, 125% of target, was set at a 2018 revenue total $35.02 billion. The business plan and management’s expectations for the three-year performance cycle accounted for a changing business environment that included the expected end of the Costco relationship and related sale of the Costco cobrand portfolio in June 2016.

GAAP rules related to revenue recognition changed after the targets were set. As such, the Company adjusted the 2018 revenue goal to be $37.45 billion. This adjustment reflects the same level of growth as under the original targets.

On a GAAP basis, 2018 revenue was $40.34 billion; however, the CBC deemed it appropriate to consider adjustments to the Company’s reported results when determining the payout for this factor to exclude FX impacts since these changes are beyond management’s control and were not reflected in the original plan. On an adjusted basis, the Company finished 2018 with revenue of $40.46 billion, which would correspond to a 125% payout against target for this factor.(37)

Results Needed for Potential Payout 2018 Outcome 2018 Achievement
2018 Revenues (Billions) % Earned $40.46(37)  125%  
$38.57 125%
$37.45 100%
$36.35 75%
$33.18 0%

(36) EPS includes: 2016 $5.93 (adj.), 2017 $5.87 (adj.), and 2018 $6.36 (adj.); See Annex A for a reconciliation to EPS on a GAAP basis.
(37) See Annex A for a reconciliation to revenue net of interest expense on a GAAP basis.

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PROGRESS ON STRATEGIC MILESTONES (50% OF PORTFOLIO GRANT)

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

Strategic Milestones Achievements Three-Year
Outcome
1. Remove $1 billion of cost from the business by the end of 2017 Over the last eight years ending 2017, billings have grown more quickly than operating expenses,(38) demonstrating our long history of disciplined expense control to create leverage as we grow the business. That continued in 2018 when operating expense was flat to 2017. CBC concluded that milestones were scored at the maximum payout level
2. Acceleration of Merchant Coverage balanced with reducing Discount Rate Erosion 2018 marked the second year in a row where we acquired at least 1.5 million new merchants in the U.S., further keeping us on track to reach virtual parity coverage with Visa and Mastercard by the end of 2019. We did this while minimizing discount rate erosion and growing discount revenue at 8% for the year.
3. Acceleration of Lending Accounts Receivable Growth: 8-10% CAGR over 2015 Accounts Receivable (including non-Card Accounts Receivable) Lending Accounts Receivable growth of 13% for 2018 was approximately 2x industry growth(39) with the majority of the growth (~60%) coming from our existing customers allowing us to maintain industry leading credit metrics.

Final Scoring for 2016-2018 Portfolio Grant

Based on the above discussions of actual performance against goals, the CBC concluded that the award was earned at significantly above target: 124% of its targeted amount.

Performance Measure Weight x     Achievement Score =     Weighted Average Score
EPS   30 % 121 % 36.5 %
Revenue 20 % 125 % 25 %
Strategic Milestones 50 %                     125 % 62.5 %
             Payout: 124 %

The CEO and other NEOs’ PG 2016-18 grants resulted in the following payouts ($000s):

PG 2016-18
Grant Amount
      PG 2016-18
(Q1 2019) Payout
S.J. Squeri           $ 1,500              $ 1,860
K.I. Chenault $ 5,125 $ 6,355
J.C. Campbell $ 1,500 $ 1,860
D.E. Buckminster $ 1,200 $ 1,488
A.D. Williams $ 900 $ 1,116

See page 60 for additional detail on Mr. Chenault’s payout.

(38) Operating expenses represents salaries and employee benefits, professional services, occupancy and equipment, and other expenses.
(39) Source: AXP internal data and NY Fed Q4’ 18 Household Debt and Credit Report, Credit Card Debt Balance.

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RSUs Awarded in January 2016-Vesting Based on 2016-2018 Performance

Performance RSUs were awarded in January 2016 for the three-year performance period ending December 2018. The awards vest based on the Company’s three-year average ROE performance. Our ROE results during the three-year period were strong. For example, we were able to increase our Common Equity Tier 1 capital by 200 basis points in 2018. We did this while increasing our dividend by 11% and returning capital to shareholders in the form of share repurchases.

Results Needed for Potential Payout Three-Year Outcome 2016-2018
Achievement
Three-Year Average ROE                % Target Shares Granted               
100%
>=30% 125%            26.3% (average)
28% 108.3% Year ROE
23 – 27% 100% 2018 27.5 %(40)          
22% 95% 2017 25.4 %(41)
20% 75% 2016 26.0 %
<=5% 0%

This resulted in the vesting of the following shares for the CEO and other NEOs:

Target Number
of Shares
           Shares
Vested
S.J. Squeri 68,312 68,312
K.I. Chenault 106,223 106,223
J.C. Campbell 36,726 36,726
D.E. Buckminster 23,505 23,505
A.D. Williams 21,668 21,668

Other Compensation Decisions

Offer Letter — Ms. Marrs

In March 2018, we hired Ms. Anna Marrs as our President of Global Commercial Services. Ms. Marrs has extensive, relevant experience to our Company having been CEO of Commercial & Private Banking and Regional CEO ASEAN & South Asia for Standard Chartered Bank (SCB) and a partner in the banking practice at McKinsey & Co.

In order to provide a strong long-term incentive, to induce her to relocate from Singapore to London and to reimburse Ms. Marrs for compensation forfeited as a result of leaving SCB, the CBC negotiated an incentive-based compensation package commensurate with the compensation levels and target pay structures of similarly situated executives at peer companies. The Board considered the amount of the incentive compensation forfeited by Ms. Marrs upon joining our Company and the vesting/payment timing of the forfeited amounts, as well as the CBC’s intent to provide a pay opportunity that promotes long-term Company performance.

(40) 2018 adjusted ROE, excluding the impacts of certain discrete tax benefits in the fourth quarter of 2018 and the lower U.S. federal statutory corporate income tax rate due to the Tax Act, is a non-GAAP measure. See Annex A for a reconciliation to ROE on a GAAP basis.
(41) 2017 adjusted ROE, excluding the impacts of the Tax Act charge of $2.6 billion in the fourth quarter of 2017, is a non-GAAP measure. See Annex A for a reconciliation to ROE on a GAAP basis.

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The following awards were provided as 2018 long-term incentive compensation and also in consideration that Ms. Marrs did not receive her 2018 long-term incentive grant from SCB considering her resignation from SCB. The performance terms of these awards are the same as the January 2018 grants to other NEOs to align her goals with those of all executives to drive enterprise-wide growth. These incentive awards are subject to both performance targets and continued employment, as well as subject to clawback under the Company’s Detrimental Conduct Policy.

2018 Performance Equity Awards: Ms. Marrs received a $2,750,000 equity grant in October 2018. Approximately 80% of this grant is in the form of Performance RSUs that vest based on the Company’s 2018-20 ROE performance. The remaining portion of the grant is in the form of stock options, further incentivizing stock price appreciation. Both of these awards vest in October 2021 subject to her continued employment with the Company.
2018 Portfolio Grant: Ms. Marrs received a $1,100,000 Portfolio Grant that vests in October 2021 based on the Company’s performance over 2018-20.

The following awards were provided considering Ms. Marrs’ forfeited compensation with SCB:

Sign-On Equity Awards: The Company granted her 9,734 RSUs, with a target value of $1,000,000. The award vests in two equal installments, with 50% of grant vesting two years after the grant date on October 31, 2020, and 50% three years after the grant date on October 31, 2021. These awards tie Ms. Marrs’ compensation with shareholders’ interests because actual payout is impacted by the Company’s stock price performance over the vesting period. Based on guidance from the Federal Reserve, the Company also added a performance condition that requires positive cumulative net income during the respective vesting periods, and continued employment through each of the vesting dates. This incentive award is subject to clawback under the Company’s Detrimental Conduct Policy.
Sign-On Cash Awards: The Company granted her a total of $3,000,000 or GBP equivalent in sign-on cash compensation, of which $2,500,000 or GBP equivalent was payable within 45 days from the commencement of her employment, and $500,000 or GBP equivalent is payable at the first anniversary of her employment start date contingent upon continued employment through the respective payment dates. These sign-on cash awards are subject to clawback if she voluntarily resigns or is terminated for “Good Cause” (as defined in the American Express Senior Executive Severance Plan) within 24 months of receipt of payments.

Compensation for Prior CEO

Mr. Chenault retired from the Company on February 1, 2018. The Summary Compensation Table includes partial year 2018 compensation as well as deferred compensation from prior years (see below for details).

Compensation Received for 2018 Performance:

Mr. Chenault received 1/12th of his annual 2018 base salary and target AIA for serving as our CEO from 1/1/2018 to 1/31/2018.

Awarded Compensation (in thousands):
 
Salary AIA
$167 $552

The CBC did not grant Mr. Chenault any additional AIA or LTIA specifically in relation to his retirement or service in 2018.

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Compensation Reported in 2018:

As disclosed in last year’s proxy statement, the CBC agreed to provide an annual stipend of $300,000 per year to Mr. Chenault for office space with administrative support for use after retirement (consistent with past Company practice for retiring CEOs) for a period of nine years (the year Mr. Chenault becomes age 75), with an additional one-time setup payment of $500,000 plus appropriate office hardware on a one-time basis, and driver support for security for one year. These values are reported as a lump-sum payment under All Other Compensation in the 2018 Summary Compensation Table. Additionally, the 2018 Summary Compensation Table includes other items reported as 2018 compensation due to SEC reporting rules for deferred compensation, according to the following table:

Award Description Amount
2017 AIA Annual award for 2017 performance; typically awarded in cash, but provided in RSUs in the first quarter of 2018 in order to emphasize long-term alignment $8.3 million
2015-2017 PG Long-term performance award granted in 2015; deferred in equity when payable so appears in this year’s Summary Compensation Table $4.0 million
2016-2018 PG Long-term performance award granted in 2016, settled in cash and paid in the first quarter of 2019 due to post-retirement payout $6.4 million

Pay Decisions

The compensation decisions described under this section reflect changes to target compensation levels that the CBC uses to make pay decisions, including target AIA and LTIA granted each January. These amounts differ from the compensation disclosed under the Summary Compensation Table because these are changes to target compensation levels and do not reflect actual compensation paid except when additional equity was granted (as explained below).

Target Direct Compensation - $MM
Executive             Component                  2018                  2019       
Stephen J. Squeri
CEO & Chairman
2018 pay was set in October 2017 in connection with Mr. Squeri’s appointment to CEO and Chairman
The CBC considered 2018 performance, and peer group compensation levels when setting 2019 pay; year-over-year pay increases were delivered entirely in equity, emphasizing long-term performance
 
Salary $1.50 $1.50
Target AIA $4.50 $4.50
LTIA $10.20 $12.20
Total Pay $16.20 $18.20
 
 

Target Direct Compensation - $MM
              Component                  2018                  2019       
Jeffrey C. Campbell
Chief Financial Officer
The CBC last adjusted Mr. Campbell’s compensation in February 2018 considering a number of factors, including level of compensation provided by our peers for similar roles. As a result of the CBC’s decisions, Mr. Campbell’s target equity compensation increased by $500,000 in 2018 through an additional equity grant awarded in April 2018. This amount is included in the table shown on this page
Salary $1.00 $1.00
Target AIA $3.50 $3.50
LTIA $4.50 $4.50
Total Pay $9.00 $9.00
 
 
 
 
 

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Target Direct Compensation - $MM
Executive             Component                  2018                  2019       
Douglas E. Buckminster
Group President, Global Consumer Services Group
The CBC increased Mr. Buckminster’s target compensation in February 2018 considering a number of factors, including his promotion to Group President, Global Consumer Services and the level of compensation provided by our peers for similar roles. As a result of the CBC’s decisions, Mr. Buckminster’s target compensation increased by $1.85 million ($150,000 salary, $700,000 Target AIA, and $1 million equity grant awarded in April 2018). These amounts are included in the table shown on this page         
In this expanded role, Mr. Buckminster took on additional responsibility for the credit and fraud risk management and information management teams
Mr. Buckminster is also responsible for Consumer Lending and enterprise capabilities, such as credit, information management and Amex Digital Labs
The CBC reviewed Mr. Buckminster’s target compensation in January 2019 and considering his performance and external review of pay data, the CBC approved additional total target compensation adjustments
Salary $0.90 $1.00
Target AIA $2.90 $3.70
LTIA $4.30 $4.80
Total Pay $8.10 $9.50
 
 
 
 
 
 
 

Target Direct Compensation - $MM
              Component                  2018                  2019       
Anré D. Williams
Group President, Global Merchant and Network Services
The CBC increased Mr. Williams’ target compensation in February 2018 considering a number of factors, including his promotion to Group President, Global Merchant and Network Services and the level of compensation provided by our peers for similar roles. In this expanded role, Mr. Williams took on additional responsibility for our Global Network Partnerships. Mr. Williams is also responsible for our merchant and loyalty businesses as well as strategic partnerships. As a result of the CBC’s decisions, Mr. Williams’ target compensation increased by $2.1 million ($150,000 salary, $950,000 Target AIA, and $1 million equity grant awarded in April 2018). These amounts are included in the table shown on this page
The CBC reviewed Mr. Williams’ target compensation in January 2019 and considering his performance and external review of pay data, the Committee approved total target compensation adjustments
Salary $0.80 $0.85
Target AIA $2.55 $3.15
LTIA $3.75 $4.10
Total Pay $7.10 $8.10
 
 
 
 
 

These above decisions are changes to target amounts. Actual compensation paid depends on the Company performance, individual performance and the Company’s stock price performance. Further, to strengthen our pay for performance link, a significant portion of the compensation is granted using equity awards and subject to sustained performance over a period of time.

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Other Information

Our Commitment to Diversity & Inclusion

Our commitment to diversity and inclusivity is one of the Company’s greatest strengths. The powerful backing of American Express is the brand promise we make to our customers, and we believe that the best way to back our customers is to back our people. That idea is central to our Colleague Value Proposition (CVP), which states our commitment to helping our people become great leaders, providing a world of opportunities to grow their careers, and creating an inclusive culture to help them thrive.

An essential part of delivering on our CVP is providing fair and equitable pay for all colleagues. At our Company, we have a longstanding commitment to offering a pay structure that is equitable, transparent and free from bias. To help us meet that commitment, we regularly review our compensation practices to ensure they support pay equity and transparency, and we are proud of our record. A recent independent third-party review of our pay programs in the U.S. found that our colleagues are compensated equitably with no evidence of bias, regardless of gender. We also recently completed an expanded review that included the top 10 countries where we do business – covering over 90% of our colleague base – and we extended the analysis to include U.S. minorities. The review looked at a number of factors and drivers of compensation, including tenure, role, level, geography and performance. The expanded review found that our female colleagues are paid equitably, earning well over 99 cents for every dollar earned by their male colleagues. In addition, the review found that minority colleagues in the U.S. are paid equitably, also earning well over 99 cents for every dollar earned by their non-minority colleagues in the U.S. We are firmly committed to pay equity globally and will periodically review our processes to ensure we remain equitable.

Attracting and engaging the best colleagues is critical to our success as we continue to work toward realizing our vision of providing the best customer experience every day. For this reason, we remain committed to evolving and enhancing our diversity and inclusion initiatives so that everyone can reach their full potential, and we will continue to hold our senior leaders accountable for elevating our commitment.

Discouraging 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 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 generally 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 principles for safety and soundness.

The following policies and procedures help discourage imprudent risk taking:

Annual risk goals: Our Chief Risk Officer reviews business unit and NEO goals in relation to the Company’s risk appetite and sets certain annual risk goals for the Company at the beginning of each year.
Monitoring of risk: We monitor return on economic capital, credit risk metrics and performance against our risk appetite metrics, 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 CBC and certifies that actual results were achieved with proper risk governance and oversight, and that the Company executed a broad range of programs that help to avoid imprudent risk taking. 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% of incentive compensation for executive officers is deferred for at least three years with performance-based vesting.
Performance-based vesting: Performance Shares are used in place of time-based RSUs for the Company’s senior colleagues.
Stock ownership requirements: We have robust stock ownership requirements for our CEO and other NEOs (as described below).

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Stock Ownership Guidelines

Our current stock ownership guidelines require the CEO and our other NEOs to own and maintain a substantial stake in the Company. The CEO and our other NEOs are required to accumulate shares (i.e., shares owned outright, excluding unvested/unearned shares and unexercised stock options) with a value equivalent to a target multiple of their base salary, and to retain 50% of the net after-tax shares received upon vesting or exercise of their equity awards until guidelines are met. The specific requirements are as follows:

Officer Multiple of Base Salary
CEO 10x
All Other NEOs 3x

All of our NEOs except Ms. Marrs, who was recently hired, own more than the target number of shares. These requirements are reviewed annually and adjusted to consider NEO salary changes or changes in the Company’s stock price.

Clawback Policies

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

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 our Board, a colleague 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 colleague 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 CBC if the Company does not achieve acceptable performance in the following year.

The Company also maintains a detrimental conduct policy covering approximately 475 colleagues, including the CEO. 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.

Award Timing

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

Hedging and Pledging Restrictions
Executive officers may not hedge Company shares (e.g., no short sales, forwards, options or collars) or margin or pledge shares.

Role of the Independent Compensation Consultant

The CBC endeavors to follow good governance practices and is composed solely of independent directors. The CBC is responsible for our executive officer compensation decisions. It has retained Semler Brossy Consulting Group (Semler Brossy) as its independent compensation consultant. It held six meetings over the course of 2018, all of which ended with executive sessions without management present. During 2018, Semler Brossy attended CBC meetings, including executive sessions, and provided compensation advice independent of the Company’s management. The CBC assessed the independence of Semler Brossy pursuant to SEC rules and concluded that their work did not raise any conflicts of interest.

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Tax Treatment

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

Report of the Compensation and Benefits Committee

The CBC has reviewed and discussed the CD&A with management. Based on such review and discussion, it recommended to the Board, and the Board approved, the inclusion of the CD&A in this proxy statement.

COMPENSATION AND BENEFITS COMMITTEE*

John J. Brennan
Peter Chernin
Samuel J. Palmisano
Ralph de la Vega
Ronald A. Williams, Chair

(*reflects 2018 CBC membership)

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Note Regarding 2018 TDC Decisions and Summary Compensation Table

It is important to recognize that the way the CBC presents TDC is different from the SEC-required disclosure in the Summary Compensation Table and is not a substitute for the information in that table.

In summary, the main difference between the Summary Compensation Table and TDC is the timing of disclosure related to equity awards. The chart below details this methodology.

            Summary Compensation Table*       TDC
Concept and Purpose

Uses SEC methodology, which includes a mix of both cash compensation actually earned during 2018 and estimated value of equity granted in 2018

SEC-mandated compensation disclosure

Includes only pay that is awarded based on 2018 performance—reflects the CBC’s January 2019 compensation decisions based on 2018 performance

Calculated as a sum of: Base Salary
Base salary paid in 2018
Base salary set for 2019
Annual bonus
Annual cash bonus earned for 2018 performance
Total annual bonus awarded for 2018 performance—regardless of form of payment (i.e., cash or equity)
Portfolio Grant award
Value of PG earned for 2016-2018 (if paid in cash)
Not applicable because program eliminated as of 2019
Equity awards
Accounting value of equity awards (Stock Options and PRSUs) granted in 2018
Grant date value of equity awards (Stock Options and Performance Shares) granted in January 2019 for performance year ending 2018
* The SEC rules also require disclosure of additional elements of compensation beyond the ones mentioned in this table, such as future pay opportunities for pension benefits, above market interest rate on deferred compensation and all other compensation.

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Summary Compensation Table

The following Summary Compensation Table summarizes the compensation of our NEOs for the year ended December 31, 2018, using the SEC-required disclosure rules. It is important to recognize that 2018 TDC determined by the CBC is different than the amounts disclosed below using the SEC-required disclosure rules. See page 65 for key differences between the Summary Compensation Table and TDC awarded by the CBC for 2018.

Name and
Principal Position
   Year    Salary    Bonus(1)    Stock
Awards(2)
   Option
Awards(2)
   Non-Equity
Incentive Plan
Compensation(4)
   Change in
Pension
Value and
Non-Qualified
Deferred
Compensation
Earnings(5)
   All Other
Compensation(6)
   Total
($)
S.J. Squeri
Chairman and CEO*
2018 $ 1,487,500 $ 5,850,000 $ 5,999,903 $ 1,499,996           $ 1,860,000          $ 758           $ 643,285 $ 17,341,442
2017 $ 1,375,962 $ 7,000,000 $ 3,765,808 $ 5,384,176 $ 1,046,750 $ 60,075 $ 520,893 $ 19,153,664
2016 $ 1,350,000 $ 5,100,000 $ 3,763,308 $ 886,690 $ 795,000 $ 50,006 $ 386,262 $ 12,331,266
K.I. Chenault(7)
Retired Chairman
and CEO*
2018 $ 166,667 $ 552,083 $ 12,329,901 (3) $ 0 $ 6,355,000 (3) $ 432,720 $ 4,372,290 $ 24,208,661
2017 $ 2,038,462 $ 0 $ 12,209,937 $ 3,200,989 $ 0 $ 498,949 $ 663,036 $ 18,611,373
2016 $ 2,000,000 $ 0 $ 12,809,527 $ 1,573,150 $ 0 $ 518,804 $ 562,158 $ 17,463,639
J.C. Campbell
Chief Financial
Officer
2018 $ 1,000,000 $ 4,900,000 $ 3,120,447 $ 729,372 $ 1,860,000 $ 0 $ 254,833 $ 11,864,652
2017 $ 1,019,231 $ 4,600,000 $ 2,024,562 $ 475,352 $ 1,185,000 $ 0 $ 312,122 $ 9,616,267
2016 $ 1,000,000 $ 3,925,000 $ 2,023,235 $ 476,703 $ 900,000 $ 0 $ 230,988 $ 8,555,926
D.E. Buckminster
Group President,
Global Consumer
Services Group
2018 $ 881,250 $ 4,500,000 $ 2,586,045 $ 613,855 $ 1,488,000 $ 0 $ 258,600 $ 10,327,750
2017 $ 754,808 $ 3,350,000 $ 1,619,681 $ 2,630,276 $ 711,000 $ 46,428 $ 321,717 $ 9,433,910
2016 $ 700,000 $ 2,200,000 $ 1,294,890 $ 305,095 $ 540,000 $ 37,529 $ 246,427 $ 5,323,941
A.E. Marrs(8)
President, Global
Commercial
Services
2018 $ 236,619 $ 4,001,305 $ 3,216,065 $ 533,907 $ 0 $ 0 $ 907,797 $ 8,895,693
A.D. Williams
Group President,
Global Merchant
and Network
Services
2018 $ 781,250 $ 3,700,000 $ 2,220,580 $ 529,371 $ 1,116,000 $ 0 $ 192,159 $ 8,539,360
*

Mr. Squeri succeeded Mr. Chenault as Chairman and CEO on February 1, 2018.

(1)

The amounts in this column reflect AIA cash payments for annual performance. Mr. Campbell’s 2018 amount excludes $600,000 that was made in the form of RSUs granted in January 2019 to comply with FRB guidance that at least 50% of incentive compensation be deferred. Payment of these RSUs is deferred for three years from the grant date, subject to positive net income performance but not to continued employment. For Ms. Marrs, the 2018 amount also includes installments of a sign-on cash payment of $2,500,000 made in accordance with her employment offer letter to replace a portion of long-term incentives forfeited at her prior employer as a result of joining the Company.

(2)

Represents the aggregate grant date fair value of the awards pursuant to FASB ASC Topic 718, Compensation – Stock Compensation. Additional details on accounting for stock-based compensation can be found in Note 11, Stock Plans, to our Consolidated Financial Statements contained in our 2018 Annual Report on Form 10-K.

For Mr. Chenault, the 2018 amount in the Stock Awards column includes RSUs granted in lieu of cash incentives (2017 AIA of $8,281,172 and Portfolio Grant 2015-17 of $4,048,730). These RSUs are deferred for one year following grant date.

For Ms. Marrs, the 2018 amount in the Stock Awards column includes a $999,974 new hire equity award granted in accordance with her employment offer letter to replace a portion of long-term incentives forfeited at her prior employer as a result of joining the Company.

For all executives, all other amounts in the Stock Awards column of the Summary Compensation Table reflects only the target value of their annual PRSU awards, assuming that target performance is achieved against the average ROE target during the three-year performance period.

For each executive’s annual PRSU award, the maximum value as of the grant date, assuming the highest level of performance will be achieved, is as follows: Messrs. Squeri ($7,499,879), Campbell ($3,900,460), Buckminster ($3,232,507), Ms. Marrs ($2,770,114), and Mr. Williams ($2,775,626).

(3)

Amounts reflect grants made before 2018 and disclosed in previously filed proxy statements.


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(4) The 2018 amounts in this column reflect the cash payment made to the NEO in respect of a payout under the PG 2016-18 awards granted in 2016, in accordance with award terms.
(5) The amounts in this column reflect the actuarial increase or decrease in the present value of the NEOs’ benefits under all defined benefit pension plans established by the Company. The amounts reflect the impact of changes in interest rates and the NEOs’ changes in age during the year which are used to measure the present value. For Messrs. Buckminster and Williams, their values were negative $4,476 and negative $16,371 respectively as a result of an increase in the 2018 interest rates used to calculate the present value of their benefits.
(6) See the All Other Compensation Table below for additional information.
(7) Mr. Chenault retired on February 1, 2018. Therefore, Salary and Bonus data for Mr. Chenault is for the month of January.
(8) Ms. Marrs was appointed President, Global Commercial Services on September 10, 2018. Ms. Marrs is based in our London office and is paid in pounds sterling. Certain of the amounts for Ms. Marrs have been converted from pounds sterling into U.S. dollars using an exchange rate of 0.766 the average daily rate from August 2018 through October 2018 as published by AIRINC, a third-party data provider.

All Other Compensation

Name       Year       Perquisites
and Other
Personal
Benefits(1)
      Tax Payments/
Reimbursements(2)
      Company
Contributions
to Defined
Contribution
Plans(3)
      Executive Life
Insurance(4)
      Post-
employment
Payments(5)
      Total
S.J. Squeri 2018 $ 384,242 N/A     $ 255,375      $ 3,668 N/A $ 643,285
2017 $ 101,831 N/A $ 415,709 $ 3,353 N/A $ 520,893
2016 $ 79,472 N/A $ 303,750 $ 3,040 N/A $ 386,262
K.I. Chenault 2018 $ 26,148 N/A $ 19,962 $ 919,245 $ 3,406,935 $ 4,372,290
2017 $ 298,717 N/A $ 356,731 $ 7,588 N/A $ 663,036
2016 $ 285,310 N/A $ 270,000 $ 6,848 N/A $ 562,158
J.C. Campbell 2018 $ 67,093 N/A $ 180,000 $ 7,740 N/A $ 254,833
2017 $ 72,170 N/A $ 232,212 $ 7,740 N/A $ 312,122
2016 $ 73,248 N/A $ 150,000 $ 7,740 N/A $ 230,988
D.E. Buckminster 2018 $ 108,566            $ 0 $ 146,813 $ 3,221 N/A $ 258,600
2017 $ 96,944 N/A $ 221,858 $ 2,915 N/A $ 321,717
2016 $ 86,303 N/A $ 157,500 $ 2,624 N/A $ 246,427
A.E. Marrs 2018 $ 382,358 $ 504,617 $ 20,822 $ 0 N/A $ 907,797
A.D. Williams 2018 $ 59,206 N/A $ 128,813 $ 4,140 N/A $ 192,159
(1)

See the Perquisites and Other Personal Benefits table below for additional information regarding the components of this column.

(2)

For Ms. Marrs, the amount shown in this column includes tax payments in connection with her relocation to London from Singapore in 2018. These payments and reimbursements are made under a program that applies to all similarly-situated employees and is designed to facilitate moves globally.

For Mr. Buckminster, who was on international assignment in London until June 2014, trailing tax equalization payments or reimbursements have been made and recorded following the termination of his assignment in 2014 in order to address any foreign tax obligations relating to income received, awarded or earned during his assignment. In 2018, Mr. Buckminster received a net foreign tax credit of approximately $325,000 relating to payments made by the Company on his behalf in previous years. This amount was returned to the Company and is not reflected in the table above.

The conversion rate used for reporting mobility benefits in U.S. dollars varied from 0.75 to 0.766 during 2018 for Ms. Buckminster and Ms. Marrs.

(3)

This column reflects Company contributions to the U.S.-paid NEOs’ accounts under the Company’s RSP and RRP-RSP. See pages 73-75 for a further description of the RSP and the RRP-RSP. For Ms. Marrs, amount represents a contribution made to the U.K. Stakeholder Pension Plan, a defined contribution plan, during 2018.

(4)

This column reflects income imputed to the NEO under the Company’s executive life insurance program. Mr. Chenault’s amount also includes the cash surrender value ($339,147) and a lump sum payment ($575,385) under the terms of Key Executive Life Insurance Plan. For Ms. Marrs, no amount has been included, as U.K. Life insurance is provided on a non-discriminatory basis to all U.K. employees.

(5)

Post-employment payments include $3,025,000 for post-retirement office support ($500,000 one-time setup fee and $275,000 stipend for office support paid in 2018 as well as $2,250,000 payable over the next 8 years). Post-employment payments also include $105,000 for driver support for security for one year and $276,935 towards accrued vacation under the Company’s policy for U.S.-based retirement eligible employees.


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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(4)
     Security
During
Personal
Trips(4)
     International
Assignment/
Relocation(5)
     Other
Benefits(6)
     Total
S.J. Squeri 2018 $ 19,820 $ 198,219     $ 35,000 $ 81,482 $ 31,001 N/A $ 18,720 $ 384,242
2017 $ 30,000 $ 20,354 $ 35,000 N/A N/A N/A $ 16,477 $ 101,831
2016 $ 30,000 $ 0 $ 35,000 N/A N/A N/A $ 14,472 $ 79,472
K.I. Chenault 2018 $ 2,154 $ 21,771 $ 0 $ 1,505 $ 0 N/A $ 718 $ 26,148
2017 $ 21,391 $ 184,555 $ 35,000 $ 30,319 $ 19,510 N/A $ 7,942 $ 298,717
2016 $ 19,731 $ 152,538 $ 35,000 $ 48,715 $ 15,111 N/A $ 14,215 $ 285,310
J.C. Campbell 2018 $ 30,000 $ 2,093 $ 35,000 N/A N/A N/A $ 0 $ 67,093
2017 $ 30,000 $ 0 $ 35,000 N/A N/A N/A $ 7,170 $ 72,170
2016 $ 30,000 $ 0 $ 35,000 N/A N/A N/A $ 8,248 $ 73,248
D.E. Buckminster 2018 $ 30,000 $ 8,154 $ 35,000 N/A N/A $ 34,693 $ 719 $ 108,566
2017 $ 30,000 $ 0 $ 35,000 N/A N/A $ 31,225 $ 719 $ 96,944
2016 $ 30,000 $ 0 $ 35,000 N/A N/A $ 19,608 $ 1,695 $ 86,303
A.E. Marrs 2018 $ 3,864 $ 0 $ 0 N/A N/A $ 377,295 $ 1,199 $ 382,358
A.D. Williams 2018 $ 0 $ 0 $ 35,000 N/A N/A N/A $ 24,206 $ 59,206
(1)

For 2018, local and other travel benefits include local travel allowance for NEOs other than Messrs. Squeri, Chenault and Williams. The Company’s security policy requires the CEO to use for all travel purposes, to the maximum extent practicable, the automobiles and aircraft provided by the Company to executives for business travel. The calculation of the incremental cost for personal use of Company-owned automobiles and aircraft is based on the variable cost to the Company of operating the automobiles and aircraft and includes, among other things, fuel costs, maintenance costs and, in the case of aircraft, the cost of trip- related crew hotels and meals, and landing and ground handling fees. The calculation does not include fixed costs that would have been incurred regardless of whether there was any personal use of the automobiles or aircraft (e.g., purchase costs and depreciation, driver and flight crew fixed salaries and benefits, insurance costs, etc.).

(2)

The CEO’s personal use of Company aircraft is limited to $200,000 per year and the CEO is required to reimburse the Company any incremental costs in excess of $200,000 per year for travel on Company aircraft that is deemed by the SEC to be personal use. Messrs. Campbell and Buckminster’s 2018 amounts are in connection with personal travel in accordance with appropriate approvals.

(3)

The amount in this column reflects the perquisite allowance paid to the NEOs.

(4)

The amounts in these columns include costs associated with home security and security during personal trips for Messrs. Squeri and Chenault. Mr. Squeri’s amounts include $79,989 for security system installation and $1,493 for ongoing services.

(5)

The amounts shown include international tax and reporting services (not payments or reimbursements) in connection with Mr. Buckminster’s repatriation to the U.S. due to trailing tax liabilities. The services provided to Mr. Buckminster are provided to all employees on international assignment. Ms. Marrs’ amount includes relocation reimbursements and payments, excluding tax payments. These payments were made in connection with Ms. Marrs’ employment with American Express which required that she relocate her residence from Singapore to London.

(6)

This column reflects the aggregate amount of other perquisites and personal benefits provided, none of which individually exceeded the greater of $25,000 or 10% of the total amount of all perquisites and other personal benefits reported for the NEO. These other benefits consist of office parking, reimbursement for certain information technology services, and, on occasion, use of the Company’s tickets for sporting and entertainment events for personal rather than business purposes. We incur no incremental cost for the provision of such additional benefits.


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Grants of Plan-Based Awards

The following table provides information on Incentive awards granted to each of our NEOs in 2018 under the 2016 Incentive Compensation Plan.



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
($)(4)
Name   Award
Type(1)
  Grant Date    Approval
Date
  Threshold
($)
  Target
($)
  Maximum
($)
  Threshold
(#)
  Target
(#)
  Maximum
(#)
S.J. Squeri AIA 1/22/2018 $ 0   $4,500,000   $8,437,500
PG 2018-20 1/23/2018 1/22/2018 $ 0   $2,700,000   $3,375,000
SO 1/23/2018 1/22/2018 66,225 $ 97.98 $ 1,499,996
PRSU 1/23/2018 1/22/2018 0 61,236 76,545 $ 5,999,903
K.I. Chenault PG 2018-20 1/23/2018 1/22/2018 $ 0   $1,500,000   $1,875,000
RSU 1/23/2018 1/22/2018 125,841   $ 12,329,901
J.C. Campbell AIA 1/22/2018 $ 0   $3,500,000   $6,562,500
PG 2018-20 1/23/2018 1/22/2018 $ 0   $1,500,000   $1,875,000
SO 1/23/2018 1/22/2018 27,770 $ 97.98 $ 628,991
SO 4/30/2018 2/14/2018 4,046 $ 98.75 $ 100,381
PRSU 1/23/2018 1/22/2018 0 27,770 34,712 $ 2,720,905
PRSU 4/30/2018 2/14/2018 0 4,046 5,057 $ 399,543
D.E. Buckminster AIA 1/22/2018 $ 0   $2,811,781   $5,272,089
PG 2018-20 1/23/2018 1/22/2018 $ 0   $1,300,000   $1,625,000
SO 1/23/2018 1/22/2018 18,237 $ 97.98 $ 413,068
SO 4/30/2018 2/14/2018 8,093 $ 98.75 $ 200,787
PRSU 1/23/2018 1/22/2018 0 18,237 22,796 $ 1,786,861
PRSU 4/30/2018 2/14/2018 0 8,093