Annual Report — Form 10-K
Filing Table of Contents
Document/Exhibit Description Pages Size
1: 10-K Annual Report HTML 547K
2: EX-10.13 Form of Award Agreement for Executive Officers 15± 60K
3: EX-10.14 Form of Award Agreement for Executive Officers 9± 40K
4: EX-12 Computation in Support of Ratio of Earnings to HTML 22K
Fixed Charges
5: EX-13 Portions of the Company's 2007 Annual Report to HTML 1.75M
Shareholders
6: EX-21 Subsidiaries of the Company 6± 30K
7: EX-23.1 Consent of Pricewaterhousecoopers LLP HTML 10K
8: EX-31.1 Certification of Kenneth I. Chenault, Chief HTML 12K
Executive Officer
9: EX-31.2 Certification of Daniel T. Henry , Chief Financial HTML 12K
Officer
10: EX-32.1 Section 906 CEO and CFO Certifications HTML 11K
EX-10.14 — Form of Award Agreement for Executive Officers
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EXHIBIT 10.14
AMERICAN EXPRESS COMPANY
2007 INCENTIVE COMPENSATION PLAN
PERFORMANCE GRANT
(ALSO KNOWN AS THE 20__ INCENTIVE AWARD)
TO
-------------------------
Name of Employee
------------------------- -----------------------------------
Award Date Expiration Date of Award Period
We are pleased to inform you that, pursuant to the Company's 2007
Incentive Compensation Plan, as amended (the "Plan"), the Compensation and
Benefits Committee (the "Committee") of the Board of Directors (the "Board")
of American Express Company (the "Company"), made an award of a performance
grant (also known as the 20__ Incentive Award) to you as hereinafter set forth
(the "Award") under the Plan as of the award date specified above (the "Award
Date"). This Award is subject to the Detrimental Conduct Provisions
established by the Committee, and as from time to time amended.
1. GENERAL. You have been granted the Award subject to the provisions of the
Plan and the terms, conditions and restrictions set forth in this agreement
(this "Agreement"). The period beginning on the first day of the fiscal year
of the Company in which the Award Date occurs and ending on the Expiration
Date specified above being the "Award Period." The Schedule A Value (as that
term is defined below in Subparagraph 3(b)), if any, will be determined as
specified in Paragraph 3.
2. REQUIREMENT OF EMPLOYMENT. Your rights to the Cash Value and the Number of
Restricted Shares or Restricted Stock Units, if any (as those terms are
defined below) under Subparagraph 4(b) hereof, shall be provisional and shall
be canceled if your continuous employment with the Company and its Affiliates
or your Related (as that term is defined in the Plan) (hereinafter
collectively referred to as "employment with the American Express companies"),
terminates for any reason on or before the payment date as set forth in
Subparagraph 4(b). Whether and as of what date your employment with the
American Express companies shall terminate if you are granted a leave of
absence or commence any other break in employment intended by the Company to
be temporary, shall be determined by the Committee.
3. DETERMINATION OF THE SCHEDULE A VALUE, CASH VALUE AND THE NUMBER OF
RESTRICTED SHARES OR RESTRICTED STOCK UNITS.
(a) Except as otherwise provided below in this Paragraph 3 and in Paragraphs 2
and 5 hereof, there shall be paid to you in accordance with Paragraph 4
hereof, the Schedule A Value as of the last day of the Award Period, if any,
as provided in Subparagraph 3(b).
Page 1 of 8
(b) SCHEDULE A VALUE.
(i) Except as otherwise provided in this Paragraph 3, the Schedule A
Value as of the last day of the Award Period will be equal to the amount,
if any, determined by the Committee based on the performance (i.e., 20__
Return on Equity and 20__ Earnings Per Share) of the Company, pursuant to
Schedule A to this Agreement. However, in no event will the Schedule A
Value be greater than the maximum value as set forth in Schedule A to
this Agreement.
(ii) In the application of Schedule A to this Agreement after the
end of the Award Period for purposes of determining the Schedule A Value
pursuant to this Subparagraph 3(b), (A) if the 20__ Return on Equity or
the 20__ Earnings Per Share is less than the level needed to have some
Schedule A Value, there shall be no Schedule A Value, and (B) if the 20__
Return on Equity and the 20__ Earnings Per Share are equal to or greater
than those levels needed to have some Schedule A Value and less than or
equal to the maximum specified levels and are not represented on the
table, the Schedule A Value shall be determined by straight-line
interpolation from the amounts specified in such table immediately less
than and greater than the amounts actually attained.
(iii) The Committee shall determine in its own discretion what
portion of the Schedule A Value, if any (as adjusted in accordance with
Subparagraph 3(c) below), shall be payable in cash (the "Cash Value"),
and what portion shall be denominated in restricted shares or restricted
stock units of the Company ("the RSA" or "the RSU"), in accordance with
Paragraph 4 below. The RSA or the RSU shall have the terms substantially
as set forth in the form of restricted stock or restricted stock unit
award granted generally under the Plan, or its successor, except that the
RSA or the RSU shall vest pursuant to a period determined in the
Committee's discretion, except that such vesting period shall not be less
than one year from date of grant, and (B) be forfeitable only if your
employment with the American Express companies terminates by reason of
voluntary resignation or terminates for cause (that is, violation of the
Code of Conduct as in effect from time to time) prior to the applicable
vesting dates. The number of restricted shares or restricted stock units
of the Company comprising the RSA or the RSU (the "Number of Restricted
Shares" or the "Number of Restricted Stock Units") shall be determined by
dividing such portion of the Schedule A value so designated by the
Committee, if any, by the closing price of the shares on the date that
the Committee approves payout of the Awards, and shall be payable in the
form of an RSA or an RSU in accordance with Paragraph 4 below.
(iv) For purposes of this Award, all accounting terms are defined in
accordance with generally accepted accounting principles as set forth in
the Company's annual audited financial statements, except as otherwise
provided below (which will take into account, in each case, the expenses
and other financial effect for the applicable year(s) of performance
grants under the Plan):
(A) "Net Income" means, for any given year, the after-tax net
income (or loss) of the Company or of a segment or other part of the
Company, as the case may be, for such year as adjusted below, as
reported by the Company. The calculation of Net Income, for any
given year, will be adjusted to exclude:
o reported cumulative effect of accounting changes;
o reported income and losses from discontinued operations; and
o reported extraordinary gains and losses as determined under
generally accepted accounting principles.
Page 2 of 8
(B) "Average Annual Shareholders' Equity" means, for any given
year, the sum of the total shareholders' equity of the Company or of
a segment or other part of the Company, as the case may be, as of the
first day of such year and as of the end of each month during such
period (each as reported by the Company), divided by 13.
(C) "Return on Equity" means, for any given year, the Net Income
for such year divided by the Average Annual Shareholders' Equity for
such year.
(D) "Earnings Per Share" means, for any given year, the diluted
earnings (or loss) per share of the Company for such year, as
reported by the Company. The calculation of Earnings Per Share, for
any given year, will be adjusted in the same fashion as Net Income for
such year.
(v) To the extent permissible for purposes of Section 162(m) of the
Internal Revenue Code of 1986, as amended (the "Code"), in the event of
any change in the corporate capitalization of the Company, such as by
reason of any stock split, or a material corporate transaction, such as
any merger of the Company into another corporation, any consolidation of
the Company and one or more corporations into another corporation, any
separation of the Company (including a spin-off or other distribution of
stock or property by the Company), any reorganization of the Company
(whether or not such reorganization comes within the definition of such
term in Section 368 of the Code), or any partial or complete liquidation
by the Company, other than a normal cash dividend, if the Committee shall
determine that such a change equitably requires an adjustment in the
calculation or terms of Return on Equity and/or Earnings Per Share, on
the grounds that any such change would produce an unreasonable value,
such equitable adjustment will be made by the Committee. Any such
determination by the Committee to reflect such change under this
Subparagraph 3(b)(v) shall be final, binding and conclusive.
(c) As soon as practicable after the last day of the Award Period, the
Committee may determine, in its sole discretion, that the Schedule A Value, if
any (as determined above in Subparagraph 3(b)), may be adjusted downward, but
in no event upward, by a percentage from 0-100% (that is, to a value of zero).
In no event may the Committee amend any provision hereof so as to increase or
otherwise adjust upward the Schedule A Value. In exercising its discretion to
make a downward adjustment, the Committee may take into account factors such
as the increase in shareholder value (as indicated, for example, by
shareholder return, earnings growth and return on equity), customer
satisfaction (as indicated, for example, by customer satisfaction measures,
client retention and growth in products and services), employee satisfaction
(as indicated, for example, by the employee values survey results),
implementation of AEQL initiatives (as indicated, for example, by process
changes that achieve significant results), achievement of reengineering
initiatives (as indicated, for example, by cost savings), and such other
factors deemed relevant by the Committee; provided that any such determination
by the Committee need not be made in a uniform manner and may be made
selectively among holders of awards of performance grants, whether or not such
award holders are similarly situated.
Page 3 of 8
(d) The Committee's determinations as to the Schedule A Value, the Cash Value
and the Number of Restricted Shares or the Number of Restricted Stock Units
pursuant to this Agreement shall be final, binding and conclusive upon you and
all persons claiming under or through you.
4. PAYMENT OF AWARD.
(a) As soon as practicable after the last day of the Award Period, the
Committee shall determine whether the conditions of Paragraphs 2 and 3 hereof
have been met and, if so, shall ascertain the Schedule A Value (and any
negative adjustment thereto), Cash Value and the Number of Restricted Shares
or the Number of Restricted Stock Units, if any, in accordance with Paragraph
3 hereof.
(b) If the Committee determines that there is no Schedule A Value, this Award
will be canceled. If the Committee determines that there is some Schedule A
Value, however, the Cash Value as determined pursuant to Paragraph 3 hereof
shall become payable to you in cash, and the Number of Restricted Shares or
the Number of Restricted Stock Units shall be issued to you in the form of a
restricted stock or restricted stock unit award under the Plan, within fifteen
business days following the regularly scheduled payroll payment date of the
applicable pay period beginning after January 31 of the year following the
Award Period, but in no event later than 90 days after January 31 of the year
following the Award Period (or at such other time or times as the Committee
shall determine as provided in Paragraph 6 below).
5. TERMINATION OF EMPLOYMENT AFTER THE AWARD PERIOD BUT ON OR BEFORE THE
PAYMENT DATE. If, after the last day of the Award Period and on or before the
date specified above in Subparagraph 4(b), but during a period when you have
been in continuous employment with the American Express companies since the
Award Date, you terminate your employment with the American Express companies
for any reason, then you and all others claiming under or through you shall
not be entitled to receive any amounts or awards under this Award, except as
otherwise determined by the Committee in its sole discretion.
6. DEFERRAL OR ACCELERATION OF PAYMENT OF AWARD. Any payments to be made under
this Award may be deferred or accelerated in such manner as the Committee
shall determine; provided, however, that any such deferral or acceleration
must comply with the applicable requirements of Section 409A of the Code. As
to such a deferral of payment, any such payment in excess of the amount that
was originally payable to you under this Agreement will be based on a
reasonable interest rate or on one or more predetermined actual investments
(whether or not assets associated with the amount are actually invested
therein) as determined by the Committee, and as to such an acceleration of
payment to you under this Agreement, any such payment will be discounted to
reasonably reflect the time value of money as determined by the Committee.
7. CHANGE IN CONTROL.
(a) Notwithstanding anything in this Award to the contrary, if you have not
received payment under this Award as discussed in Subparagraph 4(b) above, and
within two years following a Change in Control, as that term is defined in the
Company's Senior Executive Severance Plan, you experience a termination of
employment that would otherwise entitle you to receive the payment of severance
benefits under the provisions of the severance plan that you participate in as
of the date of such termination of employment, then you shall be paid under
this Award, within five days after the date of such termination of employment,
a cash payment under this Award equal to the value of (i) (A) the average award
paid or payable to you under the 2006 and 2007
Page 4 of 8
Annual Incentive Award or such other annual incentive award program of the
Company or one of its subsidiaries that you participated in at the time of
such prior payment for the two years prior to the Change in Control, or (B) if
you have not received two such awards, the most recent award paid or payable
(or guideline amount payable, if you have not previously received any such
award) to you under the applicable annual incentive award program of the
Company or one of its subsidiaries at the time of such prior payment),
multiplied by (ii) the number of full or partial months that have elapsed
during the Award Period at the time of such termination of employment divided
by 12.
(b) The Committee reserves the right to amend or delete this Paragraph 7 in
whole or in part at any time and from time to time; provided, that upon and
following the occurrence of a Change in Control, the Committee may not amend
this Paragraph 7 in a manner that is detrimental to your rights without your
express written consent. Any amendment of the definition of "Change in Control"
in the Senior Executive Severance Plan will be deemed to be an amendment
permitted under this Paragraph.
8. TAX WITHHOLDING AND FURNISHING OF INFORMATION. There shall be withheld from
any payment of cash or vesting of any restricted shares or restricted stock
units under this Award, such amount, if any, as the Company determines is
required by law, including, but not limited to, U.S. federal, state, local or
foreign income, employment or other taxes incurred by reason of making of the
Award or of such payment. It shall be a condition precedent to the obligation
of the Company to make payments under this Award that you (or those claiming
under or through you) promptly provide the Company with all forms, documents
or other information reasonably required by the Company in connection with the
Award.
9. RIGHTS NOT ASSIGNABLE. Your rights and interests under the Award and the
Plan may not be sold, assigned, transferred, or otherwise disposed of, or made
subject to any encumbrance, pledge, hypothecation or charge of any nature,
except that you may designate a beneficiary pursuant to Paragraph 10 hereof.
If you (or those claiming under or through you) attempt to violate this
Paragraph 9, such attempted violation shall be null and void and without
effect, and the Company's obligation to make any further payments to you (or
those claiming under or through you) hereunder shall terminate.
10. BENEFICIARY DESIGNATION. Subject to the provisions of the Plan, you may,
by completing a form acceptable to the Company and returning it to the
Corporate Secretary's Office, at 200 Vesey Street, New York, New York 10285,
name a beneficiary or beneficiaries to receive any payment to which you may
become entitled under this Agreement in the event of your death. You may
change your beneficiary or beneficiaries from time to time by submitting a new
form to the Corporate Secretary's Office at the same address. If you do not
designate a beneficiary, or if no designated beneficiary is living on the date
any amount or award becomes payable under this Agreement, such payment will be
made to the legal representatives of your estate, which will be deemed to be
your designated beneficiary under this Agreement.
11. ADMINISTRATION. Any action taken or decision made by the Company, the
Board or the Committee or its delegates arising out of or in connection with
the construction, administration, interpretation or effect of the Plan or this
Agreement shall lie within its sole and absolute discretion, as the case may
be, and shall be final, conclusive and binding upon you and all persons
claiming under or through you. By accepting this Award or other benefit under
the Plan, you and each person claiming under or through you shall be
conclusively deemed to have indicated acceptance and ratification of, and
consent to, any action taken or decision made under the Plan by the Company,
the Board or the Committee or its delegates.
Page 5 of 8
12. CHANGE IN CONTROL PAYMENTS. This Paragraph shall apply in the event of
Change in Control (as defined in the American Express Senior Executive
Severance Plan, as amended from time to time).
(a) In the event that any payment or benefit received or to
be received by you hereunder in connection with a Change in Control or
termination of your employment (such payments and benefits, excluding Gross-Up
Payment (as hereinafter defined), being hereinafter referred to collectively
as the "Payments"), will be subject to the excise tax referred to in Section
4999 of the Code (the "Excise Tax"), then (i) if you are classified in Band 70
(or its equivalent) or above immediately prior to such Change in Control (a
"Tier 1 Employee"), the Company shall pay to such Tier 1 Employee, within five
days after receipt by such Tier 1 Employee of the written statement referred
to in Subparagraph (e) below, an additional amount (the "Gross-Up Payment")
such that the net amount retained by such Tier 1 Employee, after deduction of
any Excise Tax on the Payments and any federal, state and local income and
employment taxes and Excise Tax upon the Gross-Up Payment, shall be equal to
the Payments and (ii) if you are other than a Tier 1 Employee, the Payments
shall be reduced to the extent necessary so that no portion of the Payments is
subject to the Excise Tax but only if (A) the net amount of all Total Payments
(as hereinafter defined), as so reduced (and after subtracting the net amount
of federal, state and local income and employment taxes on such reduced Total
Payments), is greater than or equal to (B) the net amount of such Total
Payments without any such reduction (but after subtracting the net amount of
federal, state and local income and employment taxes on such Total Payments
and the amount of Excise Tax to which you would be subject in respect of such
unreduced Total Payments); provided, however, that you may elect in writing to
have other components of your Total Payments reduced prior to any reduction in
the Payments hereunder.
(b) For purposes of determining whether the Payments will be
subject to the Excise Tax, the amount of such Excise Tax and whether any
Payments are to be reduced hereunder: (i) all payments and benefits received
or to be received by you in connection with such Change in Control or the
termination of your employment, whether pursuant to the terms of this
Agreement or any other plan, arrangement or agreement with the Company, any
Person (as such term is defined in the Company's Senior Executive Severance
Plan) whose actions result in such Change in Control or any Person affiliated
with the Company or such Person (all such payments and benefits, excluding the
Gross-Up Payment and any similar gross-up payment to which a Tier 1 Employee
may be entitled under any such other plan, arrangement or agreement, being
hereinafter referred to as the "Total Payments"), shall be treated as
"parachute payments" (within the meaning of Section 280G(b)(2) of the Code)
unless, in the opinion of the firm serving, immediately prior to the Change in
Control, as the Company's independent auditors, or if that firm refuses to
serve, by another qualified firm, whether or not serving as independent
auditors, designated by the Administration Committee under the American
Express Senior Executive Severance Plan (the "Firm"), such payments or
benefits (in whole or in part) do not constitute parachute payments, including
by reason of Section 280G(b)(2)(A) or Section 280G(b)(4)(A) of the Code; (ii)
no portion of the Total Payments the receipt or enjoyment of which you shall
have waived at such time and in such manner as not to constitute a "payment"
within the meaning of Section 280G(b) of the Code shall be taken into account;
(iii) all "excess parachute payments" within the meaning of Section 280G(b)(l)
of the Code shall be treated as subject to the Excise Tax unless, in the
opinion of the Firm, such excess parachute payments (in whole or in part)
represent reasonable compensation for services actually rendered (within the
meaning of Section 280G(b)(4)(B) of the Code) in excess of the Base Amount
(within the meaning of Section 280G(b)(3) of the Code) allocable to such
reasonable compensation, or are otherwise not subject to the Excise Tax; and
Page 6 of 8
(iv) the value of any noncash benefits or any deferred payment or benefit
shall be determined by the Firm, in accordance with the principles of Sections
280G(d)(3) and (4) of the Code and regulations or other guidance thereunder.
For purposes of determining the amount of the Gross-Up Payment in respect of a
Tier 1 Employee and whether any Payments in respect of a Participant (other
than a Tier 1 Employee) shall be reduced, shall be deemed to pay federal
income tax at the highest marginal rate of federal income taxation (and state
and local income taxes at the highest marginal rate of taxation in the state
and locality of your residence, net of the maximum reduction in federal income
taxes which could be obtained from deduction of such state and local taxes) in
the calendar year in which the Gross-Up Payment is to be made (in the case of
a Tier 1 Employee) or in which the Payments are made (if you are other than a
Tier 1 Employee). The Firm will be paid reasonable compensation by the Company
for its services.
(c) In the event that the Excise Tax is finally determined
to be less than the amount taken into account hereunder in calculating the
Gross-Up Payment, then the Tier 1 Employee will be required to repay to the
Company on the fifth business day after demand an amount equal to the excess
of the earlier payment over the redetermined amount (the "Excess Amount"),
together with interest on such amount at the lowest applicable federal rate
(as defined in Section 1274(d) of the Code or any successor provision
thereto), compounded semi-annually (the "Section 1274 Rate"), from the date of
the Tier 1 Employee's receipt of such Excess Amount until the date of such
repayment (or such lesser rate (including zero) as may be designated by the
Firm such that the Excess Amount and such interest will not be treated as a
parachute payment as previously defined). In the event that the Excise Tax is
finally determined to exceed the amount taken into account hereunder in
calculating the Gross-Up Payment (including by reason of any payment the
existence or amount of which cannot be determined at the time of the Gross-Up
Payment), within five business days of such determination, the Company will
pay to the Tier 1 Employee an additional amount, together with interest
thereon from the date such additional amount should have been paid to the date
of such payment, at the Section 1274 Rate (or such lesser rate (including
zero) as may be designated by the Firm such that the amount of such deficiency
and such interest will not be treated as a parachute payment as previously
defined). The Tier 1 Employee and the Company shall each reasonably cooperate
with the other in connection with any administrative or judicial proceedings
concerning the amount of any Gross-Up Payment.
(d) As soon as practicable following a Change in Control,
the Company shall provide to each Tier 1 Employee and to each other
Participant with respect to whom it is proposed that Payments be reduced, a
written statement setting forth the manner in which the Total Payments in
respect of such Tier 1 Employee or other Participant were calculated and the
basis for such calculations, including, without limitation, any opinions or
other advice the Company has received from the Firm or other advisors or
consultants (and any such opinions or advice which are in writing shall be
attached to the statement).
13. MISCELLANEOUS. Neither you nor any person claiming under or through you
shall have any right or interest, whether vested or otherwise, in the Plan or
Page 7 of 8
the Award, unless and until all of the terms, conditions and provisions of the
Plan and this Agreement shall have been complied with. In addition, neither
the adoption of the Plan nor the execution of this Agreement shall in any way
affect the rights and powers of any person to dismiss or discharge you at any
time from employment with the American Express companies. Notwithstanding
anything herein to the contrary, neither the Company nor any of its Affiliates
(as that term is defined in the Plan) nor their respective officers,
directors, employees or agents shall have any liability to you (or those
claiming under or through you) under the Plan, this Agreement or otherwise on
account of any action taken, or decision not to take any action made, by any
of the foregoing persons with respect to the business or operations of the
Company or any of its Affiliates (as that term is defined in the Plan),
despite the fact that any such action or decision may adversely affect in any
way whatsoever Average Annual Shareholders' Equity, Earnings Per Share, Net
Income or other financial measures or amounts which are accrued or payable or
any of your other rights or interests under this Agreement.
14. GOVERNING LAW. The validity, construction, interpretation, administration
and effect of this Agreement shall be governed by the substantive laws, but
not the choice of law rules, of the State of New York.
AMERICAN EXPRESS COMPANY
By the Compensation and
Benefits Committee of the
Board of Directors:
By
-----------------------------
NOTWITHSTANDING ANY CONTRARY PROVISION IN THE AMERICAN EXPRESS COMPANY 2007
INCENTIVE COMPENSATION PLAN MASTER AGREEMENT, THE COMPANY RESERVES THE RIGHT
TO CORRECT NONMATERIAL CLERICAL ERRORS IN, AND MAKE SUBSEQUENT NONMATERIAL
CLARIFICATIONS TO, ANY AWARD AGREEMENT IN THE FUTURE, WITHOUT PRIOR
NOTIFICATION TO PARTICIPANTS.
Page 8 of 8
SCHEDULE A
20__ Incentive Awards: Proposed AXP Earnings Per Share/Return on Equity Grid
for Determining Maximum Award Value
(subject to award agreement and discretionary downward adjustment)
[Enlarge/Download Table]
20__ AXP EARNINGS PER SHARE (DILUTED)
20__ AXP LESS THAN $____ $____ $____ $____ $____ $____ OR MORE
RETURN ON EQUITY Value Max. Value Max. Value Max. Value Max. Value Max. Value
__% OR MORE $0 $ $ $ $ $
% 0 $ $ $ $ $
% 0 $ $ $ $ $
% 0 $ $ $ $ $
% 0 $ $ $ $ $
LESS THAN __% 0 0 0 0 0 0
Note: Straight-line interpolation would apply for any actual performance level
that falls between two performance levels shown on the grid.
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