UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): November 21, 2005
AMERICAN EXPRESS COMPANY
(Exact name of registrant as specified in its charter)
New York 1-7657 13-4922250
------------------------ ------------------------ ------------------------
(State or other (Commission File Number) (IRS Employer
jurisdiction of Identification No.)
incorporation)
200 Vesey Street, World Financial Center
New York, New York 10285
--------------------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
|
Registrant's telephone number, including area code: (212) 640-2000
Check the appropriate box below if the Form 8-K filing is
intended to simultaneously satisfy the filing obligation of the
registrant under any of the following provisions (see General Instruction
A.2. below):
Written communications pursuant to Rule 425 under the Securities ----- Act (17 CFR 230.425)
Soliciting material pursuant to Rule 14a-12 under the Exchange Act ----- (17 CFR 240.14a-12)
Pre-commencement communications pursuant to Rule 14d-2(b) under the ----- Exchange Act (17 CFR 240.14d-2(b))
Pre-commencement communications pursuant to Rule 13e-4(c) under the ----- Exchange Act (17 CFR 240.13e-4(c))
Item 1.01 Entry into a Material Definitive Agreement
On November 21, 2005, the Compensation and Benefits Committee (the "Committee") of the Board of Directors of American Express Company (the "Company") approved the Company's 2006 Pay-for-Performance Deferral Program (the "2006 Deferral Program"). A brief summary of the terms and conditions of the 2006 Deferral Program is set forth below and a copy of the 2006 Pay-for-Performance Deferral Program Guide is filed as Exhibit 10.1 to this report and is hereby incorporated by reference.
The 2006 Deferral Program permits eligible senior level employees to defer payment of their 2006 base salary, cash bonus related to the 2006 performance year (to be paid in or about February 2007) or any eventual payout under the Portfolio Grant-XV Award (payable in or about February 2007) under the Company's 1998 Incentive Compensation Plan, as amended; PROVIDED, HOWEVER, that generally, the maximum total amount that a participant may defer into his or her deferral account from all sources under the 2006 Deferral Program is one times base salary. The program annually credits interest equivalents to, or reduces the value of, deferred amounts according to a schedule based on the reported annual return on equity ("ROE") of the Company. In adopting the 2006 Deferral Program, the Committee set the overall schedule of rates at which interest equivalents are credited to deferred amounts, such that the rates for amounts deferred under the 2006 Deferral Program range from 0% (if the Company's ROE for a given year is greater than 10% but less than or equal to 14%) to a maximum of 14% (if the Company's ROE for a given year is 35% or more). If the Company's annual ROE is 10% or less for a given year, then the balance maintained in a participant's 2006 deferral account will be reduced in value by an amount equal to the Company's ROE for such year less 11%. The Committee may adjust the schedule, prospectively or retroactively, in its sole discretion without a participant's prior consent or notice.
If a participant elects to defer any compensation under the 2006 Deferral Program, he or she must defer such compensation for at least five years. In the event a participant's employment by the Company or any of its subsidiaries terminates prior to the end of the minimum five-year deferral period for any reason other than retirement, disability or death, then the participant's 2006 deferral account would be paid out in a lump sum as soon as practicable after termination of employment with interest equivalents credited or debited for the entire period of deferral at the lesser of (i) the initial deferred amount credited or debited annually at the ROE-based rate described above or (ii) the initial deferred amount credited annually with the rate of return on the applicable five-year U.S. Treasury note. In the event a participant's employment by the Company or any of its subsidiaries terminates on or after the end of the minimum five-year deferral period for any reason other than retirement, disability or death, then the participant's 2006 deferral account would be paid out in a lump sum with interest equivalents credited or debited annually using the ROE-based rate described above. In addition, payment of a participant's deferral account may be accelerated upon a change in control of the Company.
The Committee may delay payment to a participant under the 2006 Deferral Program until such payment is fully deductible under Section 162(m) of the U.S. Internal Revenue
Code of 1986, as amended. In addition, payment of a participant's 2006 deferral account following retirement or termination of the participant is subject to a six month delay, as required by the American Jobs Creation Act of 2004 and the administrative guidance issued thereunder (the "AJCA"). The Committee may also administer, operate or amend the 2006 Deferral Program in conformity with the AJCA in an effort to maintain the effectiveness of deferral elections.
Item 9.01 Financial Statements And Exhibits
(d) Exhibits
10.1 American Express Company 2006 Pay-for-Performance Deferral Program Guide.
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
AMERICAN EXPRESS COMPANY
(REGISTRANT)
By: /s/ Stephen P. Norman
Name: Stephen P. Norman
Title: Secretary
Date: November 23, 2005
|
EXHIBIT INDEX
Exhibit
No. Description
-------- -----------------------------------------------------------------
10.1 American Express Company 2006 Pay-for-Performance Deferral
Program Guide.
|
EXHIBIT 10.1
AMERICAN EXPRESS COMPANY
2006 PAY-FOR-PERFORMANCE DEFERRAL PROGRAM GUIDE
2006 Pay-for-Performance
Deferral Program Guide
[LOGO OF AMERICAN EXPRESS COMPANY]
American Express Company
2006 PAY-FOR-PERFORMANCE
DEFERRAL PROGRAM GUIDE
Table of Contents
Page
----
- Introduction 3-5
- Timing of Request 6
- Initial Deferral Amount 6
- Period of Deferral 6
- "Retirement" 7
- Six-Month Delay 7
- Deferral Bookkeeping Account 7
- "Interest" Equivalents on Deferred Amount 7
- ROE Formula Rate Schedule for 2006 Program 8
- Payout Provisions 9-11
- U.S. Federal/State/Local Income Tax 11
- U.S. Social Security Tax 12
- Irrevocability of Deferral Requests; Hardship Withdrawals 13
- Some Caveats 13
- Additional Details on Initial Deferred Amount 14
- Effect of Deferred Amounts on Pension Calculations 15
- Impact of Deferral on U.S. Section 401(k) Plans 16
and Other Benefit Plans
Appendix A -- Deferral Election Forms
- Worksheet for 2006 Pay-for-Performance Deferral Program 18
(required for any deferral request using the paper forms)
- Election Form for 2006 Annual Incentive Award 19-20
(otherwise payable on or about February 2007)
- Election Form for 2006 Base Salary 21-22
(otherwise payable in 2006)
- Election Form for PG-XV Award Granted in 2/04 23-24
(otherwise payable on or about February 2007)
- Comprehensive Designation of Beneficiary Form 25-26
(optional for any deferral request)
Appendix B -- "Change in Control" 27-29
|
American Express Company
2006 PAY-FOR-PERFORMANCE
DEFERRAL PROGRAM GUIDE
Introduction
These are the basic guidelines of the Compensation and Benefits Committee of the Board of Directors of American Express Company (the "Committee") concerning requests for deferred payment of:
o any cash award related to the 2006 performance year (a "2006 Annual Incentive Award") otherwise payable on or about February 2007, under the American Express Annual Incentive Award Plan or any successor plan or plans (an "Incentive Plan");(a)
o 2006 base salary otherwise payable in 2006 under the AXP Salary Deferral Plan or any successor plan or plans (a "Deferral Plan"); and
o any eventual payout under the Portfolio Grant-XV Award granted on or about 2004 and otherwise payable on or about February 2007 ("PG-XV Award") under the American Express Company 1998 Incentive Compensation Plan, as amended and restated (the "1998 Plan").(b)
A deferral of your 2006 Annual Incentive Award, 2006 base salary and/or PG-XV Award is part of the 2006 Pay-for-Performance Deferral Program (the "2006 Program").
Eligible employees will be notified about the 2006 Program. Generally, you are eligible if you are an "active" (as defined below) senior level employee (band 50 or above) who participates in the applicable Incentive Plan and: (i) is subject to U.S. income taxes; or (ii) is designated by the Company as an eligible U.S. Dollar-Paid Expatriate who is a U.S. Citizen or U.S. Greencard holder. If you are an eligible employee and the Company offers you the opportunity to participate in the 2006 Program, then you may request deferred payment of a 2006 Annual Incentive Award, 2006 base salary and/or PG-XV Award subject to the provisions of this Guide, the applicable Incentive Plan, the applicable Deferral Plan and the 1998 Plan.
(a) The Committee may include other incentive programs or awards in its sole discretion. References in this Guide to "2006 Annual Incentive Award" and "Incentive Plan" shall include such other incentive arrangements determined by the Committee.
(b) The Committee may include other Performance Grants in its sole discretion. References in this Guide to "PG-XV" shall include such other Performance Grants determined by the Committee.
You must be an "active" employee (i.e., providing services to the Company or an approved subsidiary) on December 31, 2005 and during the remainder of 2006 to participate in the 2006 Program. Employees who become newly eligible during 2006 and are offered the opportunity to participate in the 2006 Program by the Company may request deferred payment of their post-election 2006 base salary and the post-election portion of their 2006 Annual Incentive Award if they make their request to defer no later than 30 days after their first day of eligibility (e.g., date of employment for new hires). If your employee status changes to "inactive" during the year for any reason, including, but not limited to, severance, or if your employment terminates (for any reason, including, but not limited to, retirement, disability or death), all deferral elections will become immediately void except for any amounts already deferred prior to such change in status.
If you elect to defer a portion of your base salary and your employee status changes to "inactive" (as described above) during the year, your bi-weekly base salary deductions will be discontinued and previous deductions will be credited to your account. In the case of a leave of absence, the bi-weekly base salary deductions in effect prior to the leave will resume when you return from leave to "active" status. Your initial deferral amount for the purposes of the 2006 Program, therefore, will be reduced.
MODIFICATION OR TERMINATION OF 2006 PROGRAM
Any terms and features of, and benefits and rights under, the 2006 Program and your deferral election may be interpreted, modified or terminated by the Committee in its sole discretion in any manner and at any time without your prior consent or notice (including, but not limited to, alignment with legislative and regulatory developments) provided that such interpretation, modification or termination shall not cause deferred amounts to fail to meet the requirement for favorable tax treatment pursuant to the AJCA, applicable regulations thereunder, and other IRS guidance. The ROE Formula Rate applied to your deferred balance may be changed, prospectively or retroactively, in the sole discretion of the Committee without your prior consent or notice.
NEW FOR 2006
o Interest equivalents to be credited under the ROE formula rate have changed for the 2006 Program to reflect the adjusted ROE targets following the spin-off of Ameriprise Financial, Inc. by the Company during 2005.
o As previously mentioned, Congress passed legislation (known as the American Jobs Creation Act of 2004 (the "AJCA")), which generally became effective in 2005 and made significant changes to the area of nonqualified deferred compensation. In December of 2004 and September of 2005, the IRS issued guidance on the application of the new rules applicable to nonqualified deferred compensation. As a result of this additional guidance, the following changes have been made for the 2006 Program:
o Under the 2005 Program, employees were only allowed to make deferral elections for PG-XVI (payable in 2008) because it was unclear whether PG Awards would qualify as "performance-based
compensation" under the rules and thereby qualify for later elections. Under the additional guidance, it appears at this time that PG Awards do qualify as performance-based compensation. Accordingly, the Company is returning to its prior practice of permitting deferral elections for PG Awards in the year before the final year of the applicable performance period. Therefore, the Company is allowing employees to make deferral elections with respect to PG-XV (payable in 2007) under the 2006 Program.
o In the past, the Company has continued to treat individuals as employees during their serial severance period, and delayed distribution of their deferred amounts until the end of such period. The additional guidance makes clear that the Company may not treat individuals as employees during their severance periods for determining when the payments will commence, and whether the payments will follow the employee's election or distributed in a lump sum. Accordingly, the Company must now commence distributions of an employee's deferred amounts that are subject to the AJCA on his or her actual date of termination (subject to a six-month delay). Additionally, the Company will use the actual date of termination to determine whether payments will follow the employee's election or distributed in a lump sum. The Company will continue to define "retirement" for the 2006 Program and prior years' programs as the attainment of age 55 and 10 actual or deemed years of service. For existing deferred amounts that are not subject to the AJCA, the Company intends on continuing to administer the distribution of such amounts in accordance with its prior practice, to the extent such continued administration is permissible.
o Despite the issuance of the additional guidance, many issues remain unclear and future guidance is expected to be issued in 2006. Accordingly, any terms and features of, and rights and benefits under, the 2006 Program and your deferral election may be interpreted, modified or terminated by the Committee in its sole discretion in any manner and at any time without your prior consent or notice (including, but not limited to, deferring the payment date and alignment with legislative and regulatory developments) in an effort to cause deferred amounts to meet the requirement for favorable tax treatment pursuant to the AJCA, applicable regulations thereunder, and other IRS guidance.
o The Company has created a new online enrollment process for deferral elections under the 2006 Program. For the 2006 Program, employees may continue to make deferral elections manually by submitting paper forms. However, you are strongly encouraged to use the new online enrollment process instead.
TIMING OF REQUEST
Your request for deferral must be received on or before Saturday, December 31, 2005 and is irrevocable as of 11:59 PM EST on December 31, 2005. If your request for deferral form is not received by this date, the deferral election will not be effective. However, employees who become newly eligible during 2006 may request deferred payment of their post-election 2006 base salary and the post-election portion of their 2006 Annual Incentive Award if they make their request to defer no later than 30 days after their first day of eligibility (e.g., date of employment for a new hire).
INITIAL DEFERRED AMOUNT
You can request to defer from one or more of the following sources provided you defer a minimum of $5,000 from each source you select:
o any 2006 Annual Incentive Award that would otherwise be payable for 2006 performance (e.g., otherwise payable on or about February 2007);
o 2006 base salary; and/or
o PG-XV Award otherwise payable on or about February 2007.
The combined amounts that you elect to defer from your 2006 Annual Incentive Award, 2006 base salary and/or PG-XV Award is the "Initial Deferred Amount."
The maximum total amount which you may elect to defer from your 2006 Annual Incentive Award, 2006 base salary and/or PG-XV award combined is 100% of your annual base salary as of the later of December 31, 2005 or the date that you become eligible to participate. However, the maximum total amount which employees who become newly eligible may elect to defer from their 2006 base salary is 100% of their post-election 2006 base salary.
Important additional details on the "Initial Deferred Amount" are shown on page 14 of this Guide.
PERIOD OF DEFERRAL
You may request that payment(s) be deferred until one of the following (see also section on "Payout Provisions" on pages 9 to 11 of this Guide):
o a specific date, at least five years from date of deferral (i.e., February 1, 2012 for base salary, Annual Incentive Award deferrals, and PG-XV deferrals) or later; or
o your retirement (as defined below); or
o a specified date after your retirement (but not later than 10 years after retirement).
Your payment request is subject to the conditions described in this Guide.
"RETIREMENT"
"Retirement" means the date your employment terminates following your attainment of age 55 and 10 actual or deemed years of service with American Express Company or its affiliates. You will be considered to have terminated your employment as of your actual date of separation, and the Company will commence distribution of your 2006 deferrals using such date (subject to a six-month delay).
SIX-MONTH DELAY
Pursuant to the AJCA, payments to certain employees following retirement or termination must be delayed by six months. Given the difficulty in identifying affected participants, and to ensure compliance with this requirement and to protect participants from possible penalties under the AJCA, the Company will delay payments following retirement or termination to all participants by six-months. THEREFORE, REGARDLESS OF YOUR ELECTION OR AS OTHERWISE STATED IN THIS GUIDE, PAYMENTS TO ALL PARTICIPANTS FOLLOWING RETIREMENT OR TERMINATION WILL BE DELAYED BY SIX MONTHS. If the Company later determines based on additional IRS guidance that it can reasonably identify those employees who are subject to the required six-month delay, the Company may, to the extent permitted by the AJCA and additional guidance thereunder, amend this Guide to limit the six-month delay to only those participants for whom it is required under the AJCA. However, there is no guarantee that the Company can or will make such amendment, and you should not rely on the possibility of such an amendment in making your deferral elections.
DEFERRAL BOOKKEEPING ACCOUNT
A bookkeeping account will be established and maintained (for purposes of this Guide the "Deferral Bookkeeping Account") in your name and will initially be credited with your Initial Deferred Amount as of the applicable date (i.e., when amount would otherwise have been paid). "Interest" equivalents will be accrued on the Initial Deferred Amount and thereafter on the deferred balance in the account, as adjusted annually.
"INTEREST" EQUIVALENTS ON DEFERRED AMOUNT
The deferred balance is "credited" or "debited" with "interest" equivalents
based on a schedule established by the Committee (the "ROE Formula Rate"),
which is based on the Company's annual return on equity ("ROE"), as
reported, subject to adjustment for major accounting changes as determined
by the Committee in its sole discretion (see schedule on following page).
THE ROE FORMULA RATE APPLIED TO YOUR DEFERRED BALANCE MAY BE CHANGED,
PROSPECTIVELY OR RETROACTIVELY, IN THE SOLE DISCRETION OF THE COMMITTEE
WITHOUT YOUR PRIOR CONSENT OR NOTICE.
ROE Formula Rate Schedule for the 2006 Pay-for-Performance Deferral Program
=============================================================
then the ROE Formula
Rate applied to the deferral
If ROE is: Bookkeeping Account is:
============================================================
ROE minus 11%
10% and below (i.e. reduction in balance) -- NOTE
------------------------------------------------------------
Above 10% - 14 0%
------------------------------------------------------------
15 - 19 4%
------------------------------------------------------------
20 - 22 5%
------------------------------------------------------------
23 6%
------------------------------------------------------------
24 - 25 7%
------------------------------------------------------------
26 - 27 8%
------------------------------------------------------------
28 - 30 9%
------------------------------------------------------------
31 10%
------------------------------------------------------------
32% 11%
------------------------------------------------------------
33% 12%
------------------------------------------------------------
34% 13%
------------------------------------------------------------
35 and above 14%
------------------------------------------------------------
|
ROE means American Express Company's As noted above, THE DEFERRED BALANCE MAY CONSOLIDATED ANNUAL RETURN ON EQUITY AS DECREASE IN VALUE IF ROE IS 10% OR BELOW REPORTED BY THE COMPANY, SUBJECT TO IN ANY YEAR. The ROE Formula Rate adjustment for significant accounting changes applied to your deferred balance may be as determined by the Committee in its sole changed, prospectively or retroactively, discretion. If the Company ROE is not in the sole discretion of the Committee represented on the above Schedule, then the without your prior consent or notice. ROE Formula Rate will be determined using straight-line interpolation between the applicable amounts shown. |
PAYOUT PROVISIONS
You may request that the payment of the amount credited to your Deferral Bookkeeping Account begin:
o on the first day of a specific month and year, at least five years from date of deferral (i.e., February 1, 2012 for base salary, Annual Incentive Award deferrals and PG-XV deferrals) or later; or
o upon your retirement; or
o on the first day of a specific month and year after retirement (but no later than 10 years after retirement).
Payments may be made in a lump sum or in 2 to 15 approximately equal annual installments. Commencement of payment may be subject to a six-month delay.
IF YOU CHOOSE A LUMP SUM PAYMENT, interest equivalents for the year in which payment occurs will be credited or debited through the elected payment date or event using the ROE Formula Rate for the prior year. If you choose annual installments, the balance remaining after each installment payment will continue to be credited or debited with interest equivalents based on the ROE Formula Rate in effect under the Program for that year, or as otherwise determined by the Committee. (In the latter case, references in this Guide to "ROE Formula Rate" and related value calculations would refer to such other rate or calculation as determined by the Committee.)
Generally, each annual installment payment is calculated using an "annuity due" formula, which assumes, for calculation purposes, that the applicable ROE Formula Rate remains constant for the remainder of the elected payment schedule. Because the actual ROE and the ROE Formula Rate could fluctuate, your actual payments could vary from year to year. The first installment payment will be made on the first day of the first month following the elected payment date or event, or as administratively feasible thereafter, and the interest equivalents for that year will be credited or debited through the elected payment date or event using the ROE Formula Rate for the prior year. Thus, the crediting rate applied for an election or event (as defined) effective December 1 will reflect the Rate of the year beginning 23 months earlier, and the crediting rate applied for an election of January 1 will reflect the rate of the year beginning 12 months earlier. The remaining installment payments will be made on or about March 31st of each year thereafter with each payment credited or debited using the ROE formula rate for the prior year.
RETIREMENT OR DISABILITY
If your employment by American Express Company and its affiliates terminates at any time by reason of "retirement" (as defined above) or by reason of "disability" (as defined under the AJCA), the amount credited to your Deferral Bookkeeping Account will be paid out as soon as practicable following the time and in the manner you have elected (but not later than 10 years following retirement, and subject to a six-month delay), with interest equivalents credited or debited as described above.
DEATH
If you die before installment payments begin or are completed, your designated beneficiary (see Beneficiary Designation Form in the Appendix) or the legal representatives of your estate (if you do not designate a beneficiary or if your designated beneficiary does not survive you) will receive a lump sum as soon as practicable after your death, of the amount credited to your Deferral Bookkeeping Account, with interest equivalents credited or debited, using the ROE Formula Rate for the prior year.
OTHER TERMINATION
If your employment by American Express Company and its affiliates terminates for any reason other than retirement, disability or death, your Deferral Bookkeeping Account will be paid out in a lump sum as soon as practicable after termination of employment (subject to a six-month delay) with interest equivalents credited or debited for the entire period of deferral as described below:
o for terminations prior to the end of the minimum 5-year deferral period the lesser of: (i) the initial deferred amount credited or debited annually at the ROE Formula Rate; or (ii) the initial deferred amount credited annually with the rate of return on the applicable 5-year U.S. Treasury Note, with credits or debits through your termination date (for information on the deferral period, please refer to page 6 of this Guide); or
o for terminations on or after the minimum 5-year deferral period:
credited or debited annually using the ROE Formula Rate, with credits
or debits through your termination date.
CHANGE IN CONTROL
Regardless of the payout method you choose, payment of your deferral Bookkeeping Account may be accelerated upon a "Change in Control" of American Express Company. Generally, subject to governing documents, a "Change in Control" includes the acquisition of beneficial ownership by certain persons of 25% or more of the Company's common shares or all outstanding voting securities of the Company, the current Board members of the Company cease to constitute a majority thereof or certain reorganizations, mergers, consolidations, liquidations or sales of all or substantially all of the Company's assets. The timing of the payout, and the definition of a "Change in Control" are governed by the provisions of the applicable annual and long-term incentive plans, Appendix B and Committee actions. Refer to these documents for additional information.
CERTAIN OTHER LIMITATIONS
Notwithstanding anything herein to the contrary, if at the time that payment would otherwise be made to you under the Program, (i) you are an executive officer (within the meaning of Rule 3b-7 (or any successor rule) under the Securities Exchange Act of 1934 as amended from time to time) of the Company (an "Executive Officer"), or (ii) payment would be subject to the limitations of Section 162(m) of the Internal Revenue Code of 1986, as amended (or any successor provision) such that your employer would lose some or all of the federal income tax deduction for such payment, then such payment to you shall be further deferred (unless otherwise
determined by the Committee in its sole discretion) until the first taxable year in which (x) you are no longer an Executive Officer and (y) you are no longer subject to such limitations in clause (ii) above, with appropriate income equivalents being credited or debited to your Deferral Bookkeeping Account under the Program during the additional period of deferral.
U.S. FEDERAL/STATE/LOCAL INCOME TAX
YOU ARE STRONGLY URGED TO CONSULT WITH YOUR OWN PERSONAL FINANCIAL, LEGAL AND TAX ADVISORS ON THESE AND ANY OTHER TAX CONSEQUENCES.
Recent Federal Administrative Guidance: As previously mentioned, Congress passed the American Jobs Creation Act of 2004 (the "AJCA"), which generally became effective in 2005 and made significant changes to the area of nonqualified deferred compensation. The AJCA principally affects standards for deferral elections and distributions. Failure to satisfy the requirements of AJCA will result in the imposition of taxes, back interest, and an additional 20% penalty. In addition, the Company is now required to annually report deferred amounts on a participant's W-2 or 1099 for the year deferred, even if not currently includable in income for federal tax purposes.
In order to comply with the new rules, the Committee may, in its sole discretion in any manner and at any time without your prior consent or notice, decide to administer, operate, or amend the Program in conformity with the AJCA in an effort to maintain the effectiveness of deferral elections. See the section "Modification or Termination of 2006 Program" on page 4 of this Guide.
If under the AJCA or future legislative or administrative guidance your deferral elections are deemed to be ineffective or if the U.S. Internal Revenue Service ("IRS") otherwise does not give effect to your deferral election, either when made, or at a later date, this may result in the Initial Deferred Amount being included in your income in the year it is otherwise payable, and the inclusion of interest equivalents in your income in the year such interest equivalents are credited. These income amounts would be subject to current tax and tax withholding and you would also have to pay interest on any underpayment of tax together with an additional 20% penalty on compensation which is required to be included in income.
U.S. SOCIAL SECURITY TAX
For U.S. Social Security (FICA) tax purposes, the Initial Deferred Amount will be subject to FICA tax in the year that your 2006 Annual Incentive Award, 2006 base salary and/or PG Awards would otherwise be payable as if the deferral had not taken place. Thus, you will be subject to FICA tax on the initial deferral amounts. As background, FICA tax consists of two components: (i) old-age, survivors and disability insurance tax assessed at 6.2% on compensation up to $94,200 for 2006; and (ii) Medicare tax assessed at a rate of 1.45% on all applicable compensation. You should leave enough "net pay" in one or more of: your 2006 Annual Incentive Award; 2006 base salary and/or PG Award, to cover the total FICA tax amounts which will be taken at the time of deferral as well as all other pre- and post-tax deductions.
In addition, premium interest earned on deferred compensation balances will be subject to FICA tax when vested. "Premium" interest consists of the excess of a program's annual interest rate over a benchmark rate. The highest rate approved by the IRS at this time is the Moody's Average Corporate Bond Yield, which the Company will use to calculate premium interest subject to FICA. Therefore, for example, if the crediting rate for 2006 were 10% and the Moody's rate for that year were 6%, the 4% premium interest credited would be subject to FICA when vested.
Under the 2006 Program, interest equivalents vest when the 5-year employment/deferral period is completed for each deferral amount you elect or when you become "retirement" eligible (worldwide definition under the Program of at least 55 years of age with at least 10 years of service). As each 5-year employment/deferral period following a deferral election is completed, the credited interest equivalents applicable to that election vest and the premium portion then becomes subject to FICA, to be withheld in March of the vesting year (e.g., premium interest equivalents credited under the 2006 Program for an AIA deferral will become subject to FICA tax withholding in 3/2012). However, in the year you become retirement eligible, all unvested interest equivalents for all deferral elections vest, and the premium portion then becomes subject to FICA tax, to be withheld in March of the following year (e.g., if an employee becomes retirement eligible in 2007, the premium interest equivalents credited under the 2006 Program will become subject to FICA tax withholding in 3/2008).
THE TWO FOREGOING SECTIONS ARE NOT INTENDED AND SHOULD NOT BE CONSTRUED AS TAX ADVICE. YOU ARE STRONGLY URGED TO REVIEW ALL ASPECTS OF A POSSIBLE DEFERRAL WITH YOUR OWN TAX ADVISOR, INCLUDING ALL U.S. FEDERAL, STATE OR LOCAL AND FOREIGN TAX CONSEQUENCES, IN LIGHT OF YOUR INDIVIDUAL CIRCUMSTANCES. IF YOU ARE WORKING OUTSIDE THE U.S. AND/OR ARE SUBJECT TO FOREIGN TAX LAWS, IT IS PARTICULARLY IMPORTANT THAT YOU REVIEW A POSSIBLE DEFERRAL WITH YOUR TAX ADVISOR.
IRREVOCABILITY OF DEFERRAL REQUESTS;
HARDSHIP WITHDRAWALS
A request for deferred payment of your 2006 Annual Incentive Award, 2006 base salary and/or PG-XV Award is irrevocable. You may not ask for different terms. An exception to this rule is possible subject to the provisions of the Guide and applicable Deferral Document, only if the occurrence of an "unforeseeable emergency" (as defined under the AJCA) is demonstrated to, and approved by, the Committee. Any withdrawal can never be returned to your Deferral Bookkeeping Account and will be subject to U.S. income tax and other taxes in the year it is received by you, as described in more detail above. Under these standards, hardship withdrawals will only be allowed under rare and unusual circumstances and should not be relied upon for financial planning purposes.
SOME CAVEATS
Since the request to defer payment of your 2006 Annual Incentive Award, 2006 base salary and/or PG-XV Award, once approved, is irrevocable, the decision to do so requires careful personal financial planning. Please carefully review your planned deferral with your personal financial, legal and tax planning advisors prior to making such a request. Among the considerations may be: the impact on your participation in U.S. benefit plans (see pages 15 to 16 of this Guide); your cashflow needs; and planning for stock option exercises or stock purchases (e.g., to achieve your stock ownership guideline level, if you have been notified of participation in that program).
THE DEFERRAL PROGRAM IS UNFUNDED AND ALL PAYMENTS ARE MADE OUT OF THE GENERAL ASSETS OF YOUR EMPLOYER. YOUR EMPLOYER IS NOT REQUIRED TO ESTABLISH ANY SPECIAL OR SEPARATE FUND OR TO MAKE ANY OTHER SEGREGATION OF ASSETS TO ASSURE THE PAYMENT OF ANY AMOUNT UNDER THE PROGRAM. PAYMENTS UNDER THE PROGRAM ARE NEITHER SUBORDINATE NOR SUPERIOR TO THE CLAIMS OF THE EMPLOYER'S GENERAL CREDITORS. AMOUNTS DEFERRED UNDER THE PROGRAM MAY BE USED FOR ANY CORPORATE PURPOSE BY YOUR EMPLOYER; YOU AND ANYONE CLAIMING UNDER OR THROUGH YOU WILL, OF COURSE, HAVE NO INTEREST IN ANY SUCH CORPORATE ASSETS OR IN ANY PROCEEDS THEREFROM.
As a condition to your eligibility to defer your 2006 Annual Incentive Award, 2006 base salary and/or PG-XV Award, it is understood and agreed that you will provide complete and valid information, signatures and consents on all documents, and you will take such other actions that the employer determines may be necessary or desirable.
It is understood that a deferral election does not constitute a contract or an agreement, express or implied, of your continued employment by the Company or its affiliates for any period of time.
All deferrals are subject to the provisions of this Guide, the applicable Incentive Plan document, the applicable Deferral Plan document, the 1998 Plan document, and the PG-XV Award agreement. You should carefully review the applicable plan documents before making your deferral decision. Your applicable Incentive Plan document, Deferral Plan document and the 1998 Plan document are available upon request.
Additional Details on Initial Deferred Amount
2006 ANNUAL INCENTIVE AWARD 2006 BASE SALARY PG-XV AWARD
If your actual 2006 Annual The Initial Deferred Amount will be If your actual PG-XV Award value
Incentive Award otherwise payable deducted in equal installments from available for deferral is less
on or about February 2007 is less your 2006 paychecks, starting where than your elected Initial Deferred
than your elected Initial Deferred administratively possible with the Amount, your entire PG-XV Award
Amount, your entire 2006 Annual first paycheck after January 23, would be deferred, and your
Incentive Award would be deferred, 2006. Interest equivalents on your Initial Deferred Amount for the
and your Initial Deferred Amount base salary deferral will be purposes of the 2006 Program would
for the purposes of the 2006 credited or debited annually based be reduced accordingly.
Program would be reduced on the amount of time deferred.
accordingly.
(Note: if part of your 2006 Annual When you are deciding how much base
Incentive Award is paid on an salary, if any, to elect to defer,
accelerated basis in late 2006, the you should take into account these
Company will determine the amount factors:
of the Initial Deferred Amount to
be taken from the portion paid in BEFORE-TAX DEDUCTIONS
late 2006 and the portion paid in After deducting from your biweekly
February 2007. However, interest base salary the biweekly deferral
equivalents on all deferred amounts amount (i.e., Initial Deferred
will be credited/debited beginning Amount divided by the number of
on the February 2007 payment date. paychecks remaining after January
It is possible that in these and 23, 2006), the remaining base
other circumstances, less than all salary amount must at least cover
of your elected Initial Deferred your before-tax deductions for all
Amount will actually be deferred, employee benefit plans, such as the
and your elected Initial Deferred Medical, Dental, Dependent Care and
Amount for the purposes of the 2006 Health Care Reimbursement Plans
Program would be reduced participation. If your "net pay"
accordingly.) is insufficient to cover before-tax
deductions, the Company retains the
right to reduce your deferral
election(s) in its sole discretion.
AFTER-TAX DEDUCTIONS
You must leave enough "net pay"
(i.e., after all before-tax benefit
deductions, deferrals and taxes) in
each paycheck to cover your after-tax
deductions (e.g., FICA/Medicare tax
on deferrals and other items such as
tax on dividends, life insurance, long
term disability, other benefits,
United Way, etc.). If your "net pay" is
insufficient to cover after-tax
deductions, the Company retains the
right to reduce your deferral
election(s) in its sole discretion.
|
EFFECT OF DEFERRED AMOUNTS ON PENSION CALCULATIONS
2006 ANNUAL INCENTIVE AWARD 2006 BASE SALARY PG-XV AWARD
Under current U.S. IRS rules, Under current U.S. IRS rules, Not applicable.
deferred amounts cannot be included deferred amounts cannot be
for purposes of computing benefits included for purposes of (Payout under the PG-XV Award is
under a qualified, defined benefit computing benefits under a not included for purposes of
pension plan (e.g., the American qualified, defined benefit computing benefits under any
Express Retirement Plan). However, pension plan (e.g., the pension plan.)
if you are eligible under the American Express Retirement
American Express Supplemental Plan). However, if you are
Retirement Plan, which is an eligible under the American
unfunded, non-qualified plan, the Express Supplemental Retirement
Initial Deferred Amount from a 2006 Plan, which is an unfunded,
Annual Incentive Award may be non-qualified plan, the base
treated as pensionable compensation salary deferral portion of the
under that plan for the year in Initial Deferred Amount may be
which it would otherwise have been treated as pensionable
paid. compensation under that plan
for the year in which it would
otherwise have been paid.
|
IMPACT OF DEFERRAL ON
U.S. SECTION 401(K) PLANS AND OTHER BENEFIT PLANS
2006 ANNUAL INCENTIVE AWARD 2006 BASE SALARY PG-XV AWARD
Not applicable. If you currently contribute to a Not applicable.
U.S. qualified Section 401(k)
defined contribution plan (e.g., the
American Express Incentive Savings
Plan), your designated "percent of
base salary" for that purpose will
be applied to biweekly base
salary after it has been reduced by
the Initial Deferred Amount (on a
biweekly basis) that you elected to
defer under this base salary part of
the 2006 Program. Thus, the total
amount you can contribute to the
U.S. Section 401(k) plan and your
employer's contribution, if any,
could both be reduced if you choose
to defer base salary under the 2006
Program. In addition, your share of
the employer's U.S. ISP Profit
Sharing and Stock Contribution will
be based on the base salary after
reduction for deferrals. However,
if you are eligible under the U.S.
American Express Supplemental
Retirement Plan, which is an
unfunded, non-qualified plan, the
base salary deferral portion of the
Initial Deferred Amount may be
treated as eligible compensation for
purposes of certain Company
allocations (e.g., with respect to
certain employer contributions that
cannot be made under the qualified
American Express Incentive Savings
Plan) in the year the base salary
would otherwise have been paid.
Also, the Initial Deferred Amount
and any interest equivalents from
this 2006 Program that are paid to
you in the future cannot be used as
a basis for contributions to the
Section 401(k) plan in the year of
receipt.
Any applicable benefits under U.S. life
insurance and long-term disability
programs are based on annual base salary,
and therefore, should not be affected by
an election to defer under this base
salary part of the 2006 Program.
|
APPENDIX A
DEFERRAL ELECTION FORMS
-- Worksheet for 2006 Pay-for-Performance Deferral Program (required for any deferral request using the paper form process)
-- Election Form for 2006 Annual Incentive Award
(otherwise payable on or about February 2007)
-- Election Form for 2006 Base Salary
(otherwise payable in 2006)
-- Election Form for PG-XV Award Granted in 2/04 (otherwise payable on or about February 2007)
-- Comprehensive Designation of Beneficiary Form
(optional for any deferral request)
American Express Company
WORKSHEET FOR
2006 PAY-FOR-PERFORMANCE
DEFERRAL PROGRAM
Completion and return of this form is required for your deferral election.
1. Print Full Name:
----------------------------
2. Annual Base Salary (as of 12/31/05 or a later $
start date for a new hire): ---------------------
3. Deferral Amounts Elected From:
(a) 2006 Annual Incentive Award (otherwise $
payable on or about February 2007) ---------------------
(b) 2006 Base Salary (otherwise payable $
in 2006)* ---------------------
(c) Portfolio Grant-XV Award Value $
(otherwise payable on or about ---------------------
February 2007)
TOTAL (a,b,c) (minimum $5,000 from each $
source (a,b,c) you select to a ---------------------
maximum of 100% of base salary shown
on line 2 from all three sources
combined)
----------------------- ---------------------
|
Signature Date
* IF YOU ELECT TO DEFER YOUR BASE SALARY, PLEASE KEEP IN MIND YOUR BASE SALARY AFTER DEDUCTING FOR YOUR DEFERRAL AMOUNT MUST AT LEAST COVER YOUR BEFORE-TAX CONTRIBUTIONS FOR ALL EMPLOYEE PLANS. IN ADDITION, PLEASE REFER TO PAGES 15 TO 16 OF THIS GUIDE TO ENSURE YOU UNDERSTAND THE IMPACT OF DEFERRALS ON YOUR 401(K) CONTRIBUTIONS AND OTHER BENEFIT PLANS.
Any terms and features of, and rights and benefits under, the 2006 Pay-for-Performance Deferral Program Guide and your deferral election may be interpreted, modified or terminated by the Committee in its sole discretion in any manner and at any time without your prior consent or notice (including, but not limited to, deferring the payment date and alignment with legislative and regulatory developments) provided that such interpretation, modification or termination shall not cause deferred amounts to fail to meet the requirement for favorable tax treatment pursuant to the AJCA, applicable regulations thereunder, and other IRS guidance. I UNDERSTAND THAT MY DEFERRED BALANCE MAY DECREASE UNDER THE ROE SCHEDULE IF ROE PERFORMANCE IS LESS THAN THE SPECIFIED THRESHOLD. IN ADDITION, THE ROE FORMULA RATE APPLIED TO MY DEFERRED BALANCE MAY BE CHANGED, PROSPECTIVELY OR RETROACTIVELY, IN THE SOLE DISCRETION OF THE COMMITTEE WITHOUT MY PRIOR CONSENT OR NOTICE.
American Express Company
DEFERRED PAYMENT REQUEST FORM
FOR ANY AWARD FOR 2006 PERFORMANCE UNDER
THE AMERICAN EXPRESS COMPANY
ANNUAL INCENTIVE AWARD PLAN
(TO THE EXTENT APPLICABLE TO YOU, INCLUDING
ANY SUCCESSOR PLAN, THE "INCENTIVE PLAN")
(AS PART OF THE 2006 PAY-FOR-PERFORMANCE DEFERRAL PROGRAM)
IF YOU ARE REQUESTING DEFERRED PAYMENT, PLEASE FILL IN THE APPROPRIATE INFORMATION, AND SIGN, DATE AND RETURN THIS FORM PROMPTLY AS INDICATED BELOW.
To: The Compensation and Benefits Committee of the Board of Directors of American Express Company
Subject to the provisions of the applicable Incentive Plan or any successor plan, and the 2006 Program Guide, I hereby request that any award for services rendered for performance year 2006 be paid to me as indicated on this form.
INITIAL DEFERRED AMOUNT:
I hereby elect to defer the payment of a total of: $______________ of my 2006 Annual Incentive Award otherwise payable on or about February 2007 under the Incentive Plan. If my actual 2006 Annual Incentive Award is less than my elected deferral amount, the 2006 Annual Incentive Award portion of my Initial Deferred Amount would then be equal to my actual 2006 Annual Incentive Award amount. (Minimum deferral under the 2006 Pay-for-Performance Deferral Program is $5,000, taken separately from any one source; maximum deferral from all sources combined (annual incentive award, base salary, and/or Portfolio Grant-XV Award) is equal to 100% of your annual base salary.) PLEASE ALSO COMPLETE AND RETURN THE WORKSHEET ON PAGE 18 OF THIS GUIDE.
PERIOD OF DEFERRAL:
Please begin deferred payment(s) on: (check and fill in only one choice)
[ ] First day of a specific month and year (i.e., February 1, 2012 or
later): ______________; or
(month, year)
[ ] My retirement date (i.e., the date my employment terminates following my attainment of age 55 and 10 actual or deemed years of service with American Express Company or its affiliates); or
[ ] First day of a specific month and year after retirement:
____________________ years after retirement (not to exceed 10 years
after retirement).
NOTE: PAYMENTS FOLLOWING RETIREMENT ARE SUBJECT TO A SIX-MONTH DELAY (SEE PAGE 7 OF THIS GUIDE).
PAYMENT SCHEDULE:
The deferred payment(s) should be paid as follows (subject to earlier or later payment provisions under the program):
CHECK AND FILL IN ONLY ONE CHOICE.
[ ] Lump sum on or about the applicable date indicated on page 19 of this Guide; or
[ ] Paid in the following number of annual installments (not to exceed 15):
_______________, beginning on or about the applicable date indicated on
page 19 of this Guide (subsequent installment payments will generally
be made on or about March 31st of each year thereafter).
I HAVE READ MY APPLICABLE INCENTIVE PLAN DOCUMENT AND THE 2006 PROGRAM GUIDE, AND UNDERSTAND AND AGREE THAT:
o This request is irrevocable.
o Any terms and features of, and rights and benefits under, the 2006 Pay-for-Performance Deferral Program Guide and my deferral election may be interpreted, modified or terminated by the Compensation and Benefits Committee of the Board of Directors of American Express Company (the "Committee"), in its sole discretion in any manner and at any time without my prior consent or notice (including, but not limited to, deferring the payment date and alignment with legislative and regulatory developments) provided that such interpretation, modification or termination shall not cause deferred amounts to fail to meet the requirement for favorable tax treatment pursuant to the AJCA, applicable regulations thereunder, and other IRS guidance. I UNDERSTAND THAT MY DEFERRED BALANCE MAY DECREASE UNDER THE ROE SCHEDULE IF ROE PERFORMANCE IS LESS THAN THE SPECIFIED THRESHOLD. IN ADDITION, THE ROE FORMULA RATE APPLIED TO MY DEFERRED BALANCE MAY BE CHANGED, PROSPECTIVELY OR RETROACTIVELY, IN THE SOLE DISCRETION OF THE COMMITTEE WITHOUT MY PRIOR CONSENT OR NOTICE.
o Deferred amounts are subject to the conditions and provisions of my applicable Incentive Plan document or any successor plan, and to the 2006 Deferral Guide.
This form must be received on or before Saturday, December 31, 2005 by Sheena Varghese, 200 Vesey St., New York, NY 10285 Mail Drop: 01-35-09, USA. Forms received after December 31, 2005 cannot be considered.
Note: Fax will be accepted, however, original must be sent immediately following.
Fax number: (212) 640-0345
American Express Company
SALARY DEFERRAL PLAN DEFERRED PAYMENT
REQUEST FORM FOR 2006 BASE SALARY
(AS PART OF THE 2006 PAY-FOR-PERFORMANCE DEFERRAL PROGRAM)
IF YOU ARE REQUESTING DEFERRED PAYMENT, PLEASE FILL IN THE APPROPRIATE INFORMATION, AND SIGN, DATE AND RETURN THIS FORM PROMPTLY AS INDICATED BELOW.
To: The Compensation and Benefits Committee of the Board of Directors of American Express Company
Subject to all applicable provisions of the Salary Deferral Plan and the 2006 Program Guide, I hereby request that my 2006 base salary be paid to me on a deferred basis as indicated on this form.
INITIAL DEFERRED AMOUNT:
I hereby elect to defer the payment of a total of: $______________ of my 2006 base salary (otherwise payable in 2006), after deduction of any applicable before-tax benefit deductions, in equal installments from my 2006 paychecks, starting with the paycheck for services beginning on or about January 23, 2006 (e.g., February 3, 2006 paycheck). (Minimum deferral under the 2006 Pay-for-Performance Deferral Program is $5,000, taken separately from any one source; maximum deferral from all sources combined (annual incentive award, base salary, and/or Portfolio Grant-XV Award) is equal to 100% of your annual base salary). PLEASE ALSO COMPLETE AND RETURN THE WORKSHEET ON PAGE 18 OF THIS GUIDE.
PERIOD OF DEFERRAL:
Please begin deferred payment(s) on: (check and fill in only one choice)
[ ] First day of a specific month and year (i.e., February 1, 2012
or later):_______________; or
(month, year)
[ ] My retirement date (i.e., the date my employment terminates following my attainment of age 55 and 10 actual or deemed years of service with American Express Company or its affiliates); or
[ ] First day of a specific month and year after retirement:
____________________ years after retirement (not to exceed 10 years
after retirement).
NOTE: PAYMENTS FOLLOWING RETIREMENT ARE SUBJECT TO A SIX-MONTH DELAY (SEE PAGE 7 OF THIS GUIDE).
PAYMENT SCHEDULE:
The deferred payment(s) should be paid as follows (subject to earlier or later payment provisions under the program):
Check and fill in only one choice.
[ ] Lump sum on or about the applicable date indicated on page 21 of this Guide; or
[ ] Paid in the following number of annual installments (not to exceed 15):
_______________, beginning on or about the applicable date indicated on
page 21 of this Guide (subsequent installment payments will generally
be made on or about March 31st of each year thereafter).
I have read the Salary Deferral Plan and the 2006 Program Guide, and understand and agree that:
o This request is irrevocable.
o Any terms and features of, and rights and benefits under, the 2006 Pay-for-Performance Deferral Program Guide and your deferral election may be interpreted, modified or terminated by the Compensation and Benefits Committee of the Board of Directors of American Express Company (the "Committee"), in its sole discretion in any manner and at any time without your prior consent or notice (including, but not limited to, deferring the payment date and alignment with legislative and regulatory developments) provided that such interpretation, modification or termination shall not cause deferred amounts to fail to meet the requirement for favorable tax treatment pursuant to the AJCA, applicable regulations thereunder, and other IRS guidance. I understand that my deferred balance may decrease under the ROE schedule if ROE performance is less than the specified threshold. In addition, the ROE Formula Rate applied to my deferred balance may be changed, prospectively or retroactively, in the sole discretion of the Committee without my prior consent or notice.
o Deferred amounts are subject to the provisions of the Salary Deferral Plan and the 2006 Deferral Guide.
This form must be received on or before Saturday, December 31, 2005 by Sheena Varghese, 200 Vesey St., New York, NY 10285, Mail Drop: 01-35-09, USA. Forms received after December 31, 2005 cannot be considered.
Note: Fax will be accepted, however, original must be sent immediately following.
Fax number: (212) 640-0345
American Express Company
PORTFOLIO GRANT AWARD
DEFERRED PAYMENT REQUEST FORM
FOR "PG-XV AWARD"
(AS PART OF THE 2006 PAY-FOR-PERFORMANCE DEFERRAL PROGRAM)
If you are requesting deferred payment, please fill in the appropriate information, and sign, date and return this form promptly as indicated below.
To: The Compensation and Benefits Committee of the Board of Directors of American Express Company
Subject to all applicable provisions of the American Express 1998 Incentive Compensation Plan (the "1998 Plan") and the 2006 Program Guide, I hereby request that the performance/portfolio grant ("PG") Award issued under the 1998 Incentive Compensation Plan on or February 2004 which will be valued based on 2004-2006 performance (known as the "PG-XV Award") be paid to me as indicated on this form.
INITIAL DEFERRED AMOUNT:
I hereby elect to defer the payment of a total of: $______________ of my PG-XV Award (otherwise payable on or about February 2007). If my actual PG-XV Award value is less than my elected deferral amount, the PG-XV Award portion of my Initial Deferred Amount would then be equal to my actual PG-XV Award amount. (Minimum deferral under the 2006 Pay-for-Performance Deferral Program is $5,000 taken separately from any one source, maximum deferral from all sources combined (annual incentive award, base salary, and/or PG-XV Award) is equal to 100% of your annual base salary). PLEASE ALSO COMPLETE AND RETURN THE WORKSHEET ON PAGE 18 OF THIS GUIDE.
PERIOD OF DEFERRAL:
Please begin deferred payment(s) on: Check and fill in only one choice.
[ ] First day of a specific month and year (i.e., February 1, 2013
or later): ____________; or
(month, year)
[ ] My retirement date (i.e., the date my employment terminates following my attainment of age 55 and 10 actual or deemed years of service with American Express Company or its affiliates); or
[ ] First day of a specific month and year after retirement:
____________________ years after retirement (not to exceed 10 years
after retirement).
Note: payments following retirement are subject to a six-month delay (see page 7 of this Guide).
PAYMENT SCHEDULE:
The deferred payment(s) should be paid as follows (subject to earlier or later payment provisions under the program):
Check and fill in only one choice.
[ ] Lump sum on or about the applicable date indicated on page 23 of this Guide; or
[ ] Paid in the following number of annual installments (not to exceed 15):
_______________, beginning on or about the applicable date indicated on
page 23 of this Guide (subsequent installment payments will generally
be made on or about March 31st of each year thereafter).
I have read the 1998 Plan, the PG-XV Award letter and the 2006 Program Guide, and understand and agree that:
o This request is irrevocable.
o Any terms and features of, and rights and benefits under, the 2006 Pay-for-Performance Deferral Program Guide and your deferral election may be interpreted, modified or terminated by the Compensation and Benefits Committee of the Board of Directors of American Express Company (the "Committee"), in its sole discretion in any manner and at any time without your prior consent or notice (including, but not limited to, deferring the payment date and alignment with legislative and regulatory developments) provided that such interpretation, modification or termination shall not cause deferred amounts to fail to meet the requirement for favorable tax treatment pursuant to the AJCA, applicableregulations thereunder, and other IRS guidance. I understand that my deferred balance may decrease under the ROE schedule if ROE performance is less than the specified threshold. In addition, the ROE Formula Rate applied to my deferred balance may be changed, prospectively or retroactively, in the sole discretion of the Committee without my prior consent or notice.
o Deferred amounts are subject to the conditions and provisions of the 1998 Plan, the PG-XV Award agreement and the 2006 Deferral Guide.
This form must be received on or before Saturday, December 31, 2005 by Sheena Varghese, 200 Vesey St., New York, NY 10285, Mail Drop: 01-35-09, USA. Forms received after December 31, 2005 cannot be considered.
Note: Fax will be accepted, however, original must be sent immediately following.
Fax number: (212) 640-0345
American Express Company
COMPREHENSIVE DESIGNATION OF BENEFICIARY
(Note: if you have previously submitted a Comprehensive Designation of Beneficiary Form, you do not need to submit a new form unless you are making a change.)
THIS BENEFICIARY DESIGNATION REVOKES ALL PRIOR DESIGNATIONS, IF ANY, MADE BY ME UNDER ALL DEFERRAL PROGRAMS, INCLUDING ALL PRIOR PAY-FOR-PERFORMANCE DEFERRAL PROGRAMS, THE AMERICAN EXPRESS COMPANY 1985 CAREER INVESTMENT OPTION AGREEMENT, AND THE AMERICAN EXPRESS COMPANY 1990 DEFERRAL PROGRAM. IT ALSO APPLIES TO DEFERRALS TO BE MADE UNDER THE 2006 PAY-FOR-PERFORMANCE DEFERRAL PROGRAM GUIDE AND ANY SUBSEQUENT DEFERRAL AGREEMENTS WHICH I MAY ENTER INTO WITH AMERICAN EXPRESS COMPANY OR ONE OF ITS SUBSIDIARIES. All of such past, present and future arrangements or agreements will be referred to collectively as the "Agreements." In accordance with the terms of the Agreements, which govern the dispensation of all deferred compensation arrangements which I have entered into, am entering into, or will enter into, I hereby revoke all prior beneficiary designations, if any, made by me under the Agreements. I hereby designate the following as the beneficiary or beneficiaries of all accounts payable under such Agreements by reason of my death. Subject to the provisions of the Agreements, the following designation of beneficiary will remain in effect unless specifically revoked by me in writing. If no beneficiary survives me, such payments shall be paid to the legal representative of my estate.
PRIMARY BENEFICIARY
o If two primary beneficiaries are designated and one primary beneficiary predeceases me, such payment will be payable to the primary beneficiary who survives me.
o If three or more primary beneficiaries are designated and if any primary beneficiary predeceases me, the primary beneficiaries living at my death shall share equally in that which would otherwise have been payable to such deceased primary beneficiaries. If there are no primary beneficiaries living at my death, please see secondary beneficiary election below.
Full Name Relationship Percentage Share of Beneficiary to Participant Full Address of Payments |
Secondary Beneficiary (to take if no primary beneficiary survives me):
o If two secondary beneficiaries are designated and one secondary beneficiary predeceases me, such payment will be payable to the secondary beneficiary who survives me.
o If three or more secondary beneficiaries are designated and if any secondary beneficiary predeceases me, the secondary beneficiaries living at my death shall share equally in that which would otherwise have been payable to such deceased secondary beneficiaries.
Full Name Relationship Percentage Share of Beneficiary to Participant Full Address of Payments |
COMPREHENSIVE DESIGNATION OF BENEFICIARY (CONTINUED)
------------------------------------------------ ----------------------------------------------- Participant's Signature Date Spouse's Signature (if needed)* Date ------------------------------------------------ ----------------------------------------------- Print Full Name of Participant Print Full Name of Spouse ------------------------------------------------ ----------------------------------------------- Signature of Witness Date Signature of Witness Date ------------------------------------------------ ----------------------------------------------- Print Full Name of Witness Print Full Name of Witness |
* Spouse's signature is required if the award holder resides in a community property state (including, but not limited to, Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas or Washington).
The above Beneficiary Designation is hereby acknowledged and placed on file
this day of , 20 .
---------- --------------- ----
Plan Administrator
By:
-------------------------------------------------------
|
Please return the original, executed form to: Sheena Varghese, 200 Vesey St., New York, NY 10285, Mail Drop: 01-35-09, USA.
Note: Signing this Beneficiary Designation will cause all prior designations, if any, made by me to no longer be in effect.
APPENDIX B
"Change in Control"
Except as otherwise provided in an applicable governing document, "Change in Control" means the happening of any of the following:
(a) Any individual, entity or group (a "Person")
(within the meaning of Section 13(d)(3) or 14(d)(2) of the
Securities Exchange Act of 1934, as amended (the "Exchange
Act") becomes the beneficial owner (within the meaning of
Rule 13d-3 promulgated under the Exchange Act) of 25% or
more of either (i) the then outstanding common shares of the
Company (the "Outstanding Company Common Shares") or (ii)
the combined voting power of the then outstanding voting
securities of the Company entitled to vote generally in the
election of directors (the "Outstanding Company Voting
Securities"); provided, however, that such beneficial
ownership shall not constitute a Change in Control if it
occurs as a result of any of the following acquisitions of
securities: (i) any acquisition directly from the Company,
(ii) any acquisition by the Company or any corporation,
partnership, trust or other entity controlled by the Company
(a "Subsidiary"), (iii) any acquisition by any employee
benefit plan (or related trust) sponsored or maintained by
the Company or any Subsidiary or (iv) any acquisition by any
corporation pursuant to a reorganization, merger or
consolidation, if, following such reorganization, merger or
consolidation, the conditions described in clauses (i), (ii)
and (iii) of subsection (c) of this "Change in Control"
Section are satisfied. Notwithstanding the foregoing, a
Change in Control shall not be deemed to occur solely
because any Person (the "Subject Person") became the
beneficial owner of 25% or more of the Outstanding Company
Common Shares or Outstanding Company Voting Securities as a
result of the acquisition of Outstanding Company Common
Shares or Outstanding Company Voting Securities by the
Company which, by reducing the number of Outstanding Company
Common Shares or Outstanding Company Voting Securities,
increases the proportional number of shares beneficially
owned by the Subject Person; provided, that if a Change in
Control would be deemed to have occurred (but for the
operation of this sentence) as a result of the acquisition
of Outstanding Company Common Shares or Outstanding Company
Voting Securities by the Company, and after such share
acquisition by the Company, the Subject Person becomes the
beneficial owner of any additional Outstanding Company
Common Shares or Outstanding Company Voting Securities which
increases the percentage of the Outstanding Company Common
Shares or Outstanding Company Voting Securities beneficially
owned by the Subject Person, then a Change in Control shall
then be deemed to have occurred; or
(b) Individuals who, as of July 1, 1994, constitute the Board (the "Incumbent Board") cease for any reason to constitute at least a majority of the Board; provided, however, that any individual becoming a director subsequent to the date hereof whose election, or nomination for election by the Company's shareholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of either an actual or threatened election contest or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board, including by reason of agreement intended to avoid or settle any such actual or threatened contest or solicitation; or
(c) The consummation of a reorganization, merger or consolidation, in each case, unless, following such reorganization, merger or consolidation, (i) more than 50% of, respectively, the then outstanding shares of common stock of the corporation resulting from such reorganization, merger or consolidation (or any parent thereof) and the combined voting power of the then outstanding voting securities of such corporation entitled to vote generally in the election of directors is then beneficially owned, directly or indirectly, by all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding Company Common Shares and Outstanding Company Voting Securities immediately prior to such reorganization, merger or consolidation, in substantially the same proportions as their ownership immediately prior to such reorganization, merger or consolidation of such Outstanding Company Common Shares and Outstanding Company Voting Shares, as the case may be, (ii) no Person (excluding the Company, any employee benefit plan (or related trust) of the Company, a Subsidiary or such corporation resulting from such reorganization, merger or consolidation or any parent or a subsidiary thereof, and any Person beneficially owning, immediately prior to such reorganization, merger or consolidation, directly or indirectly, 25% or more of the Outstanding Company Common Shares or Outstanding Company Voting Securities, as the case may be) beneficially owns, directly or indirectly, 25% or more of, respectively, the then outstanding shares of common stock of the corporation resulting from such reorganization, merger or consolidation (or any parent thereof) or the combined voting power of the then outstanding voting securities of such corporation entitled to vote generally in the election of directors and (iii) at least a majority of the members of the board of directors of the corporation resulting from such reorganization, merger or consolidation (or any parent thereof) were members of the Incumbent Board at the time of the execution of the initial agreement or action of the Board providing for such reorganization, merger or consolidation; or
(d) The consummation of the sale, lease, exchange or
other disposition of all or substantially all of the assets
of the Company, unless such assets have been sold, leased,
exchanged or disposed of to a corporation with respect to
which following such sale, lease, exchange or other
disposition (A) more than 50% of, respectively, the then
outstanding shares of common stock of such corporation and
the combined voting power of the then outstanding voting
securities of such corporation (or any parent thereof)
entitled to vote generally in the election of directors is
then beneficially owned, directly or indirectly, by all or
substantially all of the individuals and entities who were
the beneficial owners, respectively, of the Outstanding
Company Common Shares and Outstanding Company Voting
Securities immediately prior to such sale, lease, exchange
or other disposition in substantially the same proportions
as their ownership immediately prior to such sale, lease,
exchange or other disposition of such Outstanding Company
Common Shares and Outstanding Company Voting Shares, as the
case may be, (B) no Person (excluding the Company and any
employee benefit plan (or related trust) of the Company or a
Subsidiary of such corporation or a subsidiary thereof and
any Person beneficially owning, immediately prior to such
sale, lease, exchange or other disposition, directly or
indirectly, 25% or more of the Outstanding Company Common
Shares or Outstanding Company Voting Securities, as the case
may be) beneficially owns, directly or indirectly, 25% or
more of, respectively, the then outstanding shares of common
stock of such corporation (or any parent thereof) and the
combined voting power of the then outstanding voting
securities of such corporation (or any parent thereof)
entitled to vote generally in the election of directors and
(C) at least a majority of the members of the board of
directors of such corporation (or any parent thereof) were
members of the Incumbent Board at the time of the execution
of the initial agreement or action of the Board providing
for such sale, lease, exchange or other disposition of
assets of the Company; or
(e) Approval by the shareholders of the Company of a complete liquidation or dissolution of the Company.