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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the

Securities Exchange Act of 1934

(Amendment No.     )

 

 

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

Check the appropriate box:

 

  Preliminary Proxy Statement
  Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
  Definitive Proxy Statement
  Definitive Additional Materials
  Soliciting Material Pursuant to §240.14a-12

 

LOGO

AMERICAN EXPRESS COMPANY

(Name of Registrant as Specified In Its Charter)

 

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

  No fee required.
  Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
  (1)  

Title of each class of securities to which transaction applies:

 

     

  (2)  

Aggregate number of securities to which transaction applies:

 

     

  (3)  

Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):

 

     

  (4)  

Proposed maximum aggregate value of transaction:

 

     

  (5)  

Total fee paid:

 

     

  Fee paid previously with preliminary materials.
  Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.
  (1)  

Amount Previously Paid:

 

     

  (2)  

Form, Schedule or Registration Statement No.:

 

     

  (3)  

Filing Party:

 

     

  (4)  

Date Filed:

 

     

 

 

 


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2021 Proxy Statement


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LOGO

POWERFUL BACKING STARTS WITH A POWERFUL PURPOSE WE’RE STRONGER TOGETHER We have a $1 billion action plan to promote diversity, equity and inclusion for colleagues, customers and communities. 100% We focus on inclusion and diversity by score on the Human Rights welcoming unique perspectives, experiences, and Campaign’s Corporate Equality Index since 2004, backgrounds across the organization and within based on our policies and practices that support our partnerships. LGBTQ+ inclusion. We back our communities 94% through sustainability initiatives of colleagues who participated in our annual ¶__’ū»ÆDÊĪ internal colleague survey said they would recommend American Express as a great place to work. We help small businesses stay in business by encouraging our customers to Shop Small® all year long and provide small business owners with resources and tools to help them thrive. This year, we’re especially focused on supporting small restaurants to help keep local kitchen doors open.


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March 19, 2021                                

 

Items of Business

 

To vote on the following proposals:

 

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Election of directors proposed by our Board of Directors for a term of one year, as set forth in this proxy statement

 

LOGO    

Ratification of the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm for 2021

 

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Advisory resolution to approve executive compensation

 

LOGO    

Two shareholder proposals, if properly presented at the meeting

 

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Such other business that may properly come before the meeting

 

 

ADMISSION

Due to concerns regarding COVID-19 (Coronavirus) and to assist in protecting the health and well-being of our shareholders and colleagues, this year’s Annual Meeting of Shareholders will be held virtually. There will not be a physical location for the Annual Meeting of Shareholders and you will not be able to attend the meeting in person. You will be able to listen, vote and submit questions via the virtual meeting website at www.virtualshareholdermeeting.com/AXP2021 by using the 16-digit control number included on your notice, on your proxy card or in the voting instructions that accompanied your proxy materials. Please retain the 16-digit control number should you decide to attend the virtual annual meeting. Shareholders may begin logging in to the virtual meeting website at 8:45 a.m. Eastern Time. Shareholders without a control number may listen to the Annual Meeting of Shareholders but they will not have the ability to vote or submit questions during the meeting. We designed the format of our virtual annual meeting to ensure that our shareholders who attend the Annual Meeting of Shareholders will be afforded the same rights and opportunities to participate as they would at an in-person meeting, including the ability to ask questions.

Although we intend to hold our Annual Meeting of Shareholders virtually, in the event that New York State law does not allow virtual-only meetings at the time of our Annual Meeting of Shareholders, we will hold an in-person meeting at the same date and time at our corporate headquarters at 200 Vesey Street, New York, NY 10285. If we decide to modify the structure of our Annual Meeting of Shareholders, we will announce the decision to do so by press release (which will be filed with the SEC and available at http://ir.americanexpress.com and www.proxyvote.com.)*

Detailed information regarding our 2021 Annual Meeting of Shareholders, including how to cast your vote, can be found in “Other Information” starting on page 87.

IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE 2021 ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON MAY 4, 2021:

Our proxy statement and annual report are available online at http://ir.americanexpress.com. * We will mail to certain shareholders a notice of internet availability of proxy materials, which contains instructions on how to access these materials and vote online. We expect to mail this notice and to begin mailing our proxy materials on or about March 19, 2021.

Your vote is important to us. Please exercise your shareholder right to vote.

By Order of the Board of Directors,

 

 

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Kristina V. Fink

Deputy Corporate Secretary

 

*

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

 

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WHEN

Tuesday, May 4, 2021

9:00 a.m. Eastern Time

 

 

 

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WHERE

www.virtualshareholder meeting.com/AXP2021

 

 

 

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RECORD DATE

March 8, 2021

 

 

 

 

Cautionary Note Regarding Forward-Looking Statements

This proxy statement contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that are subject to risks and uncertainties. You can identify forward-looking statements by words such as “believe,” “expect,” “anticipate,” “intend,” “plan,” “aim,” “will,” “may,” “should,” “could,” “would,” “likely,” “estimate,” “predict,” “potential,” “continue” or other similar expressions. Actual results may differ from those set forth in the forward-looking statements due to a variety of factors, including those contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020 and the Company’s other filings with the U.S. Securities and Exchange Commission. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date on which they are made. We undertake no obligation to update or revise any forward-looking statements.



Table of Contents

LOGO

 

    Notice of Annual Meeting of Shareholders
  1       Executive Summary
  6       Corporate Governance at American Express
    6     ITEM 1: Election of Directors for a Term of One Year
    6     Our Director Nominees
    15     Our Board’s Composition
    17     Our Board Evaluation Process
    19     Our Board Leadership Structure
    19     Our Board’s Primary Role and Responsibilities, Structure and Processes
    22     Our Board Committees
    25     Our Corporate Governance Framework
    27     Shareholder Engagement
    30     Compensation of Directors
      31     Director Stock Ownership
    31     Director and Officer Liability Insurance
    31     Certain Relationships and Transactions
    33     How We Approach Environmental, Social and Governance (ESG)
  41       Audit Committee Matters
    41     ITEM 2: Ratification of Appointment of Independent Registered Public Accounting Firm
    43     PricewaterhouseCoopers LLP Fees and Services
    44     Report of the Audit and Compliance Committee
  45       Executive Compensation
    45     ITEM 3: Advisory Resolution to Approve Executive Compensation (Say-on-Pay)
  46       Compensation Discussion and Analysis
    48     Section 1: Compensation Governance and Pay Principles
    50    

Section 2: Company Performance Summary

    52    

Section 3: Compensation Programs

    56    

Section 4: Compensation Determination Process

    59    

Section 5: Compensation Policies and Practices

    62    

Section 6: Report of the Compensation and Benefits Committee

    63     Compensation Tables
    77    

Equity Compensation Plans

    77    

Pay Ratio

  78       Shareholder Proposals
    78     ITEM 4: Shareholder Proposal Relating to Action by Written Consent
    81     ITEM 5: Shareholder Proposal Relating to Annual Report on Diversity
  85       Stock Ownership Information
  87       Other Information
    87     Attending the Annual Meeting of Shareholders and Webcast
    88     Notice of Business to Come Before the Meeting
    88     Additional Voting Information
    90     Multiple Shareholders Sharing the Same Address
    91     2022 Annual Meeting of Shareholders Information
    91     Availability of Form 10-K
  A-1      
Annex A—Information Regarding Non-GAAP
Financial Measures
 

 

 


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Executive Summary

Our Company’s Strategic Imperatives & Key Priorities for 2020

American Express is a globally integrated payments company that provides customers with access to products, insights and experiences that enrich lives and build business success. Our integrated payments platform includes card-issuing, merchant-acquiring and card network businesses. We are a leader in providing payments products and services to a broad range of customers including consumers, small businesses, mid-sized companies and large corporations around the world. Following two years of consistently strong financial performance driven by our success in executing against our strategic imperatives (detailed below), we quickly shifted our focus in 2020 to address the challenges of the COVID-19 pandemic. The pandemic has caused financial disruption for individuals and businesses around the world and the events of 2020 reinforced the important role that the business community plays in addressing both economic and social challenges. As a global company that employs thousands of people around the world, American Express has a long history of coming together as an organization to support our colleagues, customers and communities during challenging times. This past year we have intensified our commitments to be more intentional about how we show up for our colleagues, customers and communities, and to more effectively rally our resources to amplify our impact on a number of issues, including advancing diversity, equity and inclusion, advancing climate solutions, and building financial resiliency for our customers. Our framework for managing through the pandemic and the challenging economic environment is built on four principles:

 

LOGO

The management team and the Board believe that these key priorities for managing through the cycle reflect the most important things to focus on during the pandemic to drive long-term value creation for the Company. We concentrated our efforts on these priorities in 2020 to address the near-term challenges of the pandemic, while remaining focused on the opportunities that would advance our four long-term strategic imperatives:

 

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Business Performance

 

In 2020, we focused on our key priorities for managing through the cycle while continuing to invest in initiatives that advance our long-term strategic imperatives. Business performance highlights in 2020 include:

 

  Maintained the dividend with capital ratios well above targets and record levels of liquidity;

 

  Improved customer satisfaction scores and card retention rates versus 2019 levels;

 

  Extended and expanded key enterprise-wide partnerships;

 

  Launched our first proprietary accounts payable automation offering, American Express One AP;
  Executed the largest-ever global Shop Small® campaign in 18 countries and territories;

 

  Sustained virtual parity coverage in the U.S., and continued to grow coverage internationally, adding over 3.7 million merchant locations outside of the U.S;

 

  Launched the first foreign card processing network in mainland China;

 

  Rolled out new and enhanced financial relief programs in over 20 countries;

 

  Maintained strong industry-leading credit metrics due to robust risk management efforts and capabilities; and

 

  Continued to invest in areas critical for the long term, including new services, capabilities and Card Member benefits, new card acquisitions and expanding our merchant network globally.
 

 

2021 PROXY REPORT  |  AMERICAN EXPRESS        1


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Key 2020 Priorities for Managing Through the Cycle

 

 

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2020 Financial Performance Highlights

 

LOGO

 

(1) 

Billed business represents transaction volumes (including cash advances) on cards and other payment products issued by American Express (proprietary billed business) and cards issued under network partnership agreements with banks and other institutions, including joint ventures (Global Network Services billed business). In-store spending activity within Global Network Services retail cobrand portfolios, from which we earn no revenue, is not included in billed business.

 

2        AMERICAN EXPRESS  |  2021 PROXY REPORT


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LOGO

 

How our Compensation Program Supports our Business Strategy

Our executive compensation program is designed to support the longevity and stability of the Company by driving long-term business outcomes, promoting strong governance practices and encouraging responsible risk-taking. This is achieved by linking individual pay with the Company’s performance on a diverse set of measures as well as financial and strategic goals. Most senior executives’ compensation is variable and covers annual and multi-year performance periods. Long-term Incentive Awards are designed to align executives with the Company’s long-term performance using performance-based equity awards in the form of restricted stock units and stock options. Further, the Company scorecard incentivizes performance and includes key objectives in four categories: Shareholder, Customer, Colleague and Strategic Imperatives.

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

Our Board of Directors

The following provides current summary information about each director nominee. Our director nominees possess a range of diverse skills, backgrounds, experience and viewpoints that we believe are integral to an effective and well-functioning board. Detailed information about each nominee’s qualifications, experience, skills and expertise along with select professional and community contributions can be found starting on page 7.

Our Director Nominees

 

Name

 

Position

 

Age

 

Director Since

 

AC

 

CB

 

NGPR

 

  R  

Thomas J. Baltimore

  Director   57   2021              

Charlene Barshefsky

  Director   70   2001              

John J. Brennan

  Director   66   2017            

Peter Chernin

  Director   69   2006        

   

Ralph de la Vega

  Director   69   2016  

         

Michael O. Leavitt

  Director   70   2015            

Theodore J. Leonsis

  Director   65   2010            

Karen L. Parkhill

  Director   55   2020            

Charles E. Phillips

  Director   61   2020              

Lynn A. Pike

  Director   64   2020              

Stephen J. Squeri

  CEO & Chairman   62   2018                

Daniel L. Vasella

  Director   67   2012            

Lisa W. Wardell

  Director   51   2021              

Ronald A. Williams

  Lead Independent Director   71   2007      

     

Christopher D. Young

  Director   49   2018            

  Member        Chair

 

AC    Audit and Compliance    CB    Compensation and Benefits      NGPR   

Nominating, Governance and

Public Responsibility

           R    Risk

 

2021 PROXY REPORT  |  AMERICAN EXPRESS        3


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LOGO

 

 

Director Nominee Demographics

 

 

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Diversity of Skills, Viewpoints and Expertise

 

 

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(1) 

Based on self-identified characteristics.

 

4        AMERICAN EXPRESS  |  2021 PROXY REPORT


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Corporate Governance Highlights

 

 
LOGO

 

 

Board Structure and Independence

LOGO    Election of three new directors in 2020: Karen L. Parkhill, Charles E. Phillips and Lynn A. Pike; and two new directors in 2021: Thomas J. Baltimore and Lisa W. Wardell

 

LOGO    Strong Lead Independent Director with explicit duties and responsibilities

 

LOGO    All directors are independent except the Chairman

 

  

LOGO    Diverse and highly skilled Board that provides a range of viewpoints

 

LOGO    Consideration of optimal Board leadership structure for the Company

 

LOGO    Executive sessions led by the Lead Independent Director at each regular in-person board meeting without management present

  

LOGO    Executive sessions at committee meetings led by independent committee chairs without
management present

 

 
LOGO

 

 

Shareholder Rights

LOGO    Proxy access rights

 

LOGO    Annual election of all directors

  

LOGO    Majority voting for directors
(in uncontested elections)

  

LOGO    Shareholders representing at least 25% of outstanding shares are able to call special meetings

 

 

 
LOGO

 

 

Board Oversight

LOGO    Oversees the Company’s annual business plan and corporate strategy, succession planning and risk management

 

LOGO    Monitors the Company’s workplace culture, “tone at the top” and values

 

LOGO    Proactive, comprehensive and strategic Board and senior management succession planning

 

LOGO    Annual dedicated Board meeting focused on Company strategy

 

  

 

LOGO    Key management and rising talent reviewed at an annual talent review

 

LOGO    Risk-aware culture overseen by a separate Risk Committee of the Board

 

LOGO    Director access to experts and advisors, both internal and external

  

 

LOGO    The Nominating, Governance and Public Responsibility Committee oversees Environmental, Social and Governance (ESG) matters

 

LOGO    The Compensation and Benefits Committee oversees the Company’s strategies relating to diversity, equity and inclusion initiatives as well as key talent metrics

 

 
LOGO

 

 

Strong Corporate Governance Practices

LOGO    Prohibition on hedging and pledging transactions by executive officers and directors

 

LOGO    Sound policy on public company board service

 

LOGO    Responsive, active and ongoing shareholder engagement

 

LOGO    Strategic succession planning resulting in regular Board and committee refreshment with a range of tenures

 

LOGO    Robust Code of Business Conduct for Members of the Board of Directors and Code of Conduct for American Express colleagues, each with an annual certification requirement

 

  

LOGO    Mandatory retirement age of 72 years for all directors

 

LOGO    Conducted a third-party Board evaluation in 2020 and maintained our annual written Board and committee performance evaluations

 

LOGO    Comprehensive clawback policy for senior executives

 

LOGO    Robust annual risk assessment of executive compensation programs, policies and practices

  

LOGO    Significant share ownership requirements for senior executives and directors

 

LOGO    Strong commitment to ESG

 

LOGO    Wide-ranging and comprehensive director onboarding program along with robust continuing educational programs

For a detailed discussion of our corporate governance framework and our director nominees, please see “Corporate Governance at American Express” beginning on page 6.

 

2021 PROXY REPORT  |  AMERICAN EXPRESS        5


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Corporate Governance at American Express

Item 1: Election of Directors for a Term of One Year

Our Board currently has 16 members. Fifteen of our directors are standing for re-election to hold office until the next Annual Meeting of Shareholders or until their successors are duly elected and qualified. One of our current directors is retiring and not standing for re-election. For more information, please see “Our Retiring Director” on page 15. Our Board has appointed Laureen E. Seeger, Richard Starr and Kristina V. Fink as proxies to vote your shares on your behalf. The proxies intend to vote for the election of each of the 15 candidates nominated by the Board unless you indicate otherwise on your proxy or voting instruction form or when you vote by telephone or online. Each candidate has consented to being named in this proxy statement and serving as a director, if elected. However, if any nominee is not able to serve, the Board can either nominate a different person or reduce the size of the Board. If the Board nominates another individual, the persons named as proxies may vote for that nominee.

Our Director Nominees

Our director nominees hold and have held senior positions as leaders of various large, complex businesses and organizations and in government, demonstrating their ability to develop and execute significant policy and operational objectives at the highest levels. Our nominees include current and former chief executive officers, chief financial officers, chief operating officers and members of senior management of large, global businesses. Through these roles, our nominees have developed expertise in core business strategy, operations, finance, human capital management and leadership development, compliance, controls and risk management, as well as the skills to respond to rapidly evolving business environments and foster innovation and business transformation. Additionally, our nominees’ experience serving in government and on other boards bring valuable knowledge and expertise, including in the areas of public policy, governance, succession planning, compensation, financial reporting and regulatory compliance.

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

 

6        AMERICAN EXPRESS  |  2021 PROXY REPORT


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LOGO

 

LOGO

 

Thomas J.

Baltimore

 

Chairman and CEO,
Park Hotels & Resorts

 

Director since 2021

Independent

Age 57

 

Career Highlights

 

  Chairman and CEO of Park Hotels & Resorts, Inc., a NYSE-listed lodging real estate investment trust (REIT) focused on upper-upscale and luxury hotel assets with 60 assets owned in the U.S.

 

  Former President, CEO and Director of RLJ Lodging Trust, a NYSE-listed lodging REIT focused on premium branded hotels in the U.S.

 

Committee Membership(s)

 

  Audit and Compliance

 

 

Specific Qualifications, Experience,
Skills and Expertise

  Public company CEO

  Hospitality and real estate industry expert

  Core business, operations and management

  Financial accounting expertise

  Public company governance

 

  

Select Professional and
Community Contributions

  Executive Committee Member, American Hotel & Lodging Association

  Director, University of Virginia Investment Management Company

  Executive Board Member, National Association of Real Estate Investment Trusts

  Director, The Real Estate Roundtable

 

 

 

Other Current Public Directorships

 

  Park Hotels & Resorts, Inc.

  Prudential Financial Inc.

  

 

Other Public Directorships in the Past Five Years

  AutoNation

  RLJ Lodging Trust

  Duke Realty Corporation

             
         

LOGO

 

Charlene Barshefsky

 

Former Senior
International Partner,
WilmerHale

 

Director since 2001

Independent

Age 70

 

Career Highlights

 

  Former Senior International Partner at WilmerHale, where she advised U.S. and international companies on international business transactions, government relations, market access, and foreign government regulation of business and investments

 

  Former U.S. Trade Representative and member of President Clinton’s Cabinet, where she served as chief trade negotiator and principal trade policymaker for the United States, negotiating complex market access, regulatory and investment agreements with virtually every major country in the world

 

Committee Membership(s)

 

  Risk

 

 

Specific Qualifications, Experience,
Skills and Expertise

  High-level government service

  Expertise negotiating with foreign governments

  Advisor to firms on doing business in international markets

  Broad legal and public policy experience

  Public company governance

 

  

Select Professional and
Community Contributions

  Trustee, Howard Hughes Medical Institute

  Member, Council on Foreign Relations

 

 

Other Current Public Directorships

  The Estée Lauder Companies Inc.

  MDC Partners Inc.

  

 

Other Public Directorships in the Past Five Years

  Starwood Hotels & Resorts Worldwide, Inc.

  Intel Corporation

 

2021 PROXY REPORT  |  AMERICAN EXPRESS        7


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LOGO

 

LOGO

 

John J.

Brennan

 

Chairman Emeritus and

Senior Advisor, The

Vanguard Group, Inc.

 

Director since 2017

Independent

Age 66

 

Career Highlights

 

  Chairman emeritus and senior advisor of The Vanguard Group, Inc., a global investment management company

 

  Former CEO, CFO and Chairman of the Board of The Vanguard Group, Inc.

 

  Former Chairman of the Board of Governors of The Financial Industry Regulatory Authority (FINRA), a U.S. financial services industry regulator

 

  Former Chairman of the Financial Accounting Foundation, an overseer of financial accounting and reporting standard-setting boards

 

Committee Membership(s)

 

  Audit and Compliance

 

  Risk (Chair)

 

 

Specific Qualifications, Experience,
Skills and Expertise

  Core business, operations and management

  CFO and financial accounting expertise

  Risk and audit oversight

  Financial industry operations and regulation

  Institutional investor perspective

 

  

Select Professional and
Community Contributions

  Chairman, Board of Trustees of the University of Notre Dame

  Chairman, Vanguard Charitable Endowment Program

  Founding Trustee, King Abdullah University of Science and Technology

 

 

 

Other Current Public Directorships

  None

  

 

Other Public Directorships in the Past Five Years

  General Electric Company

  LPL Financial Holdings, Inc.

             
         

LOGO

 

Peter

Chernin

 

Founder and CEO,
Chernin Entertainment

 

Director since 2006

Independent

Age 69

 

Career Highlights

 

  Founder and CEO of Chernin Entertainment, a film and television production company, and The Chernin Group, LLC, which focuses on strategic opportunities in media, technology and entertainment

 

  Co-Founder and Partner of TCG, a multi-stage investment firm dedicated to building consumer businesses

 

  Former President, Chief Operating Officer and director of News Corporation

 

  Former Chairman and CEO of the Fox Group, where he oversaw the global operations of the company’s film, television, satellite cable and digital media businesses

 

Committee Membership(s)

 

  Compensation and Benefits

 

  Nominating, Governance and Public Responsibility (Chair)

 

 

Specific Qualifications, Experience,
Skills and Expertise

  Core business, operations and management

  Experience building global media businesses

  Digital business development

  Brand and marketing expertise

  Public company governance

 

  

Select Professional and
Community Contributions

  Co-Chairman and Co-Founder, Malaria No More

  Director and Co-chair, Board of Visitors of the University of California, Berkeley

  Former Director, Harvard AIDS Initiative

 

 

Other Current Public Directorships

  None

  

 

Other Public Directorships in the Past Five Years

  Pandora Media, Inc.

  Twitter, Inc.

 

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LOGO

 

LOGO

 

Ralph de la

Vega

 

Former Vice Chairman,

AT&T Inc.

 

Director since 2016

Independent

Age 69

 

Career Highlights

 

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

 

  Chairman of the De la Vega Group

 

  Former President and CEO of AT&T Mobile and Business Solutions

 

  Former CEO of AT&T Mobility

 

  Former Chief Operating Officer of Cingular Wireless

 

Committee Membership(s)

 

  Audit and Compliance (Chair)

 

  Compensation and Benefits

 

 

Specific Qualifications, Experience,
Skills and Expertise

  Core business, operations and management

  Global business leader

  Extensive business experience in Latin America

  Digital and mobile technology expertise

  Financial accounting expertise

 

  

Select Professional and

Community Contributions

  Former Chairman and Current Director, Junior Achievement Worldwide

  Director, Latino Donor Collaborative

  Former Executive Board Member, Boy Scouts of America

 

 

Other Current Public Directorships

  Amdocs Ltd.

  

 

Other Public Directorships in the Past Five Years

  None

             
         

LOGO

 

Michael O.

Leavitt

 

Founder and Chairman,
Leavitt Partners, LLC

 

Director since 2015

Independent

Age 70

 

Career Highlights

 

  Founder and Chairman of Leavitt Partners, LLC, a health care consulting firm, and Chairman of Leavitt Equity Partners, a private equity fund

 

  Former U.S. Secretary of Health and Human Services

 

  Former Administrator of the U.S. Environmental Protection Agency

 

  Former Governor of Utah

 

Committee Membership(s)

 

  Audit and Compliance

 

  Nominating, Governance and Public Responsibility

 

 

Specific Qualifications, Experience,
Skills and Expertise

  Extensive government experience

  Core business, operations and management

  Broad public policy experience

  Regulatory experience

  Public company governance

 

  

Select Professional and

Community Contributions

  Board of Advisors, Center for Presidential Transition, Washington D.C.

 

 

Other Current Public Directorships

  Medtronic, Inc.

  

 

Other Public Directorships in the Past Five Years

  HealthEquity, Inc.

 

2021 PROXY REPORT  |  AMERICAN EXPRESS        9


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LOGO

 

LOGO

 

Theodore J.

Leonsis

 

Founder, Chairman and
CEO, Monumental
Sports &
Entertainment, LLC

 

Director since 2010

Independent

Age 65

 

Career Highlights

 

  Founder, Chairman and CEO of Monumental Sports & Entertainment, LLC, a sports, entertainment, media and technology company that owns the NBA’s Washington Wizards, NHL’s Washington Capitals, the WNBA’s Washington Mystics, the Capital City Go-Go, Wizards District Gaming, Caps Gaming and the Capital One Arena in Washington, D.C.

 

  Former Vice Chairman Emeritus of AOL LLC, a leading global ad-supported web company

 

  Former Chairman of Revolution Money, Inc., acquired by American Express in January 2010

 

Committee Membership(s)

 

  Compensation and Benefits

 

  Nominating, Governance and Public Responsibility

 

 

Specific Qualifications, Experience,
Skills and Expertise

  Successful innovator and entrepreneur

  Core business, operations and management

  Expertise in social media and digital trends

  Brand and marketing expertise

  Public company governance

 

  

Select Professional and
Community Contributions

  Chairman, D.C. College Access Program, Inc.

  Co-Founder and Vice-Chair, Greater Washington Partnership

  Co-Founder and Co-Executive Chairman, aXiomatic Gaming

  Council Member, National Museum of African American History and Culture

 

 

 

Other Current Public Directorships

  Groupon, Inc.

  

 

Other Public Directorships in the Past Five Years

  None

             
         

LOGO

 

Karen L.

Parkhill

 

Executive Vice
President and Chief
Financial Officer,
Medtronic, Inc.

 

Director since 2020

Independent

Age 55

 

Career Highlights

 

  Executive Vice President and Chief Financial Officer of Medtronic, Inc., where she leads the global finance organization and key supporting functions including Treasury, Controller, Tax, Internal Audit, Investor Relations, Business Development, Information Technology and Enterprise Business Services

 

  Former Vice Chairman and Chief Financial Officer of Comerica Inc., where she directly managed the Finance department overseeing Accounting, Business Finance, Corporate Planning and Development, Investor Relations, Treasury and Economics, with responsibility for all financial reporting

 

  Former Chief Financial Officer of the Commercial Banking business at JP Morgan Chase and Co.

 

Committee Membership(s)

 

  Audit and Compliance

 

  Risk

 

 

Specific Qualifications, Experience,
Skills and Expertise

  Public company CFO

  Financial accounting expertise

  Banking industry expertise

  Core business, operations and management

  Risk and audit oversight

 

  

Select Professional and
Community Contributions

  Former Member, International Women’s Forum

  Former National Trustee, Boys and Girls Clubs of America

  Former Director, Methodist Health System

 

 

Other Current Public Directorships

  None

  

 

Other Public Directorships in the Past Five Years

  Comerica Inc.

 

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LOGO

 

LOGO

 

Charles E.

Phillips

 

Former Chairman and
CEO, Infor, Inc.

 

Director since 2020

Independent

Age 61

 

Career Highlights

 

  Former Chairman and CEO of Infor, Inc., an enterprise software application provider

 

  Managing Partner and Co-Founder of Recognize, a technology private equity firm

 

  Former President of Oracle Corporation

 

Committee Membership(s)

 

  Risk

 

 

Specific Qualifications, Experience,
Skills and Expertise

  Technology industry expertise

  Core business, operations and management

  Financial services industry and investment expertise

  Risk oversight

  Regulatory experience

 

  

Select Professional and
Community Contributions

  Former Director, Federal Reserve Bank of New York

  Director, Apollo Theater

  Director, Council on Foreign Relations

 

 

 

Other Current Public Directorships

  ViacomCBS Inc.

  

 

Other Public Directorships in the Past Five Years

  BancoSantander SA

             
         

LOGO

 

Lynn A.

Pike

 

Former President,
Capital One Bank

 

Director since 2020

Independent

Age 64

 

Career Highlights

 

  Former President of Capital One Bank and a former member of the Capital One Executive Committee

 

  Former President of Business Banking at Bank of America, as well as the former President of California for that corporation

 

Committee Membership(s)

 

  Compensation and Benefits

 

 

Specific Qualifications, Experience,
Skills and Expertise

  Unique perspective as Chair of American Express National Bank

  Banking industry expertise

  Core business, operations and management

  Payments and network industry expertise

  Regulatory experience

 

  

Select Professional and
Community Contributions

  Chair, American Express National Bank

  Director, Hiscox USA (HICI)

  Director, Bankwork$

  Director, California State University Channel Islands Foundation

 

 

Other Current Public Directorships

  Hiscox Ltd.

  

 

Other Public Directorships in the Past Five Years

  None

 

 

 

 

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LOGO

 

LOGO

 

Stephen J.

Squeri

 

Chairman and CEO,

American Express

Company

 

Director since 2018

Chairman of the Board

since 2018

Age 62

 

Career Highlights

 

  Chairman and CEO of American Express Company

 

  Mr. Squeri has held many positions during his 35 years at American Express, including Vice Chairman, Group President of Global Corporate Services, Group President of Global Services and Executive Vice President and Chief Information Officer

 

Committee Membership(s)

 

  None

 

 

Specific Qualifications, Experience,
Skills and Expertise

  Unique perspective as Company CEO

  Global business leader

  Core business, operations and management

  Payments and network industry expertise

  Expertise in digital and mobile innovation

 

  

Select Professional and
Community Contributions

  Trustee, Valerie Fund

  Trustee, Manhattan College

  Member, Board of Governors of Monsignor McClancy Memorial High School

    
 

Other Current Public Directorships

  None

  

Other Public Directorships in the Past Five Years

  None

             
         

LOGO

 

Daniel L.

Vasella

 

Honorary Chairman and
Former Chairman and
CEO, Novartis AG

 

Director since 2012

Independent

Age 67

 

Career Highlights

 

  Honorary Chairman and former Chairman and CEO of Novartis AG, a company that engages in the research, development, manufacture and marketing of health care products worldwide

 

  CEO and Former Chief Operating Officer, Senior Vice President, Head of Worldwide Development and Head of Corporate Marketing at Sandoz Pharma Ltd.

 

  Chairman, Numab Therapeutics AG

 

Committee Membership(s)

 

  Compensation and Benefits

 

  Nominating, Governance and Public Responsibility

 

 

Specific Qualifications, Experience,
Skills and Expertise

  Core business, operations and management

  Finance, investment and M&A experience

  Global business leader

  Led a highly regulated business

  Public company governance

  

Select Professional and
Community Contributions

  Foreign Honorary Member, American Academy of Arts and Sciences

  Former Member, International Business Leaders Advisory Council for the Mayor of Shanghai

  Former Trustee, Carnegie Endowment for International Peace

 

 

 

Other Current Public Directorships

  PepsiCo, Inc.

  SciClone Pharmaceuticals, Inc.

  

 

Other Public Directorships in the Past Five Years

  None

 

 

 

 

 

 

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LOGO

 

LOGO

 

Lisa W.
Wardell

 

Chairman and CEO,
Adtalem Global

Education, Inc.

 

Director since 2021

Age 51

 

Career Highlights

 

  Chairman and CEO of Adtalem Global Education, Inc, where she oversees the strategic repositioning of Adtalem’s portfolio, successfully acquiring and integrating companies in Adtalem’s financial services vertical, and leading turnarounds and divestitures of Adtalem’s non-core assets

 

  Former Executive Vice President and Chief Operating Officer for The RLJ Companies, where she was responsible for managing The RLJ Companies portfolio, including strategic partnerships, mergers and acquisitions, business strategy, operations and finance

 

  Former Principal at Katalyst Venture Partners, a private equity firm that invested in start-up technology companies

 

Committee Membership(s)

 

 Risk

 

 

Specific Qualifications, Experience,
Skills and Expertise

 

  Public company CEO

  Core business, operations and management

  Risk oversight

  Finance, investment and M&A experience

  Public company governance

 

 

Select Professional and Community

Contributions

 

  Director, THINK450

  Member, The Business Council

  Member, The Executive Leadership Council

  Member, CEO Action for Diversity and Inclusion

 

 

Other Current Public Directorships

  Adtalem Global Education Inc.

  Lowe’s Companies, Inc.

 

 

Other Public Directorships in the Past Five Years

  Christopher and Banks, Inc.

            
        

LOGO

 

Ronald A.

Williams

 

Former Chairman and
CEO, Aetna, Inc.

 

Director since 2007

Lead Independent

Director since 2018

Age 71

 

Career Highlights

 

  Chairman and CEO of RW2 Enterprises, LLC, where he advises senior corporate executives on the development of effective strategies and the achievement of transformational leadership grounded in core values

 

  Operating advisor to Clayton, Dubilier & Rice, LLC, a private equity firm

 

  Former Chairman and CEO of Aetna, Inc., a leading diversified health care benefits company

 

Committee Membership(s)

 

  Compensation and Benefits (Chair)

 

  Nominating, Governance and Public Responsibility

 

 

Specific Qualifications, Experience,
Skills and Expertise

  Core business, operations and management

  Finance, risk management and investment expertise

  Led a highly regulated business

  Experience innovating through information technology

  Public company governance

 

 

Select Professional and
Community Contributions

  Chair of the Board of Trustees, Conference Board

  Trustee, Massachusetts Institute of Technology

  Trustee, Committee for Economic Development

 

 

Other Current Public Directorships

  The Boeing Company

  Johnson & Johnson

 

 

Other Public Directorships in the Past Five Years

  Envision Healthcare

 

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LOGO

 

LOGO

 

Christopher D.

Young

 

Executive Vice
President – Business
Development, Microsoft
Corp.

 

Director since 2018

Independent

Age 49

 

Career Highlights

 

  Executive Vice President – Business Development of Microsoft Corp., responsible for developing Microsoft’s global business development strategies that drive growth across the company

 

  Former CEO of McAfee, LLC, one of the world’s leading independent cybersecurity companies

 

  Former Senior Vice President and General Manager at Intel Security Group, where he led the initiative to spin out McAfee

 

Committee Membership(s)

 

  Nominating, Governance and Public Responsibility

 

  Risk

 

 

Specific Qualifications, Experience,
Skills and Expertise

  Cybersecurity expert

  Core business, operations and management

  Experience in national security and emergency preparedness

  Product development and marketing experience

  Risk oversight

 

  

Select Professional and
Community Contributions

  Member, President’s National Security Telecommunications Advisory Committee

  Former Director, Cyber Threat Alliance

  Former Member, Board of Trustees of Princeton University

 

 

Other Current Public Directorships

  None

  

 

Other Public Directorships in the Past Five Years

  Rapid7, Inc.

  Snap Inc.

 

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LOGO

 

Our Retiring Director

Anne Lauvergeon is retiring from our Board at the end of her current term and, therefore, will not stand for reelection at our Annual Meeting of Shareholders. We thank Ms. Lauvergeon for her service and wish her continued success in the future.

Our Board’s Composition

As illustrated by the director biographies on the previous pages, our Board is made up of a diverse group of leaders with substantial experience in their respective fields. Our Board believes that the combination of the various skills, qualifications and experiences of the director nominees contributes to an effective and well-functioning Board and that, individually and as a whole, the director nominees possess the necessary qualifications to provide effective oversight and insightful strategic guidance.

We continually review our Board’s composition to identify the skills needed for our Company both in the near term and into the future. Ongoing strategic board succession planning, along with our mandatory retirement age for directors, assures that the Board continues to maintain an appropriate mix of objectivity, skills and experiences to provide fresh perspectives and effective oversight and guidance to management, while leveraging the institutional knowledge and historical perspective of our longer-tenured directors. Over the next few years, several of our current Board members will retire due to our mandatory retirement age. Considering this, our Board engaged a third-party consultant in 2019 to gain an outside perspective and help support Board succession processes and assessments. This workstream is actively underway and our Board added three new members in 2020 and two new members in 2021. We believe that increasing the size of our Board in the short term to allow for knowledge transfer and information sharing between newer directors and retiring directors will help ensure an orderly and effective Board succession process over the next few years.

Ideal Director Nominee Attributes

The Nominating, Governance and Public Responsibility Committee assesses potential candidates based on their history of achievement, the breadth of their business experiences, whether they bring specific skills or expertise in areas that the committee has identified as desired and whether they possess personal attributes and experiences that will contribute to the sound functioning of our Board.

Diversity is also a key consideration in our nomination and succession planning processes. Our Corporate Governance Principles provide that the Board should be diverse, engaged and independent. When reviewing potential board nominees, the Nominating, Governance and Public Responsibility Committee considers the holistic diversity of the Board, including gender and race, and does not discriminate on the basis of ethnicity, sexual orientation, culture or nationality. Specifically, we seek individuals who:

 

 

have established records of significant accomplishment in leading global businesses and large, complex organizations

 

 

have achieved prominence in their fields and possess skills or significant experience in areas of importance to our business strategy and expected future business needs

 

 

possess integrity, independence, energy, forthrightness, strong analytical skills and the commitment to devote the necessary time and attention to the Company’s affairs

 

 

demonstrate they can constructively challenge and stimulate management and exercise sound judgment

 

 

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

 

 

will contribute to the diversity of skills, experience and backgrounds on our Board

Process for Identifying and Adding New Directors

The Nominating, Governance and Public Responsibility Committee uses a professional search firm to help identify, evaluate and conduct due diligence on potential director candidates. Using a professional search firm supports the committee in conducting a broad search and looking at a diverse pool of potential candidates. The committee also maintains an ongoing list of potential candidates and considers recommendations made by the Board’s independent directors.

In addition, the Nominating, Governance and Public Responsibility Committee considers all shareholder recommendations for director candidates and applies the same standards in considering candidates submitted by shareholders as it does in evaluating all other candidates. Shareholders can recommend candidates by writing to the committee in care of the Company’s Deputy Corporate Secretary, whose contact information is on page 29. Shareholders who wish to submit nominees for election at an annual or special meeting of shareholders should follow the procedure described on page 91.

 

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LOGO

 

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

 

1

  

Collect

Candidate Pool

 

LOGO

Independent search firms

 

LOGO

Independent director recommendations

 

LOGO

Shareholder recommendations

 

 

 

2

  

Holistic

Candidate Review

Potential candidates are comprehensively reviewed and the subject of rigorous discussion during Nominating, Governance and Public Responsibility Committee meetings and Board meetings.

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

 

LOGO

During these meetings, directors assess candidates on the basis of their skills and experience, their personal attributes and their expected contribution to the diversity of skills, experiences and backgrounds on our Board.

 

LOGO

Due diligence is conducted by a third party, including soliciting feedback from other directors and persons outside the Company.

 

 

 

3

  

Recommendation

to the Board

 

LOGO

The Nominating, Governance and Public Responsibility Committee presents qualified candidates to the Board for review and approval.

 

 

Seven New

Independent

Directors Added

Since 2017

 

LOGO  

Racial, ethnic and

gender diversity

 

LOGO  

Current and

former CEOs

 

Current and

former CFOs

 

LOGO  

Regulatory
expertise

 

LOGO  

Global business

leaders

 

LOGO  

M&A and investment

expertise

 

LOGO  

Technology and

cybersecurity

expertise

 

LOGO  

Hospitality industry

expertise

 

LOGO  

Financial services,

banking and

payments industry

expertise

 

 

Director Onboarding

The Company maintains a comprehensive director onboarding program. In 2020, due to the COVID-19 pandemic, the Company’s director onboarding program was transitioned to a virtual experience to facilitate the seamless integration of new directors into their roles, all while maintaining consistency, integrity and efficiency within the Company’s existing onboarding process. The Company’s virtual director onboarding program includes all elements of the in-person experience and each onboarding session is individually tailored to take into account a director’s prior experience and background. In addition, new processes were developed for the virtual environment to introduce new directors and facilitate integration on the Board.

 

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LOGO

 

Our Board Evaluation Process

Our Board continually seeks to improve its performance. Throughout the year, our Lead Independent Director has regular one-on-one discussions with our Board members and conveys their feedback on an ongoing basis to our Chairman. Separately, our Chairman, Chief Legal Officer and Corporate Secretary, and Deputy Corporate Secretary each routinely communicates with our Board members to obtain real-time feedback. We believe that this continuous feedback cycle along with our formal annual evaluation process helps to ensure the continued effectiveness of our board.

Our Nominating, Governance and Public Responsibility Committee oversees the formal annual evaluation process of the effectiveness of our Board and its standing committees. In 2020, our Board engaged a third-party evaluation firm to augment the Board’s annual written evaluation process. The third-party evaluation firm conducted confidential interviews with each director that included discussions of the overall functioning and effectiveness of the Board and its standing committees, the leadership structure of the Board as well as a peer review. The evaluation firm presented the findings to the Board for consideration and feedback. Our Board believes that employing an independent third-party evaluation firm to assist in the evaluation process provided valuable insights and will contribute to the overall functioning and ongoing effectiveness of the Board and will consider doing so periodically going forward.

In addition, the annual written evaluation questionnaires for the Board and standing committees, described further below, were also utilized in the 2020 evaluation process to maintain important year-over-year comparisons.

Our annual Board evaluations cover the following areas:

 

LOGO  Board efficiency and overall effectiveness

 

LOGO  Board and committee structure

 

LOGO  Board and committee composition

 

LOGO  Satisfaction with the performance of the Chairman

 

LOGO  Satisfaction with the performance of the Lead Independent Director

 

LOGO  Board member access to the Lead Independent Director, CEO and other members of senior management

 

LOGO  Quality of Board discussions and balance between presentations and discussion

 

LOGO  Quality and clarity of materials presented to directors

 

LOGO  Board and committee information needs

 

LOGO  Satisfaction with Board agendas and the frequency and format of meetings and time allocations

 

LOGO  Areas where directors want to increase their focus

 

LOGO  Board dynamics and culture

 

LOGO  Board and committee access to experts and advisors

 

LOGO  Satisfaction with the format of the evaluation

 

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LOGO

 

 

 

Below is a summary of our Board Evaluation process:

 

 
 

     

  1  

 

 
 

Annual Board and Committee Evaluations

 

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

 

Written questionnaires are used for the Board and each standing committee and are updated and tailored each year to address the significant processes that drive board effectiveness. Each director completes a written questionnaire on an unattributed basis for the Board and for each committee on which they serve. The questionnaires include open-ended questions and space for candid commentary.

 

In addition, the committee decided to utilize a third-party evaluation firm in 2020 to augment the existing process in place as described above. The evaluation firm conducted confidential interviews with each director and presented the findings to the Board for consideration and feedback.

 

 
 

 

  2  

 

 
 

Summary of the Written Evaluations

 

Reports are produced summarizing the written questionnaires, which include all responses and highlight year-over-year trends.

 

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

 

 
 

 

  3  

 

 
 

Board and Committee Review

 

The Chair of the Nominating, Governance and Public Responsibility Committee leads a discussion of the written Board and committee evaluation results at the Board level. Separately, each committee chair leads a discussion of the applicable written committee evaluation at each committee meeting and reports on their discussions to the full Board.

 

In 2020, our third-party evaluation firm also delivered a report to our full Board summarizing the findings of that process.

 

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

 

 
 

     

  4  

 

 
 

Actions

 

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

 

  Streamlined Board committee structure and meeting cadence;

 

  Board meetings in international locations with Company site visits are under consideration when permitted by health and travel conditions;

 

  Director onboarding program was modified and enhanced;

 

  Management with varying degrees of seniority present to the Board and its committees;

 

  Information and materials regularly provided to directors continue to evolve to alleviate “information overload” and to enable directors to focus on the key data;

 

  Format of board meetings has been altered to enable more time for director discussion with and without the CEO present;

 

  Number of informal meetings between directors and key executives has been increased;

 

  Increased time for informal director gatherings;

 

  Director education and presentations on emerging risk areas, corporate governance, industry disruptors and competitors; and

 

  Board members added with expertise in areas critical to the Company’s business strategy and operations.

 

 

 

 

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LOGO

 

Our Board Leadership Structure

We believe that strong independent leadership is essential for our Board to effectively perform its primary oversight functions. It is also important for the Board to retain flexibility to determine its leadership structure based on the particular composition of the Board, the individuals serving in leadership positions, the needs and opportunities of the Company as they change over time and the additional factors described below.

The Board feels that a combined Chairman and CEO role allows the Company to effectively convey its business strategy and core values to shareholders, customers, colleagues, regulators and the public in a single, consistent voice. The Board also recognizes the necessity of having a strong Lead Independent Director with a clearly defined role and set of responsibilities (as detailed below) where there is a combined Chairman and CEO or where the Chairman is not independent. Our Board has been led by Mr. Squeri, our Chairman and CEO, and Mr. Williams, our Lead Independent Director, since 2018. Messrs. Squeri and Williams have forged a strong, collaborative, candid and productive working relationship. Their leadership is supplemented by engaged and expert committee chairs along with independent-minded, skilled and committed directors.

Our Board and Nominating, Governance and Public Responsibility Committee recently completed its annual review of the Board’s leadership structure. The review considered the insightful, effective and sound leadership provided by Mr. Williams during his tenure as Lead Independent Director as well as the tangible benefits of having a Chairman and CEO with an operational focus and extensive company experience given the global and complex nature of our business. In addition, the review also considered how the Company’s robust corporate governance practices combined with the Board’s current leadership structure helps to ensure both clear, strategic alignment throughout the Company and independent oversight of management. Taking all of this into account, our Board continues to believe that our current structure, led by Messrs. Squeri and Williams, allows the Board to focus on key strategic, policy and operational issues, provides critical and effective leadership (both internally and externally), and creates an environment in which the Board can work effectively and appropriately challenge management, all of which we believe will benefit the long-term interests of our shareholders.

Strong Lead Independent Director with Defined Role and Responsibilities

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

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

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

 

LOGO

Preside at all meetings of the Board at which the Chairman is not present, including the executive sessions of the independent directors, and apprise the Chairman of the issues considered and decisions reached at those sessions;

 

LOGO

Call additional meetings of independent directors as needed;

 

LOGO

Lead the Board in putting forth its expectations for “tone at the top”;

 

LOGO

Meet regularly with the Chairman and serve as a liaison between the Chairman and the independent directors;

 

LOGO

Facilitate effective and candid communication to optimize Board performance;

 

LOGO

Advise the Chairman of the Board’s informational needs, and review and approve the types of information sent to the Board and Board meeting agendas;

 

LOGO

Review and approve the schedule of Board meetings to assure there is sufficient time for discussion of all agenda items;

 

LOGO

Monitor and coordinate with the Chairman on appropriate governance issues and developments; and

 

LOGO

Be available as appropriate for consultation and direct communication with major shareholders.

In addition, all Board members are encouraged to propose the inclusion of additional Board agenda items that they deem necessary or appropriate in carrying out their duties. All Board members have direct access to the Chairman and Lead Independent Director.

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

Our Board bears the responsibility for the oversight of management on behalf of our shareholders in order to ensure long-term value creation. In that regard, the primary responsibilities of our Board include, but are not limited to (i) oversight of the Company’s annual business plan, (ii) corporate strategy and goals, (iii) ongoing succession planning and talent management and (iv) risk management.

 

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LOGO

 

How our Board Oversees our Annual Business Plan and Corporate Strategy

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

 

LOGO   

 

In 2020, in response to the COVID-19 pandemic, our Board met regularly to analyze and assess the impact of the pandemic on the Company’s strategy and performance. Our Board and management discussed the Company’s strategy and business throughout the year. In addition, our Board engaged in a virtual two-day meeting to conduct a deep dive into the Company’s strategic goals, timeline to achieve these goals and execution plans.

 

 

 

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

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

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

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

Additionally, the detailed results of the Company’s Annual Colleague Experience Survey are reviewed each year with the Board. Our Annual Colleague Experience Survey provides insights into employee satisfaction, leadership efficacy, learning opportunities, and career development. The insights provided by the survey help improve the American Express colleague experience, workplace culture and business results. We believe that maintaining our strong workplace culture, adhering to our Blue Box Values and ensuring that our people feel included, valued, recognized and backed will help us attract, retain and develop the right talent to lead the Company and successfully execute our corporate strategy. Please see page 39 for additional information about our workplace culture.

 

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LOGO

 

How our Board Oversees Risk Management

Board of Directors

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

 

 

Risk Committee

 

LOGO    Provides oversight of our enterprise risk management framework, processes and methodologies. Approves our Enterprise Risk Management (ERM) policy, which covers risk governance, risk oversight and risk appetite, including credit risk, market risk, liquidity risk, operational risk, reputational risk, country risk, model risk, asset-liability management risk and strategic and business risk. Our ERM policy:

   Defines the authorized risk limits to control exposures within our risk capacity and risk tolerance, including stressed forward-looking scenarios

   Establishes principles for risk taking in the aggregate and for each risk type, and is supported by a comprehensive system for monitoring limits, escalation triggers and assessing control programs

LOGO    Reviews and concurs in the appointment, replacement, performance and compensation of our Chief Risk Officer

LOGO    Receives regular updates from the Chief Risk Officer on key risks, transactions and exposures

LOGO    Receives reports on cybersecurity and related risks at least twice a year

LOGO    Reviews our risk profile against the tolerances specified in the Risk Appetite Framework, including significant risk exposures, risk trends in our portfolios and major risk concentrations

LOGO    Provides oversight of management’s execution of capital management, liquidity planning and resolution planning

LOGO    Monitors the quality and effectiveness of the Company’s technology security, data privacy and disaster recovery capabilities

 

    

 

 

Audit and Compliance Committee

 

LOGO    Assists the Board in its oversight responsibilities relating to the integrity of our annual and quarterly consolidated financial statements and financial reporting process, internal and external auditing, including the qualifications and independence of the Company’s independent registered public accounting firm and the performance of our internal audit services function, and the integrity of our systems of internal control over financial reporting and legal and regulatory compliance

LOGO    Provides oversight of our Internal Audit Department

LOGO    Reviews and concurs in the appointment, replacement, performance and compensation of our Chief Audit Executive and approves Internal Audit’s annual audit plan, charter, policies, budget and overall risk assessment methodology

LOGO    Receives regular updates on the status of the audit plan and results including significant reports issued by Internal Audit and the status of our corrective actions

LOGO    Reviews and approves our compliance policies, which include our Compliance Risk Tolerance Statement

LOGO    Reviews the effectiveness of our Corporate-wide Compliance Risk Management Program

LOGO    Appoints, replaces, reviews and evaluates the qualifications of the Company’s independent registered public accounting firm

 

    

 

Compensation and Benefits Committee

 

LOGO    Works with the Chief Colleague Experience Officer and the Chief Risk Officer to ensure our overall compensation programs, as well as those covering our business units and risk-taking employees, appropriately balance risk with business incentives and that business performance is achieved without taking imprudent or excessive risk

   Our Chief Risk Officer is actively involved in setting goals, including for our business units

   Our Chief Risk Officer also reviews the current and forward-looking risk profiles of each business unit and provides input into performance evaluations

   Our Chief Risk Officer meets with the committee and attests whether performance goals and results have been achieved without taking imprudent risks

LOGO    Uses a risk-balanced incentive compensation framework to decide on our bonus pools and the compensation of senior executives

 

 

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LOGO

 

Board Oversight of Information and Cybersecurity

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

Our information and cybersecurity program is designed to protect the confidentiality, integrity and availability of information and information systems from unauthorized access, use, disclosure, disruption, modification or destruction. The program is built upon a foundation of advanced security technology, a well-staffed and highly trained team of experts, and robust operations based on the National Institute of Standards and Technology Cybersecurity Framework. This consists of controls designed to identify, protect, detect, respond to and recover from information and cybersecurity incidents. The framework defines risks and associated controls which are embedded in our processes and technology. Those controls are measured and monitored by a combination of subject matter experts and a security operations center with our integrated cyber detection, response and recovery capabilities.

 

Program Highlights

 

  LOGO

We have a robust Cyber Crisis Response Plan in place that provides a documented framework for handling high severity security incidents and facilitates coordination across multiple parts of the Company.

 

  LOGO

We deploy a defense-in-depth strategy with multiple layers of controls including embedding security into our technology investments.

 

  LOGO

We invest in threat intelligence and are active participants in industry and government forums to improve sector cybersecurity defense.

 

  LOGO

We collaborate with our peers in the areas of threat intelligence, vulnerability management and response and drills.

 

  LOGO

We routinely perform simulations and drills at both a technical and management level.

 

  LOGO

We incorporate external expertise and reviews in all aspects of our program.

 

  LOGO

All colleagues receive annual cybersecurity awareness training.

 

We continuously assess the risks and changes in the cyber environment and dynamically adjust our program and investments as appropriate and have considered the enhanced cybersecurity risks as a result of the COVID-19 pandemic and work-from-home arrangements.

How our Management Oversees Risk

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

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

Our Board Committees

Our Board’s current standing committee membership information is listed on the following pages. Effective March 8, 2021, our Board approved revisions to the membership of our standing committees (see page 3 for our Board’s current committee membership). Each current member of our standing committees and each member in 2020 was independent and fulfilled the requirements applicable to each committee on which they served.

 

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LOGO

 

Board Committee Responsibilities

 

 

Audit and Compliance Committee

 

             

COMMITTEE
HIGHLIGHTS

 

 

LOGO

  

9

Meetings
in 2020

  

2020 Members

John J. Brennan

Ralph de la Vega

Anne Lauvergeon

Michael O. Leavitt

Karen L. Parkhill

Daniel L. Vasella (Chair)

  

Independence

Each member of the

committee is independent

and financially literate.

  

Audit Committee
Financial Expert

Each of Mr. Brennan,

Mr. de la Vega and

Ms. Parkhill meet the
requirements as defined by
U.S. Securities and Exchange Commission (SEC) rules.

             

 

Role and Responsibilities

   Assists the Board in its oversight of the integrity of our consolidated financial statements and related financial reporting processes, and internal and external auditing, including the qualifications and the independence of the independent registered public accounting firm, the performance of the Company’s Internal Audit services function, the integrity of our systems of internal control over financial reporting, and legal and regulatory compliance. See page 44 under Report of the Audit and Compliance Committee for additional information regarding the duties of the committee with respect to oversight of our financial reporting process

   Appoints, replaces, reviews and evaluates the qualifications of the Company’s independent registered public accounting firm

   Oversees the process for the receipt, retention and treatment, on a confidential basis, of complaints we receive regarding accounting, internal accounting controls or auditing matters and the confidential, anonymous submission by our employees of concerns regarding questionable accounting or auditing matters

   Reviews and discusses reports from management regarding significant reported ethics violations under our Code of Conduct and other corporate governance policies

   Meets regularly in executive session with management, including with the Company’s Chief Financial Officer, Chief Legal Officer and Corporate Secretary, Chief Compliance & Ethics Officer and Chief Audit Executive, and also with the Lead Engagement Partner from the Company’s independent registered public accounting firm

 

 

 

Compensation and Benefits Committee

 

             

COMMITTEE HIGHLIGHTS

 

LOGO

  

6     

Meetings     

in 2020     

  

2020 Members

John J. Brennan

Peter Chernin

Ralph de la Vega

Theodore J. Leonsis

Lynn A. Pike

Ronald A. Williams (Chair)

Christopher D. Young

  

Independence

Each member of the

committee is independent.

  
             

 

Role and Responsibilities

   Oversees the compensation of our executive officers and designated key employees

   Oversees our employee compensation plans and arrangements and employee benefit plans

   Approves an overall compensation philosophy and strategy for the Company and its executive officers, including the selection of performance measures that appropriately balance risk with business objectives, and the review of our compensation practices so business performance is achieved without taking imprudent or excessive risk, with appropriate input from the Company’s Chief Risk Officer

   Evaluates potential conflicts of interest with respect to its advisors

   The committee may delegate certain of its responsibilities to one or more of its members or to executive officers or designated senior executives, to the extent permissible under its charter, the Company’s bylaws, the terms of the applicable plans, laws, rules, regulations and listing standards, and subject to any limitations imposed by our Board from time to time

   Reviews strategies relating to diversity, equity and inclusion as well as key talent metrics, and such other matters as the committee deems appropriate from time to time

 

Compensation and Benefits Committee Interlocks and Insider Participation

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

 

 

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LOGO

 

 

Nominating, Governance and Public Responsibility Committee

 

             

COMMITTEE

HIGHLIGHTS

 

LOGO

  

5       

Meetings       

in 2020       

  

2020 Members

Peter Chernin (Chair)

Michael O. Leavitt

Theodore J. Leonsis

Lynn A. Pike

Daniel L. Vasella

Ronald A. Williams

  

Independence

Each member of the

committee is independent.

  

                                                                      

             

 

Role and Responsibilities

   Considers and recommends candidates for election to the Board

   Provides oversight of and advice with respect to corporate governance matters at the Company consistent with the long-term best interests of the Company and its shareholders

   Advises the Board on director compensation

   Oversees the annual performance evaluation process for the Board and Board committees, including establishing criteria for evaluating their performance

   Advises the Board on Board leadership

   Considers feedback from shareholders regarding governance practices

   Administers the Related Person Transaction Policy

   Supports the Board with respect to CEO and management succession planning

   Reviews legislation, regulations and policies affecting us and the communities we serve, as well as our philanthropic programs, our political action committee, our corporate political contributions and our government relations activities

   Reviews the Company’s practices and positions on ESG issues and the impact those issues have on the Company’s business and key stakeholders

 

Political Engagement Activities

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

 

 

 

Risk Committee

 

             

COMMITTEE
HIGHLIGHTS

 

LOGO

  

11       

Meetings       

in 2020       

  

2020 Members

Charlene Barshefsky

John J. Brennan (Chair)

Anne Lauvergeon

Karen L. Parkhill

Christopher D. Young

  

Independence

Each member of the

committee is independent.

  
             

 

Role and Responsibilities

   Assists the Board in its oversight of the Company’s Enterprise Risk Management framework and roles and responsibilities of the three lines of defense, and other risk management policies and procedures established by management to identify, assess, measure and manage key risks facing the Company

   Assists the Board in its oversight of management’s execution of capital management, liquidity planning and resolution planning

   Monitors the quality and effectiveness of the Company’s Information Security Program

   Meets regularly in executive session with the Company’s Chief Risk Officer

 

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

 

 

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LOGO

 

Our Corporate Governance Framework

We have adopted Corporate Governance Principles that, together with the charters of the four standing committees of the Board (Audit and Compliance, Compensation and Benefits, Nominating, Governance and Public Responsibility and Risk), our Code of Conduct (which constitutes our code of ethics for colleagues) and the Code of Business Conduct for Members of the Board of Directors, provide our governance framework. Key governance policies and processes also include our Whistleblower Policy, our comprehensive Enterprise Risk Management Program, our commitment to transparent financial reporting and our systems of internal checks and balances. Comprehensive management policies, many of which are approved at the Board committee level, guide the Company’s operations.

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

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

 

 

Corporate Governance Principles

 

 

Charters for each of the four standing Board committees

 

 

Code of Conduct (which constitutes our code of ethics)

 

 

Code of Business Conduct for Members of our Board

Majority Voting Standard for Director Elections

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

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

Director Membership on Other Boards

Our Board expects individual directors to allot sufficient time and attention to Company matters and to use their judgment and consider all of their commitments when accepting additional directorships of other corporations or charitable organizations. Specifically, our Corporate Governance Principles provide that a director should not serve on the boards of more than four public companies (including ours) or, if the director is an active Chief Executive Officer or equivalent of another public company, on the boards of more than three public companies (including ours). Additionally, a director who serves on the Audit and Compliance Committee should not serve on more than two other public company audit committees.

All of our current directors comply with our policies set forth above. However, we are aware that some of our shareholders have their own board membership policies that are more restrictive than our policy. When a director joins our Board and annually thereafter, as part of our evaluation process, we ensure that each director has sufficient time to be a productive member of our Board and has exhibited as much throughout the year. Our Board believes that the above policy strikes the right balance by allowing for the experience gained through membership on other boards and the time commitment needed for engaged board service.

Director Attendance

Our meeting attendance policy is set forth in our Corporate Governance Principles. During 2020, our Board met 13 times and our committees met 31 times. All directors attended 75% or more of the meetings of the Board and Board committees on which they served in 2020.

All of our directors serving on our Board at the time of our 2020 Annual Meeting of Shareholders attended the meeting virtually due to the COVID-19 pandemic. Our Board strongly encourages all of its members to attend the Annual Meeting of Shareholders but understands there may be exigent circumstances, especially during these unprecedented times. Despite the extraordinary circumstances created by the pandemic, the Board continued to meet regularly on a virtual basis throughout the year.

 

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LOGO

 

Executive Sessions

Executive sessions of independent directors, led by our Lead Independent Director, enable the Board to discuss matters, such as strategy, CEO and senior management performance and compensation, succession planning and board effectiveness, without management present. Any director may request additional executive sessions of independent directors. During 2020, our independent directors met in executive session at each regularly scheduled Board meeting.

Our Board’s Size

Our Corporate Governance Principles provide that while the Board need not adhere to a fixed number of directors, generally a board of 12-14 directors offers a sufficiently large and diverse group to address the important issues facing the Company and provides a wide range of perspectives, while being small enough to encourage personal involvement and discussion. We recognize that at times the number of directors on our Board may be higher than this range during periods of succession planning-related transitions, and when this occurs, expect the size of our Board to subsequently come back to within this range (12-14) as directors do not stand for re-election in accordance with our mandatory retirement age or to pursue other interests.

Proxy Access

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

Trading in Company Securities

We prohibit hedging and pledging transactions in Company securities by executive officers and directors. Employees that are not executive officers are also prohibited from hedging Company securities and discouraged from pledging Company securities and may only do so if certain criteria are met.

Additionally, we require members of senior management as well as our directors to pre-clear every transaction in Company securities for themselves, their immediate family members, and any family trust with the Deputy Corporate Secretary. This includes gifts, transactions in discretionary accounts and non-routine transactions such as optional cash purchases in the Dividend Reinvestment Plan.

Our Board’s Independence

 

14/15

Director Nominees are Independent

 

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

Based on our guidelines, the Board determined in March 2021 that all of its members in 2020, other than Mr. Squeri, and all of the Board’s director nominees for election at the 2021 Annual Meeting of Shareholders, other than Mr. Squeri, are independent.

Effective March 1, 2021, Ambassador Barshefsky retired as a partner from the law firm of WilmerHale, an international law firm based in Washington, D.C. From time to time and in the ordinary course of its business, WilmerHale provides legal services to American Express that we consider to be de minimis in nature. Ambassador Barshefsky does not provide any such legal services, and she does not receive any compensation from the firm that is generated by or related to our payments to WilmerHale for such services. The Nominating, Governance and Public Responsibility Committee determined, based on fees paid to the firm over the past three years, that WilmerHale does not perform substantial legal services for the Company on a regular basis. The fees and expenses paid to WilmerHale represented less than 1% of the firm’s annual revenue in each of the past three years and represented less than 0.1% of American Express’ revenues in each such year. Further, the Nominating, Governance and Public Responsibility Committee reviewed the nature of American Express’ engagement of WilmerHale and the services rendered, including the expertise and relevant experience of the firm and the specific partners engaged to work on the matters for which we have engaged the firm, and determined that Ambassador Barshefsky’s service on American Express’ Board should not impair American Express’ ability to engage WilmerHale when American Express determines such engagements to be appropriate and in our best interests. The committee is satisfied that WilmerHale, when engaged for legal work, is chosen by American Express’ legal group on the basis of the directly relevant factors of experience, expertise and efficiency. After considering the foregoing, the committee determined and recommended to the Board that American Express’ professional engagement of WilmerHale does not impair Ambassador Barshefsky’s independence.

 

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LOGO

 

Shareholder Engagement

Our Board’s Commitment to Shareholder Engagement

 

WHY WE ENGAGE

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

 

  LOGO

Provide visibility and transparency into our business, our performance and our corporate governance, ESG and compensation practices;

 

  LOGO

Discuss with our shareholders the issues that are important to them, hear their expectations for us and share our views; and

 

  LOGO

Assess emerging issues that may affect our business, inform our decision making, enhance our corporate disclosures and help shape our practices.

 

 

LOGO

 

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LOGO

 

HOW WE ENGAGE

Following our 2020 Annual Meeting of Shareholders, we engaged with shareholders representing approximately 41% of our outstanding shares on corporate governance, ESG, executive compensation and related matters. During these meetings, depending on the investor’s priorities, we discussed and sought direct feedback on a broad number of issues including company strategy and performance, board composition, ESG and executive compensation programs. The below table provides a snapshot of our ongoing engagement process and outcomes.

 

   

Board Involvement

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

 

 

LOGO     

 

  

Actions Taken by the Board Following Shareholder Engagement

 

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

 

LOGO    Redesigned performance restricted stock unit awards to include relative ROE metric and relative TSR modifier

 

LOGO    Eliminated Portfolio Grant (long-term cash) program in 2019 and transitioned target award values to 100% equity tied to Company and stock performance for Named Executive Officers (NEOs)

 

LOGO    Continued to align compensation program with the Company’s strategic priorities

 

LOGO    Released our comprehensive ESG report (available on our website), an evolution of our annual Corporate Social Responsibility Report, that contains increased disclosure on a number of initiatives and metrics

 

LOGO    Reached 100 percent pay equity for colleagues across genders globally and across races and ethnicities in the U.S

 

LOGO    Adopted proxy access

 

LOGO    Adopted shareholder right to call special meetings

 

LOGO    Changed our executive compensation peer group

 

LOGO    Simplified our Annual Incentive Award program to be more formulaic and based on a single Company scorecard

 

LOGO    Committed to not provide office support to future retiring CEOs

 

LOGO    Enhanced our website disclosures on political contributions and inclusion and diversity

 

LOGO    Continued to evolve and enhance our proxy disclosures

 

LOGO    Amended our Corporate Governance Principles to limit the number of public company boards on which our directors may serve

 

LOGO    Added directors with financial services, payments, cybersecurity and digital backgrounds

 

 

 

Investor Relations and
Senior Management

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

 

  Formal events

  One-on-one meetings

  Group meetings throughout the year

 

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

 

 

 

 

LOGO     

 

 

Corporate Secretary’s Office

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

 

 

 

LOGO     

 

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LOGO

 

How to Communicate with our Board

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

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

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

Kristina V. Fink

Deputy Corporate Secretary

American Express Company

200 Vesey Street

New York, NY 10285

(212) 640-2000

corporatesecretarysoffice@aexp.com

 

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LOGO

 

Compensation of Directors

The Nominating, Governance and Public Responsibility Committee reviews director compensation and seeks to compensate our directors in a manner that attracts and retains highly qualified directors and aligns the interests of our directors with those of our long-term shareholders. In 2019, the committee engaged an independent compensation advisory firm, Semler Brossy Consulting Group, to assist the committee in its review of the competitiveness and structure of the Company’s non-management director compensation. This review included a competitive benchmarking of our director compensation against the companies that our Compensation and Benefits Committee examines as a reference when examining the competitiveness of our executive compensation practices, as well as the S&P 100 and certain financial institutions. After completing its review, the Nominating, Governance and Public Responsibility Committee recommended modest increases to our program effective January 1, 2020, in order to better position our program from a competitive standpoint going forward, as described below. No changes were made to the Company’s non-management director compensation programs for 2021.

The following table provides information on the 2020 compensation of non-management directors who served for all or a part of 2020. We reimburse directors for reasonable out-of-pocket expenses attendant to their board service.

 

Name

Fees Earned or
Paid in  Cash(1)
Stock
Awards(2)
All Other
Compensation(3)
Total

Charlene Barshefsky

$   120,000 $   200,000 $   115,800 $   435,800

John J. Brennan

$ 175,000 $ 200,000 $ 21,422 $ 396,422

Peter Chernin

$ 145,000 $ 200,000 $ 82,106 $ 427,106

Ralph de la Vega

$ 135,000 $ 200,000 $ 30,566 $ 365,566

Anne L. Lauvergeon

$ 140,000 $ 200,000 $ 44,749 $ 384,749

Michael O. Leavitt

$ 135,000 $ 200,000 $ 34,162 $ 369,162

Theodore J. Leonsis

$ 130,000 $ 200,000 $ 63,744 $ 393,744

Karen L. Parkhill

$ 119,628 $ 200,000 $ 5,054 $ 324,682

Charles E. Phillips(4)

$ 8,424 $ —   $ —   $ 8,424

Lynn A. Pike

$ 118,842 $ 200,000 $ 2,058 $ 320,900

Daniel L. Vasella

$ 157,785 $ 200,000 $ 59,450 $ 417,235

Ronald A. Williams

$ 170,000 $ 275,000 $ 131,432 $ 576,432

Christopher D. Young

$ 132,198 $ 200,000 $ 14,183 $ 346,381

 

(1)

Annual Retainers. For service in 2020, we paid non-management directors an annual retainer of $100,000 for board service. We paid an additional annual retainer of $20,000 to members of the Audit and Compliance and Risk Committees, and $15,000 to members of the Compensation and Benefits Committee and Nominating, Governance and Public Responsibility Committee. We also paid an annual retainer to the Chair of each of the Board committees as follows: Audit and Compliance and Risk, $20,000; and Compensation and Benefits and Nominating, Governance and Public Responsibility, $15,000. We pay no fees for attending meetings, but the annual retainer for board service of $100,000 is reduced by $20,000 if a director does not attend at least 75% of his or her aggregate board and committee meetings. In addition, our Lead Independent Director during 2020, Ronald A. Williams, received an annual retainer of $100,000 (which includes $75,000 in SEUs (see footnote 2)).

 

    

The majority of non-management directors, except Theodore J. Leonsis, Karen L. Parkhill, Lynn A. Pike, and Ronald A. Williams, deferred all or a portion of their 2020 retainers into a cash account, a share equivalent unit (SEU) account, or both, under the deferred compensation plan described below in footnote 2.

 

(2) 

Share Equivalent Unit Plan. To align our non-management directors’ annual compensation with shareholder interests, each non-management director is credited with common SEUs upon election or reelection at each Annual Meeting of Shareholders. Each SEU reflects the value of one common share. Directors receive additional SEUs as dividend equivalents on the units in their accounts. SEUs do not carry voting rights and must be held at least until a director ends his or her service on the Board. Each SEU is payable in cash equal to the then-value of one common share at the time of distribution to the director. On May 5, 2020, the date of last year’s annual meeting, each non-management director elected to the Board was credited with SEUs having a value of $200,000, which consisted of 2,326 SEUs, based on the market price of our common shares for the average of the 15 trading days immediately preceding such date. In addition, our Lead Independent Director during 2020, Ronald A. Williams, received an annual SEU retainer of $75,000, which consisted of 767 SEUs for the year based on the market price of our common shares for the average of the last 10 trading days of such calendar quarter. We report in this column the aggregate grant date fair value of these SEUs in accordance with FASB ASC Topic 718, Compensation – Stock Compensation.

 

    

Deferred Compensation Plan for Directors. Non-management directors may defer the receipt of up to 100% of their annual retainer fees into either: (1) a cash account in which amounts deferred will be credited at the rate of 120% of the applicable federal long-term rate for December of the prior year or (2) their SEU account. Directors will receive cash payments upon payout of their deferrals.

 

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The balances in directors’ SEU accounts as of December 31, 2020 are set forth in the table below. These amounts represent the aggregate number of SEUs granted under the SEU Plan for all years of service as a director and additional units credited as a result of the reinvestment of dividend equivalents and, for directors who participated in the SEU option under our deferred compensation plan for directors, retainer amounts deferred into their SEU account and dividend equivalents thereon.

 

Name

Number of

SEUs

Charlene Barshefsky

  69,142

John J. Brennan

  14,777

Peter Chernin

  44,656

Ralph de la Vega

  15,206

Anne L. Lauvergeon

  28,264

Michael O. Leavitt

  22,016

Theodore J. Leonsis

  33,872

Karen L. Parkhill

  2,344

Charles E. Phillips

  71

Lynn A. Pike

  2,344

Daniel L. Vasella

  34,064

Ronald A. Williams

  74,078

Christopher D. Young

  9,393

 

(3) 

Insurance. We provide our non-management directors with group term life insurance coverage of $50,000. The group life insurance policy is provided to the directors on a basis generally available to all Company employees. This column includes the premium paid for such coverage.

 

    

Dividend Equivalents. Dividend equivalents are reinvested in additional units for all directors based upon total SEUs held at the time of Company quarterly dividend payment dates. This column includes the fair market value of the dividend equivalents received by the directors during 2020 in these amounts: Amb. Barshefsky $115,746, Mr. Brennan $21,368, Mr. Chernin $74,052, Mr. de la Vega $22,512, Ms. Lauvergeon $44,695, Gov. Leavitt $34,108, Mr. Leonsis $55,690, Ms. Parkhill $2,004, Mr. Phillips $0, Ms. Pike $2,004, Dr. Vasella $54,396, Mr. Williams $123,378, and Mr. Young $12,629.

 

    

Directors’ Charitable Award Program. We maintain a Directors’ Charitable Award Program for directors elected prior to July 1, 2004. To fund this program, we purchased joint life insurance on the lives of participating directors. The death benefit of $500,000 funds a donation to a charitable organization that the director recommends. The Company paid no premiums for the policies of non-management directors who served for all or part of 2020.

 

    

Matching Gift Program. Directors are eligible to participate in the Company’s Matching Gift Program on the same basis as Company employees. Under this program, the American Express Foundation matches gifts to approved charitable organizations up to $8,000 per calendar year. This column includes the amounts matched with respect to calendar year 2020.

 

(4) 

Mr. Phillips was elected to our Board effective December 1, 2020.

Director Stock Ownership

Our Corporate Governance Principles provide that non-management directors are required to obtain a personal holding of shares (directly or through SEUs) with a value of $1 million within five years of joining the Board. All non-management directors have achieved or are on track to achieve this requirement during the required time period.

Director and Officer Liability Insurance

We have an insurance program in place to provide coverage for director and officer liability. The coverage provides that, subject to the policy terms and conditions, the insurers will: (i) reimburse us when we are legally permitted to indemnify our directors and officers; (ii) pay losses, including settlements, judgments and legal fees, on behalf of our directors and officers when we cannot indemnify them; and (iii) pay our losses resulting from certain securities claims. A portion of the insurance program is blended with certain other insurances covering the Company. The insurance program is effective from November 30, 2020 to November 30, 2021 and is provided by a consortium of insurers. ACE American Insurance Company and XL Specialty Insurance Company are the lead insurers with various other insurers providing excess coverage. We expect to obtain similar coverage upon expiration of the current insurance program. The annual premium for the insurance program is approximately $5.2  million.

Certain Relationships and Transactions

In the ordinary course of our business, we engage in transactions, arrangements and relationships with many other entities, including financial institutions and professional organizations. Some of our directors, director nominees, executive officers, greater than 5% shareholders, and their immediate family members (each, a Related Person) may be directors, officers, partners, employees or shareholders of these entities. We carry out transactions with these entities on customary terms and, in many instances, these Related Persons may not have knowledge of them. To the Company’s knowledge, since January 1, 2020, no Related Person has had a material interest in any of our ongoing business transactions or relationships except as described on the following page.

 

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Our Related Person Transaction Policy

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

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

Pre-Approved Categories of Related Person Transactions

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

Related Person Transactions

Our executive officers and directors may from time to time take out loans from certain of our subsidiaries on the same terms that these subsidiaries offer to the general public. For example, our U.S. card-issuing bank may extend credit to our directors and executive officers under our charge or lending products. All indebtedness from these transactions is in the ordinary course of our business and is on the same terms, including interest rates and collateral, in effect for comparable transactions with other people. Such indebtedness involves normal risks of collection and does not have features or terms that are unfavorable to our subsidiaries. Our executive officers and directors may also enter into transactions with us involving other goods and services, such as travel services and investments in deposit products offered by subsidiaries of the Company. These transactions are also in the ordinary course of our business, and we provide them on terms that we offer to our customers generally. Occasionally, we may have employees who are related to our executive officers, directors or director nominees. We compensate these individuals in a manner consistent with our practices that apply to all employees. The sister-in-law of Mr. Squeri, our Chairman and CEO, is employed by the Company in a non-executive position and received compensation in 2020 of between $240,000 and $270,000. The compensation and other terms of employment of Mr. Squeri’s sister-in-law are determined on a basis consistent with the Company’s human resources policies.

Certain executive officers, directors and members of their immediate families are directors, employees or have equity interests in companies with whom the Company has entered into ordinary course business relationships from time to time and with whom the Company may enter into additional ordinary course business relationships. These may include ordinary course merchant acceptance relationships pursuant to which these companies accept our charge and credit card products and pay us fees when their customers use these cards, as well as use of the Company’s cards and financial and other products and services, including extensions of credit, on terms and conditions similar to those available to other customers generally. From time to time, we may enter into joint marketing or other relationships with one or more of these companies in the ordinary course that encourage customers to apply for and use our cards. We have periodically engaged Martellus Group (Martellus), a consulting company where the spouse of our Chief Risk Officer, Mr. Raymond Joabar, was a co-owner. Mr. Joabar’s spouse sold her interest in Martellus in June 2020 and retained no beneficial interest therein. Historically, Martellus had small engagements with various parts of the Company’s marketing and serving organizations. Each transaction was conducted on, and all services were provided in, the ordinary course of business and on arm’s-length terms. While Mr. Joabar’s spouse was a co-owner, she was not in any client-facing roles and primarily served as the back-office administrator for Martellus. In 2020, we made aggregate payments to Martellus of approximately $975,218 for consulting services. We also may provide ordinary course commercial card and bill payments services or business insights to some of these companies, for which these companies pay fees to us. We may engage in other commercial transactions with these companies and pay or receive fees in those transactions. We have a number of similar ordinary course relationships with Berkshire Hathaway Inc. and its subsidiaries. We have also purchased insurance and other products from subsidiaries of Berkshire Hathaway Inc. in the ordinary course of business and on arm’s-length terms. Additionally, the Company may from time to time make charitable contributions to nonprofit organizations where our directors or executive officers are directors or trustees.

 

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How We Approach Environmental, Social and Governance (ESG)

Our approach to our ESG work is a natural extension of both our mission – to become essential to our customers by providing differentiated products and services to help them achieve their aspirations – and our commitment to doing what is right. We deliver value for our shareholders, colleagues, customers, communities and other stakeholders by investing financial and human resources in ways that address their social, environmental and economic needs.

We view sustainable value creation through many lenses:

 

 

Delivering exceptional products, services, and experiences

 

 

Enabling commerce and helping businesses grow

 

 

Promoting a culture of respect that fosters inclusion, diversity and trust

 

 

Upholding the highest standard of integrity

 

 

Safeguarding our customers’ privacy and data

 

 

Making a difference in the communities where we work and live

 

 

Protecting the environment and supporting a low-carbon future

Our approach is underscored by disciplined risk management that helps us endure as a place where people want to work, invest and do business.

ESG Strategy and Oversight Framework

In 2020, we completed a comprehensive assessment to update our priority environmental, social and governance issues. One key insight from the assessment was the interconnectedness of many key ESG issues, such as the impact that inclusion and diversity, climate change and financial resiliency have on important priorities like colleague attraction and retention, customer satisfaction and community resiliency. From these findings, we developed a framework to drive our ESG strategy moving forward.

 

Mission: Back people and businesses to thrive and create equitable, resilient and sustainable communities globally
Stakeholders including shareholders, colleagues, customers and communities
Sound governance including business ethics, transparency and accountability

LOGO

Promote

Diversity, Equity and Inclusion

 

Support a diverse, equitable and inclusive

workforce, marketplace and society.

    

LOGO

Build

Financial Confidence

 

Provide responsible, secure and transparent

products and services to help people and

businesses build financial resilience.

    

LOGO

Advance

Climate Solutions

 

Enhance our operations and capabilities to

meet customer and community needs in the

transition to a low-carbon future.

 

 

        

Nominating, Governance and Public Responsibility Committee

         
                

 

Executive Committee

 

ESG Steering Committee

 

ESG Working Groups

Governance

At the Board level, the Nominating, Governance and Public Responsibility Committee reviews our ESG strategy and Corporate Social Responsibility (CSR) program, monitors progress against our goals and provides guidance on our efforts. Day to day, our CSR team works with colleagues throughout the Company to shape our efforts and monitor progress on key issues. Additional information can be found under the Governance & Corporate Responsibility tab on our Investor Relations website.

Our Executive Committee reviews and evaluates performance and long-term goals with respect to ESG matters for the Company. In 2020, we launched a new cross-functional ESG Steering Committee, led by senior executives from across the Company, to help guide our ESG strategy and related policies and programs. To support the integration of this strategy into our business, the ESG Steering Committee plans to develop new goals and metrics.

 

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Strategic Engagement

Our strategy begins by identifying our key stakeholders, then engaging with them to understand the ESG issues that matter to them, as well as the impact those issues have on our business. We have identified eight key stakeholder groups based on their impact on our business activities, including shareholders, colleagues, customers (consumers, small businesses, mid-sized companies and large corporations), governments and regulators, suppliers, community and nonprofit organizations, ESG research and rating agencies, and partners and peers. Our continued engagement with these stakeholders helps ensure we are meeting their expectations and advancing our efforts to operate responsibly. In 2020, as part of our comprehensive ESG issue assessment, we interviewed more than 30 internal and external stakeholders, including Executive Committee members, shareholders, customers, strategic partners, suppliers, nonprofit leaders and others. We also conducted an ESG survey of our colleague base across the Company.

Operations and Reporting Enhancements

In 2020, we expanded our ESG reporting and operational practices, including:

 

 

Conducted a climate risk scenario analysis aligned with the Task Force on Climate-related Financial Disclosures (TCFD) to assess our Company’s physical risks related to climate change; and

 

 

Provided disclosure in accordance with the Sustainability Accounting Standards Board (SASB) reporting framework in our ESG Report for the first time.

Office of Enterprise Inclusion, Diversity and Business Engagement

In 2020, we launched a new Office of Enterprise Inclusion, Diversity and Business Engagement. This office, partnering closely with our Executive Committee, Chief Colleague Inclusion & Diversity Officer and Colleague Advisory Networks worldwide, is working to create new and expand existing initiatives across the enterprise as we intensify our focus on driving meaningful, long-term change in our culture and the way we operate. The framework for this effort spans across six pillars, Brand, Culture, Colleague, Customer, Business and Community with each led by members of the Executive Committee charged with developing comprehensive, multi-year plans that include timelines, accountabilities and metrics for driving progress within their respective pillars.

 

Chairman and CEO

 

Office of Enterprise Inclusion, Diversity and Business Engagement

 

Colleague Advisory Networks

 

     

Key Pillars

      
          

 

 

Brand

Authentically build                 brand relevance and  brand affinity for the Company with Black/ African American, Latinx, Asian and LGBTQ+ communities, customers and colleagues.

 

   

 

Culture

Become a company where explicit consideration of equity is integrated into everything we do to embody true inclusion.

   

 

Colleague

Create a culture that respects, values and recognizes everyone by removing systemic barriers to achieve inclusion and advancement that drives company success.

   

 

Customer

Develop a holistic strategy across the Enterprise to strengthen our business with underrepresented minority groups and small businesses.

   

 

Business

Develop a holistic strategy across the Enterprise to strengthen our business with underrepresented minority suppliers and investments in underrepresented minority businesses.

   

 

Community

Combat systemic racism and promote equity and advancement through
our community initiatives and charitable priorities.

 

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Our ESG Ratings

We monitor our performance across several environmental, social and governance-related ratings and rankings. Highlights from 2020 include:

 

 

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2020 HIGHLIGHTS

 

   

LOGO      

Our ESG    

Approach    

  

LOGO   Advance our ESG Strategy

 

 Developed a framework to drive our ESG strategy moving forward

 

 Formed a new cross-functional ESG Steering Committee, led by senior executives from across the Company, to help guide our Company ESG strategy and related policies and programs

 

 Launched a $1 billion action plan to promote diversity, equity and inclusion for colleagues, customers and communities

  
   

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Backing    

Our    

Colleagues    

  

LOGO   Back Our Colleagues During the COVID-19 Pandemic

 

 Prioritized our colleagues’ well-being and safety by moving to temporary work-from-home arrangements in virtually all locations around the world, which will be maintained as an option for colleagues through September 6, 2021

 

 Provided coverage for all out-of-pocket medical and pharmacy service costs related to COVID-19 testing and treatment for colleagues enrolled in our U.S. medical plans

 

LOGO   Foster an Inclusive and Diverse Culture

 

 Launched the Office of Enterprise Inclusion, Diversity and Business Engagement to expand upon our successful inclusion and diversity programs and create new initiatives to drive meaningful, long-term change

 

 Held our fourth global Women’s Conference and launched the American Express Ambition Project to help leaders recognize their responsibility to nurture ambition and provide future generations of women with the backing to say, “I am ambitious.”

 

 Achieved 100% pay equity for colleagues across genders globally and across races and ethnicities in the U.S.

 

 94% of colleagues who participated in our annual internal colleague survey said they would recommend American Express as a great place to work

 

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LOGO     

Backing Our     Customers    

 

  

LOGO   Back Our Customers During the COVID-19 Pandemic

 

 Created a Customer Pandemic Relief Program to provide short-term support for customers impacted by COVID-19 and enhanced and expanded our longer-term Financial Relief Program to provide assistance in 21 countries to customers in need

 

LOGO   Support Small Businesses

 

 Spent more than $200 million as part of our largest-ever global Shop Small campaign to support a Card Member offer and the associated marketing campaign to help jumpstart spending at small merchants

 

 $19.8 billion in estimated reported spending by U.S. consumers at independent retailers and restaurants on Small Business Saturday1

 

 Established “Stand for Small,” a coalition of more than 100 companies that came together to provide support to small businesses navigating the impacts of COVID-19

 

 24,500 women entrepreneurs have participated in the workshops hosted by the ChallengeHER initiative since 2013 to help boost government contracting opportunities for women-owned small businesses

 

LOGO   Make our Products and Services Better for Society

 

 $101 million donated by U.S. Card Members to benefit charitable causes through our JustGiving Program since 2010

 

  
   

LOGO     

Backing Our     Communities    

  

LOGO   Strengthen the Communities in Which We Operate

 

 $48 million in charitable giving globally, including grants provided by the Company, the American Express Foundation, our Center for Community Development and gift-matching programs2

 

LOGO   Back Our Communities During the COVID-19 Pandemic

 

 $8 million provided in financial support to COVID-19 relief efforts

 

LOGO   Support a Diverse, Equitable and Inclusive Society

 

 Pledged $10 million to support Black-owned small businesses over the next four years through a coalition that we built with the U.S. Chamber of Commerce Foundation that brings together four national Black Chambers

 

 $8 million provided in grants to the NAACP Legal Defense and Educational Fund, the National Urban League and other People of Color-led organizations

 

LOGO   Enable Colleagues to Back Our Communities

 

 26,000+ colleagues across 35 countries donated to nonprofits through our colleague gift-matching programs

 

LOGO   Develop Social Purpose Leaders

 

 150,000+ social purpose leaders trained since 2007 with the support of our grants

 

1 

The American Express 2020 Small Business Saturday Consumer Insights Survey was conducted by Teneo on behalf of American Express and the National Federation of Independent Business (NFIB). The study is a nationally representative sample of 2,572 U.S. adults 18 years of age or older. The sample was collected using an email invitation and an online survey. The study gathered self-reported data and does not reflect actual receipts or sales. It was conducted anonymously on November 29, 2020. The survey has an overall margin of error of +/- 2.0%, at the 95% level of confidence. Projections are based on the current U.S. Census estimates of the U.S. adult population, age 18 years or older.

2 

Inclusive of Covid-19 relief effort grants and grants to support a diverse, equitable and inclusive society.

 

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LOGO     

Moving to a    

Low-Carbon    

Future    

 

  

LOGO   Remain Carbon Neutral

 

 Carbon neutral since 20183

 

 100% renewable electricity powering our operations since 2018

 

LOGO   Assess Climate Risks and Opportunities

 

 Conducted a climate risk scenario analysis aligned to the Task Force on Climate-related Financial Disclosures (TCFD) framework to assess physical risks related to climate change

 

LOGO   Engage Our Colleagues in Sustainability

 

 57,000 trees planted during our Earth Month colleague campaign

 

  
   

LOGO     

Operating     Responsibly    

 

  

LOGO   Maintain the Highest Standards of Ethics and Integrity

 

 Our colleagues receive annual Global Regulatory Learning requirements on important policies, laws and regulations that govern our industry, guide our Company and protect our colleagues, customers and brand

 

 The Amex Ethics Hotline is available online and by phone 24/7 for colleagues, contractors, vendors, suppliers and others to raise ethical or compliance concerns, with access to representatives who collectively speak more than 200 languages

 

LOGO   Support Supplier Diversity

 

 Launched new goal to double our spend with diverse and minority-owned suppliers in the U.S. to $750 million annually by the end of 2024

 

 

3 

Achieved carbon neutrality for scope 1, 2, and 3 (waste and colleague business travel, including third-party air, rail and rental cars) through renewable energy credits, carbon offsets, and reduced GHG emissions. Operations include all our managed facilities, field sites and data centers. Managed facilities are individual properties operationally managed by our global real estate team and housing critical business functions. Field sites are individual properties that are not operationally managed by our global real estate team but directly by our business units. They are typically smaller sites, less than 30,000 square feet (including airport lounges, foreign exchange kiosks, and sales offices) that are owned or leased by the Company.

 

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$1 Billion Action Plan to Promote Diversity, Equity and Inclusion for Colleagues, Customers and Communities

In 2020, we announced our action plan to advance diversity, equity and inclusion priorities across the Company. The plan includes a series of internal and external initiatives, commitments and resources, supported by $1 billion in investments toward enhancing diverse representation and equal opportunities for our colleagues, customers and communities. Some of our new commitments include:

 

 

Doubling our spend with diverse and minority-owned suppliers in the U.S. to $750 million annually by the end of 2024. This includes increasing spend with Black-owned suppliers to at least $100 million annually.

 

 

Providing access to capital and financial education to at least 250,000 Black-owned small and medium-sized businesses in the U.S. by 2024.

 

 

Providing 100 Black female entrepreneurs with grants of $25,000 each and access to 100 days of business resources to help them grow their ventures.

 

 

Providing $50 million in grants by the end of 2024 to support nonprofit organizations around the world that are led by people of color or underrepresented groups, including organizations that are focused on addressing inequality and promoting social justice.

 

 

Increasing the representation of American Express Leadership Academy participants in the U.S. who are people of color from 50% in 2019 to 75% by 2024.

Diversity, Equity and Inclusion

We actively cultivate an inclusive and diverse workplace where every voice is valued, teamwork is rewarded and different points of view are celebrated. We are also committed to making sure our colleagues represent the diversity within the communities where we work and live. Our senior executives take responsibility for delivering on our commitments and seeking diverse representation at all levels. Our Company scorecard, which is used to measure our performance and progress on our business priorities, includes a clear set of diversity goals and overall talent metrics. We set our scorecard metrics annually and review our progress against them regularly to hold ourselves accountable. For more information, please refer to the Compensation Discussion Analysis section of this proxy statement.

2020 Global Workforce

We value having a diverse workforce that brings broad perspectives to our Company and helps meet the diverse needs of our stakeholders.

 

LOGO    LOGO    LOGO

of our Executive Committee is female or

from diverse races and ethnic backgrounds

  

of our total global workforce

is female

  

of our U.S. workforce is from

diverse races and ethnic backgrounds4

100% Pay Equity

At American Express, we have a longstanding commitment to pay all colleagues equitably and that our compensation practices are free from bias. To help meet that commitment, we regularly review our compensation practices to ensure they support pay equity and transparency.

Additionally, each year, American Express works with an independent third-party to conduct a comprehensive pay equity review. The review assesses pay on a statistical basis and considers a multitude of factors known to impact compensation, including but not limited to, tenure, role, level, geography and performance. In recent years, this review has covered our entire global colleague base. The review process identifies inconsistencies in pay based on gender globally and based on race and ethnicity in the United States. Where necessary and appropriate, salary adjustments are made to address these inconsistencies.

 

4 

Based on preliminary data for the 2020 US EEO-1 submission for Black/African American, Hispanic/Latinx, Asian, Native American or Alaskan Native, Native Hawaiian or Pacific Islander and two or more races.

 

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In 2019, the goal of our review and subsequent adjustments was to achieve pay parity, meaning differences in pay were statistically insignificant. In 2020, we went even further and made additional investments to achieve 100% pay equity for colleagues across genders globally and across races and ethnicities in the United States. All necessary and appropriate salary adjustments were made to achieve 100% pay equity. The Company is committed to this goal going forward.

 

 

LOGO

Our Workplace Culture

Our colleagues are instrumental in enabling the Company to deliver on its vision to provide the world’s best customer experience every day. To attract and retain the best talent, we continuously invest in programs, benefits and resources to ensure our colleagues can grow in their careers and thrive professionally and personally. Our focus has helped us build a reputation for being an employer of choice, earning a spot among the top 20 companies on Fortune’s ranking of the World’s Most Admired Companies for the last eleven years. In addition, we were recently ranked number nine on the 2020 Fortune 100 Best Companies to Work For list in the U.S.

Expanding our Blue Box Values

Our Blue Box Values guide how we operate as a company. In 2020, we made some important changes to be more explicit about our efforts to create an inclusive and diverse workforce, adding two new values: “We Embrace Diversity” and “We Stand for Inclusion.” These updated values are designed to make clear that we do not tolerate bias of any kind and to reinforce our commitment to ensuring we have a welcoming and inclusive culture.

 

 

WE BACK OUR CUSTOMERS – Relationships are at the heart of our business. We strive to be essential to our customers by delivering exceptional products, services and experiences every day – and promise to have their backs in everything we do.

 

 

WE MAKE IT GREAT – We deliver an unparalleled standard of excellence in everything we do, staying focused on the biggest opportunities to be meaningful to our customers. From our innovative products to our world-class customer service, our customers expect the best – and our teams are proud to deliver it.

 

 

WE DO WHAT’S RIGHT – Customers choose us because they trust our brand and people. We earn that trust by ensuring everything we do is reliable, consistent and with the highest level of integrity.

 

 

WE RESPECT PEOPLE – We trust and respect one another for who we are and what we contribute. We are accountable to one another and empower every voice through open, courageous dialogue so others feel heard.

 

 

WE EMBRACE DIVERSITY – We see diversity of people and experiences as fuel for the creativity and innovation we need to be and deliver our best.

 

 

WE STAND FOR INCLUSION – We all have biases. However, we do not tolerate bias that excludes or minimizes anyone – all people belong. We are committed to ensuring that we have a welcoming and inclusive culture where everyone’s voice matters and where people of all races, ethnicities, genders, gender identities, sexual orientations, ages, religions, disabilities and viewpoints can thrive.

 

 

WE WIN AS A TEAM – We view each other as colleagues – part of the same team, striving to deliver the brand promise to our customers and each other every day. Individual performance is essential and valued, but never at the expense of the team.

 

 

WE SUPPORT OUR COMMUNITIES – We respect our communities and are committed to working together so they can thrive and make a meaningful difference in the world.

Backing our Colleagues During COVID-19

Throughout the pandemic, we have worked to provide our colleagues with the flexibility and resources needed to stay safe, healthy and productive. We expanded our extensive health benefits and well-being programs to provide virtual counseling, wellness coaching, meditation classes, exercise programs and more to help colleagues cope with the challenges and stress of the pandemic. For colleagues enrolled in one of our U.S. medical plans, we provided coverage for all out-of-pocket medical and pharmacy service costs related to COVID-19 testing and treatment. We quickly moved to work-from-home arrangements in virtually all locations around the world, during which we completely transformed our brick-and-mortar call centers to virtual, home-based servicing.

Decisions to reopen offices are being made on a location-by-location, floor-by-floor and colleague-by-colleague basis and are not happening all at once. As offices open, we are implementing appropriate safety protocols such as increasing janitorial servicing, limiting the number of people in elevators and on floors and staggering arrival and departure times, where necessary. We are also providing colleagues with the option to continue temporarily working from home through September 6, 2021.

 

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LOGO

 

Prioritizing Colleague Health and Well-Being

The health and well-being of our colleagues plays an integral role in their ability to thrive at work and at home. We take a holistic approach to well-being, providing resources that address the physical, financial and emotional health of our colleagues and their families. We want our colleagues and their loved ones to be and feel at their best. Through our award-winning health and mental well-being program, Healthy Living, we provide health and well-being benefits and supportive company policies. From the healthcare we provide through our on-site Wellness Centers to one-on-one coaching and counseling, we seek ways to help our colleagues and their families stay safe and foster healthy lifestyles. Our health and well-being programs provided opportunities and resources for colleagues to stay engaged and healthy while at home and dealing with the global pandemic. For National Mental Health Awareness Month in May 2020, our Chief Colleague Experience Officer launched “Make Space,” a campaign that encouraged colleagues to continue to carve out time for their total well-being by focusing on making space to care, connect and contribute. We have hosted several wellness webinars, bringing in subject matter experts to discuss topics such as ergonomics, nutrition, managing stress and caregiving. We developed and continue to update a variety of health and financial well-being resources, tips and benefits. Our Healthy Living well-being coaches hold regular livestreamed workout sessions, posting an at-home workout plan for those who are not able to attend. We introduced an online virtual meditation program and offered colleagues free memberships to a mindfulness and meditation app. Through our Healthy Minds program, we rolled out a new Grief and Loss Support program, providing colleagues with one-to-one counseling from licensed therapists as well as access to numerous articles on coping with loss. In addition, we have continued to enhance programs and policies to keep up with changing realities.

Providing Learning and Development Opportunities

We place a strong focus on continuous professional development as the ability to constantly learn is critical to the success of our people and our business. We provide learning opportunities in many forms, including tools and guidance for maximizing learning on the job; cross-border and cross-business unit assignments; career coaching, mentoring, and professional networking; rotation opportunities; virtual learning sessions; and formal classroom instruction. Through our internal leadership program, we provide training and development experiences tailored to individuals at all levels of the Company that are designed to instill specific behaviors that drive successful leadership.

List of Awards and Recognition

Our commitment to be a great place to join, stay and grow a career continues to earn us industry awards and recognition. Here are some of the recognitions from 2020 that make us most proud:

 

 

Anita Borg Top Companies for Women Technologists

 

 

Best Workplaces for Financial Services & Insurance – ranked #2

 

 

Forbes America’s Best Employers for Diversity

 

 

Forbes Best Companies to Work for in Spain – ranked #5 (#1 Best Credit Card Company)

 

 

FORTUNE 100 Best Companies to Work For – ranked #9

 

 

FORTUNE 100 Best Workplaces for Women – ranked #15

 

 

FORTUNE World’s Most Admired Companies – ranked #14

 

 

Great Place to Work: Best Workplaces in Italy – ranked #1

 

 

Kincentric Best Employers in Malaysia

 

 

Newsweek and Statista America’s Most Responsible Companies – ranked #12

 

 

People Companies that Care list

 

 

Working Families Top 10 Employers in the U.K.

 

 

Working Mother 100 Best Companies

 

 

Working Mother Best Companies for Dads

Learn More about Environmental, Social and Governance Matters at American Express

Please visit http://about.americanexpress.com/corporate-responsibility-reports for our 2019-2020 ESG report and to learn more about our ESG activities. This report, or any other information from the American Express website, is not incorporated by reference into this proxy statement.

 

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Audit Committee Matters

Item 2: Ratification of Appointment of Independent Registered Public Accounting Firm

 

Our Board recommends that you vote FOR the

following resolution:

The Audit and Compliance Committee has sole authority to appoint and replace the Company’s independent registered public accounting firm, which reports directly to the Committee, and is directly responsible for its compensation and oversight of its work. The Audit and Compliance Committee conducted its annual evaluation of PricewaterhouseCoopers LLP (PwC) and, after assessing the performance and independence of PwC, the Committee believes that retaining PwC is in the best interests of the Company. The Audit and Compliance Committee reappointed PwC as our independent registered public accounting firm for 2021.

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

RESOLVED, that the appointment by the Audit and Compliance Committee of the Company’s Board of Directors of PricewaterhouseCoopers LLP, as independent registered public accounting firm for the Company, to audit the financial statements of the Company and its subsidiaries for 2021, is hereby ratified and approved.

 

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

 

 

A Detailed Assessment

 

 
PwC has been our independent auditor since 2005. The Audit and Compliance Committee charter requires a detailed review of the independent audit firm, including as compared to other firms, at least every 10 years. This review, conducted in 2014, assessed PwC’s performance across the following criteria: professional expertise, audit engagement team performance, communications, independence and objectivity, and fees. A wide range of internal stakeholders were surveyed and asked to comment generally, identify areas for recognition and improvement, and indicate how PwC’s performance was trending over time. PwC’s audit fees were benchmarked against other firms based on publicly available data. The positive results of the review resulted in the decision to continue to engage PwC and also identified several areas of opportunity for improvement that were discussed with PwC.

 

PwC’s Objectivity and Independence

 

 
The Audit and Compliance Committee reviews relationships between PwC and American Express that may reasonably be thought to bear on independence and reviews PwC’s annual independence evaluation and assesses its independence. Recognizing that independence and objectivity can be compromised by an auditor’s provision of non-audit services, the Audit and Compliance Committee has approved a management policy governing the provision of services by PwC.

 

Quality of PwC’s Auditing Practices

 

 
The Audit and Compliance Committee reviews issues raised by the Public Company Accounting Oversight Board (PCAOB) reports on PwC, PwC’s internal quality control procedures and results of PwC’s most recent quality control reviews, as well as issues raised by recent governmental investigations, if any. The Audit and Compliance Committee also discusses PwC’s quality initiatives and the steps PwC is taking to enhance the quality and efficiency of its audits with the lead engagement partner.

 

PwC’s Performance as Auditor

 

 
The Audit and Compliance Committee discusses and comments on PwC’s audit plan and strategy for the audit, including the objectives, overall scope and structure, the resources provided and available at the firm, and the Audit and Compliance Committee’s expectations. The Audit and Compliance Committee also receives periodic updates from the lead engagement partner on the status of the audit and areas of focus by PwC.

 

Performance of Lead Engagement Partner

 

 
The lead engagement partner of PwC is subject to a mandatory five-year rotation period. The Audit and Compliance Committee chair is involved in selecting the lead engagement partner. During the year, the Audit and Compliance Committee chair meets one-on-one with the lead engagement partner to promote a candid dialogue and the Audit and Compliance Committee meets in executive session with the lead engagement partner to discuss the progress of the audit and any audit issues, deliver Audit and Compliance Committee feedback and discuss any other relevant matters.

 

PwC’s Communications with the Audit and Compliance Committee

 

 

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

 

 

Terms of the Engagement and Audit Fees

 

 

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

 

 

 

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PricewaterhouseCoopers LLP Fees and Services

Fees for 2020 and 2019

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

 

Types of Fees

  

2020

    

2019

 

Audit Fees

   $   27,256      $   26,551  

Audit-Related Fees(1)

     2,778        4,518  

Tax Fees

     426        425  

All Other Fees

     104        97  

TOTAL

   $ 30,564      $ 31,591  

 

(1)

PwC performs the audit of the Company’s pension plans for Switzerland and Hong Kong where the fees are paid by the respective plan. These fees are not included in Audit-Related Fees since they were not paid by the Company. The total fees for these two audits were $26K and $19K in 2020 and 2019, respectively.

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

Policy on Pre-Approval of Services Provided by PricewaterhouseCoopers LLP

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

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

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

Other Transactions with PricewaterhouseCoopers LLP

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

 

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Report of the Audit and Compliance Committee

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

In the performance of its oversight function, the Audit and Compliance Committee has reviewed and discussed with management and PwC the Company’s audited financial statements. The Audit and Compliance Committee also has discussed with PwC the matters required to be discussed by the applicable requirements of the PCAOB and the SEC. In addition, the Audit and Compliance Committee has received from PwC the written disclosures and letters required by applicable requirements of the PCAOB regarding PwC’s communications with the audit committee concerning independence, has discussed with PwC their independence from the Company and its management, and has considered whether PwC’s provision of non-audit services to the Company is compatible with maintaining the firm’s independence.

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

Based on the reviews and discussions referred to above, the Audit and Compliance Committee recommended to the Board that the Company’s audited financial statements be included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020 for filing with the SEC.

AUDIT AND COMPLIANCE COMMITTEE*

Daniel L. Vasella, Chair

John J. Brennan

Ralph de la Vega

Anne Lauvergeon

Michael O. Leavitt

Karen L. Parkhill

(*Reflects 2020 Audit and Compliance Committee membership)

 

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Executive Compensation

Item 3: Advisory Resolution to Approve Executive Compensation (Say-on-Pay)

 

The Board recommends a vote FOR this item.

Pursuant to regulations under Schedule 14A of the Securities Exchange Act of 1934, we are asking you to approve, on an advisory basis, the compensation of the Company’s Named Executive Officers (NEOs) disclosed in the Compensation Discussion and Analysis (CD&A), the compensation tables, notes and narrative in this Proxy Statement.

Our Board believes that the compensation of our executive officers is aligned with performance, is sensitive to our share price and appropriately motivates and retains our executives. We believe our executive compensation program delivers pay that is strongly linked to Company performance over time.

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

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

Section Table of Contents

 

48    Section 1: Compensation Governance and Pay Principles
   48    Governance Practices
   48    Pay Principles
   49    Say on Pay
   49    Shareholder Engagement
50    Section 2: Company Performance Summary
   50    2020 Company Performance
   51    2020 Pay Decision for NEOs
   51    CEO Total Direct Compensation
52    Section 3: Compensation Programs
   52    Base Salary
   52    Annual Incentive Awards
   55    Long-Term Incentive Awards
56    Section 4: Compensation Determination Process
   56    Annual Compensation and Decision-Making Process
   56    Peer Group and Benchmarking
   57    Role of Independent Compensation Consultant
   57    2021 Annual Target Direct Compensation
   57    Settlement of LTIA Granted in January 2018
59    Section 5: Compensation Policies and Practices
   59    Discouraging Imprudent Risk Taking
 

 

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Compensation Discussion and Analysis

Our CD&A describes our executive compensation programs and compensation decisions for our NEOs, who for 2020 were:

Stephen J. Squeri Chairman and CEO

 

 

 

Stephen J. Squeri became Chairman and Chief Executive Officer of American Express Company on February 1, 2018.

 

In his previous role as Vice Chairman, Steve led the company’s Global Commercial Services group, as well as its shared services groups, which include technology, customer servicing, credit administration and business services functions.

 

Steve joined American Express in 1985 as a manager in the Travellers Cheque Group. From 2000 to 2002, he served as President of the Establishment Services group in the U.S. and Canada, and he was President of the Corporate Card group from 2002 to 2005, during which time he globalized the business. Steve became the company’s Chief Information Officer in 2005 and also led the Corporate Development function, overseeing mergers and acquisitions. In 2009, Steve was named Group President and led the formation of the Global Services Group, consolidating and globalizing the company’s shared services functions.

Jeffrey C. Campbell Chief Financial Officer

 

 

 

Jeffrey C. Campbell joined American Express Company in July 2013 as Chief Financial Officer, overseeing the company’s financial operations worldwide as well as Corporate Development.

 

As a member of the Executive Committee, Jeff plays an important role in developing the strategic direction for American Express and represents the company to the financial community.

 

Before joining American Express, Jeff was CFO of the McKesson Corporation, the largest healthcare services company in the United States. He played an essential role as McKesson grew significantly and expanded its leadership in healthcare distribution and technology. Previously, Jeff spent 13 years at AMR Corp. and its principal subsidiary, American Airlines, ultimately becoming their CFO in 2002.

Douglas E. Buckminster Group President, Global Consumer Services Group

 

 

 

Douglas E. Buckminster is Group President of Global Consumer Services, a role he assumed in February 2018. As a member of the Executive Committee, he leads the businesses responsible for consumer products and services, digital strategy and capabilities, and risk and information management.

 

Doug previously served as President, Global Consumer Services Group, responsible for growing the consumer and bank partnership businesses in more than 150 countries around the world, a role he assumed in October 2015. Prior to this role, he served as President, Global Network & International Card Services from February 2012, and prior to that, he was President, International Consumer and Small Business Services, responsible for American Express’ consumer and small business strategy and growth across 20 international proprietary markets. Doug has also served as regional President for American Express International’s Latin America, Canada, and Caribbean (LACC) region, and the general manager of the International Lending and Insurance Services organizations.

 

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Anré D. Williams Group President, Global Merchant and Network Services

 

 

Anré D. Williams is Group President of Global Merchant & Network Services (GMNS), a role he assumed in February 2018. As a member of the Executive Committee, he leads the businesses that manage and evolve important partnerships for the company with key stakeholders, including merchants, strategic partners, banks, and loyalty coalitions.

 

As head of GMNS, Anré oversees the following businesses: Global Merchant Services (GMS), which manages the relationships with the millions of merchants around the world that accept American Express; Strategic Partnerships, which leads the negotiations and relationships with American Express’ most strategic global partners; Global Network Services, which runs the Company’s payments network and manages bank partnerships globally; and Global Loyalty Coalition, which includes the Payback rewards programs internationally.

 

Anré began his career at American Express in 1990 in marketing roles supporting a number of products and initiatives, including the American Express Platinum Card. He also served in the Small Business division and as President of Global Corporate Payments.

Laureen E. Seeger Chief Legal Officer and Corporate Secretary

 

 

Laureen E. Seeger is Chief Legal Officer and Corporate Secretary of American Express Company, a position she assumed in July 2014. As a member of the Executive Committee, she oversees the Law, Government Affairs, Global Security and Corporate Secretarial functions for American Express and its subsidiaries. She is also a member of the Enterprise Risk Management Committee.

 

Prior to American Express, Laureen served as Executive Vice President, General Counsel and Chief Compliance Officer of McKesson Corporation. Preceding her appointment in March 2006, she was Vice President and General Counsel of McKesson Provider Technologies (MPT), McKesson’s health care information technology solutions business. Before joining McKesson, Laureen was Partner-In-Charge of the Technology Litigation Section at the law firm Morris, Manning & Martin, LLP.

 

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LOGO

 

Section 1: Compensation Governance and Pay Principles

Governance Practices

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

Our programs and practices continue to:

 

 

Link a significant portion of pay to business and stock performance

 

 

Employ robust goal-setting process to align goals with Company strategy

 

 

Bind cash incentives and equity awards to recoupment and forfeiture provisions

 

 

Apply clawback provisions for all NEOs based on detrimental conduct

 

 

Recoup the CEO’s annual cash incentive award at the discretion of the Compensation and Benefits Committee if the Company does not achieve acceptable performance in the following year

 

 

Discourage imprudent risk taking, including the Chief Risk Officer’s review of goals and results to confirm that actual results were achieved within the Company’s risk appetite framework

 

 

Maintain significant NEO stock ownership requirements

 

 

Cap annual cash incentive payment for NEOs (187.5% of target for extraordinary performance)

 

 

Prohibit executive officers from hedging company stock or margining or pledging shares

 

 

Have double-trigger change-in-control provisions

Our programs and practices do not:

 

 

Pay dividends or dividend equivalents on Performance Restricted Stock Units granted to NEOs unless they vest

 

 

Provide excessive perquisites, benefits or severance benefits

 

 

Make excise tax gross-ups upon a change-in-control

 

 

Maintain individual employment agreements or change- in-control arrangements

 

 

Reprice options

Pay Principles

We believe our executive compensation program is thoughtful, consistent and continues to align with the Company’s business strategies.

 

 

    We align pay with Company performance and to support a long-term, high-performance business model.

 

    We link most of the pay for senior executives to long-term business strategies and key priorities. The CEO’s pay has added emphasis on performance-based incentives (93% of CEO’s pay) with a substantial stockholding requirement.
    We measure performance against challenging goals established at the start of each performance cycle that are aligned with our key business priorities.

 

    We discourage imprudent risk taking by avoiding undue emphasis on any one metric or short-term goal.
 

We continue to review our pay principles with input from shareholders and regulators, including the Board of Governors of the Federal Reserve System (Federal Reserve) and the Office of the Comptroller of the Currency (OCC).

 

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Say-On-Pay

 

 

LOGO

The Compensation and Benefits Committee values the input of our shareholders and regularly engages with them on executive compensation matters to foster a constructive dialogue on the programs and decision-making process. The Compensation and Benefits Committee considers the long-term interests of the Company and our shareholders when making decisions regarding our compensation program.

 

LOGO

 

Following our 2020 Annual Meeting of Shareholders, we met with shareholders representing approximately 41% of our outstanding shares and other constituents to discuss executive compensation, corporate governance and related matters.

 

LOGO

  96.1% of the votes cast at our 2020 Annual Meeting of Shareholders favored our say-on-pay proposal. The strong support for our compensation programs, reflected by our say-on-pay results, and our shareholder engagement discussions influenced the Compensation and Benefits Committee’s decision to continue the 2019 program design for 2020.
 
 

Shareholder Engagement and Responsiveness to 2020 Say-on-Pay Vote

We have a longstanding practice of engaging with our shareholders on executive compensation matters and taking appropriate action considering feedback received.

 

 

LOGO

 

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LOGO

 

Section 2: Company Performance Summary

2020 Company Performance

Our 2020 financial results were significantly impacted by the deterioration in the global economy due to the pandemic and the related containment measures. The Company shifted its focus to address the challenges of the pandemic with a framework that is built on four priorities: supporting our colleagues and winning as a team; protecting our customers and our brand; structuring the Company for growth in the future; and remaining financially strong. The management team and the Board believe that these key priorities for managing through the cycle reflect the most important things to focus on during the pandemic to drive long-term value creation for the Company.

The progress we made on these four key priorities confirms the resilience of our differentiated business model, which includes a loyal and diverse customer base, a valued brand, our global merchant network, and our integrated payments platform.

Throughout 2020, we took several actions in response to COVID-19 to support our colleagues, Card Members and merchants. At the same time, we continued to structure the Company for long-term growth by investing in differentiated services and benefits, extending key partnerships, strengthening our network, and executing strategic M&A. We also maintained strong capital and liquidity positions, enabling us to continue paying dividends and investing in initiatives that advance our long-term strategic imperatives of expanding our leadership in the premium consumer space, building on our strong position in commercial payments, strengthening our global network to provide unique value, and making American Express an essential part of our customers’ digital lives.

Our 2018-2020 financial results – shown below – reflect two years of consistently strong financial performance, followed by an unprecedented year in which our financial results were significantly impacted by the pandemic.

 

 

LOGO

 

(1)

FX-adjusted information assumes a constant exchange rate between the periods being compared for purposes of currency translation into U.S. dollars (i.e., assumes 2020 foreign exchange rates apply to 2019 results, 2019 foreign exchange rates apply to 2018 results). Total revenues net of interest expense on an FX-adjusted basis is a non-GAAP measure. Management believes the presentation of information on an FX-adjusted basis is helpful to investors by making it easier to compare the Company’s performance in one period to that of another period without the variability caused by fluctuations in currency exchange rates.

(2)

Adjusted Diluted Earnings per share, excluding the impacts of a litigation-related charge in the first quarter of 2019 and certain discrete tax benefits in the fourth quarter of 2018, is a non-GAAP measure. Management believes adjusted diluted EPS is useful in evaluating the ongoing operating performance of the Company. See Annex A for a reconciliation to diluted EPS on a GAAP basis.

(3)

TSR is the total return on common shares over a specified period, expressed as a percentage (calculated based on the change in stock price over the relevant measurement period and assuming reinvestment of dividends). Source: Bloomberg (returns compounded daily), calculated as of December 31, 2020.

 

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2020 Pay Decisions for NEOs

Based on the Company’s overall performance, the Compensation and Benefits Committee determined 2020 pay decisions as follows:

 

 

Base Salary – No changes to base salaries

 

 

Annual Incentive Award (AIA) – Payout below target level and lower compared to 2019

 

 

Long-Term Incentive Awards (LTIA)

 

   

Portfolio Grant (2018 – 2020) – Payout below target level

 

   

Performance Restricted Stock Units (2018 – 2020) – Vested at target level

 

   

Stock Options (2018 – 2020) – Vested at target level

(See pages 52-55 for more details)

CEO Total Direct Compensation

The CEO’s 2020 Total Direct Compensation decision is consistent with our pay for performance philosophy and focuses on variable and “at-risk” compensation that is closely aligned with Company performance and is sensitive to the Company’s stock performance. The chart below shows that 93% of the CEO’s 2020 compensation is performance-based with a significant portion (73%) tied to the future performance of the Company.

 

 

LOGO

The CEO’s compensation shown below reflects the target direct compensation for 2020 that was set at the start of 2020, as well as the Compensation and Benefits Committee’s compensation decision in January 2021 considering 2020 performance and external market data provided by the Compensation and Benefits Committee’s independent compensation consultant.

As shown below, 2020 Actual compensation of $19.96 million is 3% below the 2020 Target of $20.50 million and 13% below 2019 Actual compensation of $23 million.

 

 

LOGO

 

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Section 3: Compensation Programs

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

 

        

 

 

BASE SALARY     

 

            

 

ANNUAL INCENTIVE AWARD   

(AIA)

            

 

LONG-TERM INCENTIVE AWARD

(LTIA)

      
           
 

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

   

AIA is designed to recognize the Company’s annual performance as well as individual performance.

   

LTIA is intended to align incentives with shareholder interests and the Company’s long-term financial objectives.

 
           
      LOGO     LOGO  
   

 

Base Salary

Base salaries correspond to experience and job scope and provide competitive fixed pay. The Compensation and Benefits Committee periodically reviews salaries and may recommend adjustments driven by market data.

Annual Incentive Award (AIA)

The AIA is an annual cash-denominated performance-based component of executive compensation designed to recognize Company performance as well as individual performance.

The AIA is structured to reflect specific and measurable Company goals, approved by the Compensation and Benefits Committee at the beginning of the year, including key objectives in four categories: Shareholder, Customer, Colleague and Strategic Imperatives. In 2020, following the onset of the pandemic, the Strategic Imperatives section of the scorecard was modified to reflect the 2020 Key Priorities for Managing Through the Cycle because the management team and the Board believe that these are the most important things for the Company to focus on in 2020 to drive long-term value creation, while making progress against the opportunities that would advance the Company’s long term strategic imperatives. The Compensation and Benefits Committee believes each performance metric is a clear driver of Company performance and aligns with the Company’s focus on continued long-term value creation.

The Compensation and Benefits Committee uses the same Company Scorecard to determine annual incentives for all executives to promote an enterprise-wide focus. The Company scorecard is based on the following metrics:

 

 

 

  Components   Weighting   Key Metrics Considered

Annual    

    Incentive        

Award    

 

 

  Shareholder

  55%  

 Revenue Growth, EPS, ROE

 

 

  Customer

  15%  

 Net Promoter Score, Billings Growth, Active Merchant Locations

 

 

  Colleague

  15%  

 Talent Retention and Diversity Representation

 

 

  Key Priorities For Managing Through the Cycle

 

 

15%

 

 Support our colleagues and win as a team

   

 Protect our customers and the brand

   

 Structure our company for growth in the future

         

 Remain financially strong

 

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LOGO

 

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

 

                                  
                                  
       
        

 

Individual NEO   

Target Amount   

 

 

 

Company    

Performance    

Multiplier (0-150%)    

 

 

 

Individual   
Performance   
Multiplier (0-125%)   

 

 

 

Annual AIA   
Payout (Payout   
Range: 0-187.5%)   

 

    
                                  
                                  
           

 

    Performance    

 

 

        Multiplier        

                    
           

 

Significantly
Outperform
(maximum)

 

 

150%

                    
           

 

Meets
Expectations

 

 

100%

                    
           

 

Significantly
Underperform

 

 

<100%

Compensation
and Benefits
Committee

Discretion

                    
                                  
 
 

 

Actual payout is subject to reduction considering the Compensation and Benefits Committee’s

assessment of risk taking and risk management results during the year.

 

 

                  

2020 Annual Incentive Awards

2020 Performance Multiplier – Company

The Compensation and Benefits Committee evaluated the following results against the performance objectives approved for all NEOs at the beginning of 2020. Financial goals approved at the start of the year were consistent with the full-year guidance that the Company provided publicly in January 2020 and did not change despite the fact that the Company withdrew that guidance in March 2020. For each metric, the goals represent a measurement for a range of outcomes that could result in a higher or lower payout. Following the onset of the pandemic, the Strategic Imperatives section of the scorecard was modified to reflect the 2020 Key Priorities for Managing Through the Cycle because the management team and the Board believe that these are the most important things for the Company to focus on in 2020 to drive long-term value creation. Payouts for 2020 performance occurred in February 2021.

The following table provides details of Company performance in 2020, relative to the goals:

 

Shareholder (55%)

  2020 Target    2020 Actual Performance    2019 Actual Performance

Revenue Growth (FX-adjusted)

 

9%

  

(17%)(1)

  

9%(1)

EPS

 

$9.05

  

$3.77     

  

$8.20(2)

ROE

 

25%

  

14%     

  

30%(2)

Customer (15%)

                

  Net Promoter Score

 

Goal achieved above target level

  Billings Growth (FX-adjusted)

 

8%

  

(18%)

  

6%

  Active Merchant Locations

 

Sustained virtual parity coverage in the U.S.(3), and continued to grow coverage internationally, adding over 3.7 million merchant locations outside of the U.S.

Colleague (15%)

                

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

   Goals achieved at or above target levels

 

(1)

Total revenues net of interest expense on an FX-adjusted basis is a non-GAAP measure. See footnote 1 on page 50 for an explanation of FX-adjusted information. Reported revenue growth was (17%) and 8% for 2020 and 2019, respectively.

(2)

2019 Adjusted diluted EPS and adjusted ROE, excluding the impacts of a litigation-related charge in the first quarter of 2019, are non-GAAP measures. See Annex A for a reconciliation to diluted EPS and ROE on a GAAP basis.

(3)

Source: AXP internal data and The Nilson Report Issue 1188, “Global Brand Card Acceptance Worldwide”.

 

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LOGO

 

Key Priorities for Managing Through
the Cycle (15%)
  2020 Results            

  Support our colleagues
and win as a team

 

LOGO   Enabled over 64,000 global colleagues to work from home

 

 

LOGO   Developed and began executing against a robust, multi-faceted and centrally coordinated “return to office” plan across 29 countries and 40 sites to continue to ensure the safety and health of all our colleagues

 

 

LOGO   As part of the creation of the Office of Enterprise Inclusion, Diversity and Business Engagement, a central, cross enterprise-wide Inclusion & Diversity plan was established to create long term momentum and change against six key pillars: Colleague, Customer, Business, Community, Brand, and Culture

 

 

LOGO   Received numerous employee/workplace accolades including our highest rankings ever in Fortune’s 100 Best Companies to Work For (#9), Fortune’s Best Workplaces for Women (#15), and PEOPLE’s 50 Companies That Care (#10)

 

  Protect our customers and our brand

 

LOGO   Developed short-term and enhanced long-term financial relief programs to address the financial needs of customers in over 20 countries across the globe

 

 

LOGO   Enhanced our value propositions on many of our consumer and small business products by adding limited time offers and statement credits in categories that are relevant to the current environment, such as wireless, groceries, streaming services, business essentials and food delivery

 

 

LOGO   Maintained attrition rates below 2019 levels

 

 

LOGO   Customer sentiment as measured by Net Promoter Score (NPS) improved vs. 2019 baseline

 

 

LOGO   Executed the largest-ever global Shop Small campaign in 18 countries and territories

 

   

LOGO   Ranked #1 credit card issuer in the J.D. Power 2020 U.S. Credit Card Satisfaction Study and #1 for our mobile app in the 2020 U.S. Credit Card Mobile App Satisfaction Study for Best Credit Card Mobile App, ranking first out of 11 U.S. issuers on all four factors of the study (navigation; visual appeal; speed; and information/content)

 

  Structure the company for growth in the future

 

LOGO   Extended key partnerships, including Marriott, British Airways, Amazon and Lowe’s

 

 

LOGO   First foreign card processing network to launch in mainland China

 

 

LOGO   Added over 3.7 million merchant locations outside of the U.S.

 

 

LOGO   Completed the acquisition of Kabbage, a digital SME cash management platform

 

 

LOGO   Launched a proprietary accounts payable automation offering, American Express One AP, and overall AP automation volumes across our proprietary and partner platforms doubled in 2020

 

  Remain financially strong

 

LOGO   Our balance sheet remained very strong – cash and investment balances reached all-time highs during 2020

 

 

LOGO   Fourth quarter common Equity Tier 1 ratio of 13.5% was significantly above our 10-11% target, and we paid the dividend in all quarters

 

 

LOGO   Global charge and lending write-off and delinquency rates have remained best-in-class

 

 

Based on the Company’s overall performance in 2020 across Shareholder, Customer, Colleague, and Key Priorities Managing Through the Cycle, the Compensation and Benefits Committee determined the 2020 Company Performance Multiplier to be below target at 80%.

Performance Multiplier – Individual

The Compensation and Benefits Committee has discretion to modify awards downward or upward to differentiate and reward leadership performance. Factors considered in determining the appropriate individual multiplier for the NEOs included the assessment of risk taking, risk management, and performance against the Company’s leadership behaviors (Setting the Agenda, Bringing Others With You and Doing It the Right Way) in light of the challenges presented in 2020. The maximum individual performance multiplier for leadership performance is 125%.

Summary of NEOs’ AIA for 2020

The following table summarizes the actual AIA paid to each NEO for the 2020 performance year (in thousands).

 

Name

   Target AIA                 x            Company Multiplier           x    Individual Multiplier           =    Actual AIA     

S.J. Squeri

     $   4,500                   80 %                  110 %                $   3,960

J.C. Campbell

     $   3,700                   80 %                  111 %                $   3,285

D.E. Buckminster

     $   4,000                   80 %                  113 %                $   3,600

A.D. Williams

     $   3,400                   80 %                  110 %                $   2,995

L.E. Seeger

     $   2,850                   80 %                  102 %                $   2,330

 

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LOGO

 

Long-Term Incentive Award (LTIA)

Our LTIA aligns NEOs’ interests with those of shareholders and establishes retention incentives through multi-year, performance-based vesting periods. The elements of the Company’s LTIA and their respective features are described in the table below:

 

Element

   Key Metrics    Features

Performance Restricted Stock Units

(80% of award)

  

  3-year average ROE as compared to performance peers

  Relative TSR compared to the same performance peers as ROE

  

  3-year cliff vesting period

  Payout tied to 3-year relative performance and stock price performance

  0-120% of target shares awarded

Stock Options

(20% of award)

  

  Stock price appreciation

  

  3-year cliff vesting period

  Must meet positive cumulative net income threshold to be exercisable

  10-year term

Performance Restricted Stock Units

As a financial institution with a lending book and fee income, we consider effective returns on capital to be a validation of high performance. The program requires top-quartile ROE for Performance Restricted Stock Units to pay out at target, and above target payouts are contingent on TSR performance being in the top third of our peer group regardless of our ROE performance. Median ROE performance results in an 80% payout.

 

AXP Relative ROE Performance Payout %(1)       AXP Relative TSR Performance Payout %

>90th

    120%

 

+

67th Percentile or better of

Performance Peer Group

Up to
120%

   75th

    100%

   50th

    80%

 

   25th

    50%

 

< 67th Percentile of

Performance Peer Group

 

 

Cap at

100%

 

<25th

    0%

 

 

 

Performance Peers

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

 

 
    

 

  Bank of America

 

  Fifth Third Bancorp

 

  M&T Bank

    

  State Street

    
 

  BNY Mellon

 

  Goldman Sachs

 

  Morgan Stanley

    

  Truist Financial         

 
 

  Capital One  Financial

 

  Huntington Bancshares

 

  Northern Trust

    

  U.S. Bancorp

 
 

  Citigroup

 

  JPMorgan Chase

 

  PayPal

    

  Visa

 
 

  Citizens Financial  Group

 

  KeyCorp

 

  PNC Financial Services  Group

    

  Wells Fargo

 
 

  Discover

 

  Mastercard

 

  Regions Financial

      
            

 

(1) 

Straight line interpolation applies if performance is between two points.

Summary of NEO’s LTIA Award in 2020 (Granted in January 2021)

Based on Company and individual performance in 2020, the Compensation and Benefits Committee granted the following long-term incentive awards in January 2021. The payouts of these awards are dependent on the achievement of the key metrics described above. The award amount for each NEO is as follows:

 

  

 

   S.J. Squeri    J.C. Campbell    D.E. Buckminster    A.D. Williams    L.E. Seeger

Performance Restricted Stock Units

     $   11,600      $   4,240      $   4,720      $   3,880      $   3,520

Stock Options

     $ 2,900      $ 1,060      $ 1,180      $ 970      $ 880

Total

     $ 14,500      $ 5,300      $ 5,900      $ 4,850      $ 4,400

 

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LOGO

 

Section 4: Compensation Determination Process

Annual Compensation and Decision-Making Process

Our Compensation and Benefits Committee is responsible for assisting the Board of Directors in its oversight responsibilities related to executive compensation programs, including determining the payouts for the last completed fiscal year and setting the annual performance goals for the upcoming performance cycle for each of our Executive Officers including the CEO. Typically, the Committee follows the key activities outlined below:

 

LOGO

Peer Group and Benchmarking

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

 

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LOGO

 

How We Select the Company’s Compensation Peers

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

 

            

 

Comparator Group for 2020

 

           
  

Financial Institutions

 

          Iconic Global Consumer Brands          

Payments & Technology

Businesses

 
  

  Bank of America

 

  BNY Mellon

 

  BlackRock

 

  Capital One Financial

 

  Citigroup

 

  Goldman Sachs

 

  JPMorgan Chase

 

  Morgan Stanley

 

  U.S. Bancorp

 

  Wells Fargo

 

    

  Coca-Cola

 

  Colgate-Palmolive

 

  Nike

 

  PepsiCo

 

  Starbucks

    

  Cisco

 

  Discover

 

  Mastercard

 

  PayPal

 

  Visa

 
                        

Role of the Independent Compensation Consultant

The Compensation and Benefits Committee is composed solely of independent directors. The Committee is responsible for approving our executive officer compensation decisions. It has retained Semler Brossy Consulting Group (Semler Brossy) as its independent compensation consultant. The Committee held seven meetings over the course of 2020, all of which ended with executive sessions without management present. During 2020, Semler Brossy attended Compensation and Benefits Committee and American Express National Bank Board meetings, including executive sessions, and provided compensation advice independent of the Company’s management. Semler Brossy does no other work for the Company. The Compensation and Benefits Committee assessed the independence of Semler Brossy pursuant to SEC rules and concluded that their work did not raise any conflicts of interest.

2021 Annual Target Direct Compensation

The Compensation and Benefits Committee reviews target direct compensation each year. In reviewing target compensation levels, the Compensation and Benefits Committee considers various factors, such as roles and responsibilities, experience, industry expertise, internal equity, Company and individual performance, as well as market data and pay mix for the Company’s peer group, which was provided by the Compensation and Benefits Committee’s independent compensation consultant. All compensation components except base salary are performance based:

For performance year 2021, there are no changes from 2020 to the target direct compensation listed below:

 

  S.J. Squeri J.C. Campbell D.E. Buckminster A.D. Williams L.E. Seeger

Base Salary

$ 1,500 $ 1,000 $ 1,100 $ 850 $ 850

AIA(1)

$ 4,500 $ 3,700 $ 4,000 $ 3,400 $ 2,850

Performance Restricted Stock Units(2)

$ 11,600 $ 4,240 $ 4,720 $ 3,880 $ 3,520

Stock Options(3)

$ 2,900 $ 1,060 $ 1,180 $ 970 $ 880

Total Target Direct Compensation

$ 20,500 $ 10,000 $ 11,000 $ 9,100 $ 8,100

 

(1)

Actual AIA payout will be based on Company and individual performance in 2021 considering performance against pre-established 2021 goals.

 

(2)

Performance Restricted Stock Units cliff vest after three years based on relative ROE and relative TSR performance over the three year period.

 

(3)

Stock Options cliff vest 100% after three years based on positive cumulative net income.

Settlement of LTIA Granted in January 2018

The Compensation and Benefits Committee awarded long-term incentives (Portfolio Grants and Performance Restricted Stock Units) in 2018 that vest based on performance over a three-year period. The target goals established in the first quarter of 2018 were consistent with the Company’s business plan and management expectations at the start of the performance period. While evaluating actual performance, the Compensation and Benefits Committee deemed it appropriate to consider adjustments when determining the payout, including certain tax, litigation and credit-related impacts as well as certain investments on initiatives related to the Company’s Key Priorities for Managing Through the Cycle that were not contemplated when setting goals at the start of 2018.

 

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LOGO

 

Portfolio Grant Awarded in January 2018 (Vesting Based on 2018-2020 Performance)

Under the Portfolio Grant (PG) program, management is assessed and rewarded for performance against a combination of financial objectives (EPS and revenue weighted at 30% and 20%, respectively) and results against specific strategic milestones (weighted at 50%) that indicate success in positioning the Company for the future. While the Company continued to make strong progress on the strategic milestones over this period, EPS and revenue were significantly impacted by the pandemic in 2020. As a result, EPS and revenue performance were below target for the three-year period, resulting in scores of 78% and 0% for those objectives, respectively. Performance against strategic milestones remained strong throughout the three-year period, resulting in an above target score of 125%.

The strategic milestones established for this grant covered a range of initiatives as set forth below. The range of payouts for achievement against strategic milestones, as with the other elements, is from 0% to 125% of target.

 

    Strategic Milestones    Achievements
 

Strategic Imperatives

 

  Expand leadership in the premium consumer space

 

  Build on our strong position in commercial payments

 

  Strengthen our global integrated network to provide unique value

 

  Make AXP an essential part of our customers digital lives

  

Consumer: Disciplined refresh cycle of premium products in 2018-2019, strategic acquisitions such as Loungebuddy and Resy to enhance lifestyle benefit offerings. Majority of new Card Members in 2018-2020 chose fee-based products supporting growth in subscription-like fee revenue.

 

Commercial: Expansion of AP automation offerings through multiple partnerships and the acquisition of Acompay, which relaunched in 2020 as American Express One AP, to service the full AP file for mid-sized clients. Double digit billed business growth in International SME in both 2018 and 2019. Acquired Kabbage in 2020, a leading digital SME cash management platform to support “beyond the card” strategy.

 

Network: Achieved and sustained virtual parity coverage(1) in the U.S. and continued to grow coverage internationally, adding over 3.7 million merchant locations outside of the U.S. in 2020. Launched the first foreign card processing network in China.

 

Digital: Enhanced capabilities to meet the evolving digital needs of our Card Members, strong adoption of Pay It Plan It with over 5.7 million Plans created since launch totaling over $4.7 billion (with Millennials/GenZ accounting for >45% of plans) and built upon the digital capabilities and experiences we offer to Card Members through the integration of acquisitions and expansion of partnerships. Recognized as the #1 mobile app in the J.D. Power 2020 U.S. Credit Card Mobile App Satisfaction Study for Best Credit Card Mobile App. ~70% of Non-T&E spend was online/card-not-present in 2020.

 

In addition to delivering against the strategic imperatives in 2020, the Company shifted its focus to address the challenges of the pandemic with a framework that is built on four priorities: supporting our colleagues and winning as a team; protecting our customers and our brand; structuring the Company for growth in the future; and remaining financially strong.

       The progress we made on these key priorities for managing through the cycle is detailed in the AIA discussion on page 54.

 

(1) 

Source: AXP internal data and The Nilson Report Issue 1188, “Global Brand Card Acceptance Worldwide”.

Based on the performance against these three objectives as explained above, the Compensation and Benefits Committee concluded that the overall payout under the 2018-2020 Portfolio Grant Award Program is below target at 86%.

 

  Performance Metrics  
  3-year Cumulative EPS
(30%)
2020 Revenue
(20%)

Strategic
Milestones

(50%)

Total

Score

78% 0% 125% 86%

Performance RSUs Awarded in January 2018 (Vesting Based on 2018-2020 Performance)

Performance RSUs were awarded in January 2018 for the three-year performance period ending December 2020. The awards vested at Target based on the Company’s three-year average adjusted ROE performance, which was 25.1%(1).

 

LOGO

 

(1)

2018 adjusted ROE excludes the impact of certain discrete tax benefits in Q4’18. 2019 adjusted ROE excludes the impact of a litigation-related charge in Q1’19. See Annex A for a reconciliation to ROE on a GAAP basis.

 

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LOGO

 

Section 5: Compensation Policies and Practices

Discouraging Imprudent Risk Taking

Our executive compensation program is:

 

LOGO

Structured to provide a balance of cash and stock; annual and long-term incentives; and varied performance measures over different time horizons;

 

LOGO

Designed to encourage the proper level of risk taking consistent with our business model and strategies; and

 

LOGO

Designed to be consistent with regulatory principles for safety and soundness.

The following policies and procedures help discourage imprudent risk taking:

Discouraging Imprudent Risk Taking

 

   

Cross-Section    

of Metrics    

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

Annual Risk    

Goals    

   Our Chief Risk Officer reviews goals for safety and soundness in relation to the Company’s risk appetite and sets certain annual risk goals for the Company at the beginning of each year

Monitoring    

of Risk    

   We monitor relevant metrics, including credit risk and market risk metrics, performance against our risk appetite thresholds as well as material operational risk events on a regular basis. We assign control and compliance ratings to each business unit as part of our annual assessment of performance.

Adjustment of    

Compensation    

   At year-end, our Chief Risk Officer meets with the Compensation and Benefits Committee and certifies as to whether actual results were achieved with proper risk governance and oversight, and whether the Company executed on its broad range of programs that help to avoid imprudent risk taking. The Chief Risk Officer issues a year-end memorandum summarizing an overall assessment of the Company’s risk profile. If deemed necessary, risk adjustments are made to Company annual incentive funding levels as well as to individual incentive awards.

Deferred Incentive    

Compensation    

   At least 50% of total incentive compensation for executive officers is deferred for at least three years with performance-based payout.

Performance    

Based Vesting    

  

 

Performance Restricted Stock Units are used in place of time-based RSUs for the Company’s senior colleagues

Stock Ownership    

Requirements    

  

 

We have robust stock ownership requirements for our CEO and other NEOs (as described below).

Stock Ownership Guidelines

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

 

       

CEO    

 

10x  

 

BASE SALARY    

                     

All Other   

NEOs   

 

3x  

 

BASE SALARY    

All of our NEOs own more than the target number of shares.

 

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LOGO

 

Clawback and Recoupment Policies

We seek to recover, to the extent practicable, performance-based compensation from any executive officer and certain other members of senior management under certain circumstances. The Company has two arrangements to clawback or cancel awards:

 

 

Detrimental Conduct Agreement

 

 

Incentive Compensation Recoupment Policy

The table below outlines our policies:

 

  

 

  Detrimental Conduct Agreement    Incentive Compensation Recoupment Policy

WHO

 

◾  Approximately 1,500 colleagues at Vice President level and above (including CEO)

  

◾  All colleagues

WHEN

 

◾  Colleague engages in detrimental conduct:

 

  Working for a competitor (applies to approximately 500 colleagues)

 

  Soliciting American Express colleagues or customers

 

  Denigrating the Company in the media

 

  Engaging in certain misconduct that leads to termination

 

  Other detrimental conduct categories (e.g. sharing confidential information)

  

◾  AXP financial results are restated:

 

  Colleagues engaged in fraud or misconduct that caused or partially caused the need for the restatement; and

  Less compensation would have been paid to the colleagues based upon the restated financial results

 

WHAT

 

◾  Forfeit unvested equity awards and repay proceeds from Incentive Compensation Plan awards that vested in the last two years and dividends paid on restricted stock

  

◾  Company will seek to recover the difference between the amount actually paid and what should have been paid based on the restated financial results

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

Perquisites

We provide limited perquisites to support our objective to attract and retain talent for key positions, as well as to address security concerns. For the CEO, the Company’s security policy requires him to use for all travel purposes, to the maximum extent practicable, the automobiles and aircraft provided by the Company for business travel. We also provide an annual cash perquisite allowance of $35,000 for executive officers of the Company, which includes all NEOs. Our NEOs are also eligible to receive certain benefits available to all other colleagues with a corporate card including Membership Reward points which are available for personal use.

Post-Employment Compensation

Retirement Benefits

NEOs receive retirement benefits through the following plans:

 

 

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

 

 

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

 

 

Deferral Plan: Allows U.S. NEOs to defer a portion of their base salary and AIA payout. The annual deferral limit is equal to one times the NEO’s base salary.

NEO retirement benefits are more fully described under Retirement Plan Benefits on page 70 and under Nonqualified Deferred Compensation on pages 71 and 72.

 

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LOGO

 

Severance: Senior Executive Severance Policy

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

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

Tax Treatment

Tax rules generally limit the deductibility of compensation paid to our NEOs to $1 million per year. The Compensation and Benefits Committee maintains the flexibility to pay nondeductible incentive compensation.

 

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LOGO

 

Section 6: Report of the Compensation and Benefits Committee

The Compensation and Benefits Committee has reviewed and discussed the CD&A with management. Based on such review and discussion, it recommended to the Board, and the Board approved, the inclusion of the CD&A in this Proxy Statement.

COMPENSATION AND BENEFITS COMMITTEE*

 

Ronald A. Williams, Chair

John J. Brennan

Peter Chernin

Ralph de la Vega

  

Theodore J. Leonsis

Lynn A. Pike

Christopher D. Young

 

*

Reflects 2020 Compensation and Benefits Committee membership

Note Regarding 2020 Total Direct Compensation Decisions and Summary Compensation Table

It is important to recognize that the way the Compensation and Benefits Committee presents Total Direct Compensation (on page 51) is different from the SEC-required disclosure in the Summary Compensation Table on the following page and is not a substitute for the information in that table.

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

 

  

 

     

 

   Summary Compensation Table**    Total Direct Compensation

Concept and Purpose

  

 

  

Uses SEC methodology, which includes a mix of both cash compensation actually earned during 2020 and estimated value of equity granted in 2020

 

SEC-mandated compensation disclosure

   Includes only pay that is awarded based on 2020 performance— reflects the Compensation and Benefits Committee’s January 2021 compensation decisions based on 2020 performance
 

 

    

 

Calculated as a sum of:

   Base Salary   

  Base salary paid in 2020

  

  Base salary set for 2020

 

   Annual bonus   

  Annual cash bonus earned for 2020 performance

  

  Total annual bonus awarded for 2020 performance—regardless of form of payment (i.e., cash or equity)

 

   Portfolio Grant award   

  Value of PG earned for 2018-2020 (if paid in cash)

  

  Not applicable because program eliminated as of 2019

 

 

   Equity awards   

  Accounting value of equity awards (Stock Options and Performance Restricted Stock Units) granted in 2020

  

  Grant date value of equity awards (Stock Options and Performance Restricted Stock Units) granted in January 2021 for performance year ending 2020

 

**

The SEC rules also require disclosure of additional elements of compensation beyond the ones mentioned in this table, such as future pay opportunities for pension benefits, above market interest rate on deferred compensation and all other compensation.

 

62        AMERICAN EXPRESS  |  2021 PROXY REPORT


Table of Contents

LOGO

 

Summary Compensation Table

The following Summary Compensation Table summarizes the compensation of our NEOs for the year ended December 31, 2020, using the SEC-required disclosure rules. It is important to recognize that 2020 Total Direct Compensation determined by the Compensation and Benefits Committee is different than the amounts disclosed below. See page 62 for key differences between the Summary Compensation Table and Total Direct Compensation awarded by the Compensation and Benefits Committee for 2020 Performance.

 

Name and

Principal

Position

Year Salary Bonus(1) Stock
Awards(2),(3)
Option
Awards(2)
Non-Equity
Incentive Plan
Compensation(4)
Change in
Pension Value
and
Non-Qualified
Deferred
Compensation
Earnings(5)
All Other
Compensation(6)
Total

 

S.J. Squeri

Chairman and CEO

 

2020

$

  1,500,000

$

  3,960,000

$

  13,016,122

$

  2,899,986

$

  2,322,000

$

  64,575

$

  458,636

$

  24,221,319  

 

2019

$

1,500,000

$

7,000,000

$

10,318,663

$

2,439,992

$

1,875,000

$

83,985

$

578,362

$

23,796,002  

 

2018

$

1,487,500

$

5,850,000

$

5,999,903

$

1,499,996

$

1,860,000

$

758

$

643,285

$

17,341,442  

 

J.C. Campbell

Chief Financial
Officer

 

2020

$

1,000,000

$

3,285,000

$

4,857,541

$

1,059,986

$

1,290,000

$

0

$

206,880