EXHIBIT 10.1
AMERICAN EXPRESS COMPANY
1998 INCENTIVE COMPENSATION PLAN
PORTFOLIO GRANT 20__-20__
TO
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December 31, 20__
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Award Date Expiration Date of Award Period
$
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Total Target Value
We are pleased to inform you that, pursuant to the Company's 1998
Incentive Compensation Plan, as amended (the "Plan"), the Compensation and
Benefits Committee (the "Committee") of the Board of Directors (the "Board")
of American Express Company (the "Company"), made an award of a portfolio
grant to you as hereinafter set forth (the "Award") under the Plan as of the
award date specified above (the "Award Date"). The Award is subject to the
Detrimental Conduct Provisions established by the Committee, and as from time
to time amended.
1. GENERAL. You have been granted the Award subject to the provisions of
the Plan and the terms, conditions and restrictions set forth in this
agreement (this "Agreement"). The Total Target Value of the Award
consists of the Target Values of four components: the Target Value of
the Average Annual EPS Incentive Component (the "Average Annual EPS
Target Value"); the Target Value of the Average Annual Net Revenue
Incentive Component (the "Average Annual Net Revenue Target Value");
the Target Value of the Average Annual ROE Incentive Component (the
"Average Annual ROE Target Value"); and the Target Value of the
Relative Total Shareholder Return Component (the "Relative TSR Target
Value"). Each component's Target Value is 25% of the Total Target
Value. The period beginning January 1, 20__ and ending on the
expiration date specified above (the "Expiration Date") is the "Award
Period." The Total Target Value, or any of its components, may be
reduced by the Committee in its sole discretion, which may include
but need not be limited to, situations where on the last day of the
Award Period you are engaged in Related Employment, as that term is
defined in the Plan. The Schedule A Value (as that term is defined
below), if any, of each component will be determined as specified in
Paragraph 3.
2. REQUIREMENT OF EMPLOYMENT. Except as otherwise provided in Paragraphs
4 and 6, your rights to the Cash Value and the Number of Restricted
Shares or Letters of Intent, if any (as those terms are defined
below) under Paragraph 5 shall be provisional and shall be canceled
in whole or in part, as determined by the Committee in its sole
discretion if your continuous employment with the Company and its
Affiliates (as that term is defined in the Plan) or your Related
Employment (as that term is defined in the Plan) (hereinafter
collectively referred to as "employment with the American Express
companies"), terminates for any reason on or before the Payment Date
set forth in Paragraph 5. Whether and as of what date your employment
with the American Express companies shall terminate if you are
granted a leave of absence or commence any other break in employment
intended by your employer to be temporary, shall be determined by the
Committee in its sole discretion.
3. DETERMINATION OF THE SCHEDULE A VALUES, INITIAL VALUE, FINAL VALUE,
CASH VALUE AND THE NUMBER OF RESTRICTED SHARES OR LETTERS OF INTENT.
(a) Except as otherwise provided in this Paragraph 3 and in
Paragraphs 2, 4 and 6, there shall be paid to you in accordance with
Paragraph 5, the sum, as may be adjusted by the Committee pursuant to
Subparagraph 3(i), of:
(i) the Schedule A Value of the Average Annual EPS Incentive
Component (the "Average Annual EPS Schedule A Value") as of the last
day of the Award Period, if any, as provided in Subparagraph 3(b);
(ii) the Schedule A Value of the Average Annual Net Revenue
Incentive Component (the "Average Annual Net Revenue Schedule A Value")
as of the last day of the Award Period, if any, as provided in
Subparagraph 3(c);
(iii) the Schedule A Value of the Average Annual ROE Incentive
Component (the "Average Annual ROE Schedule A Value") as of the last
day of the Award Period, if any, as provided in Subparagraph 3(d); and
(iv) the Schedule A Value of the Relative Total Shareholder
Return Component (the "Relative TSR Schedule A Value") as of the last
day of the Award Period, if any, as provided in Subparagraph 3(e).
(b) AVERAGE ANNUAL EPS SCHEDULE A VALUE. Except as otherwise
provided in this Paragraph 3, the Average Annual EPS Schedule A Value as
of the last day of the Award Period will be equal to (Xb) times (Yb),
where (Xb) equals the Average Annual EPS Incentive Payout Percentage, if
any, determined by the Committee in its sole discretion based on the
Average Annual EPS (as that term is defined below) of the Company or of a
unit of the Company, as the case may be, pursuant to the formula provided
in Schedule A to this Agreement, and where (Yb) is the Average Annual EPS
Target Value. However, in no event will (Xb) be greater than the Maximum
Average Annual EPS Value, which equals the maximum Average Annual EPS
Incentive Payout Percentage set forth in Schedule A to this Agreement,
times the Average Annual EPS Target Value.
(c) AVERAGE ANNUAL NET REVENUE SCHEDULE A VALUE. Except as otherwise
provided in this Paragraph 3, the Average Annual Net Revenue Schedule A
Value as of the last day of the Award Period will be equal to (Xc) times
(Yc), where (Xc) equals the Average Annual Net Revenue Incentive Payout
Percentage, if any, determined by the Committee in its sole discretion
based on the Average Annual Net Revenue (as that term is defined below)
of the Company or of a unit of the Company, as the case may be, pursuant
to the formula provided in Schedule A to this Agreement, and where (Yc)
is the Average Annual Net Revenue Target Value. However, in no event will
(Xc) be greater than the
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Maximum Average Annual Net Revenue Value, which equals the maximum
Average Annual Net Revenue Incentive Payout Percentage set forth in
Schedule A to this Agreement, times the Average Annual Net Revenue Target
Value.
(d) AVERAGE ANNUAL ROE SCHEDULE A VALUE. Except as otherwise
provided in this Paragraph 3, the Average Annual ROE Schedule A Value as
of the last day of the Award Period will be equal to (Xd) times (Yd),
where (Xd) equals the Average Annual ROE Incentive Payout Percentage, if
any, determined by the Committee in its sole discretion based on the
Average Annual ROE (as that term is defined below) of the Company or of a
unit of the Company, as the case may be, pursuant to the formula provided
in Schedule A to this Agreement, and where (Yd) is the Average Annual ROE
Target Value. However, in no event will (Xd) be greater than the Maximum
Average Annual ROE Value, which equals the maximum Average Annual ROE
Incentive Payout Percentage set forth in Schedule A to this Agreement,
times the Average Annual ROE Target Value.
(e) RELATIVE TSR SCHEDULE A VALUE. Except as otherwise provided in
this Paragraph 3, the Relative TSR Schedule A Value as of the last day of
the Award Period will be equal to (Xe) times (Ye), where (Xe) equals the
Relative TSR Incentive Payout Percentage, if any, determined by the
Committee in its sole discretion based on a comparison of the Amex TSR
and the S&P 500 TSR, pursuant to the formula provided in Schedule A to
this Agreement, and where (Ye) is the Relative TSR Target Value. However,
in no event will (Xe) be greater than the Maximum TSR Value, which equals
the maximum Relative TSR Incentive Payout Percentage set forth in
Schedule A to this Agreement, times the Relative TSR Target Value.
(f) CALCULATION. In the application of Schedule A to this Agreement
after the end of the Award Period for purposes of determining the
Schedule A Values pursuant to Subparagraphs 3(b), (c), (d) and (e):
(i) if the Average Annual EPS is less that the level
needed to have some Average Annual EPS Schedule A Value, there
shall be no Average Annual EPS Schedule A Value; and if the Average
Annual EPS is equal to or greater than the level to have some
Average Annual EPS Schedule A Value, but less than or equal to the
maximum level, and the Average Annual EPS actually attained is not
represented in the table set forth on Schedule A, then the Average
Annual EPS Schedule A Value shall be determined by straight-line
interpolation from the amounts specified in such table immediately
less than and greater than the Average Annual EPS actually
attained;
(ii) if the Average Annual Net Revenue is less that the
level needed to have some Average Annual Net Revenue Schedule A
Value, there shall be no Average Annual Net Revenue Schedule A
Value; and if the Average Annual Net Revenue is equal to or greater
than the level to have some Average Annual Net Revenue Schedule A
Value, but less than or equal to the maximum level, and the Average
Annual Net Revenue actually attained is not represented in the
table set forth on Schedule A, then the Average Annual Net Revenue
Schedule A Value shall be determined by straight-line interpolation
from the amounts specified in such table immediately less than and
greater than the Average Annual Net Revenue actually attained;
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(iii) if the Average Annual ROE is less that the level
needed to have some Average Annual ROE Schedule A Value, there
shall be no Average Annual ROE Schedule A Value; and if the Average
Annual ROE is equal to or greater than the level to have some
Average Annual ROE Schedule A Value, but less than or equal to the
maximum level, and the Average Annual ROE actually attained is not
represented in the table set forth on Schedule A, then the Average
Annual ROE Schedule A Value shall be determined by straight-line
interpolation from the amounts specified in such table immediately
less than and greater than the Average Annual ROE actually
attained; and
(iv) if the difference between the Amex TSR and the S&P
500 TSR is less that the level needed to have some Relative TSR
Schedule A Value, there shall be no Relative TSR Schedule A Value;
and if the difference between the Amex TSR and the S&P 500 TSR is
equal to or greater than the level to have some Relative TSR
Schedule A Value, but less than or equal to the maximum level, and
the actual difference between the Amex TSR and the S&P 500 TSR is
not represented in the table set forth on Schedule A, then the
Relative TSR Schedule A Value shall be determined by straight-line
interpolation from the amounts specified in such table immediately
less than and greater than the actual difference between the Amex
TSR and the S&P 500 TSR.
(g) DEFINITIONS. For purposes of this Award, the following terms
shall have the following meanings (which will take into account, in each
case, the expenses and other financial effect for the applicable year(s)
of portfolio grants under the Plan except as adjusted by the application
of Subparagraphs 3(h) and 3(i)).
(i) "Net Revenue" means, for any given year, the total revenues of
the Company or of a segment or other part of the Company, as the case may
be, for such year, as reported by the Company.
(ii) "Average Annual Net Revenue" means, for the Award Period, the
sum of the Net Revenue for every year during the Award Period, divided by
3.
(iii) "Net Income" means, for any given year, the after-tax net
income (or loss) of the Company or of a segment or other part of the
Company, as the case may be, for such year as adjusted below, as reported
by the Company. The calculation of Net Income for any given year will be
adjusted to exclude:
- reported cumulative effect of accounting changes;
- reported income and losses from discontinued operations; and
- reported extraordinary gains and losses as determined under
generally accepted accounting principles.
(iv) "Earnings Per Share" means, for any given year, the diluted
earnings (or loss) per share of the Company for such year, as determined
by the Company. The calculation of Earnings Per Share, for any given
year, will be adjusted in the same fashion as Net Income for such year.
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(v) "Average Annual EPS" means, for the Award Period, the sum of the
Earnings Per Share for every year during the Award Period, divided by 3.
(vi) "Average Annual Shareholders' Equity" means, for any given
year, the sum of the total shareholders' equity of the Company or of a
segment or other part of the Company, as the case may be, as of the first
day of such year and as of the end of each month during such period (each
as reported by the Company), divided by 13.
(vii) "Annual Return on Equity" means, for any given year, the Net
Income for such year divided by the Average Annual Shareholders' Equity
for such year.
(viii) "Average Annual ROE" means, for the Award Period, the sum of
the Annual Return on Equity for every year during the Award Period,
divided by 3.
(ix) "Amex Total Shareholder Return" or "Amex TSR" means the
compound annual growth rate, expressed as a percentage with one decimal
point, in the value of a share of common stock in the Company due to
stock appreciation and dividends, assuming dividends are reinvested,
during the Award Period. For this purpose, the "Beginning Stock Price"
shall mean the average closing sales prices on the New York Stock
Exchange Composite Transaction Tape for the trading days in the month of
December immediately preceding the beginning of the Award Period; and,
the "Ending Stock Price" shall mean the average closing sales prices on
the New York Stock Exchange Composite Transaction Tape for the trading
days in the month of December immediately preceding the Expiration Date.
The Amex TSR is calculated as follows:
((ENDING STOCK PRICE + VALUE OF DIVIDENDS PAID AND REINVESTED DURING THE AWARD PERIOD) 1 )
((-----------------------------------------------------------------------------------) --- ) -1
(( BEGINNING STOCK PRICE ) 3 )
(x) "S&P 500 Total Shareholder Return" or "S&P 500 TSR" means the
compound annual growth rate, expressed as a percentage with one decimal
point, in the value of the S&P 500 Index during the Award Period. It is
calculated in a manner consistent with Subparagraph 3(g)(xii) from
information publicly reported by Standard & Poors Company (or the entity
that publishes such other index, as the case may be).
(h) To the extent permissible for purposes of Section 162(m) of the
Internal Revenue Code of 1986, as amended (the "Code"), in the event of
any change in the corporate capitalization of the Company, such as by
reason of any stock split, or a material corporate transaction, such as
any merger of the Company into another corporation, any consolidation of
the Company and one or more corporations into another corporation, any
separation of the Company (including a spin-off or other distribution of
stock or property by the Company), any reorganization of the Company
(whether or not such reorganization comes within the definition of such
term in Section 368 of the Code), or any partial or complete liquidation
by the Company, other than a normal cash dividend, if the Committee shall
determine that such a change equitably requires an adjustment in the
calculation or terms of the Average Annual ROE, the Average Annual Net
Revenue, the Average Annual EPS or the Relative Total Shareholder Return
Component under this Award, on the grounds that any such change would
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produce an unreasonable value, such equitable adjustment will be made by
the Committee. Any such determination by the Committee under this
Subparagraph 3(h) shall be final, binding and conclusive.
(i) As soon as practicable after the last day of the Award Period,
the Committee may determine, in its sole discretion, that the sum of the
Schedule A Values (as initially determined in Subparagraphs 3(b), (c),
(d) and (e)) may be adjusted downward (that is, to a value of zero), but
in no event upward, as follows:
(i) YOUR UNIT'S RESULTS. Downward by a percentage (ranging from
0-100%) of such initially determined sum, based on such criteria as the
Committee shall deem appropriate relating to your unit's results, with
such resultant sum being the "Initial Value"; provided that any such
determination by the Committee need not be made in a uniform manner and
may be made selectively among holders of awards of portfolio grants in
your unit, whether or not such award holders are similarly situated.
(ii) YOUR INDIVIDUAL RESULTS. The Initial Value may be adjusted
further downward by a percentage (ranging from 0-100%) of such Initial
Value after the application of Subparagraph 3(k)(i), based on such
criteria as the Committee shall deem appropriate relating to your
individual results, with such final resultant sum being the "Final
Value" (except as otherwise provided by Paragraph 8); provided that
any such determination by the Committee need not be made in a uniform
manner and may be made selectively among holders of awards of
portfolio grants, whether or not such award holders are similarly
situated.
In no event may the Committee amend any provision hereof so as to
increase or otherwise adjust upward the Schedule A Value of any component.
(j) Subject to the limitations set forth in Paragraph 8, the
Committee shall determine the Schedule A Values, the Initial Value and
the Final Value pursuant to this Agreement, and such determinations by
the Committee shall be final, binding and conclusive upon you and all
persons claiming under or through you.
(k) The Committee shall determine in its own discretion what portion
of the Final Value, if any, shall be payable in cash (the "Cash Value"),
and what portion shall be denominated in Restricted Shares or Letters of
Intent of the Company ("the RSA" or "the LOI"), in accordance with
Paragraph 5 below. The RSA or the LOI shall have the terms substantially
as set forth in the form of Restricted Share or Letter of Intent awards
granted generally under the Plan, or its successor, except that the RSA
or the LOI shall vest pursuant to a period determined in the Committee's
discretion, except that such vesting period shall not be less than one
year from date of grant, and (B) be forfeitable only if your employment
with the American Express companies terminates by reason of voluntary
resignation or terminates for cause (that is, violation of the Code of
Conduct as in effect from time to time) prior to the applicable vesting
dates. The number of restricted shares or letters of intent of the
Company comprising the RSA or the LOI (the "Number of Restricted Shares"
or the "Number of Letters of Intent") shall be determined by dividing
such portion of the Final Value so designated by the Committee, if any,
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by the closing price of the shares on _______,__ 20__ or such other date
that the Committee approves payout of the Awards, and shall be payable in
the form of an RSA or an LOI in accordance with Paragraph 5 below.
4. DEATH, DISABILITY OR RETIREMENT.
(a) If, on or before the Payment Date set forth in Subparagraph
5(b), but during a period when you have been in continuous employment
with the American Express companies since the Award Date, you terminate
your employment with the American Express companies by reason of
disability (as that term is defined in the Plan) at any time following
the Award Date or you die at any time following the Award Date, you will
be entitled to that proportion of the Final Value as the number of full
months which have elapsed between January 1, 20__ and the end of the
month in which your termination of employment by reason of death or such
disability occurs (not to exceed 38) bears to 38, and for this purpose,
to the extent not otherwise previously determined by the Committee, in
the event of your disability or death, the Final Value shall be
calculated by applying the rate at which the expense for the Award was
being accrued for purposes of the Company's annual audited financial
statement at the end of the last completed calendar quarter prior to your
disability or death, as applicable. Such amount, if any, shall be payable
as soon as practicable thereafter, unless otherwise determined by the
Committee, in cash, common shares of the Company, or other property, or
any combination thereof, and you and all others claiming under or through
you shall not be entitled to receive any other amounts under this Award.
(b) If, on or before the Payment Date set forth in Subparagraph
5(b) but during a period when you have been in continuous employment
with the American Express companies since the Award Date, you
terminate your employment with the American Express companies by
reason of retirement (as that term is defined by the Committee), and
such event occurs more than one year after the Award Date, you
generally will be entitled to receive that proportion of the Final
Value as the number of full months which have elapsed between
January 1, 20__ and the end of the month in which your termination
of employment by reason of such retirement occurs (not to exceed 38)
bears to 38, unless such termination occurs following the attainment
of age 60, in which case you will be entitled to receive 50% of the
Final Value you would otherwise forfeit under the above formula, or,
unless such termination occurs following attainment of age 62, in
which case you will be entitled to 100% of the Final Value. The
Final Value for this purpose shall be determined after the last day
of the Award Period in the normal course in accordance with
Paragraph 3. Such amount, if any, shall be payable in cash,
Restricted Shares or Letters of Intent, as described in Paragraph
3(k) above, or other property, or any combination thereof, after the
Award Period in accordance with Paragraphs 5 and 6, and you and all
others claiming under or through you shall not be entitled to
receive any other amounts under this Award.
5. PAYMENT OF AWARD.
(a) As soon as practicable after the last day of the Award Period, or
the earlier date your continuous employment with American Express companies
terminates by reason of disability or death in accordance with Paragraph 4,
but prior to payment in respect of the Award, the Committee shall determine
whether the conditions of Paragraph 2, and Paragraph 3 or 4, have been met
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and, if so, shall ascertain the Final Value, Cash Value and the Number of
Restricted Shares or the Number of Letters of Intent, if any, in accordance
with Paragraph 3 or 4, as the case may be.
(b) If the Committee determines that there is no Average Annual EPS
Schedule A Value, no Average Annual Net Revenue Schedule A Value, no Average
Annual ROE Schedule A Value and no Relative TSR Schedule A Value, then this
Award will be canceled. If the Committee determines that there is some Average
Annual EPS Schedule A Value, Average Annual Net Revenue Schedule A Value,
Average Annual ROE Schedule A Value or Relative TSR Schedule A Value, however,
the Cash Value as determined pursuant to Paragraph 3 shall become payable to
you in cash, and the Number of Restricted Shares or the Number of Letters of
Intent shall be issued to you in the form of a Restricted Share or Letter of
Intent award under the Plan, or its successor, except that the RSA or the LOI
shall vest pursuant to a period determined in the Committee's discretion, and
such vesting period shall not be less than one year from date of grant), or
other property, or any combination thereof, as soon as practicable following
__________ __, 20__ (or at such other time or times as the Committee shall
determine as provided in Paragraph 7) (the "Payment Date").
6. TERMINATION OF EMPLOYMENT AFTER THE AWARD PERIOD BUT ON OR BEFORE THE
PAYMENT DATE. If, after the last day of the Award Period and on or before the
Payment Date specified in Subparagraph 5(b), but during a period when you have
been in continuous employment with the American Express companies since the
Award Date, your employment terminates with the American Express companies for
any reason other than death, disability or retirement as set forth in
Paragraph 4, then you and all others claiming under or through you shall not
be entitled to receive any amounts under this Award, except as otherwise
determined by the Committee in its sole discretion.
7. DEFERRAL OR ACCELERATION OF PAYMENT OF AWARD. Any payments to be made under
this Award may be deferred or accelerated in such manner as the Committee
shall determine; provided, however, that any such deferral or acceleration
must comply with the applicable requirements of Section 409A of the Code. As
to such a deferral of payment, any amount paid in excess of the amount that
was originally payable to you under this Agreement will be based on a
reasonable interest rate as determined by the Committee, and as to such an
acceleration of payment to you under this Agreement, any amount so paid will
be discounted to reasonably reflect the time value of money as determined by
the Committee.
8. CHANGE IN CONTROL.
(a) Notwithstanding anything in this Agreement to the
contrary (except for the provision dealing with a limitation under Section
280G of the Code, and except as otherwise provided by Paragraph 8(b) below),
if there is a Change in Control (as defined below) prior to the payment of the
Award under the Agreement, your Final Value of the Award determined under
Section 3(i)(ii) of the Agreement may not be less than the Total Target Value
of the Award multiplied by the Average Payout Percentage (as defined below).
(b) Notwithstanding anything in this Agreement to the
contrary (except for the provision dealing with a limitation under Section
280G of the Code), if you have not received payment under the Agreement and,
within two years after the date of a Change in Control (as defined below), you
experience a termination of employment that would otherwise entitle you to
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receive the payment of severance benefits under the provisions of the
severance plan that is in effect and in which you participate as of the date
of such Change in Control, (i) you shall immediately be 100% vested in the
Award; (ii) the Final Value of the Award will equal the Total Target Value of
the Award multiplied by the Average Payout Percentage (as defined below), but
prorated based on (a) the total number of full and partial months of the Award
Period which have elapsed between (X) January 1, 20__, and (Y) the date of
such termination of employment (not to exceed 36), divided by (b) the total
number of months in the Award Period; and (iii) such value of the Award shall
be paid to you in cash within five days after the date of such termination of
employment.
(c) "Average Payout Percentage" means the average of the
payout percentages for your unit under the two portfolio grant awards that
were paid by the Company immediately preceding the date of such Change in
Control.
(d) A "Change in Control" has that meaning as defined in
American Express Senior Executive Severance Plan, as amended from time to
time.
(e) The Committee may not amend or delete this Paragraph 8
of this Agreement in a manner that is detrimental to you, without your written
consent.
9. TAX WITHHOLDING AND FURNISHING OF INFORMATION. There shall be withheld from
any payment of cash or vesting of restricted shares or letters of intent under
this Award, such amount, if any, as the Company and/or your employer
determines is required by law, including, but not limited to, U.S. federal,
state, local or foreign income, employment or other taxes incurred by reason
of making of the Award or of such payment. It shall be a condition to the
obligation of the Company to make payments under this Award that you (or those
claiming under or through you) promptly provide the Company and/or your
employer with all forms, documents or other information reasonably required by
the Company and/or your employer in connection with the Award.
10. RIGHTS NOT ASSIGNABLE. Except as otherwise determined by the Committee in
its sole discretion, your rights and interests under the Award and the Plan
may not be sold, assigned, transferred, or otherwise disposed of, or made
subject to any encumbrance, pledge, hypothecation or charge of any nature,
except that you may designate a beneficiary pursuant to Paragraph 11. If you
(or those claiming under or through you) attempt to violate this Paragraph 10,
such attempted violation shall be null and void and without effect, and the
Company's obligation to make any further payments to you (or those claiming
under or through you) hereunder shall terminate.
11. BENEFICIARY DESIGNATION. Subject to the provisions of the Plan, you may,
by completing a form acceptable to the Company and returning it to the
Corporate Secretary's Office, at 200 Vesey Street, New York, New York 10285,
name a beneficiary or beneficiaries to receive any payment to which you may
become entitled under this Agreement in the event of your death. You may
change your beneficiary or beneficiaries from time to time by submitting a new
form to the Corporate Secretary's Office at the same address. If you do not
designate a beneficiary, or if no designated beneficiary is living on the date
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any amount becomes payable under this Agreement, such payment will be made to
the legal representatives of your estate, which will be deemed to be your
designated beneficiary under this Agreement.
12. ADMINISTRATION. Any action taken or decision made by the Company, the
Board or the Committee or its delegates arising out of or in connection with
the construction, administration, interpretation or effect of the Plan or this
Agreement shall lie within its sole and absolute discretion, as the case may
be, and shall be final, conclusive and binding upon you and all persons
claiming under or through you. By accepting this Award or other benefit under
the Plan, you and each person claiming under or through you shall be
conclusively deemed to have indicated acceptance and ratification of, and
consent to, any action taken or decision made under the Plan by the Company,
the Board or the Committee or its delegates.
13. CHANGE IN CONTROL PAYMENTS. This Paragraph shall apply in the event of
Change in Control (as defined in the American Express Senior Executive
Severance Plan, as amended from time to time).
(a) In the event that any payment or benefit received or to
be received by you hereunder in connection with a Change in Control or
termination of your employment (such payments and benefits, excluding Gross-Up
Payment (as hereinafter defined), being hereinafter referred to collectively
as the "Payments"), will be subject to the excise tax referred to in Section
4999 of the Code (the "Excise Tax"), then (i) in the case you are classified
in Band 70 (or its equivalent) or above immediately prior to such Change in
Control (a "Tier 1 Employee"), the Company shall pay to you, within five days
after receipt by you of the written statement referred to in Subparagraph (e),
an additional amount (the "Gross-Up Payment") such that the net amount
retained by you, after deduction of any Excise Tax on the Payments and any
federal, state and local income and employment taxes and Excise Tax upon the
Gross-Up Payment, shall be equal to the Payments and (ii) in the case you are
other than a Tier 1 Employee, the Payments shall be reduced to the extent
necessary so that no portion of the Payments is subject to the Excise Tax but
only if (A) the net amount of all Total Payments (as hereinafter defined), as
so reduced (and after subtracting the net amount of federal, state and local
income and employment taxes on such reduced Total Payments), is greater than
or equal to (B) the net amount of such Total Payments without any such
reduction (but after subtracting the net amount of federal, state and local
income and employment taxes on such Total Payments and the amount of Excise
Tax to which you would be subject in respect of such unreduced Total
Payments); PROVIDED, HOWEVER, that you may elect in writing to have other
components of your Total Payments reduced prior to any reduction in the
Payments hereunder.
(b) For purposes of determining whether the Payments will be
subject to the Excise Tax, the amount of such Excise Tax and whether any
Payments are to be reduced hereunder: (i) all payments and benefits received
or to be received by you in connection with such Change in Control or the
termination of your employment, whether pursuant to the terms of this
Agreement or any other plan, arrangement or agreement with the Company, any
Person (as such term is defined in the Company's Senior Executive Severance
Plan) whose actions result in such Change in Control or any Person affiliated
with the Company or such Person (all such payments and benefits, excluding the
Gross-Up Payment and any similar gross-up payment to which a Tier 1 Employee
may be entitled under any such other plan, arrangement or agreement, being
hereinafter referred to as the "Total Payments"), shall be treated as
"parachute payments" (within the meaning of Section 280G(b)(2) of the Code)
unless, in the opinion of the Firm, such payments or benefits (in whole or in
part) do not constitute parachute payments, including by reason of Section
280G(b)(2)(A) or Section 280G(b)(4)(A) of the Code; (ii) no portion of the
Total Payments the receipt or enjoyment of which you shall have waived at such
time and in such manner as not to constitute a "payment" within the meaning of
-10-
Section 280G(b) of the Code shall be taken into account; (iii) all "excess
parachute payments" within the meaning of Section 280G(b)(l) of the Code shall
be treated as subject to the Excise Tax unless, in the opinion of the Firm,
such excess parachute payments (in whole or in part) represent reasonable
compensation for services actually rendered (within the meaning of Section
280G(b)(4)(B) of the Code) in excess of the Base Amount (within the meaning of
Section 280G(b)(3) of the Code) allocable to such reasonable compensation, or
are otherwise not subject to the Excise Tax; and (iv) the value of any noncash
benefits or any deferred payment or benefit shall be determined by the Firm in
accordance with the principles of Sections 280G(d)(3) and (4) of the Code and
regulations or other guidance thereunder. For purposes of determining the
amount of your Gross-Up Payment and whether your Payments shall be reduced,
you shall be deemed to pay federal income tax at the highest marginal rate of
federal income taxation (and state and local income taxes at the highest
marginal rate of taxation in the state and locality of your residence, net of
the maximum reduction in federal income taxes which could be obtained from
deduction of such state and local taxes) in the calendar year in which the
Gross-Up Payment is to be made (if you are a Tier 1 Employee) or in which the
Payments are made (if you are other than a Tier 1 Employee). The Firm will be
paid reasonable compensation by the Company for its services.
(c) In the event that the Excise Tax is finally determined
to be less than the amount taken into account hereunder in calculating the
Gross-Up Payment, then an amount equal to the amount of the excess of the
earlier payment over the redetermined amount (the "Excess Amount") will be
deemed for all purposes to be a loan to you made on the date of your receipt
of such Excess Amount, which you will have an obligation to repay to the
Company on the fifth business day after demand, together with interest on such
amount at the Section 1274 Rate from the date of your receipt of such Excess
Amount until the date of such repayment (or such lesser rate (including zero)
as may be designated by the Firm such that the Excess Amount and such interest
will not be treated as a parachute payment as previously defined). In the
event that the Excise Tax is finally determined to exceed the amount taken
into account hereunder in calculating the Gross-Up Payment (including by
reason of any payment the existence or amount of which cannot be determined at
the time of the Gross-Up Payment), within five business days of such
determination, the Company will pay to you an additional amount, together with
interest thereon from the date such additional amount should have been paid to
the date of such payment, at the Section 1274 Rate (or such lesser rate
(including zero) as may be designated by the Firm such that the amount of such
deficiency and such interest will not be treated as a parachute payment as
previously defined). You and the Company shall each reasonably cooperate with
the other in connection with any administrative or judicial proceedings
concerning the amount of any Gross-Up Payment.
(d) As soon as practicable following a Change in Control,
the Company shall provide to you if you are a Tier 1 Employee or it is
proposed that your Payments be reduced, a written statement setting forth the
manner in which your Total Payments were calculated and the basis for such
-11-
calculations, including, without limitation, any opinions or other advice the
Company has received from the Firm or other advisors or consultants (and any
such opinions or advice which are in writing shall be attached to the
statement).
14. MISCELLANEOUS. Neither you nor any person claiming under or through you
shall have any right or interest, whether vested or otherwise, in the Plan or
the Award, unless and until all of the terms, conditions and provisions of the
Plan and this Agreement shall have been complied with. In addition, neither
the adoption of the Plan nor the execution of this Agreement shall in any way
affect the rights and powers of any person to dismiss or discharge you at any
time from employment with the American Express companies. Notwithstanding
anything herein to the contrary, neither the Company nor any of its Affiliates
(as that term is defined in the Plan) nor their respective officers,
directors, employees or agents shall have any liability to you (or those
claiming under or through you) under the Plan, this Agreement or otherwise on
account of any action taken, or decision not to take any action made, by any
of the foregoing persons with respect to the business or operations of the
Company or any of its Affiliates (as that term is defined in the Plan),
despite the fact that any such action or decision may adversely affect in any
way whatsoever Average Annual Shareholders' Equity, Earnings Per Share, Net
Income or other financial measures or amounts which are accrued or payable or
any of your other rights or interests under this Agreement.
15. GOVERNING LAW. The validity, construction, interpretation, administration
and effect of this Agreement shall be governed by the substantive laws, but
not the choice of law rules, of the State of New York.
AMERICAN EXPRESS COMPANY
By the Compensation and
Benefits Committee of the
Board of Directors:
By
----------------------------------
NOTWITHSTANDING ANY CONTRARY PROVISION IN THE AMERICAN EXPRESS COMPANY 1998
INCENTIVE COMPENSATION PLAN 1998 MASTER AGREEMENT, THE COMPANY RESERVES THE
RIGHT TO CORRECT NONMATERIAL CLERICAL ERRORS IN, AND MAKE SUBSEQUENT
NONMATERIAL CLARIFICATIONS TO, ANY AWARD AGREEMENT IN THE FUTURE, WITHOUT
PRIOR NOTIFICATION TO PARTICIPANTS.
-12-
SCHEDULE A
Page 1 of 2
AXP PORTFOLIO GRANT PERFORMANCE/PAYOUT GRID
FOR EXECUTIVE OFFICERS
GRID 1
(subject to award agreement and discretionary downward adjustment)
- ------------------------------------------------------------------------------------------------------------------------
AXP AVERAGE ANNUAL $ AXP AVERAGE ANNUAL $ NET REVENUE AXP AVERAGE ANNUAL RETURN
EARNINGS PER SHARE (DILUTED) ($ BILLION) ON EQUITY
(25% weight) (25% weight) (25% weight)
- ------------------------------------------------------------------------------------------------------------------------
20__-20__ Perform. Max. Value %(a) 20__-20__ Perform. Max. Value %(a) 20__-20__ Perform. Max. Value %(a)
- ------------------------------------------------------------------------------------------------------------------------
$____ Or More % $__ or More % __% Or More %
- ------------------------------------------------------------------------------------------------------------------------
$ % $ % % %
- ------------------------------------------------------------------------------------------------------------------------
$ % $ % % %
- ------------------------------------------------------------------------------------------------------------------------
$ % $ % % %
- ------------------------------------------------------------------------------------------------------------------------
$ % $ % % %
- ------------------------------------------------------------------------------------------------------------------------
Less Than $ 0 Less than ___ 0 Less than __% 0
- ------------------------------------------------------------------------------------------------------------------------
- ---------------------------
Note: Straight-line interpolation would apply for any actual performance
level that falls between two performance levels shown on the grid.
(a) "%" = percent of the executive's dollar Target Value allocated to the
applicable performance factor.
SCHEDULE A
Page 2 of 2
AXP PORTFOLIO GRANT PERFORMANCE/PAYOUT GRID
FOR EXECUTIVE OFFICERS
GRID 2
(subject to award agreement and discretionary downward adjustment)
- ------------------------------------------------------------------------
AXP TOTAL SHAREHOLDER RETURN (TSR) %
VS. S&P 500
(25% WEIGHT)
- ------------------------------------------------------------------------
20__-20__ Performance
(percentage points AXP is higher or
lower) Max. Value % (a)
- ------------------------------------------------------------------------
+__% Or Higher %
+__% %
+__% %
+__% %
+__% %
+__% %
+__% %
+__% %
+__% %
+__% %
+__% %
+__% %
+__% %
0% %
-__% %
Lower than -__% 0%
- ------------------------------------------------------------------------
- ---------------------------
Note: Straight-line interpolation would apply for any actual performance level
that falls between two performance levels shown on the grid.
(a) = % percent of the executive's dollar Target Value allocated to the
applicable performance factor.