UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): October 2, 2009
AMERICAN EXPRESS COMPANY
(Exact name of registrant as specified in its charter)
New York 1-7657 13-4922250
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(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation Identification No.)
or organization)
200 Vesey Street, World Financial Center
New York, New York 10285
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (212) 640-2000
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(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of
the following provisions (see General Instruction A.2. below):
[ ] Written communications pursuant to Rule 425 under the Securities Act (17
CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17
CFR 240.14a- 12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
ITEM 5.02 DEPARTURE OF DIRECTORS OR CERTAIN OFFICERS; ELECTION OF DIRECTORS;
APPOINTMENT OF CERTAIN OFFICERS; COMPENSATORY ARRANGEMENTS OF
CERTAIN OFFICERS
(b) On October 5, 2009, American Express Company (the "Company")
announced that Alfred F. Kelly, Jr., President of the Company and head of the
Company's Global Consumer Group, will step down from his positions and leave
the Company effective April 10, 2010.
(e) Separation Agreement with Mr. Kelly
In connection with Mr. Kelly's planned departure from the Company, on
October 5, 2009, the Compensation and Benefits Committee (the "Compensation
Committee") of the Board of Directors of the Company approved a letter
agreement, dated October 2, 2009 (the "Separation Agreement"), setting forth
the terms of Mr. Kelly's separation from the Company. The payments and
benefits to which Mr. Kelly is entitled under the Separation Agreement, which
are summarized below, are generally subject to Mr. Kelly's compliance with the
terms and conditions of the Separation Agreement.
Pursuant to the terms of the Separation Agreement, Mr. Kelly's active
employment with the Company will continue until April 10, 2010 (the
"Separation Date"), during which time he will receive salary payments at the
rate of (i) $765,000 per annum through December 31, 2009, and (ii) $850,000
per annum effective on or about January 1, 2010, which increase reflects the
restoration of Mr. Kelly's salary to the level paid to him prior to the
Company's temporary reduction earlier in 2009 of senior management salary
levels in light of the economic environment. Mr. Kelly will also continue to
receive through the Separation Date benefits at the level and type he
currently receives, including for 2010 a flexible perquisite allowance of
$35,000 and a local transportation allowance of $30,000. In addition to
receiving his base salary and benefits, Mr. Kelly will also be eligible to
receive a bonus for 2009 performance in the amount of $4,000,000, provided
that he remains in the employ of the Company through the date that bonuses are
paid to the Company's employees generally, which is expected to be in February
2010.
In addition to the amounts described above, pursuant to the terms of
the Separation Agreement, Mr. Kelly will receive separation payments totaling
$9,700,000, which will be payable in biweekly installments during the two-year
period beginning with the Separation Date and ending April 6, 2012 (the
"Separation Period").
Provided Mr. Kelly remains in the employ of the Company through the
Separation Date, he will also be eligible to receive a payout in the normal
course of the portfolio grants that he was awarded in each of 2007, 2008 and
2009, subject to the Company's achieving the performance levels required for
the payment of such awards.
Subject to the terms of the Separation Agreement, during the
Separation Period all outstanding restricted stock awards ("RSAs") and
non-qualified stock options ("NQSOs") that were previously granted to Mr.
Kelly will continue to vest in accordance with their terms, and NQSOs will
continue to be exercisable subject to the terms and administration of the
Company plans pursuant to which such awards were granted, with those RSAs and
NQSOs that have not vested prior to the earlier of (i) Mr. Kelly's
commencement of employment with another employer and (ii) the end of the
Separation Period being cancelled and terminated. Excluding the NQSOs and RSAs
described in the next paragraph, none of Mr. Kelly's NQSOs that are expected
to vest during the Separation Period are in-the-money, and the value of Mr.
Kelly's RSAs that are expected to vest during the Separation Period is
estimated to be $1,943,634, in each case assuming a share price of $33.00 per
share.
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Notwithstanding the preceding paragraph, pursuant to the terms of the
Separation Agreement, the Company and Mr. Kelly have agreed to the following:
o the NQSO of 311,190 shares with an exercise price per share of
$16.71, which was granted to Mr. Kelly on January 29, 2009, will
continue to vest ratably in four annual installments through the
fourth anniversary of the date of grant, and Mr. Kelly will have the
full ten-year option term (i.e., through January 29, 2019) to
exercise such award (regardless of whether he commences employment
with another employer during such period). (The aggregate
in-the-money value of such NQSO (including the portions that vest
prior to the commencement and after the conclusion of the Separation
Period), is $5,069,285, assuming a share price of $33.00 per share.);
o the NQSO of 475,000 shares with an exercise price per share of
$58.54, which was granted to Mr. Kelly on July 31, 2007, will
continue to vest in accordance with its terms in three installments
on July 31, 2010 (118,750 shares), July 31, 2011 (118,750 shares) and
July 31, 2012 (237,500 shares), and Mr. Kelly will have until October
31, 2012, to exercise such award (regardless of whether he commences
employment with another employer prior to such date);
o the portion (18,000 shares) of the RSA granted to Mr. Kelly on July
31, 2007, will vest on July 31, 2012, subject to the achievement of
average annual return on equity for the Company of at least 15%
(regardless of whether he commences employment with another employer
prior to such date) (The value of such portion of such RSA is
$594,000, assuming a share price of $33.00 per share.); and
o Mr. Kelly will also receive a restricted stock unit in January 2010
with a value of $2,000,000 at the time of grant and which will vest
four years after the date of grant (regardless of whether he
commences employment with another employer during the period prior to
the vesting date).
In addition to the payments and benefits described above, pursuant to
the terms of the Separation Agreement, Mr. Kelly will also receive payouts of
amounts credited to him under the Company's deferred compensation programs and
supplemental retirement program, in each case subject to the terms of the
respective plans, applicable laws and regulations and elections previously
made by him, as the case may be. Such amounts are expected to commence being
paid during the Separation Period or March 2013, as applicable.
In consideration for the payments and benefits provided pursuant to
the Separation Agreement, Mr. Kelly has agreed to a general release of claims
against the Company, as well as various restrictive covenants, including (i)
not being employed by or acting as a consultant to certain competitors of the
Company and not soliciting significant customers of the Company through April
6, 2012 and (ii) not soliciting for employment or employing any employees of
the Company through April 6, 2014.
In connection with Mr. Kelly's separation from the Company, the
Company expects to record a charge for the quarter ended September 30, 2009,
as well as in future quarters, in respect of the payments and benefits to
which Mr. Kelly will be entitled under the terms and conditions of the
Separation Agreement.
None of the charges to be taken in respect of the Separation
Agreement is expected to have a material impact on the Company's results of
operations in the period in which it is recorded.
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OTHER COMPENSATION ACTIONS
In addition to the action taken by the Compensation Committee with
respect to the Separation Agreement with Mr. Kelly, on October 5, 2009, the
Compensation Committee approved increases to the annual base salaries
(effective October 2009) of each of Edward P. Gilligan, Vice Chairman of the
Company, Stephen Squeri, Group President - Global Services, and Daniel T.
Henry, Executive Vice President and Chief Financial Officer of the Company.
Mr. Gilligan's base salary was increased from $742,500 per annum to $1,100,000
per annum to reflect his increased responsibilities with the Company; Mr.
Squeri's base salary was increased from $540,000 per annum to $750,000 per
annum in connection with his promotion to Group President; and Mr. Henry's
base salary was increased from $562,500 per annum to $700,000 per annum after
a review of competitive market data. The base salaries of each of Messrs.
Gilligan, Squeri and Henry in effect prior to such increases reflected the
Company's 10% temporary reduction made earlier in 2009 of senior management
salary levels in light of the economic environment.
In addition to the salary increases described above, the Compensation
Committee also approved a special cash award to Mr. Gilligan in the amount of
$2,000,000, which amount is payable on October 30, 2011, provided that Mr.
Gilligan continues to be in the employ of the Company on such date. Also, the
Compensation Committee approved the payment of an aggregate $100,000 to Mr.
Gilligan to assist with his relocation back to the United States from his
overseas assignment, which will be paid to Mr. Gilligan on a monthly basis
during the 12 months commencing November 2009.
FORWARD-LOOKING STATEMENTS
This report includes forward-looking statements, which are subject to risks
and uncertainties. Forward-looking statements contain words such as "believe,"
"expect," "anticipate," "optimistic," "intend," "plan," "aim," "will," "may,"
"should," "could," "would," "likely" and similar expressions. Readers are
cautioned not to place undue reliance on these forward-looking statements,
which speak only as of the date on which they are made. The Company undertakes
no obligation to update or revise any forward-looking statements. Factors that
could cause actual results to differ materially from these forward-looking
statements include, but are not limited to, the following: the actual amount
of the charges recorded in connection with the separation payments and
benefits payable to Mr. Kelly in connection with his separation from the
Company. A further description of these and other risks and uncertainties can
be found in the Company's Annual Report on Form 10-K for the year ended
December 31, 2008, its Quarterly Reports on Form 10-Q for the quarters ended
March 31 and June 30, 2009, and its other reports filed with the SEC.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
AMERICAN EXPRESS COMPANY
(REGISTRANT)
By: /s/ Carol V. Schwartz
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Name: Carol V. Schwartz
Title: Secretary
Date: October 6, 2009
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