EXHIBIT 10.3
AMERICAN EXPRESS COMPANY
AMERICAN EXPRESS BANK LTD.
DEFERRED COMPENSATION PLAN FOR DIRECTORS AND ADVISORS
(As amended effective July 28, 2003)
SECTION 1. EFFECTIVE DATE
The effective date of the Plan is October 1, 1977, except as otherwise
provided therein.
SECTION 2. ELIGIBILITY
Any Director or Advisor to the Board of American Express Company (the
"Company") or Director of American Express Bank Ltd. ("AEB") (hereinafter
"Directors") who is not an officer or employee of the Company, AEB or a
subsidiary thereof is eligible to participate in the Plan.
SECTION 3. AMOUNT AND TERM OF DEFERRAL
A Director may elect to defer the receipt of either 50% or 100% of the
compensation payable to the Director for serving on the Board of Directors of
the Company or AEB, as well as service on Committees of those Boards. The term
of deferral shall be the calendar year from January 1 to December 31.
SECTION 4. DEFERRED COMPENSATION ACCOUNTS
Deferred compensation will be credited to the Director's bookkeeping
account(s) established under the Plan. In accordance with the Director's
instructions, amounts deferred will be credited either to an account linked to
the Company's return on equity (the "ROE-Based Option") or an account linked
to the performance of the Company's Common Stock, par value $0.20 per share
(the "Share Equivalent Option") as more completely described below.
(a) ROE-Based Option
Amounts deferred for which the Director has chosen the
ROE-Based Option shall be credited or debited with interest
equivalents at a rate equal to the ROE Formula Rate under the
Company's Pay-for-Performance Deferral Program.
As promptly as practicable each year after the Compensation
and Benefits Committee determines the ROE Formula Rate with
respect to the prior year, the amounts held in the account
under the ROE-Based Option on December 31 of the prior year
shall be credited or debited at the ROE Formula Rate as
follows: Amounts that have been held in the account for the
entire prior year will be credited or debited by an annual
percentage rate equal to the ROE Formula Rate. Amounts that
were deferred during the prior year will be credited or
debited at a proration of the annual ROE Formula Rate based on
the number of days during the prior year they were held in the
account (e.g., the number of days actually held divided by
366).
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(b) Share Equivalent Option
Amounts deferred for which the Director has chosen the Share
Equivalent Option will be converted hypothetically into units
equivalent to the shares of the Company's Common Stock ("Share
Equivalent Units or SEUs"), determined by dividing the amount
of deferred compensation in each calendar quarter by the
average market price of the Common Shares for the last fifteen
(15) trading days of such calendar quarter. On any dividend
payment date for the Common Shares, dividend equivalents in
the form of additional SEUs will be credited to the Director's
account equal to (i) the per-share cash dividend divided by
the average market price of the Common Shares on the payment
date, multiplied by (ii) the number of such units credited to
such account on the payment date.
(b)(i) Stock Splits
In the event of any change in the outstanding Common Shares of
the Company by reasons of any stock split, stock dividend,
split up, split-off, spin-off, recapitalization, merger,
consolidation, rights offering, reorganization, combination or
exchange of shares, a sale by the company of all or part of
its assets, any distribution to the shareholders other than a
normal cash dividend, or other extraordinary or unusual event,
the number of SEUs credited to a Director's account shall be
automatically adjusted on the same basis so that the
proportionate interest of the Director under the Plan shall be
maintained as before the occurrence of such event.
(b)(ii) Valuing SEUs Payable to Directors
SEUs shall be payable to a Director as of December 31 of the
year in which Board service terminates or the year in which
the director has elected to receive a payment. The SEUs will
be valued for payment by multiplying the applicable number of
units by the average of the average market price of a Common
Share as reported on the New York Stock Exchange Composite
Transactions Tape for the fifteen (15) trading days
immediately preceding December 31.
The average market price on any valuation date under the Plan
shall be the average of the highest and lowest sales prices of
the stock as reported on the New York Stock Exchange Composite
Transactions Tape.
SECTION 5. TIME OF ELECTION; TRANSFER OF BALANCES
A Director who is newly elected shall make his or her election to participate
in the Plan within 60 days of his or her initial election. Thereafter, if a
director wishes to change his or her election, they should do so not later
than December 31 for compensation to be paid in the next year.
Directors who participate in the Plan may also elect, between December 1 and
December 31 of each year, to transfer existing balances between the ROE based
account and the SEU account. Such transfers shall occur as of December 31 and
must involve the entire balance; partial account balance transfers are not
permitted. In the event of a balance transfer, the SEU's will be valued at the
15 trading day average price immediately prior to December 31.
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SECTION 6. FORM OF DISTRIBUTION OF ACCOUNT BALANCE
A Director may elect to receive amounts accumulated in his or her account
under the Plan in cash in either (a) a lump sum or (b) a number of annual
installments (not to exceed 10) as specified by the Director. Regardless of
the election that a Director may make, he or she must begin to receive
distributions not earlier than his or her termination of service as a director
and not later than the tenth anniversary or termination of such service. In
the absence of a valid election, the balances that have accumulated in a
Director's account will be distributed as promptly as administratively
practicable following such Director's termination of service as a director.
Distributions will be paid within the first 60 days of the year, based on the
account balance as of December 31 of the prior year.
If the Director elects to receive installment payments, each installment will
be paid proportionally, based on the number of remaining installment payments
and the number of remaining balance(s) accumulated in the Director's account,
including related accrued dividends.
SECTION 7. DEATH PRIOR TO RECEIPT
In the event that a Director dies prior to receipt of any or all of the
amounts payable to him or her pursuant to the Plan, any amounts that are then
credited to the Director's account shall be paid to the legal representatives
of the Director's estate in a lump sum within sixty (60) days following the
Company's receipt of notification of the Director's death.
SECTION 8. DIRECTOR'S RIGHTS UNSECURED
The right of any Director to receive future payments under the provisions of
the Plan shall be an unsecured, contractual claim against the general assets
of the Company. The Plan shall be unfunded. The Company shall not be required
to establish any special or separate fund or to make any segregation of assets
the payment of any amounts under the Plan.
Participants may not sell, transfer, assign, pledge, levy, attach, encumber or
alienate any amounts payable under the Plan.
SECTION 9. STATEMENT OF ACCOUNT
A statement of account will be sent to each Director not later than sixty (60)
days after the close of each calendar quarter, which will confirm the
Director's account balance(s) as of the end of the preceding quarter.
SECTION 10. AMENDMENT
The Plan may be amended at any time and from time to time by the Board of
Directors of the Company' provided, however, that the Board may not adopt any
amendment that would materially and adversely affect any right or benefit to
any Director with respect to any SEUs theretofore credited without such
Director's written consent.
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AMERICAN EXPRESS COMPANY
AMERICAN EXPRESS BANK LTD.
DEFERRED COMPENSATION PLAN FOR DIRECTORS AND ADVISORS
(As amended effective July 28, 2003)
SECTION 1. EFFECTIVE DATE
The effective date of the Plan is October 1, 1977, except as otherwise
provided therein.
SECTION 2. ELIGIBILITY
Any Director or Advisor to the Board of American Express Company (the
"Company") or Director of American Express Bank Ltd. ("AEB") (hereinafter
"Directors") who is not an officer or employee of the Company, AEB or a
subsidiary thereof is eligible to participate in the Plan.
SECTION 3. AMOUNT AND TERM OF DEFERRAL
A Director may elect to defer the receipt of either 50% or 100% of the
compensation payable to the Director for serving on the Board of Directors of
the Company or AEB, as well as service on Committees of those Boards. The term
of deferral shall be the calendar year from January 1 to December 31.
SECTION 4. DEFERRED COMPENSATION ACCOUNTS
Deferred compensation will be credited to the Director's bookkeeping
account(s) established under the Plan. In accordance with the Director's
instructions, amounts deferred will be credited either to an account linked to
the Company's return on equity (the "ROE-Based Option") or an account linked
to the performance of the Company's Common Stock, par value $0.20 per share
(the "Share Equivalent Option") as more completely described below.
(a) ROE-Based Option
Amounts deferred for which the Director has chosen the
ROE-Based Option shall be credited or debited with interest
equivalents at a rate equal to the ROE Formula Rate under the
Company's Pay-for-Performance Deferral Program.
As promptly as practicable each year after the Compensation
and Benefits Committee determines the ROE Formula Rate with
respect to the prior year, the amounts held in the account
under the ROE-Based Option on December 31 of the prior year
shall be credited or debited at the ROE Formula Rate as
follows: Amounts that have been held in the account for the
entire prior year will be credited or debited by an annual
percentage rate equal to the ROE Formula Rate. Amounts that
were deferred during the prior year will be credited or
debited at a proration of the annual ROE Formula Rate based on
the number of days during the prior year they were held in the
account (e.g., the number of days actually held divided by
366).
-1-
(b) Share Equivalent Option
Amounts deferred for which the Director has chosen the Share
Equivalent Option will be converted hypothetically into units
equivalent to the shares of the Company's Common Stock ("Share
Equivalent Units or SEUs"), determined by dividing the amount
of deferred compensation in each calendar quarter by the
average market price of the Common Shares for the last fifteen
(15) trading days of such calendar quarter. On any dividend
payment date for the Common Shares, dividend equivalents in
the form of additional SEUs will be credited to the Director's
account equal to (i) the per-share cash dividend divided by
the average market price of the Common Shares on the payment
date, multiplied by (ii) the number of such units credited to
such account on the payment date.
(b)(i) Stock Splits
In the event of any change in the outstanding Common Shares of
the Company by reasons of any stock split, stock dividend,
split up, split-off, spin-off, recapitalization, merger,
consolidation, rights offering, reorganization, combination or
exchange of shares, a sale by the company of all or part of
its assets, any distribution to the shareholders other than a
normal cash dividend, or other extraordinary or unusual event,
the number of SEUs credited to a Director's account shall be
automatically adjusted on the same basis so that the
proportionate interest of the Director under the Plan shall be
maintained as before the occurrence of such event.
(b)(ii) Valuing SEUs Payable to Directors
SEUs shall be payable to a Director as of December 31 of the
year in which Board service terminates or the year in which
the director has elected to receive a payment. The SEUs will
be valued for payment by multiplying the applicable number of
units by the average of the average market price of a Common
Share as reported on the New York Stock Exchange Composite
Transactions Tape for the fifteen (15) trading days
immediately preceding December 31.
The average market price on any valuation date under the Plan
shall be the average of the highest and lowest sales prices of
the stock as reported on the New York Stock Exchange Composite
Transactions Tape.
SECTION 5. TIME OF ELECTION; TRANSFER OF BALANCES
A Director who is newly elected shall make his or her election to participate
in the Plan within 60 days of his or her initial election. Thereafter, if a
director wishes to change his or her election, they should do so not later
than December 31 for compensation to be paid in the next year.
Directors who participate in the Plan may also elect, between December 1 and
December 31 of each year, to transfer existing balances between the ROE based
account and the SEU account. Such transfers shall occur as of December 31 and
must involve the entire balance; partial account balance transfers are not
permitted. In the event of a balance transfer, the SEU's will be valued at the
15 trading day average price immediately prior to December 31.
-2-
SECTION 6. FORM OF DISTRIBUTION OF ACCOUNT BALANCE
A Director may elect to receive amounts accumulated in his or her account
under the Plan in cash in either (a) a lump sum or (b) a number of annual
installments (not to exceed 10) as specified by the Director. Regardless of
the election that a Director may make, he or she must begin to receive
distributions not earlier than his or her termination of service as a director
and not later than the tenth anniversary or termination of such service. In
the absence of a valid election, the balances that have accumulated in a
Director's account will be distributed as promptly as administratively
practicable following such Director's termination of service as a director.
Distributions will be paid within the first 60 days of the year, based on the
account balance as of December 31 of the prior year.
If the Director elects to receive installment payments, each installment will
be paid proportionally, based on the number of remaining installment payments
and the number of remaining balance(s) accumulated in the Director's account,
including related accrued dividends.
SECTION 7. DEATH PRIOR TO RECEIPT
In the event that a Director dies prior to receipt of any or all of the
amounts payable to him or her pursuant to the Plan, any amounts that are then
credited to the Director's account shall be paid to the legal representatives
of the Director's estate in a lump sum within sixty (60) days following the
Company's receipt of notification of the Director's death.
SECTION 8. DIRECTOR'S RIGHTS UNSECURED
The right of any Director to receive future payments under the provisions of
the Plan shall be an unsecured, contractual claim against the general assets
of the Company. The Plan shall be unfunded. The Company shall not be required
to establish any special or separate fund or to make any segregation of assets
the payment of any amounts under the Plan.
Participants may not sell, transfer, assign, pledge, levy, attach, encumber or
alienate any amounts payable under the Plan.
SECTION 9. STATEMENT OF ACCOUNT
A statement of account will be sent to each Director not later than sixty (60)
days after the close of each calendar quarter, which will confirm the
Director's account balance(s) as of the end of the preceding quarter.
SECTION 10. AMENDMENT
The Plan may be amended at any time and from time to time by the Board of
Directors of the Company' provided, however, that the Board may not adopt any
amendment that would materially and adversely affect any right or benefit to
any Director with respect to any SEUs theretofore credited without such
Director's written consent.
-3-