Executives at American Express Will See Retirement Benefits
By Robin Sidel
The Wall Street Journal
Saturday, January 27, 2007
American Express Co. is cutting retirement benefits for its top
executives by about 12% under a wide-ranging overhaul of the
card company's benefits program for all employees.
The changes, which will be effective in July, come amid
shareholder criticism over supplemental executive retirement
plans, or SERPs, that award big pay packages to departing
executives. The plans typically are based on compensation that
the executives receive in the last few years of their careers.
The cutbacks apply to a handful of top executives including
Kenneth Chenault, the company's chief executive. In 2005, Mr.
Chenault received total compensation of about $9 million. The
company hasn't yet disclosed his 2006 pay package.
The move also comes as American Express is cutting costs and
reducing some investment spending amid industrywide expectations
that consumer credit quality will deteriorate this year.
American Express, which issues credit cards and charge cards --
which must be paid in full each month -- and operates its own
card-processing network, said earlier this week that
fourth-quarter operating expenses rose 10% from year-earlier
levels to $6 billion.
An American Express spokesman said that the changes to the
retirement plan aren't related to cost-cutting efforts.
Although the top executives will see a cutback in their
benefits, a company spokesman said that other employees won't
see a reduction of benefits under the new plan. New employees
who join the company after April 1, however, will be subject to
terms of a new, leaner plan.
American Express made the change in its supplemental-pension
formula after consultations with the United Brotherhood of
Carpenters and Joiners of America, which had filed a shareholder
resolution that would have excluded all bonuses from the
The carpenters union pension fund has filed similar proposals at
16 other companies.
--Scott Thurm contributed to
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