AUSWR
The Association of U S West Retirees
 

 

 

Top Executives at American Express Will See Retirement Benefits Shrink
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 formula.

The carpenters union pension fund has filed similar proposals at 16 other companies.

--Scott Thurm contributed to this article.

Write to Robin Sidel at robin.sidel@wsj.com

http://online.wsj.com/article/SB116985871092289650.html?mod=us_business_whats_news