Edgar Filing: AMERICAN EXPRESS CO

Preliminary Proxy Statement

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Definitive Proxy Statement

Definitive Additional Materials

Soliciting Material pursuant to §240.14a-12

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LOGO

proxy statement for

2013 annual meeting

of shareholders

our values

Our Blue Box Values reflect who we are

and what we stand for as a company.

LOGO

Against the backdrop of a slow-growth environment, American Express delivered a strong total shareholder return in 2012 by controlling expenses, improving credit quality and generating higher revenues in all of our major business segments.

LOGO

AMERICAN EXPRESS COMPANY

200 VESEY STREET

NEW YORK, NEW YORK 10285

NOTICE OF

ANNUAL MEETING OF SHAREHOLDERS


Date and Time		Monday, April 29, 2013, at 9:00 a.m.

Place		American Express Company 200 Vesey Street, 26th Floor New York, New York 10285

Items of Business		(1) Election of directors (2) Ratification of appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm for 2013 (3) Advisory resolution to approve executive compensation (4) Shareholder proposal relating to separation of chairman and CEO roles (5) Such other business that may properly come before the Annual Meeting

Record Date		Close of business on March 1, 2013

LOGO

Carol V. Schwartz

Secretary and Corporate Governance Officer

March 8, 2013

TABLE OF CONTENTS


General Information			1
Annual Meeting Information			1
How to View Proxy Materials Online			1
How to Vote			1
Proxy Summary			3
2012 Performance Highlights			3
Executive Compensation Program			3
Meeting Agenda Items			4
Election of Directors			4
Ratification of Appointment of PricewaterhouseCoopers LLP for 2013			5
Advisory Approval of Our Executive Compensation (Say on Pay)			5
Shareholder Proposal			5
Corporate Governance at American Express			6
Our Corporate Governance Framework			6
Corporate Governance Principles and Practices			7
Board Meetings and Board Committees			10
Risk Oversight			12
Report of the Audit, Risk and Compliance Committee			14
Corporate Citizenship at American Express			15
Ownership of Our Common Shares			16
Compensation of Directors			18
Executive Compensation			20
Compensation Discussion and Analysis			20
Report of the Compensation and Benefits Committee			40
Executive Compensation Tables			41
Equity Compensation Plans			55
Item 1—Election of Directors			56
Board Membership Criteria and Diversity			56
Our Director Nominees			57
Item 2—Ratification of Independent Registered Public Accounting Firm			65
Item 3—Advisory Resolution to Approve Executive Compensation (Say on Pay)			67
Item 4—Shareholder Proposal Relating to Separate Chairman and CEO Roles			68
Additional Information			70
Certain Relationships and Transactions			70
Section 16(a) Beneficial Ownership Reporting Compliance			72
Director and Officer Liability Insurance			72
2014 Annual Meeting of Shareholders Information			72
Other Matters			73
Voting Instructions and Information			75
Voting Instructions			75
Voting Information			76
Additional Information Regarding Participants in the Solicitation			A1
Information Regarding Non-GAAP Financial Measures			B1


Location of the Annual Meeting			Inside Back Cover

GENERAL INFORMATION

Annual Meeting Information

We are providing this proxy statement to you in connection with the solicitation of proxies by the board of directors of American Express Company for the 2013 Annual Meeting of Shareholders and for any adjournment or postponement of the meeting. We expect to mail our notice of Internet availability of the proxy materials on or about March 15, 2013 and to begin mailing our proxy materials on March 20, 2013.

We are holding the Annual Meeting at 9:00 a.m. Eastern Time on Monday, April 29, 2013, at our headquarters in New York City, and we invite you to attend in person. Directions are on the inside back cover. If you need special assistance at the meeting because of a disability, you may contact Carol V. Schwartz, our Secretary, by telephone at 212-640-5714, by e-mail at carol.schwartz@aexp.com, or by writing to her at the company’s headquarters at 200 Vesey Street, New York, New York 10285.

We do not require tickets for admission to the meeting but do limit attendance to shareholders on the record date or their proxy holders. Please bring proof of your common share ownership, such as a current brokerage statement, and photo identification. If you hold shares through a bank, broker, or other nominee (also known as shares held in “street name”), you must obtain a valid legal proxy, executed in your favor, from the holder of record if you wish to vote these shares at the meeting. For safety and security purposes, no cameras, camcorders, videotaping equipment, or other recording devices, and no large packages, banners, placards, or signs will be permitted in the meeting. Only shareholders or their valid proxy holders may address the meeting.

We have arranged for a live audio webcast and a replay of the 2013 Annual Meeting of Shareholders to be accessible to the general public at our website at http://ir.americanexpress.com. (Information from this website is not incorporated by reference into this proxy statement.)

How to View Proxy Materials Online

Important Notice Regarding the Availability of Proxy Materials for the Shareholder Meeting To Be Held on April 29, 2013.

Our proxy statement and 2012 annual report to shareholders are available online at http://ir.americanexpress.com.

We will mail to certain shareholders a notice of Internet availability of proxy materials. This notice contains instructions on how to access our proxy statement and 2012 annual report and vote online. We also offer you the option to receive our proxy materials electronically in the future. You may register to do so at our website.

How to Vote

We encourage you to vote as soon as possible, even if you plan to attend the meeting in person. Your vote is important, and for all items other than ratification of our auditor, if you hold shares in street name, your shares will not be voted by your bank or broker if you do not provide voting instructions. You may vote common shares that you owned as of the close of business on March 1, 2013, which is the record date for the meeting.

You may vote in the following ways:


BY TELEPHONE	BY INTERNET	BY MAIL
In the United States or Canada, you can vote your shares by calling 1-800-690-6903.	You can vote your shares online at www.proxyvote.com.	You can vote by mail by marking, dating, and signing your proxy card or voting instruction form and returning it in the accompanying postage-paid envelope.

GENERAL INFORMATION

For telephone and Internet voting, you will need the 12-digit control number included on your notice, on your proxy card, or in the instructions that accompanied your proxy materials.

Telephone and Internet voting are available through 11:59 p.m. Eastern Time on Tuesday, April 23, 2013, for shares held in employee plans, and through 11:59 p.m. Eastern Time on Sunday, April 28, 2013, for all other shares.

Revocation of Proxies

You can revoke your proxy at any time before your shares are voted if you:

Submit a written revocation to our Secretary

Submit a later-dated proxy or voting instruction form

Provide subsequent telephone or Internet voting instructions, or

Vote in person at the meeting

If you sign and return your proxy card or voting instruction form without any voting instructions with respect to a matter, your shares will be voted as our board recommends.

Voting at the Annual Meeting

The way you vote your shares prior to the meeting will not limit your right to change your vote at the meeting if you attend in person and vote by ballot. If you hold shares in street name and you want to vote in person at the meeting, you must obtain a valid legal proxy from the record holder of your shares at the close of business on the record date indicating that you were a beneficial owner of shares, as well as the number of shares of which you were the beneficial owner on the record date, and appointing you as the record holder’s proxy to vote these shares. You should contact your bank, broker, or other nominee to obtain a legal proxy.

Additional information regarding voting procedures and the meeting can be found under Voting Instructions and Information on page 75.

Vote Confirmation

We are again offering our shareholders the opportunity to confirm their vote was cast in accordance with their instructions. Vote confirmation is consistent with our commitment to sound corporate governance standards and an important means to increase transparency. Beginning April 15, 2013 and for up to two months after the annual meeting, you may confirm your vote beginning 24 hours after your vote is received, whether it was cast by proxy card, electronically or telephonically. To obtain vote confirmation, log onto www.proxyvote.com using your control number (included on your notice, on your proxy card, or in the instructions that accompanied your proxy materials) and receive confirmation on how your vote was cast. If you hold your shares through a bank or brokerage account, the ability to confirm your vote may be affected by the rules of your bank or broker and the confirmation will not confirm whether your bank or broker allocated the correct number of shares to you.

PROXY SUMMARY

We provide below highlights of certain information in this proxy statement. As it is only a summary, please review the complete proxy statement and 2012 annual report before you vote.

2012 Performance Highlights

The company’s results for 2012 reflected strong spending growth and credit performance in both the United States and internationally. The rate of growth was, however, slower than in the prior year, reflecting in part the impact of a challenging global economic environment.

We had a record $888 billion in worldwide billed business (spending on American Express^® Cards, including Cards issued by third parties), an increase of 8% (9% on an FX adjusted basis) over last year.

Our total revenues net of interest expense rose 5% (6% on an FX adjusted basis¹) to $31.6 billion.

Our credit performance outpaced the industry, and write-off rates remained near historic lows.

Our total shareholder return for the year was 24%, compared to a 16% gain for the S&P 500 Index.

We executed on our growth strategies by broadening our digital capabilities and introducing innovative products and services, including Bluebird, our next-generation alternative to checking and debit.

The company also reached settlements in 2012 with bank regulators to resolve reviews of certain aspects of our U.S. consumer card practices for compliance with certain consumer protection laws and regulations. Further information on our 2012 performance can be found on page 20.

Executive Compensation Program

Our executive compensation program is designed to reward our leadership team for delivering results and building sustainable shareholder value. We believe our program’s performance measures align the interests of our shareholders and senior executives by tying pay outcomes to our short-, medium-, and long-term performance. Several important features of our executive compensation program are:

Over 85% of the total direct compensation delivered for 2012 to our CEO and other Named Executive Officers was variable and tied to performance.

Our Compensation and Benefits Committee assesses performance using a framework that reviews results relative to our goals and to our competitors, progress against strategic initiatives, and risk/control and compliance goals. This framework is designed to provide a broad and balanced view of performance and discourage imprudent risk-taking.

Our long-term incentive awards included performance-vested restricted stock units whose value is based on achievement of return on equity targets as well as stock performance, stock options, and three-year performance-period portfolio grant awards whose value is based on the achievement of financial and strategic goals and relative stock performance.

We require our executive officers to have significant outright ownership of company shares, and we prohibit hedging of their company shares.

The foreign currency adjusted information, a non-GAAP measure, assumes a constant exchange rate between the periods being compared for purposes of currency translation into U.S. dollars, making it easier to compare performance in one period to another period without the variability caused by fluctuations in currency exchange rates.

PROXY SUMMARY

We made a number of changes to our executive compensation program in recent years to further strengthen the link between pay and performance. For example, we added performance vesting to our annual restricted stock unit grants, added a clawback feature to the cash bonus paid to the CEO, and prospectively eliminated excise tax gross-up in change-in-control situations for all employees.

Our Compensation Discussion and Analysis is on pages 20 to 40, the Report of the Compensation and Benefits Committee is on page 40, and our Summary Compensation Table and the other compensation tables and narrative discussion are on pages 41 to 54.

Meeting Agenda Items

Item 1—Election of Directors

You are being asked to elect 13 directors. Except for Messrs. Leschly and Miller, who have reached the mandatory retirement age of 72, each of our current directors is standing for reelection to hold office until the next annual meeting of shareholders and until his or her successor is duly elected and qualified.

All directors attended over 75% or more of the meetings of the board and board committees on which they served in 2012.

SUMMARY INFORMATION ABOUT OUR DIRECTORS AND DIRECTOR NOMINEES

AGE

DIRECTOR

SINCE

CURRENT OCCUPATION

INDEPENDENT

OTHER

PUBLIC
BOARDS

COMMITTEE
MEMBERSHIPS

ARC

Charlene Barshefsky

2001

Senior International Partner, WilmerHale

Ursula M. Burns

2004

CEO, Xerox Corporation

Kenneth I. Chenault

1997

CEO, American Express Company

Peter Chernin

2006

Founder, Chernin Entertainment Inc.

Anne Lauvergeon

2013

Partner and Managing Director, Efficiency Capital

Theodore J. Leonsis

2010

CEO, Monumental Sports & Entertainment LLC

Jan Leschly*

1997

Founder and Chairman, Care Capital LLC

–

Richard C. Levin

2007

President, Yale University

–

Richard A. McGinn

1998

General Partner, MR Investment Partners

Edward D. Miller*

2003

Former President and CEO, AXA Financial, Inc.

Samuel J. Palmisano

2013

Former Chairman and CEO, IBM

Steven S Reinemund

2007

Dean, Wake Forest Schools of Business

Daniel L. Vasella

2012

Former Chairman and CEO, Novartis AG

Robert D. Walter

2002

Founder and Former Chairman and CEO, Cardinal Health, Inc.

Ronald A. Williams

2007

Former Chairman and CEO, Aetna, Inc.


ARC	Audit, Risk and Compliance Committee	C	Chair
CB	Compensation and Benefits Committee	M	Member
IT	Innovation and Technology Committee
NG	Nominating and Governance Committee
PR	Public Responsibility Committee

*	Messrs. Leschly and Miller have reached the mandatory retirement age of 72 and are not standing for reelection.

PROXY SUMMARY

SUMMARY INFORMATION ABOUT OUR 2012 BOARD AND COMMITTEE MEETINGS


	MEMBERS	INDEPENDENCE	MEETINGS
Full Board (at 12/31/2012)	13	77%	8
Audit, Risk and Compliance	5	100%	15
Compensation and Benefits	5	100%	8
Innovation and Technology	5	80%	4
Nominating and Governance	5	100%	6
Public Responsibility	5	80%	3

REQUIRED VOTE

Except in a contested election, each director nominee is elected annually by a majority of votes cast. As was the case for the 2010, 2011 and 2012 annual meetings, a former employee, Mr. Peter Lindner, has indicated that he intends to present himself as a nominee. Accordingly, the director voting standard will be a plurality of votes cast, as discussed on page 58.

ITEM 1 RECOMMENDATION: Our board recommends a vote FOR the election of the director candidates nominated by the board.

Item 2—Ratification of Appointment of PricewaterhouseCoopers LLP for 2013

PricewaterhouseCoopers LLP (PwC) has been our independent registered public accounting firm since 2005. Our Audit, Risk and Compliance Committee charter requires a comparison of resources available in other audit firms at least every ten years. The most recent review took place in 2004, at which time the committee engaged PwC.

The fees paid to PwC are detailed on page 65. Tax and Other Fees in 2012 were approximately 1% of the total fees paid to PwC in 2012.

One or more representatives of PwC will be present at the meeting, will be given the opportunity to make a statement if they desire to do so, and will be available to respond to appropriate questions.

ITEM 2 RECOMMENDATION: Our board recommends a vote FOR this proposal.

Item 3—Advisory Approval of Our Executive Compensation (Say on Pay)

We are asking shareholders to approve on an advisory basis our Named Executive Officer compensation. We hold this advisory vote on an annual basis. The next such advisory vote will be at the 2014 annual meeting.

ITEM 3 RECOMMENDATION: Our board recommends a vote FOR this proposal.

Item 4—Shareholder Proposal

A proposal relating to separate chairman and chief executive officer (CEO) roles is expected to be presented for vote and is on page 68.

ITEM 4 RECOMMENDATION: Our board recommends a vote AGAINST this proposal.

CORPORATE GOVERNANCE AT AMERICAN EXPRESS

Our Corporate Governance Framework

Our corporate governance framework is designed to support the company’s brand attributes of trust, security, and integrity, and to promote achievement of our financial targets through responsible development and execution of corporate strategy.

Our governance framework enables independent and skilled directors to provide oversight, advice, and counsel to promote the interests of American Express and its shareholders. Key governance policies and processes include our codes of conduct, our comprehensive enterprise-wide risk management program, our commitment to transparent financial reporting, and our systems of internal checks and balances.

Corporate Governance—

Integrity and Trust

At American Express, we seek to achieve strong results for our shareholders. We do this through a commitment to high standards of ethical behavior and integrity, sound governance and risk management practices, a strong ethos of customer service, and a commitment to giving back to the communities in which we work and operate.

You may view our Corporate Governance Principles, the charters of each of our board committees, and the codes of conduct for our employees and directors at http://ir.americanexpress.com. These documents provide the framework for our governance at the board level. Our directors understand that they serve you as shareholders in carrying out their responsibility to oversee the operation and strategic direction of our company. To do so effectively, they periodically review our corporate governance principles and practices to assure that they are appropriate and reflect high standards.

American Express Corporate Governance Framework


Board Independence	Ÿ	10 out of 13 of our director nominees are independent.
	Ÿ	Our CEO is the only member of management who serves as a director.
Board Composition	Ÿ	Directors may not stand for reelection after age 72.
	Ÿ	Directors regularly review board performance, assess gaps in skills or experience on the board, and periodically bring on new directors to add a fresh perspective and assure continuity and adequate succession planning.
Board Committees	Ÿ	We have five board committees—Audit, Risk and Compliance; Compensation and Benefits; Nominating and Governance; Public Responsibility; and Innovation and Technology.
	Ÿ	Our Audit, Risk and Compliance; Compensation and Benefits; and Nominating and Governance Committees are composed entirely of independent directors.
	Ÿ	Chairs of our board committees shape the agenda and information presented to their committees.
Independent Lead Director	Ÿ	Our independent directors annually elect an independent lead director.
Independent Lead Director	Ÿ	Our independent lead director chairs regularly scheduled executive sessions, at which directors can discuss matters without management present, including management performance, succession planning, board information needs, and board effectiveness.
Board Oversight of Risk and Strategy	Ÿ	Risk management is overseen by our Audit, Risk and Compliance Committee. Key risks are reviewed by this committee and reported to the board.
Board Oversight of Risk and Strategy	Ÿ	Our Compensation and Benefits Committee reviews compensation practices so that they do not encourage imprudent risk-taking.
	Ÿ	Our Public Responsibility Committee reviews political contributions activities.
	Ÿ	Our board directly oversees and advises management on development and execution of strategy, including through an in-depth review at an annual two-day strategy off-site.

CORPORATE GOVERNANCE AT AMERICAN EXPRESS


Accountability	Ÿ	All directors are elected annually.
	Ÿ	In uncontested director elections, our directors are elected by a majority of votes cast.
	Ÿ	Each common share is entitled to one vote.
	Ÿ	Special meetings may be called by holders of 25% of our common shares, in accordance with our by-law procedures.
	Ÿ	We have regular outreach and engagement with shareholders, and all shareholders are able to raise concerns to our directors or to our corporate ombudsperson.
Director Stock Ownership	Ÿ	A personal holding of 20,000 shares (including share equivalent units) is recommended for each director, to be acquired within five years of joining the board.
Succession Planning	Ÿ	CEO and management succession planning is one of the board’s highest priorities. Our board devotes significant attention to identifying and developing talented senior leaders.
Open Lines of Communication	Ÿ	Our board promotes open and frank discussions with senior management.
Open Lines of Communication	Ÿ	Our directors have access to all members of management and other employees on a confidential basis and are authorized to hire outside consultants or experts at the company’s expense.

Corporate Governance Principles and Practices

Board Independence

Our governance principles provide that a substantial majority of our directors will meet the criteria for independence required by the New York Stock Exchange (NYSE). A director is considered independent if the board determines that he or she does not have a material relationship with the company. In making its annual independence determinations, the board considers transactions between each director nominee and the company. Our board has established guidelines to assist it in determining director independence. These guidelines can be found within the corporate governance principles on the “Corporate Governance” link at http://ir.americanexpress.com. They cover, among other things, employment and compensatory relationships, relationships with our auditors, customer and business relationships, and contributions to not-for-profit organizations.

Based on our guidelines, on February 21, 2013, the board determined that Messrs. Leschly and Miller together with 10 of the board’s 13 director nominees are independent: Mses. Burns and Lauvergeon, and Messrs. Chernin, Levin, McGinn, Palmisano, Reinemund, Vasella, Walter, and Williams. The other director nominees, Ambassador Barshefsky, Mr. Chenault, and Mr. Leonsis, are not independent under these guidelines.

Our director independence guidelines provide that a material relationship with the company will be deemed to exist if a director is a partner of, or of counsel to, a law firm that performs substantial legal services to the company on a regular basis. Ambassador Barshefsky is a partner of the law firm of WilmerHale, which firm provided legal services to us in 2012 at customary rates. As discussed under Certain Relationships and Transactions on page 71, Mr. Leonsis provided services to the company in 2012 and is not independent.

Board Leadership

CHAIRMAN AND CEO ROLES

Our governance principles provide that ordinarily and in normal circumstances, the chief executive officer will also serve as chairman of our board. Our board believes that our combination of an independent lead director, independent committee chairs, and experienced and committed directors, with Mr. Chenault serving in a unified

CORPORATE GOVERNANCE AT AMERICAN EXPRESS

chairman and chief executive officer role, serves the best interests of American Express at this time. By serving as both chairman and chief executive officer, Mr. Chenault has been able to draw on his knowledge of the daily operations of the company, industry, and competitive developments, and of the company’s relationships with customers, employees, and business partners to provide our board with leadership in setting its agenda and focusing its discussions. Mr. Chenault’s combined role has also ensured that we present our message and strategy to shareholders, employees, and customers with a unified voice, and provides unambiguous accountability.

INDEPENDENT LEAD DIRECTOR

The Nominating and Governance Committee reviews our board’s leadership

structure. In February 2011, at the recommendation of the committee, the board

established the position of independent lead director, replacing our past practice

of rotating presiding directors. This position was put in place to supplement the

leadership that had historically been provided by each of our board committee

chairs and the presiding directors. The committee believes that providing a clearly

defined and significant independent lead director role, combined with having

active, independent-minded, skilled, and committed directors, provides a

framework for effective board oversight.

Our lead director, currently Mr. Robert D. Walter, is an independent director. He

was reelected lead director in February 2013 by the independent directors upon

the recommendation of the Nominating and Governance Committee.

EXECUTIVE SESSIONS

Executive sessions enable the board to discuss matters without management

present, including strategy, management performance, succession planning, and

board effectiveness. Our non-management directors generally meet in executive

session at each regularly scheduled board meeting, including at least one

executive session of independent directors only. Any director may request

additional executive sessions of non-management or independent directors.

Additional meetings of the independent directors may also be called at any time

by the lead director. During 2012, our board held seven executive sessions of non-

management directors, one of which included independent directors only.

Duties and Powers of Our Independent Lead Director:

• Preside at all meetings of the board at which the chairman is not present, including the executive sessions of the independent directors, and apprise the chairman of the issues considered and decisions reached.

• Call additional meetings of independent directors.

• Facilitate communication and serve as a liaison between the chairman and the independent directors.

• Advise the chairman of the board’s informational needs and review and approve the types of information sent to the board and board meeting agendas.

• Review and approve the schedule of board meetings to assure that there is sufficient time for discussion of all agenda items.

• If requested by major shareholders, be available as appropriate for consultation and direct communication.

• Perform such other duties as the independent directors may from time to time designate.

Accountability

MAJORITY VOTING FOR DIRECTORS

Our by-laws provide that directors will be elected by a majority of “for” votes cast in a non-contested election (where the number of nominees is the same as the number of directors to be elected). If a director receives a greater number of votes “against” than votes “for” his or her election, the director is required to immediately submit his or her resignation to the board. Our board of directors, excluding such individual, will decide whether or not to accept such resignation and will promptly disclose and explain its decision in a Form 8-K filed with the Securities and Exchange Commission (SEC) within 90 days after the results of the election are certified.

In a contested election, the director nominees who receive the plurality of votes cast are elected as directors. Under the plurality standard, the number of persons equal to the number of vacancies to be filled who receive more votes than other nominees are elected to the board, regardless of whether they receive a majority of votes cast. An election is considered contested under our certificate of incorporation if there are more nominees than positions on the board to be filled at the meeting of shareholders as of the 14th day prior to the date on which we file our definitive proxy statement with the SEC.

CORPORATE GOVERNANCE AT AMERICAN EXPRESS

For the election of directors at the 2013 annual meeting, because Mr. Peter Lindner has indicated that he intends to present himself as a nominee, there will be more nominees than the number of directors to be elected, and therefore, plurality voting will govern, as described on page 58.

CALLING OF SPECIAL SHAREHOLDER MEETINGS

Our by-laws allow holders of 25% or more of our common shares to call a special meeting of shareholders in accordance with specified procedures. Our board adopted this by-law amendment in 2011 in response to input from our shareholders.

Management Succession Planning

One of our board’s primary responsibilities is to ensure that we have the appropriate management talent to successfully pursue our strategies. Oversight of the management succession process is the responsibility of the Nominating and Governance Committee. Our board believes that the directors and the CEO should collaborate on succession planning and that the entire board should be involved in the critical aspects of the CEO succession planning process, including establishing selection criteria that reflect our business strategies, identifying and evaluating potential internal candidates, and making key management succession decisions.

Management succession is regularly discussed by the directors in board meetings and in executive sessions of the board. Our board annually conducts a detailed review of the company’s talent strategies, leadership pipeline, and succession plans for key executive positions. Directors become familiar with potential successors for key management positions through various means, including the comprehensive annual talent review, informal meetings, board dinners, and presentations to the board.

Open Lines of Communication

COMMUNICATING WITH DIRECTORS

You may communicate with our board or an individual director by letter, e-mail, or telephone, directed in care of the company’s Secretary, who will forward your communication to the intended recipients. If you wish to communicate a concern about our financial statements, accounting practices, or internal controls, the concern should be directed to the chair of the Audit, Risk and Compliance Committee. If the concern relates to the company’s governance practices, business ethics, or corporate conduct, the concern should be directed to the chair of the Nominating and Governance Committee. Matters relating to executive compensation may be directed to the chair of the Compensation and Benefits Committee. If you are unsure of the category your concern relates to, you may communicate it to any one of the independent directors or to the lead director. The contact information for the company’s Secretary is on page 1.

Our “whistleblower” policy prohibits American Express or any of its employees from retaliating or taking any adverse action against anyone for raising a concern in good faith. If you nonetheless prefer to raise a shareholder concern to our board in a confidential or anonymous manner, the concern may be directed to the Office of the Ombudspersons at the company’s headquarters or by telephone to 1-800-297-1010. An ombudsperson will refer the concern to the chair of the Audit, Risk and Compliance Committee, who will see that the matter is properly investigated.

DIRECTOR ACCESS

All of our directors have access to individual members of management and to other employees on a confidential basis. Directors are authorized to conduct independent investigations and to hire outside consultants or experts at the company’s expense. Directors also have access to company records and files, and directors may contact other directors without informing management of the purpose or even the fact of such contact.

CORPORATE GOVERNANCE AT AMERICAN EXPRESS

Board Meetings and Board Committees

Director Attendance

ATTENDANCE AT BOARD MEETINGS

During 2012, our board met eight times. All directors attended 75% or more of the meetings of the board and board committees on which they served in 2012.

ATTENDANCE AT ANNUAL MEETINGS

In 2012, all of our directors other than Messrs. Reinemund and Williams were present at the Annual Meeting of Shareholders. Our board encourages all its members to attend the annual meetings but understands there may be situations that prevent such attendance.

Board Committee Membership

The following table lists our five board committees, the chairs of each committee, the directors who currently serve on them, and the number of Committee meetings held in 2012. Ms. Lauvergeon and Mr. Palmisano joined the board in March 2013, and so their committee appointments have not yet been made.

Membership on Board Committees


NAME	AUDIT, RISK AND COMPLIANCE	COMPENSATION AND BENEFITS	INNOVATION AND TECHNOLOGY	NOMINATING AND GOVERNANCE	PUBLIC RESPONSIBILITY
Amb. Barshefsky					C
Ms. Burns	—
Mr. Chenault
Mr. Chernin		—	—	—	—
Ms. Lauvergeon
Mr. Leonsis			C
Mr. Leschly		C			—
Mr. Levin	—				—
Mr. McGinn		—	—	—
Mr. Miller		—	—	—
Mr. Palmisano
Mr. Reinemund	—			—	—
Dr. Vasella	—
Mr. Walter		—	—	C
Mr. Williams	C
2012 Meetings	15	8	4	6	3

C = Chair

— = Member

Board Committee Responsibilities

AUDIT, RISK AND COMPLIANCE COMMITTEE

All members of the Audit, Risk and Compliance Committee are independent directors as required by the listing standards of the NYSE and our governance principles. Our board has also determined that the Chairman of the Audit, Risk and Compliance Committee meets the requirements for being an “audit committee financial expert” as defined by SEC rules.

CORPORATE GOVERNANCE AT AMERICAN EXPRESS

RESPONSIBILITIES: Assist the board in its oversight of the company’s financial statements and financial reporting processes, internal and external auditing, the integrity of the company’s systems of internal accounting and financial controls, financial policies and strategies, capital structure, and risk management and compliance programs and policies. The Audit, Risk and Compliance Committee meets regularly in executive session with management, including with our Chief Risk Officer with regard to the company’s risk management processes, controls, and capabilities; with our General Auditor with regard to significant operational matters, internal controls, and other control matters; with our General Counsel and Chief Compliance Officer with respect to significant legal, compliance, and regulatory matters; and also with the company’s independent registered public accounting firm.

The duties of the Audit, Risk and Compliance Committee with respect to oversight of the company’s financial reporting process are described in the Report of the Audit, Risk and Compliance Committee on page 14 under Report of the Audit, Risk and Compliance Committee.

COMPENSATION AND BENEFITS COMMITTEE

All members of the Compensation and Benefits Committee are independent directors as required by the listing standards of the NYSE and our governance principles.

RESPONSIBILITIES: Oversight responsibility for the compensation of executive officers and designated key employees of the company, including the applicable compensation plans and arrangements, as well as the company’s employee benefit plans. As part of this oversight responsibility, among other duties, the committee is responsible for approving an overall compensation philosophy and strategy for the company and its executive officers, including the selection of performance measures aligned with the company’s business strategy, and for reviewing the company’s compensation practices so that they do not encourage imprudent risk taking.

The processes and procedures by which the Compensation and Benefits Committee considers and determines Named Executive Officer compensation are described in the Compensation Discussion and Analysis included in this proxy statement. The Compensation and Benefits Committee may delegate certain of its responsibilities to one or more Compensation and Benefits Committee members or to designated senior executives or committees in accordance with applicable laws, regulations, and plan requirements.

Compensation and Benefits Committee Interlocks and Insider Participation

The current members of the Compensation and Benefits Committee are Messrs. Chernin, Leschly, McGinn, Miller, and Walter. None of the current members is a former or current officer or employee of the company or any of its subsidiaries. None of the current members has any relationship required to be disclosed under this caption under the rules of the SEC.

INNOVATION AND TECHNOLOGY COMMITTEE

The Innovation and Technology Committee was established by the board in July 2010 to assist the board in its oversight of strategic innovation and technology.

RESPONSIBILITIES: Reviews and makes recommendations to the board on major strategies and plans developed by management relating to technological and commercial innovation, the innovation and technology acquisition process to assure ongoing business growth, and the measurement and tracking systems in place to achieve successful innovation.

NOMINATING AND GOVERNANCE COMMITTEE

All members of the Nominating and Governance Committee are independent directors as required by the listing standards of the NYSE and our governance principles.

RESPONSIBILITIES: Considers and recommends candidates for election to the board, advises the board on director compensation, oversees the annual performance evaluations of the board and board committees, advises the board on corporate governance and board leadership, administers the company’s Related Person Transaction Policy, and oversees the company’s management succession process.

CORPORATE GOVERNANCE AT AMERICAN EXPRESS

PUBLIC RESPONSIBILITY COMMITTEE

The board established the Public Responsibility Committee in recognition of the importance of issues that affect the communities in which we work, or the public interest in general.

RESPONSIBILITIES: Reviews legislation and regulation affecting American Express, our philanthropic programs, our political action committee and corporate political contributions, our government relations activities, other policies affecting the communities in which we operate, and our environmental programs.

Political Contributions Activities

We communicate with policymakers on public policy issues important to the company. In addition to our advocacy efforts, we participate in the political process through the American Express Political Action Committee (AXP PAC). The AXP PAC does not contribute to presidential campaigns.

We maintain comprehensive compliance procedures to ensure that our activities are conducted in accordance with all relevant laws, and management regularly reports to the Public Responsibility Committee regarding its engagement in the public policy arena and its political contributions. Information regarding our company’s political activities, including annual U.S. political contributions, may be found at http://about.americanexpress.com/news/pap.aspx.

Risk Oversight

Board’s Role in Risk Oversight

The company uses its comprehensive enterprise-wide risk management (ERM) program to measure, aggregate, monitor, and manage risks. The ERM program is designed to enable the board of directors and company management to assess the effectiveness of risk management capabilities, processes and controls. It also contributes to the risk-adjusted performance evaluation of its businesses and business leaders. The implementation and execution of the ERM program is headed by the company’s Chief Risk Officer.

Risk management and key risks identified by management are overseen by the company’s board of directors and two of its committees: the Audit, Risk and Compliance Committee and the Compensation and Benefits Committee. Both committees consist entirely of independent directors and provide regular reports to the board of directors regarding matters reviewed at the committee level. In addition to the risks under the purview of a particular committee, the board of directors monitors the “tone at the top” and culture of the company, oversees strategic risk, and reviews specific and significant risks facing the company from time to time.

The Audit, Risk and Compliance Committee approves key risk management policies, and monitors the company’s risk culture, talent, capabilities and risk outcomes. The Audit, Risk and Compliance Committee approves the company’s ERM policy along with its sub-policies governing individual credit risk, institutional credit risk, market risk, liquidity risk, operational risk, compliance risk, asset/liability risk and capital management, as well as the launch of new products and services. In addition, the Audit, Risk and Compliance Committee approves the company’s compliance risk tolerance statement, which reinforces the importance of compliance risk management at the company.

The Audit, Risk and Compliance Committee receives regular reports discussing the key risks affecting the company, including their likelihood and potential impact, key risk escalations and compliance with policy-based risk limits. The Audit, Risk and Compliance Committee regularly reviews the credit risk profiles of the company’s business units, including their risk trends and risk management capabilities. It also reviews enterprise-wide operational risk trends, events and capabilities, with an emphasis on compliance, fraud, legal, information security and privacy impacts, as well as trends in market, funding, liquidity and reputational risk. In addition, the Audit, Risk and Compliance Committee reviews the effectiveness of the company’s Corporate-wide Compliance Risk Management Program. The Audit, Risk and Compliance Committee meets regularly in private sessions with the company’s Chief Risk Officer, the Chief Compliance Officer, and other senior management with regard to the company’s risk management processes, controls and capabilities.

CORPORATE GOVERNANCE AT AMERICAN EXPRESS

There are several internal management committees, including the Enterprise-wide Risk Management Committee (ERMC), chaired by the company’s Chief Risk Officer, and the Asset-Liability Committee (ALCO), chaired by the company’s Chief Financial Officer, which support the Audit, Risk and Compliance Committee in overseeing risks and implementation of risk policies across the company. The ERMC is responsible for credit, operational, compliance, and reputational risks, while the ALCO is responsible for market, liquidity, asset/liability risk, and the company’s capital position. In 2012, the ERMC created a dedicated compliance sub-committee, chaired by the company’s Chief Compliance Officer.

The company’s ERM policy defines risk management roles and responsibilities. The policy sets the company’s risk appetite and defines governance over risk taking and the risk monitoring processes across the company. Risk appetite defines the overall risk levels the company is willing to accept while operating in full compliance with regulatory and legal requirements. In addition, it establishes principles for risk taking in the aggregate and for each risk type, and is supported by a comprehensive system of risk limits, escalation triggers and controls designed to ensure that the risks remain within the defined risk appetite boundaries.

The Compensation and Benefits Committee works with the Chief Risk Officer to ensure the compensation programs covering risk-taking employees, business units, and the company overall appropriately balance risk with incentives to ensure that business performance is achieved without taking imprudent or uneconomic risks. The company‘s Chief Risk Officer is actively involved in the goal-setting process, reviews the current and forward-looking risk profiles of each business unit, and provides input into performance evaluation. The Chief Risk Officer attests to the Compensation and Benefits Committee that performance goals and actual results have been achieved without taking imprudent risks. The Compensation and Benefits Committee uses a risk-balanced incentive compensation framework to decide on the company’s bonus pools and the compensation of senior executives.

CORPORATE GOVERNANCE AT AMERICAN EXPRESS

Report of the Audit, Risk and Compliance Committee

A role of the Audit, Risk and Compliance Committee is to assist the board in its oversight of the company’s financial reporting process. Management has the primary responsibility for the financial statements and the reporting process, including the system of internal controls. The company’s independent auditors are responsible for auditing the company’s financial statements and expressing an opinion as to their conformity to accounting principles generally accepted in the United States.

In the performance of its oversight function, the Audit, Risk and Compliance Committee has reviewed and discussed with management and the independent auditors the company’s audited financial statements. The Audit, Risk and Compliance Committee also has discussed with the independent auditors the matters required to be discussed by Auditing Standard No. 16, as adopted by the Public Company Accounting Oversight Board, relating to communication with audit committees. In addition, the Audit, Risk and Compliance Committee has received from the independent auditors the written disclosures and letter required by applicable requirements of the Public Company Accounting Oversight Board regarding the independent auditor’s communications with the audit committee concerning independence, has discussed with the independent auditors their independence from the company and its management, and has considered whether the independent auditors’ provision of non-audit services to the company is compatible with maintaining the auditors’ independence.

The Audit, Risk and Compliance Committee discussed with the company’s internal auditors and independent auditors the overall scope and plans for their respective audits. The internal auditors are responsible for preparing an annual audit plan and conducting internal audits under the control of the company’s General Auditor, who is accountable to the Audit, Risk and Compliance Committee. The Audit, Risk and Compliance Committee met with the internal auditors and independent auditors, with and without management present, to discuss the results of their examinations, their evaluations of the company’s internal controls, and the overall quality of the company’s financial reporting. In addition, the Audit, Risk and Compliance Committee met with the Chief Executive Officer and Chief Financial Officer of the company to discuss the processes that they have undertaken to evaluate the accuracy and fair presentation of the company’s financial statements and the effectiveness of the company’s systems of disclosure controls and procedures and internal control over financial reporting.

Based on the reviews and discussions referred to above, the Audit, Risk and Compliance Committee recommended to the board of directors, and the board has approved, that the company’s audited financial statements be included in the company’s 2012 Annual Report to Shareholders and Annual Report on Form 10-K for the year ended December 31, 2012 for filing with the SEC.

AUDIT, RISK AND COMPLIANCE COMMITTEE

Ronald A. Williams, Chairman

Ursula M. Burns

Richard C. Levin

Steven S Reinemund

Daniel L. Vasella

CORPORATE GOVERNANCE AT AMERICAN EXPRESS

Corporate Citizenship at American Express

Community

LOGO

Protecting the Environment

Giving back to the community is central to our culture. We have a rich legacy of contributing to our communities. Our first employee giving campaign dates back to 1885, when our employees raised funds to construct the pedestal for the newly arrived Statue of Liberty. We believe that serving our communities is not only integral to running a business successfully; it is part of our responsibility as citizens of the world. We strive to bring to life the American Express value of good corporate citizenship by supporting communities in ways that enhance our reputation with employees, customers, business partners, and other stakeholders. Today, we focus on three core community efforts:

Preserving and sustaining unique historic places for the future

Developing new leaders for tomorrow

Encouraging community service where our employees and customers live and work

We realize the importance of preserving cultural assets around the world and, over the years, American Express has contributed more than $50 million to historic preservation-related projects. This support has helped preserve nearly 500 iconic sites including Sir Ernest Shackleton’s Exhibition Hut, Antarctica; the Palace of Fine Arts, Mexico City; the Temple of Hercules, Rome; and Dalhousie Square, Calcutta.

Recognizing the difference that effective leadership can make, we also support programs that help nonprofit groups develop talent within their

organizations so they are better prepared to tackle the important issues of today– and tomorrow. Over 10,000 emerging nonprofit leaders worldwide have received professional development training through these programs in the past six years.

We also have a long history of helping people in times of trouble. American Express and its employees have provided humanitarian relief to victims of numerous disasters—including wildfires, floods, earthquakes, tsunamis, and other natural and man-made disasters. In the last decade, American Express has provided assistance for over 50 disasters in 35 countries, including Japan, Haiti, and the Horn of Africa.

Environment

We recognize the importance of protecting the environment and helping to combat climate change. At American Express, we have established programs to increase the efficient use of energy and natural resources and for measuring, managing, and reducing the environmental impact of our global operations. Major goals and programs include:

Reducing our carbon footprint

Improving the energy efficiency of our office equipment, building equipment, and lighting systems

Increasing the use of renewable energy such as wind, biogas, biomass, and solar to generate electricity

Reducing paper usage by digitizing internal processes and increasing digital marketing and online account servicing for customers

Engaging employees to participate in our environmental responsibility programs

Learn More About Corporate Responsibility at American Express. You may visit our corporate website at http://about.americanexpress.com/csr to learn how we, together with our cardmembers and stakeholders, are making a difference. (Information from this website is not incorporated by reference into this proxy statement.)

OWNERSHIP OF OUR COMMON SHARES

The table below shows how many American Express Company common shares certain individuals and entities beneficially owned on February 15, 2013. These individuals and entities include: (1) owners of more than 5% of our outstanding common shares; (2) our current directors; (3) the executive officers named in the Summary Compensation Table on page 41; and (4) all current directors and executive officers as a group. A person has beneficial ownership of shares if the person has voting or investment power over the shares or the right to acquire such power within 60 days. Investment power means the power to direct the sale or other disposition of the shares. Each person has sole voting and investment power over the shares, except as we describe below. This table does not include restricted stock units granted to executive officers or stock equivalent units owned by directors, since they are not beneficially owned under SEC rules.


NAME	NUMBER OF SHARES OWNED(3)(4)(5)			RIGHT TO ACQUIRE(6)		PERCENT OF CLASS(%)
Warren Buffett Berkshire Hathaway Inc. and subsidiaries 1440 Kiewit Plaza Omaha, NE 68131		151,610,700	(1)		—		13.72	%
Capital World Investors 333 South Hope Street Los Angeles, CA 90071		66,253,860	(2)		—		6.0	%
Charlene Barshefsky		20,134			—		*
Ursula M. Burns		20,000			—		*
Kenneth I. Chenault⁽⁷⁾		914,641			3,904,529		*
Peter Chernin		24,400			—		*
Edward P. Gilligan		180,528			1,499,241		*
Daniel T. Henry		102,018			516,619		*
Anne Lauvergeon		—			—		*
Theodore J. Leonsis		20,000			—		*
Jan Leschly		155,559			—		*
Richard C. Levin		2,000			—		*
Richard A. McGinn		18,412			—		*
Edward D. Miller		20,000			—		*
Samuel J. Palmisano		550			—		*
Steven S Reinemund		20,208			—		*
Daniel H. Schulman		18,857			92,677		*
Stephen J. Squeri		117,470			970,520		*
Daniel L. Vasella		—			—		*
Robert D. Walter		230,300			—		*
Ronald A. Williams		27,500			—		*
All current directors and executive officers (30 individuals)⁽⁸⁾		2,512,429			11,475,121		1.27	%

*Less than 1%.

(1)

Based on information contained in a report on Form 13F that Berkshire Hathaway Inc. (Berkshire) filed with the SEC, which contained information as of December 31, 2012. Of the shares listed in the table, National Indemnity Co. beneficially owned 120,255,879 shares. National Indemnity Co. is a subsidiary of Berkshire. Mr. Buffett, Berkshire, and certain subsidiaries of Berkshire share voting and investment power over these shares. Based on information provided to the company, Mr. Buffett owned 34.5% of the aggregate voting power of the outstanding shares of Berkshire’s Class A Common Stock and Class B Common Stock. As a result of this ownership position in Berkshire, Mr. Buffett may be considered the beneficial owner of the shares that Berkshire beneficially owns.

In 1995, we signed an agreement with Berkshire designed to ensure that Berkshire’s investment in our company will be passive. The agreement remains in effect as long as Berkshire owns 10% or more of our voting securities. Berkshire made similar commitments to the Board of Governors of the Federal Reserve System. Berkshire and its subsidiaries have also agreed to follow our board’s recommendations in voting company common shares they own as long as Mr. Chenault is our chief executive officer and Berkshire owns 5% or more of our voting securities. With certain exceptions, Berkshire and its subsidiaries may not sell company common shares to any person who owns more than 5% of our voting securities or who attempts to change the control of the company.

OWNERSHIP OF OUR COMMON SHARES

(2)

Based on information contained in a report on Schedule 13G that Capital World Investors filed with the SEC, which contained information as of December 31, 2012.

(3)

This column includes shares held in RSP accounts on February 15, 2013, as follows:


NAME		NUMBER OF SHARES IN PLAN ACCOUNTS
K.I. Chenault		23,387
E.P. Gilligan		1,634
D.T. Henry		20
D.H. Schulman		0
S.J. Squeri		111
All current executive officers		48,761

(4)

Certain executive officers held restricted shares on February 15, 2013, which we include in this column. Restricted stock units are not included in this table, since they are not beneficially owned under SEC rules. The executive may vote the restricted shares, but may not sell or transfer them during the restricted period. These restrictions lapse over a period of years ending in 2016. The individuals in the table held the following number of restricted shares.


NAME		NUMBER OF RESTRICTED SHARES
K.I. Chenault		0
E.P. Gilligan		38,757
D.T. Henry		0
D.H. Schulman		15,676
S.J. Squeri		3,281
All current executive officers		61,242

(5)

Does not include directors’ stock equivalent units, which are counted towards satisfying the director stock ownership guideline discussed on page 7. As discussed under Compensation of Directors on page 19, the balance in directors’ SEU accounts at December 31, 2012 were: Ambassador Barshefsky 45,654; Ms. Burns 48,862; Mr. Chernin 23,835; Mr. Leonsis 7,463; Mr. Leschly 30,886; Mr. Levin 20,043; Mr. McGinn 30,886; Mr. Miller 49,098; Mr. Reinemund 20,043; Dr. Vasella 854; Mr. Walter 39,251; and Mr. Williams 35,794.

(6)

These are shares that the named individuals have the right to acquire within 60 days upon the exercise of stock options they hold.

(7)

Includes 126,690 shares held in family trusts in respect of which Mr. Chenault shares voting and investment power with a directed trustee. Includes 145,792 shares that are beneficially owned by Mr. Chenault and serve as security for a credit facility that he may draw on from time to time. The outstanding balance on that facility is zero. The remaining shares that Mr. Chenault beneficially owns, including shares necessary to meet his stock ownership and holding requirements, are not part of this facility.

(8)

On February 15, 2013, the current directors and executive officers beneficially owned 13,987,550 shares, or about 1.27% of our outstanding shares. No current director or executive officer beneficially owned more than 1% of our outstanding shares.

COMPENSATION OF DIRECTORS

The Nominating and Governance Committee reviews director compensation approximately every two years and last increased director compensation in January 2010. In 2012, the committee engaged an independent compensation advisory firm, Frederic W. Cook & Co., Inc. (Cook), to assist the committee in its review of the competitiveness and structure of the company’s director compensation. The committee recommended an increase in director compensation, effective January 1, 2013, described below. The committee did not change the form of director compensation.

The following table provides information on the compensation of non-management directors who served for all or a part of 2012. We also reimburse directors for reasonable out-of-pocket expenses attendant to their board service.


NAME	FEES EARNED OR PAID IN CASH ($)(1)		STOCK AWARDS ($)(2)		OPTION AWARDS ($)(3)		CHANGE IN PENSION VALUE AND NONQUALIFIED DEFERRED COMPENSATION EARNINGS ($)(4)		ALL OTHER COMPENSATION ($)(5)			TOTAL ($)
Mr. Akerson	$	55,000	$	0	$	0	$	166,740	$	5,035		$	226,775
Amb. Barshefsky	$	100,000	$	150,000	$	0	$	0	$	34,371		$	284,371
Ms. Burns	$	110,000	$	150,000	$	0	$	0	$	35,937		$	295,937
Mr. Chernin	$	100,000	$	150,000	$	0	$	0	$	17,499		$	267,499
Mr. Leonsis	$	90,000	$	150,000	$	0	$	0	$	552,852	(6)	$	792,852
Mr. Leschly	$	115,000	$	150,000	$	0	$	0	$	22,952		$	287,952
Mr. Levin	$	110,000	$	150,000	$	0	$	0	$	14,567		$	274,567
Mr. McGinn	$	100,000	$	150,000	$	0	$	0	$	22,952		$	272,952
Mr. Miller	$	100,000	$	150,000	$	0	$	0	$	86,094	(7)	$	336,094
Mr. Reinemund	$	110,000	$	150,000	$	0	$	0	$	14,567		$	274,567
Dr. Vasella	$	55,000	$	0	$	0	$	0	$	107		$	55,107
Mr. Walter	$	110,000	$	150,000	$	0	$	0	$	45,870		$	305,870
Mr. Williams	$	130,000	$	150,000	$	0	$	0	$	25,665		$	305,665

(1)

Annual Retainers. For service in 2012, we paid non-management directors an annual retainer of $90,000 for board service and an additional annual retainer of $20,000 to members of the Audit, Risk and Compliance Committee and $10,000 to members of the Compensation and Benefits Committee, including the chairs. We also paid an annual retainer to the chair of each of the board committees as follows: Audit, Risk and Compliance $20,000; Compensation and Benefits $15,000; Nominating and Governance $10,000; and Public Responsibility $10,000. We pay no fees for attending meetings, but the annual retainer for board service of $90,000 is reduced by $20,000 if a director does not attend at least 75% of our board meetings and meetings of any committee on which he or she serves. All the non-management directors, except for Messrs. McGinn and Reinemund, deferred all or a portion of their 2012 retainers into a cash account, a share equivalent unit account, or both, under the deferred compensation plan described below in note 2. For service in 2013: the annual retainer to the chair of the Compensation and Benefits committee will be $20,000; the annual retainer to the chair of the Innovation and Technology Committee will be $10,000; members (including the chairs) of the Innovation and Technology, Nominating and Governance, and Public Responsibility Committees will receive an annual retainer of $5,000; and the lead director will receive an annual retainer of $20,000 (provided that if the lead director is also the chair of the Nominating and Governance Committee, the lead director will not receive the annual retainer for service as chair of that committee).

Mr. Akerson retired from board service in April 2012. Included in this column is the portion of the annual retainer for board and board committee service he received in 2012.

(2)

Share Equivalent Unit Plan. To align our non-management directors’ annual compensation with shareholder interests, each non-management director is credited with common share equivalent units (SEUs) having a value of $150,000 upon election or reelection at each annual meeting of shareholders. Each SEU reflects the value of one common share. Directors receive additional SEUs as dividend equivalents on the units in their accounts. SEUs do not carry voting rights and must be held at least until a director ends his or her service. Each SEU is payable in cash equal to the then value of one common share at the time of distribution to the director. For service in 2013, non-management directors will be granted SEUs having a value of $155,000.

On April 30, 2012, the date of last year’s annual meeting, each non-management director was credited with 2,594 SEUs, based on the average of the average market price of company common shares for the 15 trading days immediately preceding such date. We report in this column the aggregate grant date fair value of these SEUs in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718, Compensation – Stock Compensation. Because he had retired from the board, Mr. Akerson did not receive a SEU award in 2012. Dr. Vasella joined the board in July 2012 and therefore did not receive a SEU award in 2012, however he was credited with SEUs in connection with his deferral of certain retainer amounts into the SEU option under our deferred compensation plan for directors.

COMPENSATION OF DIRECTORS

As of December 31, 2012, the SEU balance in each director’s account was: Mr. Akerson 0; Ambassador Barshefsky 45,654; Ms. Burns 48,862; Mr. Chernin 23,835; Mr. Leonsis 7,463; Mr. Leschly 30,886; Mr. Levin 20,043; Mr. McGinn 30,886; Mr. Miller 49,098; Mr. Reinemund 20,043; Dr. Vasella 854; Mr. Walter 39,251; and Mr. Williams 35,794. These amounts represent the aggregate number of SEUs granted under the Share Equivalent Unit Plan for all years of service as a director, additional units credited as a result of the reinvestment of dividend equivalents, and, for directors who participated in the SEU option under our deferred compensation plan for directors, retainer amounts deferred into their SEU account and dividend equivalents thereon.

Deferred Compensation Plan for Directors. Non-management directors may defer the receipt of up to 100% of their annual cash retainer fees into either: (i) a cash account in which amounts deferred will be credited at the rate of 120% of the applicable federal long-term rate for December of the prior year, and/or (ii) their SEU account. Under either alternative, directors will receive cash payments and will not receive shares upon payout of their deferrals.

(3)

Option Awards. We have not granted stock options to directors since April 2002. In April 2002 and in prior years, we made stock option grants to each non-management director on the date of the annual shareholders’ meeting.

(4)

Retirement Benefits. We offer no retirement benefits to non-management directors who began their board service after March 31, 1996. We pay a retirement benefit to non-management directors who began their board service on or before March 31, 1996, have served on our board for at least five years, and have never been an employee. The retirement benefit consists of a payment of $30,000 per year for each year a director served on the board. Payments cease after a director’s death. Mr. Akerson is eligible to receive this retirement benefit. Included in this column is the amount of $166,740, which represents the change in actuarial present value from 2011 to 2012 of the accumulated benefit for Mr. Akerson. This amount is the difference between the present value of accumulated benefits at December 31, 2012 and at December 31, 2011 and reflects that Mr. Akerson commenced receiving payments in 2012 after his retirement from the board.

(5)

Insurance. We provide our non-management directors with group term life insurance coverage of $50,000. The group life insurance policy is provided to the directors on a basis generally available to all company employees. This column includes the premium paid for such coverage.

Dividend Equivalents. Dividend equivalents are reinvested in additional units for all directors based upon total SEUs held at the time of company quarterly dividend payment dates. This column includes the fair market value of the dividend equivalents received by the directors during 2012 in these amounts: Mr. Akerson $5,019; Ambassador Barshefsky $34,323; Ms. Burns $35,888; Mr. Chernin $17,450; Mr. Leonsis $4,416; Mr. Leschly $22,903; Mr. Levin $14,518; Mr. McGinn $22,903; Mr. Miller $36,154; Mr. Reinemund $14,518; Dr. Vasella $85; Mr. Walter $29,371; and Mr. Williams $25,617.

Directors’ Charitable Award Program. We maintain a Directors’ Charitable Award Program for directors elected prior to July 1, 2004. To fund this program, we purchased joint life insurance on the lives of participating directors, including Mr. Chenault. The death benefit of $500,000 funds a donation to a charitable organization that the director recommends. In 2012, the company paid premiums for policies as follows: Mr. Walter, $16,450.

Matching Gift Program. Directors are eligible to participate in the company’s Matching Gift Program on the same basis as company employees. Under this program, the American Express Foundation matches gifts to approved charitable organizations up to $8,000 per calendar year.

(6)

Consulting Agreement. As described on page 71, in July 2010 the board elected Mr. Leonsis to our board and at the same time asked him to devote significant time beyond that spent as a director to advise the company in the areas of digital, online, and mobile payments; strategic initiatives; technology development; and potential transactions. Mr. Leonsis provided these services to us under a consulting services agreement that expired in July 2012. Amounts in this column include consulting fees in the amount of $548,387 earned by Mr. Leonsis in 2012.

(7)

Subsidiary Bank Director Compensation. Mr. Miller was elected to the board of directors of the company’s subsidiary, American Express Centurion Bank (Centurion), on August 1, 2012. Mr. Miller received an aggregate of $49,891 for service in 2012 as a director and chairman of the Audit and Risk Committee of Centurion.

EXECUTIVE COMPENSATION

COMPENSATION DISCUSSION AND ANALYSIS

EXECUTIVE SUMMARY

Our executive compensation program remained generally unchanged from the prior year and is designed to reward our leadership team for delivering results and building sustainable value for shareholders. We believe our program’s performance measures align the interests of our shareholders and senior executives by tying pay outcomes to our short-, medium-, and long-term performance.

2012 Performance

We continued to grow our franchise through partnerships, innovative products and award winning service, passing the 100 million mark for cards-in-force. We saw cardmember spending reach a record high of $888 billion, achieved a new low for write-offs, and added approximately 2.5 million new customers in our Enterprise Growth Group through our digital and pre-paid products and services. In addition, by outgrowing most of our major competitors, we continued to gain share of card purchase volume in the United States during 2012.

On-Average, Over-Time Financial Targets

Fundamental to the way we measure medium- to long-term success is our progress compared to our publicly stated “on-average, over-time” financial targets:

• Revenue growth: at least 8%

• EPS growth: 12–15%

• ROE: 25% or more

Despite continued weak economic conditions we grew revenues by 6% on an FX adjusted basis. ² Our earnings per share (EPS) was impacted by three items in the fourth quarter– a restructuring reserve, an enhancement to our process to estimate future redemptions under our U.S. Membership Rewards program and a charge for cardmember reimbursements. For 2012, EPS was $3.89 and ROE was 23.1%. Excluding these three items, our adjusted 2012 EPS was $4.40 against last year’s EPS of $4.09, and our adjusted ROE was 26.1%.³ To illustrate how our performance this year compared to the prior year, EPS and ROE below are shown excluding these charges.

2012 Results

² See footnote 1 on page 3.

³ EPS is Earnings per Common Share from Continuing Operations Diluted, determined as net income from continuing operations attributable to common shareholders divided by diluted weighted-average shares; Return on Average Equity (ROE) is calculated by dividing one-year period net income by one-year average total shareholders’ equity. 2012 adjusted EPS and adjusted ROE are non-GAAP measures and exclude certain fourth-quarter items; please refer to Annex B for further discussion on the determination of these amounts.

COMPENSATION DISCUSSION AND ANALYSIS

In addition, during 2012 we made many moves to better serve our customers and drive commerce, including premium card launches and upgrades that earned more business from high-spending cardmembers; programs designed to help merchants build their businesses, such as the third-annual Small Business Saturday, fraud prevention services and new merchant financing options; signings that expanded our merchant base, such as Tim Horton’s in Canada; advances in commercial payments, including a new digital wallet that makes it easier for large and mid-size companies to manage the billing process; expanded partnerships with banks worldwide that issue American Express-branded cards; mobile commerce innovations and options for people underserved by the traditional banking system; and more rewards offerings with the expansion of our Loyalty Partner business in India and Mexico.

Our Total Shareholder Return

American Express shares delivered a total return of 24% for the year, outperforming the S&P 500 by 8 percentage points.

Over three-year and five-year periods, American Express shares substantially outperformed both the S&P 500 and the S&P Financial Index.

LOGO

Total Shareholder Return (TSR) is the total return on common shares over a specified period, expressed as a percentage (calculated based on the change in stock price over the relevant measurement period and assuming reinvestment of dividends). Source: Bloomberg (returns compounded monthly).

CEO Pay At-A-Glance

The Compensation and Benefits Committee (Compensation Committee or CBC) determined that the appropriate Total Direct Compensation (TDC) for Mr. Chenault for 2012 performance was $22 million, down 8% from $24 million for 2011. The Committee considered shareholder-value creation as well as performance from various perspectives—financial, customer, employee and strategic. The Committee also considered the impact of settlements with several bank regulators last October, after a review of certain of our U.S card practices, and

COMPENSATION DISCUSSION AND ANALYSIS

additional cardmember reimbursements. A significant portion (73%) of Mr. Chenault’s total pay is deferred (some until one year after retirement) and subject to future company performance. Further details are provided on page 34.

The chart below shows the components of TDC awarded to our CEO for 2012 performance, as compared to the prior year. As shown in the chart, AIA was reduced 23% from $8.625 million for 2011 performance to $6.625 million for 2012 performance. A larger portion of Mr. Chenault’s AIA was paid in cash for 2012 in order to balance current and deferred pay mix, resulting in 73% of his TDC being deferred. The cash portion of AIA could increase or decrease from one year to the next based on performance and to achieve the desired balance between current and deferred pay.

CEO Total Direct Compensation ($ millions)

LOGO

Total Direct Compensation shown above is not the same as total compensation shown in the Summary Compensation Table (SCT) on page 41. TDC above shows the Compensation Committee’s pay decisions for a specific performance year, whereas amounts shown in the SCT for 2012 reflect certain awards that were part of TDC for one or more prior performance periods.

Our Pay and Performance Alignment

Our performance assessment framework and pay program are designed to link pay and performance.

Program Design: Over 85% of the Total Direct Compensation delivered to our CEO and other Named Executive Officers (NEOs) is variable, which directly ties their pay to our company’s performance, including financial results, strategic initiatives, and stock performance.

Performance Assessment: Our Compensation Committee uses a comprehensive and well-defined process to assess performance, which encompasses an assessment of financial results relative to our goals and to our competitors, progress against our strategic and transformational initiatives, and risk/control and compliance standards.

RECENT PROGRAM ENHANCEMENTS

The Committee made a number of program changes in recent years to enhance the link between pay and performance. We made these changes in response to input from shareholders, as well as regulators. For performance year 2012, in response to regulatory guidance, pay mix decisions for certain NEOs changed from last year to ensure the majority of their incentive compensation was deferred for at least three years and was performance-based. In addition, stock options were awarded that vest only after three years (they previously vested pro-rata over four years) and are forfeited in the event of significant financial losses over the three-year period that impact the financial stability of the company.

COMPENSATION DISCUSSION AND ANALYSIS

Snapshot: How Compensation is Delivered to Our CEO and NEOs


COMPONENT		ROLE	COMMENTS
Base Salary	*9–14% of pay*	To provide competitive fixed pay based on responsibilities, skills, and experience.	Reviewed periodically in light of market practices and changes in responsibilities.
Annual Incentive Award (AIA)	*30–45% of pay*	To reward achievement of shareholder, customer, and employee objectives, including strategic initiatives, risk goals, and individual leadership.	AIA payouts consider outcomes against business performance and strategic goals set in the first-quarter, but do not rely on a specific matrix to allow the Compensation Committee to use judgment in considering quantitative and qualitative performance. AIA and Portfolio Grant payouts to the CEO were partially in cash and partially in RSUs that vest one year from the grant date. A significant portion of the net shares received upon vesting must be held until one year after the CEO retires. Portfolio Grants and LTIA RSUs have three-year performance periods. One-half of the total number of shares granted to NEOs for 2012 performance are stock options and one-half are performance-based RSUs.
Long-Term Incentive Awards (LTIA)	*42–61% of pay*	To reward performance that drives total shareholder value: • Portfolio Grants, performance-vested cash awards whose value is based on achievement of financial and strategic goals, and relative stock performance. • Stock Options, equity awards whose value is based on stock price growth. • Restricted Stock Units (RSUs), performance-vested equity awards whose value is based on achievement of Return on Average Equity (ROE) targets and on stock performance.

The pay mix percentages above are based on year-end 2012 pay decisions by the Compensation Committee.

Other key features of our executive compensation program include:

Stock ownership and holding requirements: We have robust stock ownership requirements, including the retention of a portion of shares for one year after stock option exercises and RSU vesting.

Clawback policy: In addition to our clawback policy that applies to all NEOs, the CEO’s cash AIA is subject to clawback at the discretion of the Compensation Committee if the company does not achieve acceptable performance in the following year.

Other practices: Our program does not include employment contracts. In addition, we have over the past few years reduced perquisites to our executive officers, and we eliminated excise tax reimbursements, gross-ups and single trigger change-in-control payments/vesting for awards granted after December 31, 2010.

COMPENSATION DISCUSSION AND ANALYSIS

2012 PERFORMANCE REVIEW

Our Performance Assessment Framework

Our Compensation Committee uses a framework to evaluate company performance and make CEO compensation decisions. Through this framework, the Compensation Committee evaluates our CEO’s performance based on achievement of goals as well as strategic and transformational initiatives, performance relative to our competitors and financial markets, and a risk/control and compliance assessment. The framework uses both qualitative and quantitative factors and is designed to provide a broad and balanced view of performance.

Our Service Profit Chain

We review performance in the context of our Service Profit Chain: engaged employees delivering superior customer service leads to satisfied customers, which in turn produces superior financial results for shareholders. Our goals focus on these three key constituencies: shareholders, customers, and employees.

Performance Assessment Framework

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The following discussion provides a summary of the Compensation Committee’s assessment of the company’s 2012 results using the above framework.

Performance Assessment Against Goals

As indicated on page 21, we delivered a strong total shareholder return in 2012, against the backdrop of a challenging global economy. We did this by generating record billings, higher revenues, improving credit quality and controlling expenses. We launched new products, grew our customer base and saw our share of U.S. card purchase volume increase.

We continued to make tangible progress against our strategic and transformational initiatives. For example, we used our Serve platform to launch a new product with Walmart, Bluebird, a checking and debit alternative that appeals to a new customer base. Serve was also used to gain presence in China through our partnership with Lianlian Group. We also expanded Loyalty Partner, our loyalty and rewards business, which saw good growth in India and Mexico, where the program was launched in 2012.

DRIVE GROWTH

In 2011 we identified five key growth initiatives (see sidebar), and in 2012 we continued to make tangible progress in all five, building on the investments and progress made in 2011.

Five Key Growth Initiatives

We are focused on the following key business areas to generate growth in the medium- to long-term:

1 Increase our share of online spending and improve our customers’ digital experience

2 Deliver greater value to merchants

3 Accelerate growth outside the United States

4 Make significant progress within Enterprise Growth

5 Broaden our customer base

COMPENSATION DISCUSSION AND ANALYSIS

Highlights include:

Our 2012 online billings were at $152 billion, up 15% from last year. We launched a number of digital initiatives and partnerships to support and expand our online billings.

The third Small Business Saturday resulted in American consumers spending more than an estimated $5 billion at local merchants. Our Card Sync technology allowed merchants to make easy and seamless offers to cardmembers using Twitter, Facebook, and Foursquare.

Outside the United States, we achieved 7% billings growth (10% on an FX adjusted basis) and reached 50 million enrollees under our Loyalty Partner business at the end of 2012, ahead of plans.

We added approximately 2.5 million customers to our Enterprise Growth Group through new product launches, platform capabilities and partnerships.

We continued to broaden our customer base through our Serve platform, with new products such as Bluebird. Through the end of 2012, 85% of Bluebird enrollees were new to American Express, and nearly half of them were under the age of 35.

DRIVE EFFICIENCY

In 2012, we implemented a number of actions to further improve our operating efficiency, including globalization of our credit and collections operations and progress in moving cardmembers to digital servicing. Our recently announced restructuring aims to further control operating expenses.

J.D. Power and Associates Award

American Express was the proud winner of its sixth consecutive J.D. Power and Associates award for highest customer satisfaction among credit card companies in the United States.

DELIVER SUPERIOR SERVICE

We continued to deliver superior service to our customers throughout the year, seeing solid improvement both in our global customer satisfaction measure, “Recommend to a Friend”, and the percentage of customers rating us as “Excellent”. Our performance has been recognized by our customers as well, with our sixth straight win of the J.D. Power Award for Customer Satisfaction in the United States, along with recognitions for service quality in a number of markets outside of the United States. The quality of our service can also be seen in our attrition rates, which improved for the year in the United States.

OUR EMPLOYEE FOCUS

American Express is globally recognized as a great place to work for fostering a diverse, flexible workplace culture as evidenced by multiple external recognitions, including Working Mother’s 100 Best Companies, DiversityInc’s Top 50, Fortune’s 100 Best Companies to Work For and Employer of Choice awards in major markets including Canada, India, Mexico and the United Kingdom. In addition, our annual employee survey continues to report high results for employee engagement and loyalty, outperforming best-in-class external benchmarks by ten points or more across dimensions where comparisons could be made.

COMPENSATION DISCUSSION AND ANALYSIS

External Screen Assessment

Once again, in 2012 we generated strong relative performance against our major competitors.

Worldwide Billed Business—Our 2012 $888 billion in billings represented 8% growth (9% on an FX adjusted basis) and total spending was more than twice the level of our nearest card-issuing competitor.

Net Write-Off Rate—At 2.1% for 2012, we continued to have the best credit performance among large issuer peers.

Share of Purchase Volume—During 2012, we gained share of card purchase volume in the United States.

From a financial performance perspective, our revenue growth and ROE were above the median of our Company Sample (see page 28), based on the most recently available data, and our one-year TSR of 24% was at the 60th percentile of this group. Our one-year TSR outperformed the S&P 500 by 8 percentage points, and we substantially outperformed both the S&P 500 and S&P Financial indices over the last three-year and five-year periods.

Risk/Control and Compliance Assessment

In 2012, our Chief Risk Officer, Chief Operational Risk Officer, Chief Compliance Officer, and General Auditor assigned a risk/control and compliance rating to the company overall and to each individual business unit and staff group, based on their assessment of risk outcomes, performance against control and compliance goals, and risk governance.

In October 2012, we announced that we had reached settlements with several bank regulators to resolve reviews of certain aspects of our U.S. consumer card practices for compliance with certain consumer protection laws and regulations. Under the settlement, we agreed to pay $27.5 million in fines and establish an $85 million fund for cardmember refunds (subject to adjustment depending on the ultimate amount of the refunds). Our own ongoing analyses of cardmember inquiries, complaints and account records identified an additional $153 million in reimbursements for various types of transactions dating back several years, which we recognized in the fourth quarter.

The settlements negatively impacted performance ratings for a number of specific business units as well as the company, which led to lower incentive award pools and also negatively affected the compensation decisions for certain business leaders. The Compensation Committee’s decision on our CEO’s total compensation for 2012 performance also considered the impact of the settlements and additional cardmember reimbursements.

COMPENSATION DISCUSSION AND ANALYSIS

EXECUTIVE COMPENSATION PROGRAM STRUCTURE

Overview of Philosophy, Design and Provisions

Our pay program is designed to recognize and reward outstanding achievement and to attract, retain, and engage our leaders in a competitive environment. We seek input from our investors as we want our program to be aligned with shareholder interests.

OUR PAY PHILOSOPHY

Following is an overview of key aspects of our pay philosophy.


Overall Objectives		Motivate our executives to: Ÿ Achieve day-to-day operational excellence Ÿ Meet short-term financial goals and strategic milestones Ÿ Deliver on our longer-term business strategies, so we can continue to build shareholder value Discourage imprudent risk taking consistent with our business model, strategies and regulatory guidance
Pay Mix Principles		Provide competitive opportunities for pay commensurate with job scope, required competencies, and performance by: Ÿ Using a mix of some fixed and mostly variable pay components with different time horizons and payout forms (cash and stock) to reward annual and sustained performance over the longer term Ÿ Requiring executive officers to have significant outright ownership of company shares Ÿ Deferring a majority of incentive compensation for three or more years
Pay for Performance		Provide a strong link between pay and performance by: Ÿ Reviewing performance from both a financial and a strategic perspective, with a range of performance measures tied to financial performance and our strategic initiatives, including risk/control and compliance measures Ÿ Encouraging balanced performance and discouraging imprudent risk taking by avoiding too much emphasis on any one metric or short-term performance Ÿ Using judgment and discretion when making pay decisions to avoid relying solely on rigid formulaic designs, taking into account both what was accomplished (Goal rating) and how it was accomplished (Leadership rating)

SHAREHOLDER FEEDBACK/CONSIDERATION OF 2012 ADVISORY VOTE ON EXECUTIVE COMPENSATION

We have benefited from shareholder feedback about executive compensation through our Say on Pay votes for the past four years. We also meet with shareholders on an ongoing basis to discuss our executive compensation program. The board welcomes this engagement. This feedback influenced a number of changes to our program in prior years, including the addition of performance vesting to our annual restricted stock grant. Based on the result of last year’s Say on Pay vote, and after conversations with shareholders, the Compensation Committee retained the prior program changes for performance year 2012 and, in response to regulatory guidance, made further program enhancements discussed on page 22. The Compensation Committee will continue to consider the outcome of Say on Pay votes and other shareholder input in making future decisions regarding executive compensation.

COMPENSATION DISCUSSION AND ANALYSIS

ASSESSING COMPETITIVE PRACTICE

Our pay program is designed to reward achievement of goals and to attract, retain, and motivate our leaders in an increasingly competitive talent market. The Compensation Committee periodically examines pay practices and CEO pay data for a group of 20 companies (our Company Sample) to better understand the competitiveness of our total compensation and its various elements. We do not target a specific percentile or make pay decisions based on market data alone, which avoids a “ratcheting up” impact. Further, we currently find this data, and market data in general, less reliable since it is subject to significant change from one year to the next—particularly for those companies in the financial services industry. As a result, we use performance as a primary driver of pay levels, as opposed to market data.

Nonetheless, the pay practices of the companies listed below are reviewed by the Compensation Committee periodically. The sample has not changed since 2009. It consists of prominent S&P 500 companies that generally match at least three of five screening criteria: similar size (based on revenue), strong brand and reputation, similar business model, substantial international presence, and competitor for talent. Since these criteria include non-financial measures, it could and did result in the inclusion of companies that are significantly smaller (e.g., Marriott) or larger (e.g., General Electric) than American Express. The Compensation Committee and its independent consultant note the relative size of these companies when reviewing their pay practices and compensation information.


Ÿ 3M	Ÿ Colgate-Palmolive	Ÿ Johnson & Johnson	Ÿ Procter & Gamble

Ÿ Bank of America	Ÿ FedEx	Ÿ JPMorgan Chase	Ÿ State Street

Ÿ Bank of New York-Mellon	Ÿ General Electric	Ÿ Marriott	Ÿ US Bancorp

Ÿ Capital One Financial	Ÿ Hewlett-Packard	Ÿ MasterCard	Ÿ Visa

Ÿ Coca-Cola	Ÿ IBM	Ÿ PepsiCo	Ÿ Wells Fargo

PAY MIX FOCUSES ON VARIABLE PAY

The charts below show that most of our NEOs’ Total Direct Compensation for 2012 is variable (87%–91%). The proportions of each pay element shown below for the performance year 2012 may change in the future based on performance or other considerations.

LOGO

COMPENSATION DISCUSSION AND ANALYSIS

Overview of Year-End 2012 Total Direct Compensation


Incentive Type	Pay Element	What It Does	How It’s Set/Links to Performance
FIXED	Base Salary	Ÿ Provides competitive fixed pay Ÿ Balances risk-taking concerns with pay for performance	Ÿ Job scope and experience, market pay
VARIABLE	Annual Incentive Award	Ÿ Provides a competitive annual incentive opportunity Ÿ Aligns with individual business unit and company performance	Ÿ Annual Service Profit Chain goals (shareholder, customer, employee), including EPS, revenue, and billed business growth, and ROE Ÿ Strategic and transformational goals Ÿ Relative performance review Ÿ Risk/control and compliance goals Ÿ Individual leadership assessment Ÿ Payouts consider outcomes against business performance and strategic goals set in the first quarter, but do not rely on a specific matrix to allow the Compensation Committee to use judgment in considering quantitative and qualitative performance.
	Cash Portfolio Grant Award	Ÿ Provides cash incentive, earned based on achievement of performance metrics Ÿ Metrics cover 3-year performance period (2013–2015)	Ÿ Payout range is 0–125% Ÿ Financial metrics (e.g., EPS) Ÿ Stock performance (e.g., TSR relative to S&P 500 index) Ÿ Strategic milestones
	Performance Restricted Stock Unit Award	Ÿ Aligns with share price Ÿ Ties target payout to 25% ROE– our publicly stated commitment to shareholders	Ÿ Payout range is 0–125% Ÿ 3-year average ROE payout (2013–15), with target based on publicly disclosed on-average, over-time target* 30% = Maximum (125%) 28% = Above Target (105%) 25% = Target (100%) 22% = Below Target (95%) 20% = Below Target (75%) 10% = Below Target (25%) 5% = Threshold (0%)
	Stock Option Award	Ÿ Aligns with share price growth	Ÿ 10-year term Ÿ Vests 3 years after grant; subject to forfeiture in the event of significant financial losses impacting the financial stability of the company.

*	For historical comparison, the company’s one-year (2012), three-year, five-year, and ten-year average ROE was 23.1%, 26.1%, 23.0%, and 25.5%, respectively.

COMPENSATION DISCUSSION AND ANALYSIS

A significant portion of year-over-year pay changes are generally reflected through changes in AIA, rather than LTIA. The Compensation Committee does not specify caps on individual components of pay to allow flexibility to provide appropriate levels of cash and equity as well as short- and long-term incentives in light of individual circumstances. The Portfolio Grant and Performance RSU programs cap the payout at 125% of the target opportunity.

We provide limited perquisites to support our objective to attract and retain talent for key positions, as well as to address security concerns. We provide a flexible cash perquisite allowance of $35,000, which executives can use for items such as financial and tax planning, and life and disability insurance. We have eliminated several perquisites over the last few years in response to evolving market practices.

Performance Measures and Time Horizons

We use a combination of measures and time horizons to foster and reward performance:

Profitability and growth (measured by growth in EPS, ROE, revenue, and billed business)

Shareholder value creation (measured by relative TSR and stock price)

Market share and sustainable competitive advantage (attainment of strategic milestones)

The following chart summarizes the relevant performance measures and time frames used to assess our variable pay elements. It also shows that when certain metrics are used in more than one incentive vehicle, they are set and measured over different time frames (i.e., 1, 3, or 10 years). Therefore, there is limited duplication of metrics with the same time horizon.

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How We Discourage Imprudent Risk Taking

Our executive compensation program is structured to provide a balance of cash and stock; annual, medium-term and long-term incentives; and financial, strategic, and stock performance measured over various time periods. It is designed to encourage the proper level of risk taking consistent with our business model and strategies. Our business and risk profile is different from other financial services firms; for example, we do not trade securities, derivatives, mortgages, or other financial instruments.

COMPENSATION DISCUSSION AND ANALYSIS

Our executive compensation program is designed to be consistent with the Federal Reserve Board’s principles for safety and soundness.

Our Chief Risk Officer (CRO) provides annual risk goals to all business units and staff groups at the beginning of each year and certifies to the Compensation Committee that performance goals are not likely to encourage imprudent risk taking.

Our CRO certifies at year end that actual results were achieved without taking imprudent risks.

We assess return on economic capital and credit risk performance, and assign business unit and staff group control and compliance ratings and risk governance ratings as part of our annual assessment of performance.

We risk-adjust company and business unit annual incentive funding levels as well as individual award decisions, including through our Chief Risk Officer’s annual assessment of risk outcomes and forward-looking risk measures.

We assess performance against a cross-section of key metrics over multiple time frames, to discourage undue focus on short-term results or any one metric, and to reinforce risk-balancing in performance measurement.

Our Compensation Committee applies judgment in making incentive compensation decisions.

Additionally, the following policies further discourage imprudent risk taking:

At least 50% of incentive compensation for executive officers is deferred at least three years with performance-based vesting.

Starting with January 2013 grants, stock options are subject to forfeiture in the event of significant financial losses that impact the financial stability of the company.

We require executive officers to hold for at least one year 50% of the net shares received upon the vesting of restricted share unit awards or upon their exercise of stock options.

We have a robust stock ownership requirement of 500,000 shares for our CEO. Other NEOs have ownership requirements ranging from 37,500 to 75,000 shares.

Our clawback policies, including the requirement that our CEO’s cash AIA is subject to clawback at the discretion of the Compensation Committee if the company does not achieve acceptable performance the next year.

Starting with compensation decisions made in January 2012, we extended performance-based vesting of RSUs to a broader group of employees.

COMPENSATION GOVERNANCE, PROCESS, AND DECISIONS

The Decision Makers

The Compensation Committee, composed solely of independent directors, is responsible for our executive officer compensation decisions. The Compensation Committee works very closely with its independent consultant, Frederic W. Cook & Co., Inc. (Cook), and management to examine pay and performance matters throughout the year. The Compensation Committee held eight meetings over the course of 2012, all of which ended with executive sessions without management present. The Compensation Committee’s charter may be accessed through the “Corporate Governance” link found on our website at http://ir.americanexpress.com.

Making Decisions

The Compensation Committee uses the performance assessment framework, described above (see page 24), as the basis for pay decisions for the CEO. For both the CEO and the other NEOs, the Compensation Committee conducts an in-depth review of performance and then applies its judgment to make compensation decisions, rather than relying solely on formulaic results to calculate incentive award payouts. The Compensation Committee believes this process is an effective way to assess the quality of the performance and leadership demonstrated by the CEO and his senior management team.

COMPENSATION DISCUSSION AND ANALYSIS

The Compensation Committee’s Process

LOGO

Each year, the Compensation Committee:

Reviews and approves the metrics and goals in the company’s performance assessment framework and the CEO’s and NEOs’ performance objectives early in the year

Reviews corporate performance in the third and fourth quarters, and progress against the CEO’s and NEOs’ objectives and incentive plan goals

In the following January, the Compensation Committee:

Discusses full-year financial and strategic performance at length, seeking to understand what was accomplished relative to established objectives, how it was accomplished, the quality of financial results, and the company’s strategic positioning for future competitive advantage

Meets with the Chief Financial Officer and the Chief Risk Officer to discuss results

Evaluates the CEO’s and other NEOs’ performance in light of these discussions

Determines TDC amounts for the CEO and each of the other NEOs based on:

–

Performance assessments (described in the next section)

–

An evaluation of their relative compensation, changes in responsibilities, and current pay practices at companies who are talent competitors

–

Input from the Compensation Committee’s independent compensation consultant, Cook

–

For the other NEOs: the CEO’s recommendations, succession planning, and retention considerations

Determines the amount of each TDC pay component based on company pay mix guidelines and individual performance

Reviews and approves the payouts for each Portfolio Grant award with a performance period completed at the end of the prior year

Approves any design changes to the executive compensation program for the coming year

COMPENSATION DISCUSSION AND ANALYSIS

Assessing NEOs

To assess performance for the year just ended, the Compensation Committee evaluates two key factors for each NEO:

Performance Against Goals

Leadership Assessment

The Goal Assessment is based on the overall performance of the company and the business units or staff groups for which an NEO is responsible. Specifically, the Goal rating assesses results against our Service Profit Chain goals with the following weightings:

Ÿ Shareholder-related goals: 50% weighting

Ÿ Customer-related goals: 25% weighting

Ÿ Employee-related goals: 25% weighting

Each NEO’s Leadership Assessment is based on individual performance and includes feedback from peers and direct reports, as appropriate, with regard to key leadership attributes.

The performance assessment takes into account the Goal rating and the Leadership rating to consider both what was accomplished and how it was accomplished. Performance assessments are graded on a three-point scale to differentiate performance and pay. The performance objectives are set by the Compensation Committee early each year, based on recommendations of the CEO and inputs from each of our General Auditor, Chief Risk Officer, and Chief Compliance Officer. At the end of the year, the CEO reviews the following items for each of the other NEOs with the Compensation Committee:

Goal and Leadership ratings

Risk/control and compliance assessment results

Key strengths and development actions

Compensation Committee’s Independent Compensation Consultant

The Compensation Committee directly engaged F.W. Cook & Co. as its independent compensation consultant to review and provide recommendations on the components of the company’s executive compensation program and to provide compensation advice independent of the company’s management. Cook attended all of the Compensation Committee meetings in 2012 and met with the Committee in executive session.

Under the terms of its engagement, Cook does not provide any other services to the company, except as pre-approved by the Chair of the Compensation Committee. In 2012, Cook provided outside director compensation advice to the Nominating and Governance Committee and to American Express Bank, FSB, and American Express Centurion Bank, U.S. banking subsidiaries of the company. The company incurred $433,888 in fees from Cook for services provided to the Compensation Committee, the Nominating and Governance Committee and the bank boards.

The Compensation Committee assessed the independence of Cook pursuant to SEC rules and concluded that Cook’s work for the board of directors did not raise any conflicts of interest.

In addition, the company engaged Compensation Advisory Partners (CAP) to assess whether the company’s compensation programs discouraged imprudent risk taking. The Committee assessed the independence of CAP pursuant to SEC rules and concluded that CAP’s work for the company did not raise any conflicts of interest.

COMPENSATION DISCUSSION AND ANALYSIS

2012 TOTAL DIRECT COMPENSATION (TDC) DECISIONS

K.I. Chenault, Chairman and CEO

The Compensation Committee determined Mr. Chenault’s TDC to be $22 million, 8% (or $2 million) less than for 2011, based on shareholder-value creation as well as performance from various perspectives—financial, customer, employee and strategic. The Committee also considered the impact of settlements with several bank regulators last October, after a review of certain of our U.S. card practices, and additional cardmember reimbursements. As shown below, AIA was reduced 23% from $8.625 million for 2011 performance to $6.625 million for 2012 performance.

Note Regarding 2012 TDC Decisions

It is important to recognize that the way the Compensation Committee presents TDC in the tables that follow is different from the SEC-required disclosure in the Summary Compensation Table (SCT) and is not a substitute for the information in that table (shown on page 41). Rather, it is intended to show how the Compensation Committee linked NEOs’ TDC and its components to the company’s 2012 performance results.

A larger portion of Mr. Chenault’s AIA was paid in cash for 2012 in order to balance current and deferred pay mix, resulting in 73% of his TDC being deferred. The cash portion of AIA could increase or decrease from one year to the next based on performance and to achieve the desired balance between current and deferred pay.


	Year-End Decisions ($mils)
CEO Total Direct Compensation (January 2013)	January 2013	January 2012
Base Salary	$2.0	$2.0
Ÿ The Compensation Committee kept Mr. Chenault’s salary at $2 million.
Annual Incentive Award (AIA)	$4.0 Cash	$2.0 Cash
Ÿ The Compensation Committee awarded Mr. Chenault $6.625 million.	$2.625 RSUs	$6.625 RSUs
Ÿ $4 million was paid in cash and the remainder was issued in Restricted Stock Units (RSUs).	$6.625 Total	$8.625 Total

Ÿ RSUs vest one year from grant. One-half are payable in shares and one-half in cash. 100% of the net shares must be held until one year after retirement.

Ÿ The cash portion of the AIA continues to include a clawback provision, which permits the Compensation Committee, at its discretion, to recoup some, or all, of the cash portion of the AIA if 2013 performance is not acceptable.
Equity Awards (RSUs and Stock Options)	$2.080 SO	$2.160 SO
Ÿ The Compensation Committee awarded 38% of Mr. Chenault’s TDC—$8.25 million, the same amount as last year—in the form of equity grants.	$6.170 RSUs	$6.090 RSUs
	$8.25 Total	$8.25 Total

Ÿ The grants were divided equally into 103,786 shares of performance-vested RSUs and 103,786 stock options.

Ÿ Mr. Chenault’s equity awards were granted on January 29, 2013. The stock options have an exercise price per share of $59.45. The RSU target is average 3-year (2013–2015) ROE of 25% (publicly stated on-average, over-time financial target).
Portfolio Grant (PG)	$5.125	$5.125
Ÿ Mr. Chenault received a Portfolio Grant award for the three-year performance period starting in 2013 and ending in 2015. The target value—$5.125 million— is the same as last year.
Total	$22.0	$24.0

COMPENSATION DISCUSSION AND ANALYSIS

Other Named Executive Officers

The CEO’s recommendations for the other NEOs were based on his review of performance and our pay mix guidelines.

The following information provides highlights of specific individual and business performance considered in the pay recommendations for the other NEOs. When approving pay decisions for other NEOs, the Compensation Committee also considered the overall performance of the company, including the impact of regulatory settlements last October, and additional cardmember reimbursements. Included below are the Compensation Committee’s January 2013 TDC decisions for each NEO.

EDWARD P. GILLIGAN, VICE CHAIRMAN

Mr. Gilligan has been the Head of the Global Consumer and Small Business Card Issuing, Merchant and Network businesses at American Express Company since October 2009. His 2012 achievements included:

Delivered strong financial results in support of the company’s growth through strong billings and revenue growth, maintenance of the discount rate, and best in class credit performance

Implemented key business transformation initiatives across the organization that yielded significant benefits

Revitalized international proprietary premium products and continued to expand the American Express franchise internationally, through new partnerships and the effective management of Loyalty Partner

Launched a number of new, high-impact initiatives to enhance our customers’ digital experiences

Led company efforts to comply with safety and soundness targets for the global banks, while implementing continuous process improvements

Mr. Gilligan’s compensation was negatively affected by the settlements with several bank regulators to resolve reviews of certain aspects of our U.S. consumer card practices for compliance with certain consumer protection laws and regulations.

STEPHEN J. SQUERI, GROUP PRESIDENT, GLOBAL CORPORATE SERVICES

Mr. Squeri has served as the Group President for Global Corporate Services since November 2011. He is responsible for Global Commercial Services, which consists of the Global Corporate Payments and Global Business Travel organizations, as well as Global Services, our shared services organization consisting of World Service, Global Business Services, Technologies and Global Credit Administration. His 2012 achievements included:

Exceeded operating expense targets across Global Commercial Services and Global Services and led planning for company-wide restructuring initiatives

Delivered superior customer service, as evidenced by the receipt of our sixth consecutive J.D. Power and Associates award in the United States

Opened a new, state-of-the-art enterprise data center. Awarded LEED (Leadership in Energy & Environmental Design) Gold Certification, the first enterprise-class data center to be awarded Gold Certification under the new and more stringent rules

Created a new global, integrated, and unified Global Commercial Services organization

Enabled multiple digital capabilities that yielded significant progress against our business objectives

COMPENSATION DISCUSSION AND ANALYSIS

DANIEL H. SCHULMAN, GROUP PRESIDENT, ENTERPRISE GROWTH

Mr. Schulman has served as the Group President for Enterprise Growth since August 2010. He is responsible for our global strategy to expand alternative mobile and online payment services, reach customers beyond our traditional base and build new revenue streams. Mr. Schulman is also responsible for our corporate development and mergers and acquisitions unit. His 2012 achievements included:

Attracted millions of incremental new customers to American Express with new product launches. These new products are beginning to achieve critical mass and scale, with a fourth-quarter annualized run rate of over $2 billion in funds added

Launched Bluebird, a new innovative checking and debit alternative product utilizing the Serve platform, to target previously unaddressed markets. New product features include bill pay, direct deposit, and remote check capture

Implemented multiple new partnerships and features for Serve, including Zynga, Verizon Wireless, and a new Serve application– Deals and Offers

Expanded into international markets, including a partnership with the Lianlian Group to use Serve for consumer and business customers in China, and the launch of new reloadable prepaid products in three new international markets

Expanded the retail footprint of American Express products, with retail distribution agreements resulting in over 20,000 new retail locations in the United States

DANIEL T. HENRY, EXECUTIVE VICE PRESIDENT AND CHIEF FINANCIAL OFFICER

Mr. Henry is responsible for leading the company’s Finance organization and representing American Express to investors, lenders, and rating agencies. His 2012 achievements included:

Prioritized investments through financial analyses and evaluation of risks and opportunities

Ensured the company’s capital allocation framework supported business strategies and resulted in a strong capital position

Managed operating cost structure to achieve 2012 objective of declining growth rate

Continued to diversify the company’s funding profile and liquidity sources by expanding the Personal Savings program

Effectively communicated the company’s business strategy and financial results to the financial community and other constituencies

COMPENSATION DISCUSSION AND ANALYSIS

NEO TDC DECISIONS

The Compensation Committee’s January 2013 TDC decisions for performance year 2012 are reflected in the table below. January 2013 TDC was lower than January 2012 TDC for each NEO other than Mr. Squeri. Mr. Squeri led efforts to control operating expense and leads our Global Corporate Services organization, which includes World Service, a unit that delivered superior customer service as reflected in our sixth consecutive J.D. Power and Associate Award.

NEOs TDC Decisions ($000s)


	E.P. GILLIGAN		S.J. SQUERI		D.H. SCHULMAN		D.T. HENRY
Base Salary	$	1,450	$	1,250	$	1,100	$	850
AIA*	$	4,600	$	4,275	$	3,800	$	2,750
Equity—RSUs**	$	2,169	$	2,001	$	1,870	$	1,421
Equity—SOs**	$	731	$	674	$	630	$	479
PG (target value)	$	1,500	$	1,325	$	1,300	$	1,200
TDC	$	10,450 (down 7% from January 2012)	$	9,525 (up 7% from January 2012)	$	8,700 (down 2% from January 2012)	$	6,700 (down 4% from January 2012)

To comply with regulatory guidance that at least 50% of total incentive compensation be deferred, $250,000 of Mr. Gilligan’s and Mr. Schulman’s 2012 AIA and $500,000 of Mr. Squeri’s 2012 AIA were paid in the form of RSU’s granted in January 2013. Payment of these RSUs is deferred for three years from the grant date, subject to positive net income performance but not to continued employment.

Similar to the CEO’s equity awards, other NEOs received RSUs that are earned based on three-year average ROE performance. For the total equity awards, an equal number of shares were delivered in the form of performance-vested RSUs and stock options.

Interim Portfolio Grant Payout Based on 2011-2012 Performance

PG2011-13 was designed to make an interim payout in the first quarter of 2013 equal to 33% of the grant value, provided performance was trending at or above target. Based on performance over the period 2011-12, the Compensation Committee approved the interim payout for PG2011-13. The performance metrics for PG2011-13 are shown below.


2011-13 Performance Metric	Performance Required for Target Payout	Weighting
Earnings Per Share (EPS)	$12.66	20%
Total Shareholder Return vs. S&P 500	At index	30%
Strategic Milestones:		50%
Consumer, Small Business, Merchant and Network Services Businesses
Ÿ Accelerate growth in international	$4.9 billion
Ÿ Increase online spend across all products	12-15%
Global Services Ÿ Deliver superior service (measured by U.S. “Recommend to a Friend” score)	2.5 percentage point improvement over 2010
Enterprise Growth Ÿ Average annual growth of Global Payment Options revenue Ÿ Reach critical mass of Serve customers	At market growth rate CBC judgment

The company will disclose performance against the above metrics at the end of the 2013 performance period, when the total payout will be determined. The interim payment in the first quarter of 2013 will be offset against the

COMPENSATION DISCUSSION AND ANALYSIS

total payout. If the total payout is lower than the interim payout, then the interim payment (or the appropriate portion) may be recouped. Award payments are also subject to capital adequacy requirements, which are based on a minimum of 7% Tier 1 capital over the period.

The NEOs’ PG2011-13 grants resulted in the following interim payouts, at 33% of grant value.


EXECUTIVE	PG2011-13 GRANT AMOUNT ($000s)		PG2011-13 INTERIM PAYOUT ($000s)
K.I. Chenault	$	5,125	$	1,691	*
E.P. Gilligan	$	1,500	$	495
S.J. Squeri	$	1,000	$	330
D.H. Schulman	$	1,300	$	429
D.T. Henry	$	1,100	$	363

* Mr. Chenault’s payment was in the form of RSUs granted in January 2013 that vest one year from the grant date. One-half of the net shares upon vesting cannot be sold until one year after his retirement.

The grant amounts of the PG awards were included in the Grants of Plan-Based Awards Table in the 2012 proxy statement. The cash payouts described above are included in the Summary Compensation Table on page 41 (non-equity incentive plan compensation). For Mr. Chenault, where the payout was made solely in the form of RSUs that vest one year after grant, the grant amount of the RSUs will be included in the Summary Compensation Table next year, under stock awards.

OTHER POLICIES AND GUIDELINES

Award Timing

Consistent with past practice, annual cycle LTIA awards were granted to NEOs in January following the company’s public announcement of its financial results for the prior fiscal year. Historically, annual cycle LTIA awards are granted on the third trading day after the company publicly announces its financial results in January; however, due to the 2013 calendar the Compensation Committee determined to grant annual cycle LTIA awards to NEOs on the last day of the regularly scheduled January 2013 Compensation Committee meetings. Our off-cycle LTIA awards (for new hires, mid-year promotions, etc.) are granted on pre-established grant dates.

Tax Treatment

Tax rules generally limit the deductibility of compensation paid to our NEOs to $1 million during any fiscal year unless such compensation is “performance-based.” In general, the company intends to structure its incentive compensation arrangements in a manner that would comply with these tax rules. However, the Compensation Committee maintains the flexibility to pay non-deductible incentive compensation if it determines it is in the best interest of the company.

Clawback Policies

We seek to recover, to the extent practicable, performance-based compensation from any executive officer and certain other members of senior management in those circumstances when:

The payment of such compensation was based on the achievement of financial results that were subsequently the subject of a restatement; and

In the board’s view, the employee engaged in fraud or misconduct that caused or partially caused the need for the restatement, and a smaller amount would have been paid to the employee based upon the restated financial results.

COMPENSATION DISCUSSION AND ANALYSIS

Also, the cash portion of the CEO’s AIA is subject to clawback at the discretion of the Compensation Committee if the company does not achieve acceptable performance in the following year.

Further, the Dodd-Frank legislation mandates regulation to add additional clawback requirements, and the company will take appropriate steps to implement the final requirements under this legislation.

American Express also maintains a “detrimental conduct” policy covering approximately 600 employees globally, including the NEOs. Each executive is required to sign an agreement that requires the executive to forfeit unvested awards, and to repay the proceeds from some or all of his or her compensation issued under our incentive compensation program in the event the executive engages in conduct that is detrimental to the company. This compensation includes Equity and Portfolio Grant awards and, in the case of our executive officers, Annual Incentive Awards that were received up to two years prior to employment termination. Detrimental conduct includes, but is not limited to, termination of employment for misconduct, working for certain competitors, soliciting company customers or employees for a period of time after termination, or disclosing confidential information.

Stock Ownership Guidelines

Our stock ownership guidelines require NEOs to own and maintain a substantial stake in the company. Our NEOs are required to accumulate a target number of shares (i.e., shares owned outright, not including unvested/unearned shares and unexercised stock options), and to retain a portion of the net after-tax shares received upon vesting or exercise of their equity awards as follows:


	STOCK OWNERSHIP GUIDELINES
			HOLDING REQUIREMENT
NEO	TARGET NUMBER OF SHARES		BEFORE TARGET MET	AFTER TARGET MET
K.I. Chenault*		500,000	75% of net shares until target number of shares is met	50% of net shares for one year
E.P. Gilligan		75,000
S.J. Squeri		75,000
D.H. Schulman		75,000
D.T. Henry		37,500

In addition to these requirements, Mr. Chenault is required to hold, one year beyond his retirement from the company, a significant portion of his 2010, 2011 and 2012 year-end AIA and PG payouts delivered in RSUs.

With the exception of Mr. Schulman, who was hired in 2010, all our NEOs own more than the target number of shares.

HEDGING POLICY AND PLEDGING RESTRICTIONS

Our Code of Conduct prohibits our employees from using short sales or put and call transactions to hedge their ownership of company securities. In addition, the company does not permit executive officers to pledge shares subject to stock ownership guidelines, including holding requirements, and limits the number of other shares they may pledge.

Post-Employment Compensation

RETIREMENT BENEFITS

NEOs receive retirement benefits through the following plans:

Retirement Savings Plan (RSP): A qualified savings 401(k) plan available to all eligible employees.

Retirement Restoration Plan (RRP): A nonqualified savings plan that makes up 401(k) benefits that would otherwise be lost as a result of the U.S. tax limits.

COMPENSATION DISCUSSION AND ANALYSIS

As part of NEOs’ planning for retirement and other long-term financial needs, we have provided them an annual opportunity under a nonqualified deferred compensation plan to defer a portion of their base salary and AIA payout. The total annual deferral is limited to 100% of base salary.

NEOs (except Mr. Schulman) also continue to earn interest on outstanding account balances under the American Express Retirement Plan, which was frozen in 2007. All retirement benefits are more fully described under Retirement Plan Benefits on page 48 and under Nonqualified Deferred Compensation on pages 49 to 50.

SEVERANCE

The company has an executive severance policy instead of individual severance or employment agreements. Under the Senior Executive Severance Policy, NEOs who are terminated involuntarily receive cash severance benefits equal to two years of base salary and AIA, except in cases of misconduct. Severance payments are made in installments, except in certain terminations following a change in control, when payment is made in a lump sum. LTIAs continue to vest during the severance period, unless the executive begins full-time, outside employment. NEOs may continue to be covered under certain of our compensation and benefit plans during the severance period. Effective January 1, 2014, U.S.-based NEOs who are age 65 or older are not eligible for severance.

To protect shareholders and our business model, executives are required to comply with non-compete, non-solicitation, confidentiality, and non-denigration provisions during the period of time they are receiving severance. Our uniform severance policy helps to avoid individual treatment and provides an important enforcement mechanism for these protections. The Compensation Committee must pre-approve severance for an executive officer.

CHANGE IN CONTROL BENEFITS

The company provides change in control (CIC) benefits to encourage executives to consider the best interests of shareholders by stabilizing any concerns about their own personal financial well-being in the face of a potential CIC of the company. Some key CIC provisions were implemented in 2011 based on shareholder input and changing market trends:

All LTIAs granted after December 31, 2010 require employment termination (“double trigger”) following a CIC before these awards will vest.

We no longer provide excise tax reimbursements and gross-up payments in the case of a CIC (in the case of LTIAs, applies to grants after December 31, 2010).

In the event of certain employment terminations in connection with a CIC, executives also receive cash severance described above under Severance and other benefits. Detailed information is provided under Potential Payments Upon Termination or Change in Control on pages 51 to 54.

REPORT OF THE COMPENSATION AND

BENEFITS COMMITTEE

The Compensation and Benefits Committee has reviewed and discussed the Compensation Discussion and Analysis with management. Based on such review and discussions, the Compensation and Benefits Committee recommended to the board of directors, and the board of directors approved, that the Compensation Discussion and Analysis be included in this Proxy Statement.

COMPENSATION AND BENEFITS COMMITTEE

Jan Leschly, Chairman

Peter Chernin

Richard A. McGinn

Edward D. Miller

Robert D. Walter

EXECUTIVE COMPENSATION TABLES

Summary Compensation Table

The following table summarizes the compensation of our NEOs for the year ended December 31, 2012.

Summary Compensation Table (1)


NAME	YEAR	SALARY ($)		BONUS ($)(2)		STOCK AWARDS ($)(3)		OPTION AWARDS ($)(3)		NON-EQUITY INCENTIVE PLAN COMPENSATION ($)(4)		CHANGE IN PENSION VALUE AND NONQUALIFIED DEFERRED COMPENSATION EARNINGS ($)(5)		ALL OTHER COMPENSATION ($)(6)		TOTAL ($)
K.I. Chenault Chairman and Chief Executive Officer	2012	$	2,000,000	$	4,000,000	$	18,864,985	$	2,159,907	$	0	$	478,945	$	987,897	$	28,491,734
	2011	$	2,000,000	$	2,000,000	$	15,274,191	$	2,193,374	$	0	$	548,290	$	1,022,836	$	23,038,691
	2010	$	1,942,308	$	2,000,000	$	2,049,971	$	9,164,925	$	0	$	560,421	$	1,095,647	$	16,813,272
E.P. Gilligan Vice Chairman	2012	$	1,450,000	$	4,350,000	$	2,620,562	$	929,413	$	495,000	$	266,338	$	564,823	$	10,676,136
	2011	$	1,450,000	$	4,750,000	$	2,128,967	$	770,998	$	3,800,000	$	210,948	$	2,779,172	$	15,890,085
	2010	$	1,423,077	$	4,450,000	$	724,967	$	3,215,112	$	1,680,000	$	212,876	$	699,438	$	12,405,470
S.J. Squeri Group President Global Corporate Services	2012	$	1,201,923	$	3,775,000	$	1,845,436	$	654,506	$	330,000	$	103,185	$	351,948	$	8,261,998
	2011	$	1,000,000	$	4,000,000	$	1,468,261	$	531,725	$	1,200,000	$	81,999	$	341,383	$	8,623,368
	2010	$	980,769	$	3,500,000	$	499,986	$	2,217,318	$	1,380,000	$	84,387	$	319,991	$	8,982,452
D. H. Schulman Group President Enterprise Growth	2012	$	1,100,000	$	3,550,000	$	1,845,436	$	654,506	$	429,000	$	0	$	309,240	$	7,888,182
	2011	$	1,100,000	$	4,000,000	$	1,835,315	$	664,653	$	1,560,000	$	0	$	202,573	$	9,362,541
	2010	$	401,923	$	2,500,000	$	5,999,957	$	1,853,515	$	780,000	$	0	$	100,895	$	11,636,290
D.T. Henry Executive Vice President and Chief Financial Officer	2012	$	850,000	$	2,750,000	$	1,402,563	$	497,435	$	363,000	$	35,244	$	333,686	$	6,231,928
	2011	$	850,000	$	3,050,000	$	1,358,114	$	491,836	$	1,320,000	$	49,462	$	384,372	$	7,503,784
	2010	$	838,462	$	2,350,000	$	3,437,458	$	1,940,154	$	1,212,000	$	51,989	$	362,540	$	10,192,602

(1)

Amounts shown are not reduced to reflect the NEOs’ elections, if any, to defer receipt of base salary, bonus, or non-equity incentive plan compensation under our deferred compensation programs.

(2)

The amounts in this column reflect AIA cash payments made for annual performance. For each NEO described below, the 2012 amount excludes the portion of 2012 AIA paid in the form of RSUs granted in January 2013. For Mr. Chenault $2.625 million out of $6.625 million of his 2012 AIA is paid in the form of RSUs granted in January 2013 that vest one year from the grant date, subject to performance conditions. 50% of these RSUs are payable in cash and the remaining net shares upon vesting cannot be sold until one year after retirement.

To comply with FRB guidance that at least 50% of incentive compensation be deferred, $250,000 of Mr. Gilligan’s and Mr. Schulman’s 2012 AIA and $500,000 of Mr. Squeri’s 2012 AIA were paid in the form of RSU’s granted in January 2013. Payment of these RSUs is deferred for three years from the grant date, subject to positive net income performance but not to continued employment.

(3)

The amounts represent the aggregate grant date fair value of awards granted in each respective year computed in accordance with stock-based compensation accounting rules (FASB ASC Topic 718). A significant portion of Mr. Chenault’s total direct compensation is delivered in the form of equity that is deferred. The table below provides detail on the RSUs included in the stock awards column:


	2012		2011		2010
Annual RSU award granted in January for performance in the prior year*	$	6,090,046	$	6,056,594	$	2,049,971
Portion of AIA awarded in RSUs in January for performance in the prior year *	$	6,624,980	$	3,125,000		—
Payment of PG award in the form of RSUs. Amount in column reflects the RSUs granted in January with respect to PG awards whose performance periods ended the prior year	$	6,149,959	$	6,092,597		—
Total	$	18,864,985	$	15,274,191	$	2,049,971

* For example, 2012 amount shows RSU awarded in January 2012 for 2011 performance

EXECUTIVE COMPENSATION TABLES

(4)

For 2012, the amounts in this column reflect the cash payment made to the NEO in respect of initial payment towards the PG2011-13 awards granted in 2011, in accordance with award terms. For Mr. Chenault, the 2012 amount excludes payment of $1.691 million, which was made in the form of RSUs granted in January 2013 that vest one year from the grant date, subject to performance. One-half of the net shares upon vesting cannot be sold until one year after retirement.

(5)

The amounts in this column reflect the actuarial increase in the present value of the NEOs’ benefits under all defined benefit pension plans established by the company.

(6)

See All Other Compensation Table below for additional information.

The table below shows the components of the amounts included for each NEO under the All Other Compensation column in the Summary Compensation Table.

All Other Compensation Table


NAME	YEAR	PERQUISITES AND OTHER PERSONAL BENEFITS ($)(1)		TAX PAYMENTS/ REIMBURSEMENTS ($)(2)		COMPANY CONTRIBUTIONS TO DEFINED CONTRIBUTION PLANS ($)(3)		EXECUTIVE LIFE INSURANCE ($)(4)		DIVIDENDS AND DIVIDEND EQUIVALENTS ($)(5)		TOTAL ($)
K.I. Chenault	2012	$	368,647	$	0	$	442,500	$	4,340	$	172,410	$	987,897
	2011	$	395,439	$	0	$	570,000	$	3,939	$	53,458	$	1,022,836
	2010	$	517,438	$	0	$	438,942	$	3,589	$	135,679	$	1,095,647
E.P. Gilligan	2012	$	89,040	$	0	$	384,250	$	2,100	$	89,433	$	564,823
	2011	$	108,942	$	2,152,743	$	413,250	$	1,958	$	102,279	$	2,779,172
	2010	$	183,077	$	36,587	$	346,923	$	1,830	$	131,021	$	699,438
S.J. Squeri	2012	$	79,489	$	0	$	242,212	$	2,150	$	28,097	$	351,948
	2011	$	69,205	$	0	$	240,000	$	2,003	$	30,175	$	341,383
	2010	$	84,004	$	0	$	199,038	$	1,870	$	35,079	$	319,991
D.H. Schulman	2012	$	94,277	$	0	$	159,500	$	4,140	$	51,323	$	309,240
	2011	$	70,741	$	0	$	31,413	$	4,201	$	96,218	$	202,573
	2010	$	72,427	$	0	$	0	$	1,380	$	27,088	$	100,895
D.T. Henry	2012	$	75,132	$	0	$	186,750	$	5,392	$	66,412	$	333,686
	2011	$	70,955	$	0	$	242,250	$	4,813	$	66,354	$	384,372
	2010	$	85,577	$	0	$	211,538	$	4,340	$	61,085	$	362,540

(1)

See the Perquisites and Other Personal Benefits table below for additional information regarding the components of this column.

(2)

For Mr. Gilligan, who was on international assignment in London until July 2009, trailing tax equalization payments and/or reimbursements have been made and recorded following termination of his assignment in 2009 to address any foreign tax obligations relating to income received, awarded or earned during his assignment. These payments and reimbursements are made under a policy that applies to all employees on international assignment and is designed to facilitate these assignments by covering taxes over and above taxes that these employees would have incurred had they remained in their home countries. In 2012, Mr. Gilligan received a net foreign tax credit of approximately $1.49 million relating to payments made by the company on his behalf in previous years, which were returned to the company and is not reflected in the table above. The payments or reimbursements included in the amount shown that were paid or received in British Pound Sterling were converted to U.S. dollars based on the conversion rate as of the date paid, received or allocated.

(3)

This column reports company contributions to the NEOs’ accounts under the company’s RSP and to the RSP Related Account under the company’s RRP. See pages 48 to 50 for a further description of the RSP and the RSP Related Account under the company’s RRP.

(4)

This column reports imputed income to the NEO under the company’s executive life insurance program.

(5)

This column reports dividends and dividend equivalents paid in connection with Restricted Stock Awards (RSAs) and RSUs awarded to the NEO under the 1998 Incentive Compensation Plan (1998 plan) or the 2007 Incentive Compensation Plan (2007 plan). Beginning with awards granted in 2011, dividends and dividend equivalents on unvested RSAs and RSUs granted to executive officers will be paid only if and when the underlying shares vest.

EXECUTIVE COMPENSATION TABLES

Perquisites and Other Personal Benefits


NAME	YEAR	LOCAL AND OTHER TRAVEL BENEFITS ($)(1)		PERSONAL USE OF COMPANY AIRCRAFT ($)(1)(2)		FLEXIBLE PERQUISITE ALLOWANCE ($)		HOME SECURITY SYSTEM ($)		SECURITY DURING PERSONAL TRIPS ($)		INTERNA- TIONAL ASSIGNMENT ($)(3)		OTHER BENEFITS ($)(4)		TOTAL ($)
K.I. Chenault	2012	$	16,623	$	195,536	$	35,000	$	34,283	$	76,241		n/a	$	10,964	$	368,647
	2011	$	31,464	$	200,000	$	35,000	$	30,906	$	61,332		n/a	$	36,737	$	395,439
	2010	$	139,273	$	200,000	$	35,000	$	75,556	$	53,671		n/a	$	13,938	$	517,438
E.P. Gilligan	2012	$	30,000	$	7,115	$	35,000		n/a		n/a	$	14,715	$	2,210	$	89,040
	2011	$	30,000	$	0	$	35,000	$	0		n/a	$	43,180	$	762	$	108,942
	2010	$	40,500	$	3,466	$	35,000	$	1,815		n/a	$	99,296	$	3,000	$	183,077
S.J. Squeri	2012	$	30,000	$	0	$	35,000		n/a		n/a		n/a	$	14,489	$	79,489
	2011	$	30,000	$	0	$	35,000	$	0		n/a		n/a	$	4,205	$	69,205
	2010	$	40,500	$	0	$	35,000	$	744		n/a		n/a	$	7,760	$	84,004
D.H. Schulman	2012	$	30,000	$	22,254	$	35,000		n/a		n/a		n/a	$	7,023	$	94,277
	2011	$	30,000	$	0	$	35,000	$	0		n/a		n/a	$	5,741	$	70,741
	2010	$	12,500	$	0	$	14,585	$	40,861		n/a		n/a	$	4,481	$	72,427
D.T. Henry	2012	$	30,000	$	0	$	35,000		n/a		n/a		n/a	$	10,132	$	75,132
	2011	$	30,000	$	0	$	35,000	$	0		n/a		n/a	$	5,955	$	70,955
	2010	$	40,500	$	0	$	35,000	$	0		n/a		n/a	$	10,077	$	85,577

(1)

For 2012, local and other travel benefits include local travel allowance for NEOs other than Mr. Chenault. For Mr. Chenault, the company’s security policy adopted by the Audit, Risk and Compliance Committee of the board requires him to use for all travel purposes, to the maximum extent practicable, the automobiles and aircraft provided by the company to executives for business travel. The calculation of incremental cost for personal use of company-owned automobiles and aircraft is based on the variable cost to the company of operating the automobiles and aircraft and includes, among other things, fuel costs, maintenance costs, and, in the case of aircraft, the cost of trip-related crew hotels and meals, and landing and ground handling fees. The calculation does not include fixed costs that would have been incurred regardless of whether there was any personal use of the automobiles or aircraft (e.g., purchase costs and depreciation, driver and flight crew fixed salaries and benefits, insurance costs, etc.).

(2)

Effective January 1, 2010, the company requires reimbursement by Mr. Chenault for incremental cost in excess of $200,000 per year for travel on company aircraft that is deemed by the SEC to be personal use, including use to travel to outside board meetings. Messrs. Gilligan’s and Schulman’s 2012 amounts are in connection with travel to outside corporate board meetings.

(3)

The amount shown includes expatriate services and allowances in connection with Mr. Gilligan’s repatriation to the United States, due to his international assignment. The services received by Mr. Gilligan apply to all employees on international assignment. Services and allowances included in the amounts shown that were paid or received in British Pound Sterling were converted to U.S. dollars based on the conversion rate as of the date paid, received, or allocated.

(4)

This column reports the total amount of other perquisites and personal benefits provided, none of which individually exceeded the greater of $25,000 or 10% of the total amount of all perquisites and other personal benefits reported for the NEO. These other benefits consist of office parking, reimbursement for certain information technology, cost associated with employee recognition programs, and cost of certain meals from the company’s dining facilities.

In addition to the perquisites and other benefits described in the table and footnotes above, our NEOs also receive occasional secretarial support with respect to personal matters and may, on occasion, use the company’s tickets for sporting and entertainment events for personal rather than business purposes. We incur no incremental cost for the provision of such additional benefits.

EXECUTIVE COMPENSATION TABLES

Grants of Plan-Based Awards

The following table provides information on SO, RSU, and PG2012-14 awards granted to each of our NEOs in 2012 under the 2007 plan. There can be no assurance that the grant date fair value of awards will ever be realized by the NEOs.

Grants of Plan-Based Awards


						ESTIMATED FUTURE PAYOUTS UNDER NON-EQUITY INCENTIVE PLAN AWARDS (2)						ESTIMATED FUTURE PAYOUTS UNDER EQUITY INCENTIVE PLAN AWARDS (2)						ALL OTHER OPTION AWARDS
NAME	AWARD TYPE (1)	GRANT DATE		APPROVAL DATE		THRESHOLD ($)		TARGET ($)		MAXIMUM ($)		THRESHOLD (#)		TARGET (#)		MAXIMUM (#)		NUMBER OF SECURITIES UNDERLYING OPTIONS (#)		EXERCISE PRICE OR BASE PRICE OF OPTION AWARDS ($/SH)(3)		GRANT DATE FAIR VALUE OF STOCK AND OPTION AWARDS ($)(4)
K.I. Chenault	PG2012-14		1/24/2012		1/23/2012	$	0	$	5,125,000	$	6,406,250
	SO		1/24/2012		1/23/2012														123,706	$	49.23	$	2,159,907
	RSU		1/24/2012		1/23/2012								0		123,706		154,632					$	6,090,046
	RSU		1/24/2012		1/23/2012										259,495							$	12,774,939
E.P. Gilligan	PG2012-14		1/24/2012		1/23/2012	$	0	$	1,500,000	$	1,875,000
	SO		1/24/2012		1/23/2012														53,231	$	49.23	$	929,413
	RSU		1/24/2012		1/23/2012								0		53,231		66,538					$	2,620,562
S.J. Squeri	PG2012-14		1/24/2012		1/23/2012	$	0	$	1,150,000	$	1,437,500
	SO		1/24/2012		1/23/2012														37,486	$	49.23	$	654,506
	RSU		1/24/2012		1/23/2012								0		37,486		46,857					$	1,845,436
D.H. Schulman	PG2012-14		1/24/2012		1/23/2012	$	0	$	1,300,000	$	1,625,000
	SO		1/24/2012		1/23/2012														37,486	$	49.23	$	654,506
	RSU		1/24/2012		1/23/2012								0		37,486		46,857					$	1,845,436
D.T. Henry	PG2012-14		1/24/2012		1/23/2012	$	0	$	1,200,000	$	1,500,000
	SO		1/24/2012		1/23/2012														28,490	$	49.23	$	497,435
	RSU		1/24/2012		1/23/2012								0		28,490		35,612					$	1,402,563

(1)

PG Awards. PG2012-14 awards link compensation to our financial and strategic performance for 2012 through 2014. The goals for the three-year performance period were approved by the Compensation Committee in March 2012 and are based 50% on financial metrics and 50% on strategic milestones. The potential award payout is determined based on a table of possible performance and earned payout levels, including a cap on the overall earned payout level. The actual payout could be higher or lower than the notional target value based on actual performance.

Restricted Stock Units. Except as specified otherwise, RSU awards will vest on the third anniversary of the grant date in an amount determined by performance against the average ROE target during the three-year performance period.

259,495 of the RSUs were granted to Mr. Chenault in connection with his 2011 AIA and the payout of PG2010-11 and will vest on the first anniversary of the grant date subject to the performance hurdle of positive net Income over the vesting period. One half of the net shares upon vesting of this award cannot be sold until one year after Mr. Chenault’s retirement. Dividend equivalents on RSUs will accrue but will not be paid unless and until the underlying shares vest.

Stock Options. The SOs have a ten-year term and 25% of these shares become exercisable on each grant date anniversary.

All awards are subject to continuous employment with the company, except that all awards may vest upon death, disability termination, retirement, or in certain circumstances in connection with a change in control of the company, as described on pages 51 to 54.

(2)

The amounts shown under these columns represent potential aggregate threshold, target, and maximum payouts for achievement of threshold, target, and maximum performance levels for PG2012-14 and ROE-based RSUs. The threshold payout is zero, since it represents the level of performance for which no award would be earned. The “target” payout is equal to 100% of the executive’s grant value, and represents the amount that may be paid for achieving the target level of performance across all performance goals. The “maximum” payout represents the amount that may be paid for achieving the maximum level of performance across all performance goals, subject to an overall cap on the payout amount.

(3)

The exercise price of the SOs is the closing price of the company’s common shares on the NYSE on the grant date.

EXECUTIVE COMPENSATION TABLES

(4)

RSU value is based on the closing price of the company’s common shares on the grant date. Option value is a hypothetical value at grant using a Black-Scholes-Merton option-pricing model. These amounts are theoretical and may not reflect the amounts that option holders will realize, which will depend upon the share price at the time of exercise.

The following assumptions were used for SOs granted in January 2012:


ASSUMPTIONS	JANUARY
Dividend yield		1.48	%
Expected volatility		41.05	%
Risk-free interest rate		1.28	%
Expected life of stock option (years)		6.28
Exercise price	$	49.23

The expected volatility is based on weighted historical and implied volatilities of the company’s common stock price. The expected life of the options is based on historical data and expectations of options currently outstanding. These assumptions are consistent with the assumptions used to report stock option valuations and expense in our 2012 Annual Report to Shareholders.

EXECUTIVE COMPENSATION TABLES

Outstanding Equity Awards at Fiscal Year-End 2012

The following table shows the number of shares covered by exercisable and unexercisable SOs and unvested RSAs and RSUs granted under the 1998 plan or the 2007 plan held by our NEOs on December 31, 2012.

Outstanding Equity Awards at Fiscal Year-End 2012


	OPTION AWARD												STOCK AWARDS
NAME	GRANT DATE	NUMBER OF SECURITIES UNDERLYING UNEXERCISED OPTIONS (#) EXERCISABLE			NUMBER OF SECURITIES UNDERLYING UNEXERCISED OPTIONS (#) UNEXERCISABLE			EQUITY INCENTIVE PLAN AWARDS: NUMBER OF SECURITIES UNDERLYING UNEXERCISED UNEARNED OPTIONS (#)	OPTION EXERCISE PRICE ($)		OPTION EXPIRATION DATE		NUMBER OF SHARES OR UNITS OF STOCK THAT HAVE NOT VESTED (#)	MARKET VALUE OF SHARES OR UNITS OF STOCK THAT HAVE NOT VESTED ($) (a)	EQUITY INCENTIVE PLAN AWARDS: NUMBER OF UNEARNED SHARES, UNITS, OR OTHER RIGHTS THAT HAVE NOT VESTED (#)			EQUITY INCENTIVE PLAN AWARDS: MARKET OR PAYOUT VALUE OF UNEARNED SHARES, UNITS, OR OTHER RIGHTS THAT HAVE NOT VESTED ($) (a)
K.I. Chenault	1/24/2012		0			123,706	(1)		$	49.230		1/24/2022				123,706	(c)	$	7,110,621
	1/24/2012															259,495	(g)	$	14,915,772
	1/27/2011		33,995	(1)		101,986			$	44.540		1/27/2021				142,780	(d)	$	8,206,994
	1/26/2010		325,459	(1)		325,459