AXP.NYSEAmerican Express CO
DEF 14A: American Express Faces Shareholder Vote on Executive Pay, Climate Lobbying, and Merchant Codes
Sentiment:
Proxy Statement
American Express is holding its annual shareholder meeting to vote on director elections, executive compensation, auditor ratification, and shareholder proposals related to golden parachutes, climate lobbying, and merchant category codes.
Worse than expectedThe Say-on-Pay vote received only 54% support, indicating shareholder dissatisfaction with executive compensation.
Summary
- American Express Company (Amex) is holding its 2024 Annual Meeting of Shareholders on May 6, 2024, virtually.
- Shareholders will vote on the election of directors, ratification of the appointment of PricewaterhouseCoopers LLP as the independent registered public accounting firm for 2024, an advisory resolution to approve executive compensation (Say-on-Pay), and approval of the Second Amended and Restated American Express Company 2016 Incentive Compensation Plan.
- The meeting will also address three shareholder proposals concerning golden parachutes, climate lobbying, and merchant category codes.
- The Board of Directors recommends voting FOR the election of each director nominee, FOR the ratification of PricewaterhouseCoopers LLP, FOR the advisory resolution on executive compensation, and FOR the approval of the Second Amended and Restated American Express Company 2016 Incentive Compensation Plan.
- The Board recommends voting AGAINST the shareholder proposals.
- The proxy materials and annual report are available online, and the company expects to begin mailing proxy materials around March 15, 2024.
Sentiment
Score: 7
Explanation: The document presents a mix of positive financial results and shareholder concerns, resulting in a moderately positive sentiment.
Positives
- Total revenue reached an all-time high of $60.5 billion, up 14% versus the prior year.
- Diluted earnings per share (EPS) for the full year 2023 were $11.21.
- The company returned $5.3 billion of capital to shareholders in the form of share repurchases and dividends in 2023.
- American Express achieved a 1-year Total Shareholder Return of 29% in 2023, outperforming the S&P Financials Index by 17 percentage points.
- The company has committed that the Chairman and CEO will not receive any future special awards.
- The company has enhanced compensation disclosure in response to shareholder feedback.
- The company maintained 100% pay equity for colleagues across genders globally and across races and ethnicities in the U.S. in 2023.
Negatives
- At the 2023 Annual Meeting of Shareholders, approximately 54% of the votes cast were in favor of the advisory vote to approve executive compensation (Say-on-Pay).
Risks
- The document contains forward-looking statements that are subject to risks and uncertainties, as detailed in the company's Annual Report on Form 10-K for the year ended December 31, 2023.
- Delays in emissions reductions undermine political stability, damage infrastructure, impair access to finance and insurance, and exacerbate health risks.
- Failure to address the potential risks to its bottom-line and its customers before it further embraces the agenda of the anti-Second Amendment lobby may expose the Company to regulatory, reputational, and litigation risks that may threaten long-term shareholder value.
Future Outlook
The company seeks to grow by focusing on four strategic imperatives.
Industry Context
The document mentions the S&P Financials Index as a benchmark for performance comparison.
Comparison to Industry Standards
- The document compares American Express's performance to the S&P Financials Index.
- The document compares American Express's performance to the LTIA Performance Peer Group.
- The document compares American Express's performance to the Compensation Peer Group.
Corporate Governance
| Change Type | Description | Effective Date | Impact Assessment |
|---|---|---|---|
| Board Committee Membership | Revisions to the membership of the standing committees were approved effective March 6, 2024. | March 6, 2024 | Facilitates effective oversight and management over key risk areas. |
| AIA Program Updates | Beginning in 2024, the Compensation and Benefits Committee increased the weighting of our Shareholder quadrant (i.e., financial objectives) from 45% to 60%, increasing the weight towards quantifiable financial objectives. | 2024 | To improve our compensation practices. |
Related Party Transactions
- Executive officers and directors may take out loans from certain subsidiaries on the same terms offered to the general public.
- Executive officers and directors may enter into transactions with the company involving other goods and services, such as travel services and deposit and checking products offered by subsidiaries of the company.
- The sister-in-law of the Chairman and CEO is employed by the company in a non-executive position and received compensation in 2023 of between $325,000 and $350,000.
- The company may make charitable contributions to non-profit organizations where our directors or executive officers are directors or trustees.
Stakeholder Impact
- The document outlines the company's commitment to building financial confidence, advancing climate solutions, and promoting diversity, equity, and inclusion, impacting customers, colleagues, and communities.
- The document outlines the company's commitment to be a great place to join, stay and grow a career continues to earn us industry awards and recognition.
Next Steps
- Shareholders to vote on the proposals at the Annual Meeting on May 6, 2024.
- The Board and Management will consider the results of the Say-on-Pay vote and shareholder feedback in future compensation decisions.
- The company will continue to engage with SBTi throughout the validation process.
Key Dates
| Date | Description |
|---|---|
| 1934 | Securities Exchange Act of 1934 |
| 1995 | Private Securities Litigation Reform Act of 1995 |
| 2005 | PricewaterhouseCoopers LLP has been the independent auditor since 2005. |
| 2010 | Theodore J. Leonsis founded Monumental Sports & Entertainment, LLC in 2010. |
| 2010 | Deborah P. Majoras was named Chief Legal Officer and Corporate Secretary in 2010. |
| 2013 | Lynn A. Pike joined the board of American Express National Bank in 2013. |
| 2014 | Laureen Seeger is Chief Legal Officer of American Express Company, a position she assumed in July 2014. |
| 2016 | Karen L. Parkhill has been Executive Vice President and CFO of Medtronic, Inc. since 2016. |
| 2016 | Lisa W. Wardell was the Chairman and CEO of Adtalem Global Education, Inc. from 2016 to 2021. |
| 2016 | The 2016 Incentive Compensation Plan was originally adopted by our Board, and approved by our shareholders at our 2016 Annual Meeting. |
| 2017 | Walter J. Clayton III served as Chair of the U.S. Securities and Exchange Commission (SEC) from 2017 to 2020. |
| 2017 | Christopher D. Young was the CEO of McAfee, LLC, one of the worlds leading independent cybersecurity companies from 2017 to 2020. |
| 2017 | John J. Brennan has been a member of the Board since 2017. |
| 2018 | Stephen J. Squeri has been Chairman and CEO of American Express Company since 2018. |
| 2018 | Christopher D. Young has been the Executive Vice President Business Development, Strategy and Ventures of Microsoft Corp., since 2020. |
| 2018 | The company has maintained carbon neutral operations powered by 100% renewable electricity since 2018. |
| 2020 | Charles E. Phillips has been the Managing Partner and co-founder of Recognize, a technology private equity firm, since 2020. |
| 2020 | The 2016 Plan was then amended and restated in March 2020, subject to shareholder approval at our 2020 Annual Meeting |
| 2021 | Anr Williams is Group President, Enterprise Services and Chief Executive Officer of AENB, a role he assumed in April 2021. |
| 2021 | The company committed to net-zero emissions in alignment with the Science Based Target initiative (SBTi) in 2021. |
| 2021 | The company launched a roadmap for its global ESG strategy in 2021. |
| 2021 | John J. Brennan was elected as Lead Independent Director in September 2021. |
| 2022 | The company submitted its nearand long-term emissions reductions targets to the SBTi for validation in December 2022. |
| 2022 | The company issued a sustainability financing report disclosing that as of December 31, 2022, it had allocated $750 million of the net proceeds of the $1 billion principal amount of sustainability notes that it issued in 2022 to eligible Green and Social Projects in support of its ESG strategy. |
| 2023 | The company made or contributed capital to approximately $484 million in investments, community development loans and grants through The American Express Center for Community Development in 2023. |
| 2023 | The company pledged $12.75 million in grants in 2023 to support small businesses as they prepare for and rebuild stronger in the aftermath of natural disasters and climate events. |
| 2023 | The company set an increased goal to support 750,000 underrepresented-owned smalland medium-sized U.S. businesses with access to capital and financial education from late 2020 through 2025, after exceeding our original goal of 250,000 underrepresented owned businesses in 2022. |
| 2023 | The company maintained 100% pay equity for colleagues across genders globally and across races and ethnicities in the United States in 2023. |
| 2023 | Christophe Le Caillec is the Chief Financial Officer of American Express, a role he assumed in August 2023. |
| 2023 | The company formed an internal Net-Zero Working Group comprised of business unit leads to support implementation of the Companys net-zero strategy in 2023. |
| 2023 | The company created an internal Net-Zero Working Group comprised of business unit leads to support implementation of the Companys net-zero strategy in 2023. |
| 2023 | The company issued a sustainability financing report disclosing that as of December 31, 2022, it had allocated $750 million of the net proceeds of the $1 billion principal amount of sustainability notes that it issued in 2022 to eligible Green and Social Projects in support of its ESG strategy. |
| 2023 | The company supported small businesses, including an estimated $17 billion in reported spending by U.S. consumers at independent retailers and restaurants on Small Business Saturday in 2023. |
| 2023 | The company awarded over $5.8 million in grants in 2023 to support approximately 750 small businesses in the U.S. and in Australia, Canada, Japan, Mexico and the United Kingdom. |
| 2023 | The company maintained the lowest U.S. fraud rates among major credit card networks in 2023. |
| 2023 | The company maintained 100% pay equity for colleagues across genders globally and across races and ethnicities in the United States in 2023. |
| 2023 | The company pledged $12.75 million in grants in 2023 to support small businesses as they prepare for and rebuild stronger in the aftermath of natural disasters and climate events. |
| 2023 | The company set an increased goal to support 750,000 underrepresented-owned smalland medium-sized U.S. businesses with access to capital and financial education from late 2020 through 2025, after exceeding our original goal of 250,000 underrepresented owned businesses in 2022. |
| 2023 | The company maintained 100% pay equity for colleagues across genders globally and across races and ethnicities in the United States in 2023. |
| 2023 | The company continued to provide transparency through disclosures on diversity representation among colleagues, including new details on hiring, promotion and retention of colleagues in the U.S. broken down by race and ethnicity and the raw median pay gap for women globally and for racially and ethnically diverse colleagues in the U.S. |
| 2023 | The company maintained 100% pay equity for colleagues across genders globally and across races and ethnicities in the United States in 2023. |
| 2023 | The company continued to provide transparency through disclosures on diversity representation among colleagues, including new details on hiring, promotion and retention of colleagues in the U.S. broken down by race and ethnicity and the raw median pay gap for women globally and for racially and ethnically diverse colleagues in the U.S. |
| 2023 | The company formed the Climate Risk Management Working Group, which is comprised of senior leaders with direct accountability to the ERMC to oversee climate risks and met quarterly. |
| 2023 | The company formed the Net-Zero Working Group, which is comprised of colleagues across the enterprise, to support the implementation of our net zero strategy. |
| 2023 | The company set a goal to have the vast majority of plastic cards issued by American Express be made of at least 70% recycled or reclaimed plastic by the end of 2024. In 2022 and 2023, we continued to expand cards made from recycled or reclaimed plastics globally. |
| 2023 | The company pledged $12.75 million in grants in 2023 to support small businesses as they prepare for and rebuild stronger in the aftermath of natural disasters and climate events. |
| 2023 | The company set an increased goal to support 750,000 underrepresented-owned smalland medium-sized U.S. businesses with access to capital and financial education from late 2020 through 2025, after exceeding our original goal of 250,000 underrepresented owned businesses in 2022. |
| 2023 | The company maintained 100% pay equity for colleagues across genders globally and across races and ethnicities in the United States in 2023. |
| 2023 | The company continued to provide transparency through disclosures on diversity representation among colleagues, including new details on hiring, promotion and retention of colleagues in the U.S. broken down by race and ethnicity and the raw median pay gap for women globally and for racially and ethnically diverse colleagues in the U.S. |
| 2024 | The Board approved revisions to the membership of our standing committees effective March 6, 2024. |
| March 8, 2024 | Record date for the meeting. |
| May 6, 2024 | Date of the Annual Meeting of Shareholders. |
Keywords
shareholder meeting, proxy statement, executive compensation, climate lobbying, merchant category codes, board of directors, corporate governance, financial performance, sustainability, ESG
Disclaimer:The information provided here is for general informational purposes only and does not constitute financial advice, recommendation, or endorsement of any kind. It may contain errors or omissions. You should not rely on this information to make financial decisions. Always seek the advice of a qualified financial professional before making any investment or financial decisions. Use of this information is at your own risk.