Exhibit 10.8

AMERICAN EXPRESS COMPANY

1998 INCENTIVE COMPENSATION PLAN

PORTFOLIO GRANT-                

TO

                «FIRSTNAME» «LASTNAME»                    

 

                         , 2006

 

December 31, 20    

Award Date

 

Expiration Date of Performance

Period (See Paragraphs 2, 5, 6, 7, et

al. for payment and vesting date)

 

$

Total Target Value

 

$

 

$

Target Value of the

Financial Incentive

Component

 

Target Value of the

Stock Incentive

Component

We are pleased to inform you that, pursuant to the Company’s 1998 Incentive
Compensation Plan, as amended (the “Plan”), the Compensation and Benefits
Committee (the “Committee”) of the Board of Directors (the “Board”) of American
Express Company (the “Company”), made an award of a portfolio grant to you as
hereinafter set forth (the “Award”) under the Plan as of the award date
specified above (the “Award Date”). This Award is subject to the Detrimental
Conduct Provisions established by the Committee, and as from time to time
amended.

1. General. You have been granted the Award subject to the provisions of the
Plan and the terms, conditions and restrictions set forth in this agreement
(this “Agreement”). The Total Target Value of the Award consists of two
components: the Target Value of the Financial Incentive Component as specified
above, representing 60% of the Total Target Value (the “Financial Target Value”)
and the Target Value of the Stock Incentive Component as specified above,
representing 40% of the Total Target Value (the “Stock Target Value”). The
period beginning January 1, 20     and ending on the expiration date specified
above (the “Expiration Date”) being the “Award Period.” The Total Target Value,
or either of its components may be reduced by the Committee in its sole
discretion, which may include but need not be limited to, situations where on
the last day of the Award Period you are engaged in Related Employment, as that
term is defined in the Plan. The Schedule A Value (as that term is defined below
in Subparagraph 3(b)), if any, and the Stock Incentive Value (as that term is
defined below in Subparagraph 3(c)), if any, will be determined as specified in
Paragraph 3 or 4 hereof, as the case may be.

 

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2. Requirement of Employment. Except as otherwise provided in Paragraphs 4 and 6
hereof, your rights to the Cash Value and the Number of Restricted Shares or
Letters of Intent, if any (as those terms are defined below) under Subparagraph
5(b) hereof, shall be provisional and shall be canceled in whole or in part, as
determined by the Committee in its sole discretion if your continuous employment
with the Company and its Affiliates (as that term is defined in the Plan) or
your Related Employment as that term is defined in the Plan (hereinafter
collectively referred to as “employment with the American Express companies”),
terminates for any reason on or before the Payment Date as set forth in
Subparagraph 5(b). Whether and as of what date your employment with the American
Express companies shall terminate if you are granted a leave of absence or
commence any other break in employment intended by your employer to be
temporary, shall be determined by the Committee in its sole discretion.

3. Determination of the Schedule A Value of the Financial Incentive, Stock
Incentive Value, Initial Value, Final Value, Cash Value and the Number of
Restricted Shares or Letters of Intent.

(a) Except as otherwise provided below in this Paragraph 3 and in Paragraphs 2,
4 and 6 hereof, there shall be paid to you in accordance with Paragraph 5
hereof, the sum, as may be adjusted by the Committee pursuant to Paragraph 3(d),
of the Schedule A Value of the Financial Incentive (the “Schedule A Value”) as
of the last day of the Award Period, if any, as provided in Subparagraph 3(b),
plus the Stock Incentive Value (as that term is defined below) after the end of
the Award Period, if any, as provided in Subparagraph 3(c)(i).

(b) Schedule A Value of the Financial Incentive.

(i) Except as otherwise provided in this Paragraph 3, the Schedule A Value as of
the last day of the Award Period will be equal to (X) times (Y), where
(X) equals the Financial Incentive Payout Percentage, if any, determined by the
Committee based on the performance (i.e., Average Annual Return on Equity,
Revenue and Earnings Per Share, as the case may be) of the Company or of a unit
of the Company, as the case may be, pursuant to the formula provided in Schedule
A to this Agreement and (Y) is the Financial Target Value. However, in no event
will (X) be greater than the Maximum Value as set forth in Schedule A to this
Agreement.

(ii) In the application of Schedule A to this Agreement after the end of the
Award Period for purposes of determining the Schedule A Value pursuant to this
Subparagraph 3(b), (A) if the Average Annual Return on Equity, Revenue and
Earnings Per Share, as the case may be, are less than those levels needed to
have some Schedule A Value, there shall be no Schedule A Value, and (B) if the
Average Annual Return on Equity, Revenue and Earnings Per Share, as the case may
be, are equal to or greater than those levels needed to have some Schedule A
Value and less than or equal to the maximum specified levels and are not

 

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represented on the table, the Schedule A Value shall be determined by
straight-line interpolation from the amounts specified in such table immediately
less than and greater than the amounts actually attained.

(iii) For purposes of this Award, the following terms shall have the following
meanings (which will take into account, in each case, the expenses and other
financial effect for the applicable year(s) of portfolio grants under the Plan
except as adjusted by the application of Subparagraph 3(b)(iv)).

(A) “Revenue” means, for any given year, managed revenue as reported by the
Company in its annual audited financial statements.

(B) “Average Annual Revenue” means, for the Award Period, the sum of Revenue for
every year during the Award Period, divided by 3.

(C) “Net Income” means, for any given year, the after-tax net income (or loss)
of the Company or of a segment or other part of the Company, as the case may be,
for such year as adjusted below, as determined by the Company in accordance with
generally accepted accounting principles applied on a basis comparable to that
used for the purpose of reporting industry segment data in the Company’s annual
audited financial statements. The calculation of Net Income, for any given year,
will be adjusted to exclude:

 

  •   reported cumulative effect of accounting changes,

 

  •   reported income and losses from discontinued operations, and

 

  •   reported extraordinary gains and losses as determined under generally
accepted accounting principles.

(D) “Earnings Per Share” means, for any given year, the diluted earnings (or
loss) per share of the Company for such year, as determined by the Company in
accordance with generally accepted accounting principles for inclusion in the
Company’s annual audited financial statements. The calculation of Earnings Per
Share, for any given year, will be adjusted in the same fashion as Net Income
for such year.

(E) “Average Annual Earnings Per Share” means, for the Award Period, the sum of
the Earnings Per Share for every year during the Award Period, divided by 3.

(F) “Average Annual Shareholders’ Equity” means, for any given year, the sum of
the total shareholders’ equity of the Company or of a segment or other part of
the Company, as the case may be, as of the first day of such year and as of the
end of each month during such period (each as determined by the Company in
accordance with generally accepted accounting principles but excluding the
effect

 

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of Statement of Financial Accounting Standards Nos. 115 and 133 (relating to
mark-to-market treatment of certain investments and accounting for derivatives,
respectively) and adjustments made to Net Income pursuant to Subparagraph
3(b)(iii)(C)), divided by 13.

(G) “Annual Return on Equity” means, for any given year, the Net Income for such
year divided by the Average Annual Shareholders’ Equity for such year.

(H) “Average Annual Return on Equity” means, for the Award Period, the sum of
the Annual Return on Equity for every year during the Award Period, divided by
3.

(I) “Amex Total Shareholder Return” or “Amex TSR” means the compound annual
growth rate, expressed as a percentage with one decimal point, in the value of a
share of common stock in the Company due to stock appreciation and dividends,
assuming dividends are reinvested, during the Award Period. For this purpose,
the “Beginning Stock Price” shall mean the average closing sales prices on the
New York Stock Exchange Composite Transaction Tape for the trading days in the
month of December immediately preceding the beginning of the Award Period; and,
the “Ending Stock Price” shall mean the average closing sales prices on the New
York Stock Exchange Composite Transaction Tape for the trading days in the month
of December immediately preceding the Expiration Date. The Amex TSR is
calculated as follows:

 

(    Ending Stock Price + value of dividends paid and reinvested during the
Award Period    )   (1/3)    Beginning Stock Price                  -1

(J) “S&P Financial Index Total Shareholder Return” or “S&P Financial TSR” means
the compound annual growth rate, expressed as a percentage with one decimal
point, in the value of the S&P Financial Index during the Award Period. It is
calculated in a manner consistent with Subparagraph 3(b)(iii)(I) above from
information publicly reported by Standard & Poors Company (or the entity that
publishes such other index, as the case may be).

(iv) To the extent permissible for purposes of Section 162(m) of the Internal
Revenue Code of 1986, as amended (the “Code”), in the event of any change in the
corporate capitalization of the Company (“Capitalization Change”), such as by
reason of any stock split, or a material corporate transaction, such as any
merger of the Company into another corporation, any consolidation of the Company
and one or more corporations into another corporation, any separation of the
Company (including a spin-off or other distribution of stock or property by the
Company), any reorganization of the Company (whether or not such reorganization
comes within the definition of such term in Section 368 of the Code), or any
partial or complete liquidation by the Company, other than a normal cash
dividend, if the Committee shall determine that such a change

 

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equitably requires an adjustment in the calculation or terms of Average Annual
Return on Equity, Revenue and/or Earnings Per Share, on the grounds that any
such change would produce an unreasonable value, such equitable adjustment will
be made by the Committee. Any such determination by the Committee to reflect
such change under this subparagraph 3(b)(iv) shall be final, binding and
conclusive.

(c) Stock Incentive Value.

(i) Except as otherwise provided in this Paragraph 3 and in Paragraph 1 above,
the Stock Incentive Value, as determined by the Committee after the last day of
the Award Period (the “Stock Incentive Value”), will be an amount equal to
(A) times (B), where (A) is the Stock Incentive Payout Percentage, if any,
determined by the Committee based on a comparison of the Amex TSR and the S&P
Financial TSR pursuant to the formula and (B) is the Stock Target Value, both
provided in Schedule A to this Agreement. However, in no event will (A) be
greater than the Maximum Value of the Stock Incentive Value as set forth in
Schedule A to this Agreement.

(ii) To the extent permissible for purposes of Section 162(m) of the Code, upon
the occurrence of a Capitalization Change, if the Committee shall determine that
such a change equitably requires an adjustment in the calculation or terms of
the Stock Incentive Amex TSR, on the grounds that any such change would produce
an unreasonable value, such equitable adjustment will be made by the Committee.
Any such determination by the Committee to reflect such change under this
Subparagraph 3(c)(ii) shall be final, binding and conclusive.

(d) As soon as practicable after the last day of the Award Period, the Committee
may determine, in its sole discretion, that the sum of the Schedule A Value and
the Stock Incentive Value (as initially determined above in Subparagraphs 3(b)
and (c), respectively) may be adjusted downward (that is, to a value of zero),
but in no event upward, as follows:

(i) Your Unit’s Results. Downward by a percentage (ranging from 0-100%) of such
initially-determined sum, based on such criteria as the Committee shall deem
appropriate relating to your unit’s results, with such resultant sum being the
“Initial Value”; provided that any such determination by the Committee need not
be made in a uniform manner and may be made selectively among holders of awards
of portfolio grants in your unit, whether or not such award holders are
similarly situated.

(ii) Your Individual Results. The Initial Value may be adjusted further downward
by a percentage (ranging from 0-100%) of such Initial Value after the
application of Subparagraph 3(d)(i), based on such criteria as the Committee
shall deem appropriate relating to your individual results, with such final
resultant sum being the “Final Value”; provided that any such determination by
the Committee need not be made in a uniform manner and may be made selectively
among holders of awards of portfolio grants, whether or not such award holders
are similarly situated.

 

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In no event may the Committee amend any provision hereof so as increase or
otherwise adjust upward the Schedule A Value or any component thereof or the
Stock Incentive Value.

(e) The Committee shall determine the Schedule A Value, the Stock Incentive
Value, the Initial Value and the Final Value pursuant to this Agreement, and
such determinations by the Committee shall be final, binding and conclusive upon
you and all persons claiming under or through you.

(f) The Committee shall determine in its own discretion what portion of the
Final Value, if any, shall be payable in cash (the “Cash Value”), and what
portion shall be denominated in restricted shares or letters of intent of the
Company (“the RSA” or “the LOI”), in accordance with Paragraph 5 below. The RSA
or the LOI shall have the terms substantially as set forth in the form of
restricted stock or letter of intent award granted generally under the Plan, or
its successor, except that the RSA or the LOI shall vest pursuant to a period
determined in the Committee’s discretion, except that such vesting period shall
not be less than one year from date of grant, and (B) be forfeitable only if
your employment with the American Express companies terminates by reason of
voluntary resignation or terminates for cause (that is, violation of the Code of
Conduct as in effect from time to time) prior to the applicable vesting dates.
The number of restricted shares or letters of intent of the Company comprising
the RSA or the LOI (the “Number of Restricted Shares” or the “Number of Letters
of Intent”) shall be determined by dividing such portion of the Final Value so
designated by the Committee, if any, by the average of the high and low market
value of the shares on January 19, 20     or such other date that the Committee
approves payout of the Awards, and shall be payable in the form of an RSA or an
LOI in accordance with Paragraph 5 below.

4. Death, Disability or Retirement.

(a) If, on or before the Payment Date set forth in Subparagraph 5(b) but during
a period when you have been in continuous employment with the American Express
companies since the Award Date, you terminate your employment with the American
Express companies by reason of disability at any time following the Award Date
(as that term is defined in the Plan) or you die at any time following the Award
Date, you will be entitled to that proportion of the Final Value as the number
of full months which have elapsed between January 1, 20     and the end of the
month in which your termination of employment by reason of death or such
disability occurs (not to exceed 38) bears to 38, and for this purpose, to the
extent not otherwise previously determined by the Committee, in the event of
your disability or death, the Final Value shall be calculated by applying the
rate at which the expense for the Award was being accrued for purposes of the
Company’s annual audited financial statement at the end of the last completed
calendar quarter prior to your disability or death, as applicable.

Such amount, if any, shall be payable as soon as practicable thereafter, unless
otherwise determined by the Committee, in cash, common shares of the Company, or
other property, or any combination thereof, and you and all others claiming
under or through you shall not be entitled to receive any other amounts under
this Award.

 

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(b) If, on or before the Payment Date set forth in Subparagraph 5(b) but during
a period when you have been in continuous employment with the American Express
companies since the Award Date, you terminate your employment with the American
Express companies by reason of retirement (as that term is defined by the
Committee), and such event occurs more than one year after the Award Date, you
will be entitled to receive an amount under this Award as provided in this
Subparagraph 4(b). Generally, in such event you will be entitled to that
proportion of the Final Value as the number of full months which have elapsed
between January 1, 20     and the end of the month in which your termination of
employment by reason of such retirement occurs (not to exceed 38) bears to 38,
unless such termination occurs following the attainment of age 60, in which case
you will be entitled to receive 50% of the Final Value you would otherwise
forfeit under the above formula, or, unless such termination occurs following
attainment of age 62, in which case you will be entitled to 100% of the Final
Value. The Final Value for this purpose shall be determined after the last day
of the Award Period in the normal course in accordance with Paragraph 3 hereof.
Such amount, if any, shall be payable in cash, Restricted Stock or Letters of
Intent, as described in Paragraph 3(f) above, or other property, or any
combination thereof, after the Award Period in accordance with Paragraphs 5 and
6 hereof, and you and all others claiming under or through you shall not be
entitled to receive any other amounts under this Award.

5. Payment of Award.

(a) As soon as practicable after the last day of the Award Period, or the
earlier date your continuous employment with American Express companies
terminates by reason of disability or death in accordance with Paragraph 4
above, but prior to payment in respect of the Award, the Committee shall
determine whether the conditions of Paragraph 2, 3 or 4 hereof have been met
and, if so, shall ascertain the Final Value, Cash Value and the Number of
Restricted Shares or the Number of Letters of Intent, if any, in accordance with
Paragraph 3 or 4, as the case may be.

(b) If the Committee determines that there is no Schedule A Value, the Financial
Incentive part of this Award will be canceled, and the Stock Incentive Value, if
any, as determined in accordance with Paragraph 3 or 4 shall become payable to
you in the form provided below in this Subparagraph 5(b). If the Committee
determines that there is some Schedule A Value, however, the Cash Value as
determined pursuant to Paragraph 3 hereof shall become payable to you in cash,
and the Number of Restricted Shares or the Number of Letters of Intent shall be
issued to you in the form of a restricted stock or letter of intent award under
the Plan, or its successor, except that the RSA or the LOI shall vest pursuant
to a period determined in the Committee’s discretion, and such vesting period
shall not be less than one year from date of grant), or other property, or any
combination thereof as soon as practicable following February 1, 20     (or at
such other time or times as the Committee shall determine as provided in
Paragraph 7 below) (the “Payment Date”).

 

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6. Termination of Employment after the Award Period but On or Before the Payment
Date. If, after the last day of the Award Period and on or before the Payment
Date specified above in Subparagraph 5(b), but during a period when you have
been in continuous employment with the American Express companies since the
Award Date, your employment terminates with the American Express companies for
any reason other than death, disability or retirement as set forth in Paragraph
4, then, you and all others claiming under or through you shall not be entitled
to receive any amounts under this Award, except as otherwise determined by the
Committee in its sole discretion.

7. Deferral or Acceleration of Payment of Award. Any payments to be made under
this Award may be deferred or accelerated in such manner as the Committee shall
determine; provided, however, that any such deferral or acceleration must comply
with the applicable requirements of Section 409A of the Code. As to such a
deferral of payment, any amount paid in excess of the amount that was originally
payable to you under this Agreement will be based on a reasonable interest rate
as determined by the Committee, and as to such an acceleration of payment to you
under this Agreement, any amount so paid will be discounted to reasonably
reflect the time value of money as determined by the Committee.

8. Change in Control. Notwithstanding anything in this Agreement to the contrary
(except for the provision dealing with a limitation under Section 280G of the
Code), if you have not received payment under the Agreement and, within two
years after the date of a Change in Control (as defined below), you experience a
termination of employment that would otherwise entitle you to receive the
payment of severance benefits under the provisions of the severance plan that
are in effect and that you participate in as of the date of such Change in
Control, (i) you shall immediately be 100% vested in the Award; (ii) the
Committee shall determine the Schedule A Value and Stock Incentive Value as of
the date of such termination of employment as if the Award Period had just
ended, based on results against the financial performance measures for the
Schedule A Value or the Amex TSR in comparison to the S&P Financial TSR for the
Stock Incentive Value up to the last day of the calendar quarter ending on or
immediately prior to such date, but prorated based on (a) the total number of
full and partial months of the Award Period which have elapsed between
(X) January 1 20    , and (Y) the date of such termination of employment (not to
exceed 36), divided by (b) the total number of months in the Award Period;
provided, however, the Committee shall adjust the resulting Schedule A value
downward by thirty-three percent (33%) and (iii) such value of the Award shall
be paid to you in cash within five days after the date of such termination of
employment. The Committee may not amend or delete this Paragraph 8 of this
Agreement in a manner that is detrimental to you, without your written consent.
A “Change in Control” has that meaning as defined in American Express Senior
Executive Severance Plan, as amended from time to time.

9. Tax Withholding and Furnishing of Information. There shall be withheld from
any payment of cash or vesting of restricted shares or letters of intent under
this Award, such amount, if any, as the Company and/or your employer determines
is required by law, including, but not limited to, U.S. federal, state, local or
foreign income, employment or other taxes incurred by reason of making of the
Award or of such payment. It shall be a condition to the obligation of the
Company to make payments under this Award that you (or those claiming under or
through you) promptly provide the Company and/or your employer with all forms,
documents or other information reasonably required by the Company and/or your
employer in connection with the Award.

 

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10. Rights Not Assignable. Except as otherwise determined by the Committee in
its sole discretion, your rights and interests under the Award and the Plan may
not be sold, assigned, transferred, or otherwise disposed of, or made subject to
any encumbrance, pledge, hypothecation or charge of any nature, except that you
may designate a beneficiary pursuant to Paragraph 11 hereof. If you (or those
claiming under or through you) attempt to violate this Paragraph 10, such
attempted violation shall be null and void and without effect, and the Company’s
obligation to make any further payments to you (or those claiming under or
through you) hereunder shall terminate.

11. Beneficiary Designation. Subject to the provisions of the Plan, you may, by
completing a form acceptable to the Company and returning it to the Corporate
Secretary’s Office, at 200 Vesey Street, New York, New York 10285, name a
beneficiary or beneficiaries to receive any payment to which you may become
entitled under this Agreement in the event of your death. You may change your
beneficiary or beneficiaries from time to time by submitting a new form to the
Corporate Secretary’s Office at the same address. If you do not designate a
beneficiary, or if no designated beneficiary is living on the date any amount
becomes payable under this Agreement, such payment will be made to the legal
representatives of your estate, which will be deemed to be your designated
beneficiary under this Agreement.

12. Administration. Any action taken or decision made by the Company, the Board
or the Committee or its delegates arising out of or in connection with the
construction, administration, interpretation or effect of the Plan or this
Agreement shall lie within its sole and absolute discretion, as the case may be,
and shall be final, conclusive and binding upon you and all persons claiming
under or through you. By accepting this Award or other benefit under the Plan,
you and each person claiming under or through you shall be conclusively deemed
to have indicated acceptance and ratification of, and consent to, any action
taken or decision made under the Plan by the Company, the Board or the Committee
or its delegates.

13. Major Transaction. This Paragraph shall apply in the event of a Major
Transaction (as defined in the American Express Senior Executive Severance Plan,
as amended from time to time).

If all or any portion of the payments or benefits to which the Participant will
be entitled under the Plan, either alone or together with other payments or
benefits which the Participant receives or is entitled to receive directly or
indirectly from the Company or any of its subsidiaries or any other person or
entity that would be treated as a payor of parachute payments as hereinafter
defined, under any other plan, agreement or arrangement, would constitute a
“parachute payment” within the meaning of Section 280G of the Code or any
successor provision thereto and regulations or other guidance thereunder (except
that “2.95” shall be used instead of “3” under Section 280G(b)(2)(A)(ii) of the
Code or any successor provision thereto), such payment or benefits provided to
the Participant under this Plan, and any other payments or benefits which the
Participant receives or is entitled to receive directly or indirectly from the
Company or any of its subsidiaries or any other person or entity that would be
treated as a payor

 

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of parachute payments as hereinafter defined, under any other plan, agreement or
arrangement which would constitute a parachute payment, shall be reduced (but
not below zero) as described below to the extent necessary so that no portion
thereof would constitute such a parachute payment as previously defined (except
that “2.95” shall be used instead of “3” under Section 280G(b)(2)(A)(ii) of the
Code or any successor provision thereto). Whether payments or benefits to the
Participant would constitute a “parachute payment”, whether such payments or
benefits are to be reduced pursuant to the first sentence of this Paragraph, and
the extent to which they are to be so reduced, will be determined by the firm
serving, immediately prior to the Major Transaction, as the Company’s
independent auditors, or if that firm refuses to serve, by another qualified
firm, whether or not serving as independent auditors, designated by the
Administration Committee under the American Express Senior Executive Severance
Plan (the “Firm”). The Firm will be paid reasonable compensation by the Company
for such services. If the Firm concludes that its determination is inconsistent
with a final determination of a court or the Internal Revenue Service, the Firm
shall, based on such final determination, redetermine whether the amount payable
to the Participant should have been reduced and, if applicable, the amount of
any such reduction. If the Firm determines that a lesser payment should have
been made to the Participant, then an amount equal to the amount of the excess
of the earlier payment over the redetermined amount (the “Excess Amount”) will
be deemed for all purposes to be a loan to the Participant made on the date of
the Participant’s receipt of such Excess Amount, which the Participant will have
an obligation to repay to the Company on the fifth business day after demand,
together with interest on such amount at the lowest applicable Federal rate (as
defined in Section 1274(d) of the Code or any successor provision thereto),
compounded semi-annually (the “Section 1274 Rate”) from the date of the
Participant’s receipt of such Excess Amount until the date of such repayment (or
such lesser rate (including zero) as may be designated by the Firm such that the
Excess Amount and such interest will not be treated as a parachute payment as
previously defined). If the Firm determines that a greater payment should have
been made to the Participant, within five business days of such determination,
the Company will pay to the Participant the amount of the deficiency, together
with interest thereon from the date such amount should have been paid to the
date of such payment, at the Section 1274 Rate (or such lesser rate (including
zero) as may be designated by the Firm such that the amount of such deficiency
and such interest will not be treated as a parachute payment as previously
defined). If a reduction is to be made pursuant to this Paragraph, the Firm will
have the right to determine which payments and benefits will be reduced, either
those under this Plan alone or such other payments or benefits which the
Participant receives or is entitled to receive directly or indirectly from the
Company or any of its subsidiaries or any other person or entity that would be
treated as a payor of parachute payments as previously defined, under any other
plan, agreement or arrangement.

14. Change in Control Payments. This Paragraph shall apply in the event of
Change in Control (as defined in the American Express Senior Executive Severance
Plan, as amended from time to time).

(a) In the event that any payment or benefit received or to be received by you
hereunder in connection with a Change in Control or termination of your
employment (such payments and benefits, excluding Gross-Up Payment (as
hereinafter defined), being hereinafter referred to collectively as the
“Payments”), will be subject to the excise tax referred to in Section

 

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4999 of the Code (the “Excise Tax”), then (i) if you are classified in Band 70
(or its equivalent) or above immediately prior to such Change in Control (a
“Tier 1 Employee”), the Company shall pay to such Tier 1 Employee, within five
days after receipt by such Tier 1 Employee of the written statement referred to
in Subparagraph (e) below, an additional amount (the “Gross-Up Payment”) such
that the net amount retained by such Tier 1 Employee, after deduction of any
Excise Tax on the Payments and any federal, state and local income and
employment taxes and Excise Tax upon the Gross-Up Payment, shall be equal to the
Payments and (ii) if you are other than a Tier 1 Employee, the Payments shall be
reduced to the extent necessary so that no portion of the Payments is subject to
the Excise Tax but only if (A) the net amount of all Total Payments (as
hereinafter defined), as so reduced (and after subtracting the net amount of
federal, state and local income and employment taxes on such reduced Total
Payments), is greater than or equal to (B) the net amount of such Total Payments
without any such reduction (but after subtracting the net amount of federal,
state and local income and employment taxes on such Total Payments and the
amount of Excise Tax to which you would be subject in respect of such unreduced
Total Payments); provided, however, that you may elect in writing to have other
components of your Total Payments reduced prior to any reduction in the Payments
hereunder.

(b) For purposes of determining whether the Payments will be subject to the
Excise Tax, the amount of such Excise Tax and whether any Payments are to be
reduced hereunder: (i) all payments and benefits received or to be received by
you in connection with such Change in Control or the termination of your
employment, whether pursuant to the terms of this Agreement or any other plan,
arrangement or agreement with the Company, any Person (as such term is defined
in the Company’s Senior Executive Severance Plan) whose actions result in such
Change in Control or any Person affiliated with the Company or such Person (all
such payments and benefits, excluding the Gross-Up Payment and any similar
gross-up payment to which a Tier 1 Employee may be entitled under any such other
plan, arrangement or agreement, being hereinafter referred to as the “Total
Payments”), shall be treated as “parachute payments” (within the meaning of
Section 280G(b)(2) of the Code) unless, in the opinion of the Firm, such
payments or benefits (in whole or in part) do not constitute parachute payments,
including by reason of Section 280G(b)(2)(A) or Section 280G(b)(4)(A) of the
Code; (ii) no portion of the Total Payments the receipt or enjoyment of which
you shall have waived at such time and in such manner as not to constitute a
“payment” within the meaning of Section 280G(b) of the Code shall be taken into
account; (iii) all “excess parachute payments” within the meaning of
Section 280G(b)(l) of the Code shall be treated as subject to the Excise Tax
unless, in the opinion of the Firm, such excess parachute payments (in whole or
in part) represent reasonable compensation for services actually rendered
(within the meaning of Section 280G(b)(4)(B) of the Code) in excess of the Base
Amount (within the meaning of Section 280G(b)(3) of the Code) allocable to such
reasonable compensation, or are otherwise not subject to the Excise Tax; and
(iv) the value of any noncash benefits or any deferred payment or benefit shall
be determined by the Firm in accordance with the principles of Sections
280G(d)(3) and (4) of the Code and regulations or other guidance thereunder. For
purposes of determining the amount of the Gross-Up Payment in respect of a Tier
1 Employee and whether any Payments in respect of a Participant (other than a
Tier 1 Employee) shall be reduced, a Participant shall be deemed to pay federal
income tax at the highest marginal rate of federal income taxation (and state
and local income taxes at the highest marginal rate of taxation in the state and
locality of your residence, net of the maximum reduction in federal income taxes
which could be obtained from deduction of such state and local

 

Page 11 of 13

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taxes) in the calendar year in which the Gross-Up Payment is to be made (in the
case of a Tier 1 Employee) or in which the Payments are made (if you are other
than a Tier 1 Employee). The Firm will be paid reasonable compensation by the
Company for its services.

(c) In the event that the Excise Tax is finally determined to be less than the
amount taken into account hereunder in calculating the Gross-Up Payment, then an
amount equal to the amount of the excess of the earlier payment over the
redetermined amount (the “Excess Amount”) will be deemed for all purposes to be
a loan to the Tier 1 Employee made on the date of the Tier 1 Employee’s receipt
of such Excess Amount, which the Tier 1 Employee will have an obligation to
repay to the Company on the fifth business day after demand, together with
interest on such amount at the Section 1274 Rate from the date of the Tier 1
Employee’s receipt of such Excess Amount until the date of such repayment (or
such lesser rate (including zero) as may be designated by the Firm such that the
Excess Amount and such interest will not be treated as a parachute payment as
previously defined). In the event that the Excise Tax is finally determined to
exceed the amount taken into account hereunder in calculating the Gross-Up
Payment (including by reason of any payment the existence or amount of which
cannot be determined at the time of the Gross-Up Payment), within five business
days of such determination, the Company will pay to the Tier 1 Employee an
additional amount, together with interest thereon from the date such additional
amount should have been paid to the date of such payment, at the Section 1274
Rate (or such lesser rate (including zero) as may be designated by the Firm such
that the amount of such deficiency and such interest will not be treated as a
parachute payment as previously defined). The Tier 1 Employee and the Company
shall each reasonably cooperate with the other in connection with any
administrative or judicial proceedings concerning the amount of any Gross-Up
Payment.

(d) As soon as practicable following a Change in Control, the Company shall
provide to each Tier 1 Employee and to each other Participant with respect to
whom it is proposed that Payments be reduced, a written statement setting forth
the manner in which the Total Payments in respect of such Tier 1 Employee or
other Participant were calculated and the basis for such calculations,
including, without limitation, any opinions or other advice the Company has
received from the Firm or other advisors or consultants (and any such opinions
or advice which are in writing shall be attached to the statement).

15. Miscellaneous. Neither you nor any person claiming under or through you
shall have any right or interest, whether vested or otherwise, in the Plan or
the Award, unless and until all of the terms, conditions and provisions of the
Plan and this Agreement shall have been complied with. In addition, neither the
adoption of the Plan nor the execution of this Agreement shall in any way affect
the rights and powers of any person to dismiss or discharge you at any time from
employment with the American Express companies. Notwithstanding anything herein
to the contrary, neither the Company nor any of its Affiliates (as that term is
defined in the Plan) nor their respective officers, directors, employees or
agents shall have any liability to you (or those claiming under or through you)
under the Plan, this Agreement or otherwise on account of any action taken, or
decision not to take any action made, by any of the foregoing persons with
respect to the business or operations of the Company or any of its Affiliates
(as that term is defined in the Plan), despite the fact that any such action or
decision may adversely affect in any way whatsoever Average Annual Shareholders’
Equity, Earnings Per Share, Net Income or other financial measures or amounts
which are accrued or payable or any of your other rights or interests under this
Agreement.

 

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16. Governing Law. The validity, construction, interpretation, administration
and effect of this Agreement shall be governed by the substantive laws, but not
the choice of law rules, of the State of New York.

 

AMERICAN EXPRESS COMPANY

By the Compensation and Benefits

Committee of the Board of Directors:

 

By    

 

Page 13 of 13

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SCHEDULE A

AXP PG-            FINANCIAL INCENTIVE COMPONENT (FIC) GRID FOR EXECUTIVE
OFFICERS

(subject to award agreement and discretionary downward adjustment)

 

 

AXP FINANCIAL INCENTIVE COMPONENT (FIC)

(allocated 60% of Total Target Value)

 

 

AXP Average Annual $
Earnings Per Share (diluted)
(40% weight)

 

 

AXP Average Annual $ Revenue
(managed basis) ($ billion)
(30% weight)

 

 

AXP Average Annual Return
on Equity
(30% weight)

 

20__ - 20__ Performance Period  

Max. Value %

(a)(b)

  20__ - 20__ Performance Period  

Max. Value %

(a)(b)

  20__ - 20__ Performance Period   Max. Value %
(a)(b) $____ or More   ___%   $___ or More   ___%   ___% or More   ___% $____  
___%   $____   ___%   ___%   ___% $____   ___%   $____   ___%   ___%   ___%
$____   ___%   $____   ___%   ___%   ___% $____   ___%   $____   ___%   ___%  
___% Less Than $____   -0-   Less Than $___   -0-   Less Than ___%   -0-

 

(a) “%” = percent of the executive’s dollar Target Value allocated to the
applicable performance factor.

(b) Straight-line interpolation would apply for any actual performance level
that falls between two performance levels shown on the grid.

AXP = Consolidated American Express Company

--------------------------------------------------------------------------------

SCHEDULE A

AXP PG-XVI STOCK INCENTIVE COMPONENT (SIC) GRID FOR EXECUTIVE OFFICERS

(subject to award agreement and discretionary downward adjustment)

 

 

AXP STOCK INCENTIVE COMPONENT (SIC)
(allocated 40% of Total Target Value)

AXP Total Shareholder Return (TSR) %

vs. S&P Financials

20__ - 20__

Performance Period
(percentage points AXP is

higher or lower)

   Max. Value %
(a)(b)    

+___% Or Higher

   ___%    

+      %

  

___%

   

+      %

  

___%

   

+      %

  

___%

   

+      %

  

___%

   

+      %

  

___%

   

+      %

  

___%

   

+      %

  

___%

   

+      %

  

___%

   

+      %

  

___%

   

+      %

  

___%

   

+      %

  

___%

   

+      %

  

___%

   

        0%

  

___%

   

-      %

  

___%

   

-      %

  

___%

   

-      %

  

___%

   

-      %

  

___%

   

-      %

  

___%

   

-      %

  

___%

   

-      %

  

___%

   

-      %

  

___%

   

-      %

  

___%

   

Lower Than -      %

  

      -0-

(a) = % percent of the executive’s dollar Target Value allocated to the
applicable performance factor

(b) Straight-line interpolation would apply for any actual performance level
that falls between two performance levels shown on the grid.

AXP = Consolidated American Express Company