American Express 1998 Annual Report Download - page 50

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48
The following table summarizes information about the
stock options outstanding at December 31, 1998:
1998 1997 1996
(shares in thousands) Weighted Weighted Weighted
Average Average Average
Shares Exercise Price Shares Exercise Price Shares Exercise Price
Outstanding at beginning
of year 20,041 $ 44.32 21,116 $ 32.60 23,479 $ 27.41
Granted 11,494 $ 88.53 6,295 $ 66.74 5,778 $ 46.02
Exercised (4,410) $ 35.16 (6,566) $ 27.65 (7,104) $ 25.64
Forfeited/Expired (1,572) $ 65.87 (804) $ 48.12 (1,037) $ 38.49
Outstanding at end
of year 25,553 $ 64.46 20,041 $ 44.32 21,116 $ 32.60
Options exercisable at end
of year 9,718 $ 40.11 9,124 $ 30.58 10,641 $ 26.05
Options Outstanding Options Exercisable
(shares in thousands) Weighted
Average Weighted Weighted
Number Remaining Average Number Average
Range of Exercise Prices Outstanding Contractual Life Exercise Price Exercisable Exercise Price
$19.40 - $39.99 5,745 4.9 $ 28.65 5,745 $ 28.65
$40.00 - $49.99 3,686 7.1 $ 45.90 2,208 $ 45.88
$50.00 - $79.99 5,185 8.1 $ 66.61 1,575 $ 66.38
$80.00 - $113.97 10,937 8.9 $ 88.51 190 $ 101.71
$19.40 - $113.97 25,553 7.6 $ 64.46 9,718 $ 40.11
The dividend yield reflects the assumption that the cur-
rent dividend payout will continue with no anticipated
increases. The expected life of the options is based on his-
torical data and is not necessarily indicative of exercise
patterns that may occur. The weighted average fair value
per option was $21.70, $14.76 and $11.43 for options
granted during 1998, 1997 and 1996, respectively.
A summary of the status of the Company’s stock
option plans as of December 31 and changes during each
of the years then ended is presented below:
NOTE 11 RETIREMENT PLANS
PENSION PLANS
In 1998, the FASB issued SFAS No. 132, “Employers’
Disclosures about Pensions and Other Postretirement
Benefits,” which revises employers’ disclosures about pen-
sion and other postretirement benefit plans. The following
disclosures reflect the requirements of the new rule.
The Company sponsors the American Express
Retirement Plan (the Plan), a noncontributory defined
benefit plan, under which the cost of retirement benefits
for eligible employees in the United States is measured
by length of service, compensation and other factors and
is currently being funded through a trust. In addition,
the Company sponsors an unfunded, nonqualified sup-
plemental plan. Funding of retirement costs for the Plan
complies with the applicable minimum funding require-
ments specified by the Employee Retirement Income
Security Act of 1974, as amended. Employees’ accrued
benefits are based on nominal account balances which
are maintained for each individual and are credited with
additions equal to a percentage, based on age plus service,
of base pay, certain commissions and bonuses, overtime
and shift differential, each pay period. Employees’ bal-
ances are also credited annually with a fixed rate of
interest based on the daily average of published five-year
Treasury Note yields. Lump sum payout at termination
or retirement is available.
Most employees outside the United States are cov-
ered by local retirement plans, some of which are funded,
or receive payments at the time of retirement or termi-
nation under applicable labor laws or agreements. Benefits