American Express 2002 Annual Report Download - page 8

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In all, we ended the year energized and with a strong
sense of momentum. Earlier than many of our competi-
tors, we took the difficult, and sometimes painful,
steps to prepare our business to compete effectively
and prosper in the current environment. Just as impor-
tant, we moved aggressively in the marketplace at a
time when some of our traditional competitors were
distracted by their problems and were not as prepared
to deal with the difficult environment. As a result, we
entered 2003 operating from a position of strength
and on the offense.
We continue to believe our long-term financial targets
of 12 to 15 percent earnings per share growth, 8 percent
revenue growth and 18 to 20 percent return on equity,
on average and over time, are appropriate. These
targets have two key underlying assumptions: growth
in the S&P 500 Index of 8 percent and card billings
growth of 6 to 10 percent, both of which are consider-
ably lower than the historical rates that we experi-
enced over the past 20 years. We are confident in our
ability to meet our long-term targets, even in a slower
growth environment, because of the changes we have
made to our business models.
Before moving on to a review of business unit results,
I would like to address some important changes we
made regarding our use of stock options. Following
extensive review of our compensation strategy, we
decided to reduce the number of option shares granted
in 2003. As a result of the actions we have taken, the
annual stock grants issued in January 2003 repre-
sented 1.1 percent of total shares outstanding, which
is down significantly from 2.9 percent a year ago.
In addition, we made the decision to expense options
beginning with 2003 awards. We were able to make
these and other changes while maintaining a total
compensation program that will enable us to attract
and retain highly talented employees, and to reward
superior performance.
I6AXPI
FLEXIBIL
WE ARE STRONGER ECONOMICALLY BECAUSE OF THE INCREASED