American Express 2011 Annual Report Download - page 93

AMERICAN EXPRESS COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The following is a detail of other, net expense for the years ended
December 31:
(Millions) 2011 2010 2009
Occupancy and equipment $ 1,685 $ 1,562 $ 1,619
Communications 378 383 414
MasterCard and Visa settlements, net of
legal fees (562) (852) (852)
Other(a) 1,260 1,208 950
Total other, net expense $ 2,761 $ 2,301 $ 2,131
(a) Includes in 2009, (i) a $135 million benefit representing the correction of an
error related to the accounting for cumulative translation adjustments
associated with a net investment in foreign subsidiaries, (ii) a $45 million
benefit resulting from the change in the fair value of certain forward
exchange contracts, (iii) a $59 million benefit related to the completion of
certain account reconciliations and (iv) lower travel and entertainment and
other expenses due to the Company’s reengineering activities.
Other, net expense includes general operating expenses, gains
(losses) on sale of assets or businesses not classified as
discontinued operations, litigation and insurance costs or
settlements and Loyalty Partner expenses.
NOTE 20
STOCK PLANS
STOCK OPTION AND AWARD PROGRAMS
Under the 2007 Incentive Compensation Plan and previously
under the 1998 Incentive Compensation Plan, awards may be
granted to employees and other key individuals who perform
services for the Company and its participating subsidiaries.
These awards may be in the form of stock options, restricted
stock awards or units (RSAs), portfolio grants (PGs) or other
incentives, and similar awards designed to meet the requirements
of non-U.S. jurisdictions.
For the Company’s Incentive Compensation Plans, there were
a total of 38 million, 40 million and 37 million common shares
unissued and available for grant as of December 31, 2011, 2010
and 2009, respectively, as authorized by the Company’s Board of
Directors and shareholders.
The Company granted stock option awards to its Chief
Executive Officer (CEO) in November 2007 and January 2008
that have performance-based and market-based conditions.
These option awards are separately disclosed and are excluded
from the information and tables presented in the following
paragraphs.
A summary of stock option and RSA activity as of December 31,
2011, and changes during the year is presented below:
Stock Options RSAs
(Shares in thousands) Shares
Weighted-
Average
Exercise
Price Shares
Weighted-
Average
Grant
Price
Outstanding as of
December 31, 2010 56,963 $ 39.54 15,074 $ 28.97
Granted 1,197 $ 44.78 4,759 $ 45.11
Exercised/vested (14,813) $ 33.97 (4,986) $ 30.74
Forfeited (349) $ 29.24 (851) $ 31.44
Expired (541) $ 44.90 – $ –
Outstanding as of
December 31, 2011 42,457 $ 41.63 13,996 $ 33.69
Options vested and expected to
vest as of December 31, 2011 42,359 $ 41.64 – –
Options exercisable as of
December 31, 2011 35,275 $ 43.10 – –
The Company recognizes the cost of employee stock awards
granted in exchange for employee services based on the grant-
date fair value of the award, net of expected forfeitures. Those
costs are recognized ratably over the vesting period.
STOCK OPTIONS
Each stock option has an exercise price equal to the market price
of the Company’s common stock on the date of grant and a
contractual term of 10 years from the date of grant. Stock
options generally vest 25 percent per year beginning with the
first anniversary of the grant date.
The weighted-average remaining contractual life and the
aggregate intrinsic value (the amount by which the fair value of
the Company’s stock exceeds the exercise price of the option) of
the stock options outstanding, exercisable, and vested and
expected to vest as of December 31, 2011 were as follows:
Outstanding Exercisable
Vested and
Expected to
Vest
Weighted-average remaining
contractual life (in years) 4.7 4.2 4.7
Aggregate intrinsic
value (millions) $ 338 $ 239 $ 337
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