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AMERICAN EXPRESS COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The aggregate grant date fair value of options with market-based
conditions was approximately $10.5 million. Compensation expense
for these awards is recognized ratably over the vesting period
irrespective of the probability of the market metric being achieved.
Total compensation expense of approximately $0.3 million, $0.5
million and $2.4 million was recorded in 2013, 2012 and 2011,
respectively.
RESTRICTED STOCK AWARDS
RSAs are valued based on the stock price on the date of grant and
generally vest 25 percent per year, beginning with the first anniversary
of the grant date. RSA holders receive non-forfeitable dividends or
dividend equivalents. The total fair value of shares vested during 2013,
2012 and 2011 was $336 million, $296 million and $221 million,
respectively (based upon the Company’s stock price at the vesting
date).
The weighted-average grant date fair value of RSAs granted in
2013, 2012 and 2011, is $60.13, $49.80 and $45.11, respectively.
LIABILITY-BASED AWARDS
Certain employees are awarded PGs and other incentive awards that
can be settled with cash or equity shares at the Company’s discretion
and final Compensation and Benefits Committee payout approval.
These awards earn value based on performance, market and service
conditions and vest over periods of one to three years.
PGs and other incentive awards are generally settled with cash and
thus are classified as liabilities and, therefore, the fair value is
determined at the date of grant and remeasured quarterly as part of
compensation expense over the vesting period. Cash paid upon vesting
of these awards in 2013, 2012 and 2011 was $45 million, $66 million
and $58 million, respectively.
Summary of Stock Plan Expense
The components of the Company’s total stock-based compensation
expense (net of forfeitures) for the years ended December 31 are as
follows:
(Millions) 2013 2012 2011
Restricted stock awards(a) $ 208 $ 197 $ 176
Stock options(a) 23 29 40
Liability-based awards 119 70 83
Performance/market-based stock
options —12
Total stock-based compensation
expense(b) $ 350 $ 297 $ 301
(a) As of December 31, 2013, the total unrecognized compensation cost related
to unvested RSAs and options of $232 million and $14 million, respectively,
will be recognized ratably over the weighted-average remaining vesting period
of 2.1 years and 1.8 years, respectively.
(b) The total income tax benefit recognized in the Consolidated Statements of
Income for stock-based compensation arrangements for the years ended
December 31, 2013, 2012 and 2011 was $127 million, $107 million and $105
million, respectively.
NOTE 21
RETIREMENT PLANS
DEFINED CONTRIBUTION RETIREMENT PLANS
The Company sponsors defined contribution retirement plans, the
principal plan being the Retirement Savings Plan (RSP), a 401(k)
savings plan with a profit-sharing component. The RSP is a tax-
qualified retirement plan subject to the Employee Retirement Income
Security Act of 1974 (ERISA) and covers most employees in the U.S.
The total expense for all defined contribution retirement plans
globally was $281 million, $254 million and $252 million in 2013, 2012
and 2011, respectively.
DEFINED BENEFIT PENSION AND OTHER POSTRETIREMENT
BENEFIT PLANS
The Company’s primary defined benefit pension plans that cover
certain employees in the U.S. and United Kingdom are closed to new
entrants and existing participants do not accrue any additional
benefits. Most employees outside the U.S. and United Kingdom are
covered by local retirement plans, some of which are funded, while
other employees receive payments at the time of retirement or
termination under applicable labor laws or agreements. The Company
complies with minimum funding requirements in all countries. The
Company sponsors unfunded other postretirement benefit plans that
provide health care and life insurance to certain retired U.S.
employees. The total expense for these plans was $59 million, $93
million and $74 million in 2013, 2012 and 2011, respectively.
The Company recognizes the funded status of its defined benefit
pension plans and other postretirement benefit plans, measured as the
difference between the fair value of the plan assets and the projected
benefit obligation, in the Consolidated Balance Sheets. As of
December 31, 2013 and 2012, the funded status related to the defined
benefit pension plans and other postretirement benefit plans was
underfunded by $661 million and $796 million, respectively, and is
recorded in other liabilities.
98