American Express 2014 Annual Report Download - page 95

Download and view the complete annual report

Please find page 95 of the 2014 American Express annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 130

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130

AMERICAN EXPRESS COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 10
OTHER LIABILITIES
The following is a summary of Other liabilities as of December 31:
(Millions) 2014 2013
Membership Rewards liability $6,521$6,151
Employee-related liabilities(a) 2,258 2,227
Rebate and reward accruals(b) 2,389 2,210
Deferred card and other fees, net 1,308 1,314
Book overdraft balances 647 442
Other(c) 4,728 4,566
Total $17,851$ 16,910
(a) Employee-related liabilities include employee benefit plan obligations and incentive compensation.
(b) Rebate and reward accruals include payments to third-party card-issuing partners and cash-back reward costs.
(c) Other includes accruals for general operating expenses, client incentives, advertising and promotion, restructuring and reengineering reserves and derivatives.
MEMBERSHIP REWARDS
The Membership Rewards program allows enrolled Card Members to earn points that can be redeemed for a broad range of rewards
including travel, entertainment, retail certificates and merchandise. The Company records a balance sheet liability that represents
management’s best estimate of the cost of points earned that are expected to be redeemed in the future. The Ultimate Redemption Rate
(URR) and weighted average cost (WAC) per point are key assumptions used to approximate the Membership Rewards liability.
The expense for Membership Rewards points is included in marketing, promotion, rewards and Card Member services expenses. The
Company periodically evaluates its liability estimation process and assumptions based on developments in redemption patterns, cost per
point redeemed, partner contract changes and other factors.
DEFERRED CARD AND OTHER FEES, NET
The carrying amount of deferred card and other fees, net of deferred direct acquisition costs and reserves for membership cancellations as of
December 31 was as follows:
(Millions) 2014 2013
Deferredcardandotherfees
(a) $1,615$1,609
Deferred direct acquisition costs (176) (164)
Reserves for membership cancellations (131) (131)
Deferred card and other fees, net $1,308$1,314
(a) Includes deferred fees for Membership Rewards program participants.
NOTE 11
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 35 million, 35 million and 36 million common shares unissued
and available for grant as of December 31, 2014, 2013 and 2012, 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.
95