American Express 2015 Annual Report Download - page 143

NOTE 12
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 and covers most employees in the United States. The total
expense for all defined contribution retirement plans globally was $224 million, $272 million and $281 million in 2015,
2014 and 2013, respectively.
DEFINED BENEFIT PENSION AND OTHER POSTRETIREMENT BENEFIT PLANS
The Company’s primary defined benefit pension plans that cover certain employees in the United States and United
Kingdom are closed to new entrants and existing participants do not accrue any additional benefits. Most employees
outside the United States 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 $23 million, $24 million and $59 million in 2015, 2014 and 2013, 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, 2015 and 2014, the funded status related to the defined benefit
pension plans and other postretirement benefit plans was underfunded by $770 million and $767 million, respectively,
and is recorded in Other liabilities.
NOTE 13
COMMITMENTS AND CONTINGENCIES
LEGAL CONTINGENCIES
In the ordinary course of business, the Company and its subsidiaries are subject to various claims, investigations,
examinations, pending and potential legal actions, and other matters relating to compliance with laws and regulations
(collectively, legal proceedings). The Company discloses its material legal proceedings under “Legal Proceedings”.
The Company has recorded reserves for certain of its outstanding legal proceedings. A reserve is recorded when it
is both (a) probable that a loss has occurred and (b) the amount of loss can be reasonably estimated. There may be
instances in which an exposure to loss exceeds the recorded reserve. The Company evaluates, on a quarterly basis,
developments in legal proceedings that could cause an increase or decrease in the amount of the reserve that has
been previously recorded, or a revision to the disclosed estimated range of possible losses, as applicable.
The Company’s legal proceedings range from cases brought by a single plaintiff to class actions with millions of
putative class members. These legal proceedings involve various lines of business of the Company and a variety of
claims (including, but not limited to, common law tort, contract, antitrust and consumer protection claims), some of
which present novel factual allegations and/or unique legal theories. While some matters pending against the
Company specify the damages claimed by the plaintiff or class, many seek an unspecified amount of damages or are
at very early stages of the legal process. Even when the amount of damages claimed against the Company are stated,
the claimed amount may be exaggerated and/or unsupported. As a result, some matters have not yet progressed
sufficiently through discovery and/or development of important factual information and legal issues to enable the
Company to estimate an amount of loss or a range of possible loss, while other matters have progressed sufficiently
such that the Company is able to estimate an amount of loss or a range of possible loss.
For those disclosed material legal proceedings where a loss is reasonably possible in future periods, whether in
excess of a related reserve for legal contingencies or where there is no such reserve, and for which the Company is
able to estimate a range of possible loss, the current estimated range is zero to $350 million in excess of any reserves
related to these matters. This range represents management’s estimate based on currently available information and
does not represent the Company’s maximum loss exposure; actual results may vary significantly. As such proceedings
evolve, including the merchant claims described under “Legal Proceedings,” the Company may need to increase its
range of possible loss or reserves for legal contingencies.
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