Pension Benefits

	Compensation Committee Report
	Summary Compensation Table
	Option Grants in 1999
	PG Awards in 1999
	Pension Benefits
	Severence and Change in Control
	Other Arrangements

PENSION BENEFITS
We provide pension benefits under the American Express Retirement Plan and the American Express Supplemental Retirement Plan.
American Express Retirement Plan. We have a Retirement Plan that is commonly referred to as a cash balance plan. Each payroll period we credit each participating employee with an amount equal to a percentage of the employee’s base salary we pay in that period. We also credit each employee with a percentage of any annual bonus and certain other types of compensation we pay at the time we pay the compensation. The percentage varies with the employee’s age and years of service. This table shows the percentages we use to determine the amount of the credits:

On January 1, 2000 the sum of age plus years of service for the named executives was as follows: Mr. Golub: 78, Mr. Chenault: 68, Mr. Linen: 88, Mr. Goeltz: 62 and Mr. Hubers: 93.
The Plan credits participants with interest on their cash balances. The Plan sets the interest rate each year based on an average of the interest rates for various five-year U.S. Treasury Notes. The minimum interest rate is 5%. The maximum rate is the lower of 10% or a specific rate set by the U.S. government under the tax laws. For 1999 the interest rate was 5.00%, and for 2000 the rate is 6%.
When the employee retires or terminates employment after completing five years of service, the Plan will pay out the cash balance amounts. The Plan will make these payments in the amounts consistent with the employees’ elections as to the form and timing of payments, including payment in a single lump sum or as an annuity. An annuity obligates the Plan to make payments in monthly installments over time, in amounts based on assumptions we make as to life expectancy and the value of making payments in the future. Employees may choose similar methods of payment for benefits they earned before July 1, 1995.
Supplemental Retirement Plan. By meeting certain legal requirements the Retirement Plan provides a tax-advantaged way for us to provide retirement benefits. However, U.S. tax law limits the amount of benefits we can provide an employee as well as the amount of compensation that we can take into account under the Retirement Plan. We make up for these lost benefits under our Supplemental Retirement Plan.
Funded Pension Plan. Some of our employees, including Messrs. Linen and Chenault, have earned retirement benefits under the American Express Funded Pension Plan, a plan in effect until May 1985. We purchased an annuity from an insurance company to fund benefits that these employees will receive under this plan when they retire or leave the Company.
Pension Table. We set forth in the table below the amount we estimate we will pay each year to the named executives as a single life annuity at age 65 under the Retirement Plan and the Supplemental Retirement Plan. Under a single life annuity, when the employee dies we cease making payments. We break out separately payments the insurance company will make under the Funded Pension Plan. In deriving our estimated payments for the Retirement Plan and the Supplemental Retirement Plan we used these assumptions:

We credit interest on account balances at the actual rate for all years through 2000 and at 5% for 2001 and later years.
We start paying retirement benefits to the executives at normal retirement age (age 65) as a single life annuity based on an interest rate of 6.26% and U.S. government-approved assumptions as to life expectancy.
We continue to employ Messrs. Golub, Chenault, Linen and Hubers until age 65 at their current base salaries and pay them annual bonuses equal to their average bonus over the last five years.
Mr. Goeltz continues his employee status until December 31, 2002 and he receives the compensation we describe on page 46.

Separate Pension Arrangement. When Mr. Golub began employment with us in 1983, we entered into an arrangement to compensate him for benefits he lost when he left his former employer. Under this arrangement, when Mr. Golub retires we will calculate his annual pension under the cash balance formula assuming he started working for us in 1978. We will pay to Mr. Golub an amount equal to any difference between this amount and the amount he is eligible to receive under the Retirement Plan and Supplemental Retirement Plan based on his actual years of service.

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