Comments on: CEO Compensation: Has American Express Figured it Out?

By: H. Peter Schiller

H. Peter Schiller — Wed, 09 Jan 2008 18:41:13 +0000

On the surface, the AmEx CEO compensation appears to be topnotch. It includes a relatively long time horizon with multiple parameters taken into consideration.

My biggest area of concern relate to the impact on employees. Will employees also be focused on similar goals? Will their compensation receive similar rewards? Will the average employees compensation be such a small fraction of the CEOs that a royalty / peasant relationship is promoted?

The package also appears to promote an all or nothing mentality. I recommend more levels of reward plateaus.

Overall, the AmEx package does appear to be on the right track.

By: Lord

Lord — Wed, 09 Jan 2008 17:36:33 +0000

The other question is how much this is modified later. Recession? Lower the targets. Poor performance? Golden parachute it to him on his way out anyway.

By: Adam

Adam — Wed, 09 Jan 2008 16:52:25 +0000

I agree with you, that if everything is as it seems, this is a very progressive move for executive compensation and governance.

Despite the long-term 6 year time horizon, however, there is still a fatal flaw in the growth requirements with these incentives in that are inherently designed to serve the street. Possessed to meet his goals and attain the wealth and glory that comes with it, will this package simply set up Chenault to be the next Ken Lay? I smell a faint hint of accounting issues and/or the increase in mysterious services charges to AMMEX customers in the coming years. But maybe I’m just a pessimist on these things?

It’ll be interested to see what happens.

By: Doug Granzow

Doug Granzow — Wed, 09 Jan 2008 15:06:54 +0000

I really like that there are different levels of success here — the fact that he can get a portion of the grants if he partially reaches the goals is actually good in my mind. Too often you see reward packages that are all or nothing for meeting a specific number. Then everything becomes about reaching that one specific number — through any means, ethical or not.