How I Voted: American Express Company (AXP) – Proxy Score 59%

American Express Company ($AXP) is a stocks in my portfolio. Their annual meeting is coming up on 4/29/2013. had collected the votes of six funds when I checked on 4/22/2013.  I voted with management 59% of the time.  View Proxy Statement. Warning: Be sure to vote each item on the proxy. Any items left blank are voted in favor of management’s recommendations. (See Broken Windows & Proxy Vote Rigging – Both Invite More Serious Crime)

I generally vote against pay packages where NEOs were paid above median in the previous year but make exceptions if warranted. According to Bebchuk, Lucian A. and Grinstein, Yaniv (The Growth of Executive Pay), aggregate compensation by public companies to NEOs increased from 5 percent of earnings in 1993-1995 to about 10 percent in 2001-2003.

Few firms admit to having average executives. They generally set compensation at above average for their “peer group,” which is often chosen aspirationally. While the “Lake Woebegone effect” may be nice in fictional towns, “where all the children are above average,” it doesn’t work well for society to have all CEOs considered above average, with their collective pay spiraling out of control. We need to slow the pace of money going to the 1% if our economy is not to become third world.

AXP’s Summary Compensation Table shows CEO/Chair K.I. Chenault was the highest paid named executive officer (NEO) at about $28.5M in 2012. I’m using Yahoo! Finance to determine market cap ($73.2B) and Wikipedia’s rule of thumb regarding classification. AXP is a large-cap company. According to the United States Proxy Exchange (USPX) guidelines (pages 9 & 10), using data from Equilar, the median CEO compensation at large-cap corporations was $10.8 million in 2010.

After inflationAXP ’s pay is well above median. I voted against the compensation plan and against all the members of the committee, or at least all the members I have an opportunity to vote against, since I don’t see committee chair Jan Leschly or Edward D. Miller on the proxy, only Peter Chernin, Richard A. McGinn and Robert D. Walter.

I voted in favor of Ken Steiner’s proposal that executives be required to hold significant stock awards until retirement age to align incentives with the long-term. I had a similar proposal at Apple this year. I also voted in favor of Northstar Asset Management’s proposal to align political contributions with the company’s values and disclose specified political expenditures. We should have this at every company. I also voted in favor of AFSCME’s proposal to separate the CEO and chair positions. That’s plain good governance. The CEO can also lead the board without a huge conflict of interest. How I voted (CorpGov) below:

# TEXTCorpGovAFSCMECalvertTrilliumDominiCBIS
1.1Charlene BarshefskyForAgainstForForAgainstFor
1.2Ursula M. BurnsForForForForForFor
1.3Kenneth I. ChenaultForForForForForFor
1.4Peter CherninAgainstForForAgainstForFor
1.5Anne LauvergeonForForForForAgainstFor
1.6Theodore J. LeonsisForForForForForFor
1.7Richard C. LevinForForForForForFor
1.8Richard A. McGinnAgainstAgainstForForForFor
1.9Samuel J. PalmisanoForForForForForFor
1.10Steven S ReinemundForForForAgainstForFor
1.11Daniel L. VasellaForForForForForFor
1.12Robert D. WalterAgainstAgainstForForForFor
1.13 Ronald A. WilliamsForAgainstAgainstAgainstAgainstAgainst
2Ratify AuditorsForAgainstAgainstAgainstAgainstFor
3Ratify NEO PayAgainstForForAgainstAgainstFor
5Indept Board ChairForForForForForFor

Mark your calendar:

We must receive notice of a shareholder’s intention to introduce a nomination or proposed item of business for an annual meeting not less than 90 days nor more than 120 days before the first anniversary of the prior year’s meeting. Assuming that the 2014 Annual Meeting of Shareholders is held on schedule, we must receive notice pertaining to the 2014 Annual Meeting of Shareholders no earlier than December 30, 2013 and no later than January 29, 2014.

 Looking at, I see action by written consent must be unanimous. That may be the default in New York state statute but I’d like to see our company set that at a simple majority. Additionally, special meetings can only be called by shareholders holding not less than 25% of the voting power determined to be Net Long Shares. Reducing that to 10% would be more shareowner friendly.

American Express Company’s ISS Governance QuickScore as of Apr 1, 2013 is 3. The pillar scores are Audit: 1; Board: 7; Shareholder Rights: 4; Compensation: 4. Brought to you by Institutional Shareholder Services (ISS). Scores range from “1” (low governance risk) to “10” (higher governance risk). Each of the pillar scores for Audit, Board, Shareholder Rights and Compensation, are based on specific company disclosure.

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