Chairman of American Express gets huge pay increase
February 26, 2008
The chief executive and chairman of the American Express Co. received a very huge boost in pay for the year 2007. On the 25th of February it was announced that Kenneth l. Chenault is getting a compensation which is approximated at a value of $53.2 million in the year 2007. This amount is almost twice the amount he got in the previous year. The news was let out in a regulatory filing on the 25th of February.
The main reason for him getting this big increase is because of a very high rise in the stock and options grant the American Express gave him. Chenault who is only 56 got an enormous amount of $42.8 million as stock awards for his performance in the year 2007. Apart from this he also got a special incentive stock option grant. This is way more than what he had got in the previous year in the form of stock awards. He had got only $16.9 million in 2006 as stock awards.
American Express also increased the base salary of Chenault in the year 2007 by an incredible figure of 13 percent to bring it to $1.24 million. Last year his base salary was only $1.10 million. Apart from the huge increase in base salary the company also gave him $6.5 million as bonus. He had received the same amount in the previous year as well.
He also got compensation in the range of $1.04 million for the year 2007. This amount however covers perquisites like a home security system worth $126,992, $323,884 for the personal use of the company plane as well as $102,601 for the personal use of company owned cars. For the time being the chairman was able to pull in $1.55 million above-market returns in the form of deferred compensation in 2007.
The total amount Chenault had received in the year 2006 was almost $27.3 million as per the statistics that was let out by the Associated Press. According to the calculations Associated Press has made the total pay which includes salary, incentives, bonuses, perquisites, and the approximate value of stock options and awards granted in a year. The calculations which are made do not include the changes in current value of pension benefits.
Chenault however might not be able to realize the 2007 grant–date value of his stock award unless American Express is successful in bouncing back from the tough consumer credit surrounding. In the year 2007 the American Express shares had fallen by more than 14 percent. The fall in 2008 till date has been 13 percent. The company however was able to gain 15 percent on the 25th of February to close at a price of $45.21.
The company however is doing rather well. They announced that the net income in the year 2007 rose from $3.71 billion to $4.01 billion. The revenue in the year 2007 also went up to $24.14 billion from $22.16 billion in the previous year.
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