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Executives

Kenneth I. Chenault - Chairman, Chief Executive Officer, Member of Operating Committee, Chairman of American Express Travel Related Services Company Inc and Chief Executive Officer of American Express Travel Related Services Company Inc

Carol V. Schwartz - Secretary

John Keenan -

Louise M. Parent - Executive Vice President, General Counsel and Member of Operating Committee

American Express Company (AXP) 2012 Annual Meeting of Shareholders April 30, 2012 9:00 AM ET

Kenneth I. Chenault

Good morning. Welcome to our 2012 Annual Meeting of Shareholders, and I am very pleased that you could join us today. With me on the dais is Carol Schwartz, Secretary of the company, who will assist me in conducting the meeting.

Before we begin, I remind you that the order of business and the rules of the meeting are set forth in the printed agenda handed out when you came in. Now before I comment on the company's financial performance, Carol will read a statement called for under the securities laws.

Carol V. Schwartz

The company's 2011 full year earnings release and supplement that were furnished in an 8-K report with the SEC on January 19, 2012, the company's 10-K report that was filed with the SEC on February 24, 2012, the company's first quarter 2012 earnings release and supplement that were furnished in an 8-K report with the SEC on April 18, 2012, as well as certain other related materials, including the company's 2011 annual report to shareholders, information from the company’s February financial community meeting and the slides we discuss at today's meeting have been posted on our Investor Relations website at ir.americanexpress.com. Paper copies of the first quarter earnings release and supplement are also available here at the meeting today. The earnings release information, the 2011 annual report to shareholders, the information from the February financial community meeting and the slides for today's meeting describe certain non-GAAP financial measures used by the company and the comparable GAAP financial information. We encourage you to review all of this information in conjunction with today's remarks.

In addition to certain non-GAAP financial measures, Mr. Chenault's remarks today contain certain forward-looking statements about the company's future financial performance and business prospects, which are subject to risks and uncertainties and speak only as of today. Forward-looking statements often contain such words as believe, expects, estimate, anticipate, optimistic, intend, plan, aim, will, may, should, could, would, likely and similar expressions. Factors that could cause actual results to differ materially from these forward-looking statements, including the company's financial and other goals, are set forth in the company's 8-K reports mentioned above, in the company's 2011 10-K report and in its other reports filed with the SEC, all of which are available through our Investor Relations website.

Kenneth I. Chenault

Thank you, Carol. Let me begin today with our 2011 performance. 2011 was an exceptionally strong year for the company. We generated excellent growth in our financials while at the same time making substantial investment in our future performance. For 2011, we generated $4.9 billion of net income, EPS growth of 22%, revenue growth of 9% and a return on average equity of 28%. Given the continued uncertainty across the global economy last year, I'm very proud of our performance. Our profitability growth was strong. Our revenue performance improved on both an absolute basis and relative to our card-issuing peers. And our strong return on equity reflected the strength of our business model and our hard work to provide superior value to our customers.

Our results in 2011 were driven by the strong performance of our business metrics. Billed business, cards-in-force, average cardmember spending and worldwide loan growth have all rebounded from the lows of 2009. And our billings clearly outperformed the pace of the economy overall.

At $822 billion, billed business for the full year was our highest ever as was our average spend of almost $15,000 per basic cardmember. After several years of declines, we stabilized and then prudently grew our worldwide loan balances, consistent with our premium lending strategy. Even as we modestly grew our loan portfolio, we continued to focus on our credit quality, and we ended the year with the lowest net write-off rate among our major competitors.

On a relative basis, the strength of our performance was quite clear. Our total billings were more than double that of our nearest issuing competitor and our growth rate of 15% was the second highest among the major issuers shown here. As you can also see, we were the only major issuer to generate positive growth in average loan balances. Given that our issuing peers are dependent on loan acquisition to drive revenue growth within their card businesses, they face a high hurdle when it comes to their financial performance.

Even with positive growth in billings, these issuing peers all had negative revenue growth in their card businesses. Our spend-centric model is driven by billings rather than loans, a much stronger position to be in given the substantial deleveraging that's occurred among consumers and small businesses over the last several years. Against our network competitors, we also did well in 2011. In the U.S., our growth rates translated into a 90 basis points increase in our share of U.S. credit and charge purchase volume. This outcome has been the result of a lot of hard work in an extremely competitive environment, along with our consistent investment in both cardmember and merchant value. In fact, because of our substantial long-term investments and ongoing focus on value, we've now moved into the #2 position among U.S. card networks in terms of credit and charge spend, with a billing share of that spend that now exceeds MasterCard.

The strength of our financial performance allowed us to invest back into our businesses in 2011 at near-record levels, leading to the acquisition of new cardmembers and merchants; the launch of a game-changing reloadable Prepaid Card in the U.S., which has no purchase or maintenance fees; the continued expansion of Global Network Services, which passed the $100 billion mark in annual billings in 2011, a terrific milestone for this business; initiatives such as Small Business Saturday, which gave small businesses across the U.S. a day of their own to start the holiday season and which had an estimated 103 million people shopping small; and the expansion of Loyalty Partner, our loyalty coalition company.

As I mentioned to you last year, we have been working steadily at transforming all of our businesses for the digital marketplace and developing new products and services that can capitalize on the opportunities it presents. In 2011, we made good progress against this objective. We did a national rollout of our offer platform with Foursquare, which automatically generates offers to enrolled cardmembers when they check in on their mobile phone at participating merchants. We launched Link, Like, Love, a first-ever Facebook application that provides participating cardmembers with deals, access and experiences based on their likes, interests and social connections. We rolled out Go Social, a site that enables small-business merchants in the U.S. to create coupon-less deals for cardmembers on digital and mobile platforms to help them grow their business. And we continued to expand the relevance of Membership Rewards as -- to expand the relevance of Membership Reward points as a virtual currency by signing new Pay with Points partners, such as Facebook, Groupon and Zynga.

As a tangible sign of our commitment to digital commerce, we opened an office in Silicon Valley and also announced a multiyear initiative to invest $100 million in early-stage start-ups that are developing innovative digital commerce technologies. A major step in our digital transformation occurred with the launch of our Serve payments platform in March. Serve is our new digital payments and commerce platform, which gives consumers new ways to spend, receive and send funds both online, as well as through mobile devices. Working with a range of business partners such as Ticketmaster, Verizon, Sprint and AOL, we begun embedding Serve into their payment processes, providing value both to our partners and our customers. All of these digital initiatives contributed to another strong year of online billings growth.

In 2011, we estimate that our online billings grew to over $130 billion, up approximately 22% from 2010. From all the numbers that we've seen, we continue to believe we’re the second -- we are the spend volume leader among card issuers in online payments. While our digital transformation has been a key focus for us, we haven't lost sight of our heritage. And as such, we continued to strengthen our customer service capabilities. New and improved tools, along with the incredible service ethos and commitment of our customer care professionals and travel counselors allow us to fulfill the promise of our brand each and every day. It's what's earned us our fifth J.D. Power award in the United States last year and the many other service prizes that we've won around the world.

So overall, our financial performance in 2011 allowed us to make substantial investments in our future growth, and I believe we did so productively. Our financial results and the progress we made against our growth objectives led to a very strong year in terms of the performance of our share price. Whether looking over a 1-, 2- or a 3-year time horizon, our total shareholder return outperformed both the S&P Financials and the S&P 500. And I'm very proud of the value we were able to provide to all of our shareholders in 2011.

While our business model and growth opportunities are important drivers of my confidence in our potential, another contributing factor is the strength of our overall aim. Our employees continue to be highly motivated. They are committed to winning and winning the right way in accordance with our values. Given the challenges we faced and the ambitious goals we have as a company, we must have motivated and committed people. And I'm proud to say we do. Our goal as a leadership team over the last year was to navigate through the near-term challenges of the marketplace while continuing to capitalize on our long-term growth opportunities. And I believe we've achieved this goal.

As we move into 2012, our company priorities are the same as they were for 2011: to drive growth, drive efficiency and to deliver superior service. Driving growth is critical to our profitability and our position in the marketplace and our long-term success. Driving efficiency allows us to compete effectively and provides a funding source for future investment. And clearly, we need to deliver superior service. It's about who we are as a company. It's about our customer commitment and it provides us with a significant competitive advantage.

Now while we have a great deal of work ahead of us, our first quarter results are a good sign of the progress we're making and the progress we've already generated against our goals. We announced our results on April 18, and I believe we had a strong quarter. We generated $1.07 of EPS, up 10% from last year. Revenues grew by 8% and our return on average equity was 27%. Worldwide billings grew by 12% on a reported basis and 13% on an FX-adjusted basis. Worldwide loans grew by 4%. Our global net write-off rate was 2.3%, down 140 basis points from the first quarter last year. And finally, our capital ratios continued to be well above our regulatory benchmarks.

As a result of our capital strength, we were advised in March that the Fed had no objection to our capital plan that we submitted. This plan included repurchasing up to $4 billion of company shares as part of our buyback program in 2012 and up to a further $1 billion of shares during the first quarter of 2013. The actual number of shares that will be repurchased will be based on our business plans, financial performance and market conditions. The plan we submitted also included an 11% increase in our dividend rate from $0.18 to $0.20 a quarter, which the board approved at our March meeting and which will begin in the second quarter.

Now a number of large financial companies submitted plans to the Federal Reserve to raise their dividends. But for most of them, these increases serve to only partially restore the cuts they were forced to make during the financial crisis. Our increase represents an actual gain for shareholders since we were able to manage through the crisis without eliminating or reducing our dividends to all of you. We know that many shareholders rely on our dividend and it was important to our board that we try to fulfill those expectations. While the environment in 2012 has some ongoing challenges, I believe our performance in the first quarter keeps us in a strong competitive position. We grew our businesses while also making progress against our digital transformation and our goal of being a major player in the digital space.

Here are some examples. In early January, we announced an operating agreement with Lianlian Group, which will allow them to use our Serve commerce platform for their customer base in China. Lianlian is a fast-growing mobile payment provider with a network across China that has served approximately 300 million mobile phone accounts. Under the agreement, which includes an equity investment, our Serve platform will power the digital wallet that Lianlian expects to launch in their -- to their customer base, strengthening our position in the mobile payment space in China.

Related to Serve, in the U.S., we launched the first application on Facebook that allows users to send, receive and request money from their Facebook friends. This application serves to further strengthen our already close partnership with Facebook and adds substantially to the relevance of Serve as a digital commerce platform. Also in the U.S., we introduced a new experience for our cardmembers using Twitter. When cardmembers sync their cards to their Twitter accounts and tweet using special offer hashtag, they qualify for special savings at participating merchants. We launched this capability at South by Southwest, an important interactive festival in Austin, Texas and received a great deal of positive feedback. Several reporters made the point that ours was the first application to actually drive commerce through Twitter's capability and customer base. We believe our Sync. Tweet. Save. program is a win for our cardmembers, our merchants, Twitter and us.

Our core businesses also had a number of important announcements during the first quarter. We announced a new co-brand card for clients of Morgan Stanley. We expanded our global alliance with Concur and Global Corporate Payments. And we expanded the reach of our prepaid products through a new deal with Office Depot. Our business progress was supported by our newest brand campaign entitled The Membership Effect, which is intended to welcome in cardmembers, merchants, partners and other customers into the American Express franchise.

We strongly believe in the power of our network and the benefits of the community we've built over the years among our customers, small businesses, large corporations and business partners. Through this campaign, we want to highlight the commerce connections and opportunities that we drive and the value these connections bring to all members of our franchise.

The final highlight I'll mention for the quarter was an external recognition we received, being named #16 on FORTUNE's list of the World's Most Admired Companies. Now making lists of this kind is not a goal of ours. It's an outcome of our efforts. And I'm pleased with the recognition because of what it says about our people, our company and our culture. Yes, it recognizes our financial performance and our business results, but it also recognizes how we achieve our results, by being a good employer, a fair competitor and a socially responsible corporate citizen. As a leadership team, we're not just focused on quarterly results. Our goal is to drive growth over the moderate to long-term while adhering to our values since that is what truly generates sustained benefit for our shareholders.

In closing my presentation of our performance, let me just say a few things. As I've discussed with you before, my focus over the last several years has been on making sure our company navigated through challenging economic conditions in the best position possible relative to our payments and card-issuing competitors. Our business model and our assets, capabilities and relationships are unique in the industry, and I believe they position us well for future growth. We have sound strategies in place with excellent people implementing those strategies. While we'll always face competitive and environmental challenges, I'm very pleased with and proud of the position of the company today. Unlike a number of companies that are firmly entrenched in traditional financial services, I believe our growth options and potential have far fewer limit.

In 2012 and beyond, we're moving forward on transforming our 162-year-old company for the digital environment and extending our leadership within payments and services. With our commitment to shareholder value, our financial strength, our unique competitive advantages, the power of our brand and, most of all, the quality, character and commitment of our people, I believe we are more than up for this challenge.

Now before beginning the formalities of our annual meeting, I also want to mention one important member of our board, Dan Akerson. Dan is not with us today as he is not standing for election, but I couldn't let this meeting pass without conveying my appreciation for his service to American Express and to all of us as shareholders. Dan joined our board in 1995 and has served as our senior Board Member for the last several years. As most of you know, Dan was named Chairman and CEO of General Motors in September of 2010. Given the time requirements of his position, Dan advised us earlier this year that he would not be standing for reelection. On behalf of our Board of Directors and all of our shareholders, I want to thank Dan for his commitment and his service to American Express. We will certainly miss his insight and judgment, but we understand Dan's priorities and wish him all the best as he successfully leads General Motors into a new era.

Now let's proceed with the meeting. Let's now turn to the formal business of our meeting. Because this is a meeting of shareholders, only shareholders should speak and the comments should relate to the company's business. To permit shareholders who could not be here today to listen to these proceedings live, we are providing a live audio webcast of today's meeting.

As Chairman, I will be responsible for the conduct of today's meeting. In doing so, I will seek to have an orderly informative session in which we get our business done, complete the voting and tabulating and give shareholders the opportunity to ask questions that are relevant to the company's business. To accomplish this, I ask that each shareholder keep his or her remarks brief and to the point and not interrupt other shareholders. Please keep your remarks to 2 minutes unless you are presenting a proposal. Our goal is to assure that all persons who wish to speak get a chance to do so in an orderly way. Privacy considerations prevent me from discussing at this meeting questions related to any specific cardmember. However, 4 of our customer care professionals are here, and they are ready to help anyone with any personal card matters after the meeting. They will be at the table outside of the room after the meeting adjourns.

Let me now introduce our directors who are with us today. I will ask each to stand briefly while I mention their names. Please hold your applause until all have been introduced. With us are: Charlene Barshefsky, Ursula Burns, Peter Chernin, Ted Leonsis, Rick Levin, Rich McGinn, Edward Miller, Robert Walter. Two of our directors, Steve Reinemund and Ron Williams, could not be here in person with us today. Please join me in applauding this outstanding group of leaders. And with us today also are Ward Hamm, Partner; and Ryan Dent, Senior Manager of our audit firm, PricewaterhouseCoopers.

All right, Carol, let's get on with the formalities.

Carol V. Schwartz

Okay. Ken, I present a copy of the Notice of Annual Meeting of Shareholders dated March 19, 2012, and affidavit showing that notice of this meeting was duly given. A copy of the notice and affidavits will be filed with the minutes of this meeting. All shareholders of record at the close of business on March 1, 2012, are entitled to vote at this meeting.

A certified list of the company's shareholders of record is present at today's meeting and will remain open for inspection during the meeting. The minutes of the last Annual Meeting of Shareholders are also here and are available for inspection.

The company has designated Peter Descovich and James Diaforli of Broadridge Financial Solutions to act as Inspectors of Election. The inspectors have taken their oath to faithfully and impartially execute their duties.

Kenneth I. Chenault

All right. Carol, do we have a quorum and may we proceed?

Carol V. Schwartz

The inspectors of election have determined that holders of at least 1,007,000,000 shares or over 86% of the common stock of the company entitled to vote at this meeting are present or are represented by proxy and constitute a quorum.

Kenneth I. Chenault

Fine. The meeting is now duly convened for the purpose of transacting business properly before it. At this point in the proceedings, we will move to the various proxy proposals. If you have already voted by proxy and do not wish to change your vote, you need do nothing further. For those of you who haven't voted by proxy or for those of you who wish to change your vote, ballots will be handed out to you. If you have brought your proxy to the meeting and haven't turned it in, you may do so now. Will any shareholder who wants a ballot, please raise your hand? The ushers will come to you to give you a ballot. If you are voting today by ballot, please vote on all items as submission of a ballot will revoke your prior proxy.

We will now introduce the proposals. I remind you that comments should pertain to the proxy proposals under consideration. We have opportunity for general questions after we close the polls.

The first item of business is the election of the Board of Directors.

Carol V. Schwartz

I propose the election of the 12 persons, whose names and biographies appear on Pages 57 to 64 of the proxy statement, to be elected as directors of the company to hold office until the next Annual Meeting of Shareholders and until their successors are duly elected and qualified.

Kenneth I. Chenault

The next matter is the proposal to ratify the appointment of PricewaterhouseCoopers to audit the company's accounts in 2012. The company's audit and risk committee has appointed PricewaterhouseCoopers as the company's independent registered public accounting firm for 2012, and the board asks the shareholders to ratify the committee appointment. Carol, would you introduce the resolution?

Carol V. Schwartz

I offer the resolution appearing on Page 66 of the proxy statement ratifying the appointment of PricewaterhouseCoopers LLP as the company's independent registered public accounting firm to audit the accounts of the company and its subsidiaries for 2012.

Kenneth I. Chenault

The next matter is the advisory vote on executive compensation. Carol, would you introduce the resolution?

Carol V. Schwartz

I offer the advisory resolution to approve the compensation of the company's named executive officers as disclosed pursuant to Item 402 of Regulation S-K, which appears as Item 3 on Page 67 of the proxy statement.

Kenneth I. Chenault

The next matter is a vote to approve performance goals and award limits under the company's 2007 incentive compensation plan. Carol, would you introduce the resolution?

Carol V. Schwartz

I offer the resolution appearing on Page 75 of the proxy statement to approve the performance goals for performance-based awards in the 2000 incentive compensation plan and including an increase in the individual award limit for restricted shares and restricted share units.

Kenneth I. Chenault

The next proposal is a proposal of the AFSCME Employee Pension Plan relating to the separation of the positions of Chairman and CEO. It appears on Page 77 of the proxy statement. Mr. Keenan will now introduce the proposal.

John Keenan

Those honored [ph] members of the board, my name is John Keenan, and I'm a representative of the AFSCME Employees Pension Plan. I hereby move to offer Proposal 6, asking our company to adopt the policy that the Chairman of the Board be an independent director. I would like to acknowledge that we appreciate the discussion with our company over the proposal. We believe an independent board chair provides a better balance of power between the CEO and the board and supports strong independent board leadership and functioning. The proposal boils down to preventing an inherent conflict of interest.

The board's job to monitor the Chief Executive and the Chairman's job to run the board. If the CEO is also the Chairman, then he or she is effectively in charge of monitoring his or her own performance. We believe that independent board leadership would be constructive here in American Express where, according to Forbes' 2012 rankings of pay efficiencies for CEOs serving at least 6 years, Chairman and CEO Ken Chenault ranked in the bottom quartile, coming in 159 out of 206 for delivering most to shareholders relative to total compensation. Independent board leadership is a reform increasingly supported by investors and directors.

In a 2010 survey conducted by Institutional Shareholder Services, 76% of investor respondents stated that the CEO should not also hold the role of Board Chairman. In a National Association of Corporate Directors survey, of directors serving on boards with an independent chairman found that 73% of directors stated that companies greatly benefit from an independent chair, while only 7% believe they did not. We recognize that an independent board chair prevents the culture shift to U.S. imperial CEO model, but this goes to the heart of corporate governance. Who runs the board and what's the board's role? Is it to work on behalf of the shareholders or work on behalf of the CEO? We maintain it should be to work on behalf of shareholders, and it's the CEO's job to do the same. Having an independent chair prevents any blurring of these lines. This is about maintaining a proper system of checks and balances.

Proxy advisor Glass Lewis supports this proposal, stating that the separation of roles of chair and CEO eliminates the conflict of interest that inevitably occurs when CEOs are responsible for self-oversight. We believe that independent board leadership would be in shareholders' best interests and we urge shareholders to vote for this proposal. Thank you.

Kenneth I. Chenault

Thank you, Mr. Keenan. The Board of Directors’ reasons for opposing this proposal appear on Page 78 of the proxy statement.

Carol V. Schwartz

Ken, Mrs. Davis is not here to present her proposal on cumulative voting, so I will move to the next item. Mr. Peter Lindner, a shareholder, is present at the meeting today. In accordance with our bylaws' advance notice provision, Mr. Lindner, you may now present your proposal and place your name in nomination if you wish to do so.

Peter Lindner

Yes, I do. I'm Peter Lindner. I've been a former Amex employee and an Amex shareholder for 20 years. I wish to take issue with the appointment of Pricewaterhouse as the CPA. And I guess, Mr. Hamm and Mr. Dent, I came to the Pricewaterhouse and told them that Ken Chenault violated Sarbanes-Oxley by certifying that the Code of Conduct was correct. And it was not and you did not follow up with me, even though I called repeatedly. So I'm against the nomination of PricewaterhouseCoopers. And by the way, you could take this up after this meeting and do it. And if you are elected, you can handle it and present a report at the next meeting.

Second of all, I am running for the Board of Directors. And I've had an ongoing feud with American Express since 2005. At any point in these 7 years, it could have been handled if the Amex Code of Conduct was followed, and it wasn't. Not only was it not followed, because I was sexually harassed by Qing Lin as an employee in 1998, who then had me fired, but after we settled in June of 2000 by a contract signed by Ash Gupta, who's now Banking President, by me and the General Counsel's office, Qing Lin in 2005, 5 years later, violated Paragraph 13 of that proposal -- of that agreement. And if you question anything I say here, there is a 269-page proxy filing if you do a search for my last name, Lindner, on Google and say site, americanexpress.com. And you can look it up on the SEC site. Sorry, that's 259 pages, but – I included transcripts to show that everything I say is true.

So Qing admitted that he violated Paragraph 13 of the contract in 2009 under oath. But in 2005, when he was questioned by the General Counsel's office, he denied it. And in February of 2006, 6 years ago, Jason Brown told me in this very building, all Qing said about you is, "I don't think Peter Lindner can work here," meaning American Express. And I wrote him a letter and said, "Now you've told me that Qing did violate the agreement," and Mr. Brown, Esquire, Vice President in the General Counsel's office, denied that. And he continued to deny it until he, under oath, admitted that Qing had told him that. So we not only have somebody who is a bad person, Qing, Vice President in Risk Management, reporting to Ash Gupta, doing something on personal motivation. He was in the closet, so I could see why he would attack me for outing him, for him hitting on me. But now we have the General Counsel's office violating a contract they signed.

I brought that to your attention, Ken, in 2009. And you said you believe in the moral and ethical standards, words to that effect, of the Amex employees. Two weeks later, Qing was no longer with American Express. So the next year, in 2010, I asked you if you wish to amend your statement, and you did not. This is really bad. So Madeleine Albright, the former U.S. Secretary of State, said on the Jon Stewart Daily Show that, "Leaders must operate on the basis of facts, not on wishful thinking." Secretary Albright said that President Franklin Roosevelt had wishful thinking that Stalin would change.

So you, Ken Chenault, told me in 2009 and 2010 that you believe that Amex's Code of Conduct was working and that Amex people were adhering to their moral standards. Yet not only did Amex Risk Management Vice President Qing violate Title VII of the Civil Rights Act of 1964 and the New York State Human Rights Law by retaliating against me in 2005 after sexually harassing me in 1998. But also Qing violated the June 2000 Amex-Lindner contract signed by me, the General Counsel's office and the current Banking President, Ash Gupta. Yet Amex General Counsel's office VP, Jason Brown, knew of Qing's violation in 2006 and lied about it, at the first, I believe, [ph] that Qing spoke to Fisher Gordon, my prospective employer and then covered it up for 3 years until January 2009, where Mr. Brown, Esquire, admitted it under oath.

Kenneth I. Chenault

Yes. Mr. Lindner, you're going to have to finish that [indiscernible]. Wrap it up.

Peter Lindner

I will. So it's wishful thinking to say that Amex employees hold to the Amex Code of Conduct when the facts are that 2 Amex Vice Presidents and the General Counsel's office violated the June 2000 agreement signed by Ash Gupta, the General Counsel's office and me, and violated the Amex Code of Conduct. So to have Jason Brown cooperate and conspire with Qing to violate the Code of Conduct and violate the General Counsel's document clearly shows that contrary to what you said, we are winning the right way, what you said in your speech today. That's not the right way by having the General Counsel override the document they signed, and saying being a socially responsible corporate citizen. That's not true either, if you don't follow the Title VII of the Civil Rights Act of 1964, which you should be a little bit sensitive to.

Kenneth I. Chenault

Wrap it up.

Peter Lindner

And finally, you say quality and character of our people. And those people are not good. I'd like to have a back and forth on this, a colloquy because you're a lawyer, you're pretty good, you're smart and you could handle it. And if you have any doubts on what I say, if you want to say, "Hey, I stand on my statement that we are holding to the things," we could get Ash Gupta to just give one number, the year he found out that his Vice President violated the contract that Ash Gupta signed. All he needs to say that one number, what year did he find out to see what it is. So Mr. Chenault, I wait to hear your answer.

Kenneth I. Chenault

Yes. My answer is that I'm not going to comment on the matters that you raised because they are the subject of litigation, as you well know. What I will say is that the company has always been committed to the highest standards of corporate integrity. As a company, we take our Code of Conduct very seriously. Our code protects and strengthens our reputation for integrity, which is at the heart of the brand, and we appropriately investigate all reported issues. The Board of Directors -- those are the end of your questions. The Board of Directors opposes Mr. Lindner's shareholder proposal and recommends against Mr. Lindner's candidacy. End of conversation. You introduced your proposal, your question is done, you've taken up time. It's done, it's done, it's done. I answered the question. I will not comment because the matters are subject -- Mr. Lindner.

Carol V. Schwartz

[indiscernible] for that. Please sit down.

Peter Lindner

What is the forum for that?

Carol V. Schwartz

This is not the forum for that.

Peter Lindner

Hey, I tried to settle it informally. And I wrote to American Express General Counsel's office, and they admitted that Qing violated that contract, and then they deny it.

Carol V. Schwartz

Okay. It's time for you to sit down. Okay, Mr. Lindner, I'm warning you, you need to sit – Mr. Lindner, I’m warning you, you need to sit down. If you do not sit down, you will need to leave the meeting, so please sit down right now. Please sit down.

Peter Lindner

I'd like to have a back-and-forth. And I told you that in advance, right?

Carol V. Schwartz

Okay. This is your last warning, Mr. Lindner. If you do not sit down now, we will need to ask you to leave the meeting and we will need to escort you from the meeting. Will you sit down?

Peter Lindner

I will sit down. I wish to have a back-and-forth.

Carol V. Schwartz

Thank you, Mr. Lindner. If any shareholder wishes to vote on Mr. Lindner's shareholder proposal relating to the American Express Code of Conduct, you may do so on Item 7 of the ballot. If any shareholder wishes to vote for Mr. Lindner as a board candidate, please write his name on the ballot under Item 1 in the space below the words, other nominee. If you need a ballot, please raise your hand, and the ushers will bring you one. Does anyone need a ballot? Okay.

As stated on Page 83 of the proxy statement, the named proxies are exercising their discretional voting authority to vote against Mr. Lindner's proposal and nomination.

Kenneth I. Chenault

At this point in the meeting, please turn in your ballots, so we can tabulate the votes on the proposals introduced today. The ushers will now collect the ballots.

Carol V. Schwartz

Anybody have any ballots? I'll go back there.

Kenneth I. Chenault

I want to make sure that everyone who wishes to vote has done so. Everyone who wishes to do so, having voted, I declare the polls closed, and ask the inspector of election to collect and tabulate the ballots. I will now take general questions while the inspectors of the election count the vote.

Question-and-Answer Session

Kenneth I. Chenault

Yes, Mr. Korba?

Harry Korba

Yes. I want to make some comments, very serious comment. And I'm not reading from any kind of teleprompter. First of all, my name for the record is Harry Korba. I reside in Yonkers, New York, the third largest city in the state of New York. I'm very unhappy -- I'm very happy and honored, Chairman Chenault, to be present this year at the 2012 Annual Meeting of Stockholders of American Express Company. And number two, this is my 20th out of the last 24 annual meetings of this here great company, which I have attended in person. And number three, nobody here is able to make this here kind of comment. This is my 1,063 annual meeting, which I have attended since Tuesday noon, April 19, 1955. So it was 57 years ago, this past Thursday, April 19, 2012. Now Chairman Chenault, some valid questions on the subject of American Express. Last year, when this here annual meeting was held on Monday morning, May 2, 2011, the common stock closed at $49.08. It closed this here past Friday on the New York Stock Exchange at $60.17. I want to tell my fellow stockholders, the common stock has risen $11.09 since Chairman Chenault has been the Chairman and Chief Executive Officer of this here company. And my final comment on the stock amount is this. Chairman Chenault stated that the quarterly dividend has been increased from $0.18 to $0.20. And one comment on the board, Chairman Chenault, 2011, this here -- no, 2010, this here company held 11 -- no, 10 director meetings. Nine were held here at the offices and one was held at Short Hills, New Jersey. 2011, you had 9 board meetings. Where were they held?

Kenneth I. Chenault

They were all held in New York, except for one meeting that we had in Short Hills, New Jersey.

Harry Korba

So that means 8 was in here and one was at...

Kenneth I. Chenault

That's right. Thank you very much, Mr. Korba, and congratulations on your attendance at our meeting and your attendance at board meetings in general. Glad to have you here.

Philip Berman

Philip Berman, portfolio manager and shareholder. Some comments and questions together. Immediately after Ed Miller became a director of the company, American Express' joint marketing relationship with the bank soared dramatically upward and our business really grew. Now with AXP's new direct emphasis on electronic and mobile digital payments, we seem to be dependent totally on Mr. Leonsis and Mr. Schulman. The transformation of American Express with digital ventures payment system is in a start-up phase with American Express potentially committing billions of dollars based on new technology. The question is what percent of 2011 American Express earnings per share are due to revolution money and the new technology, if any? And what is your timetable for seeing significant earnings increases as a direct result of the new business model changes and strategy? Could it be 2 years, 5 years, 10 years?

Kenneth I. Chenault

Good. Thank you very much, Mr. Berman, for those questions. Let me comment on the percentage of earnings and say that we don't disclose that. So I can't comment on that specifically. But let me also give you some context for our strategy. And while I have the highest regard for Mr. Miller, Mr. Leonsis, Mr. Schulman, what is very important to understand is that our success and strategy is really dependent on a broad range of leaders and employees across the company. With respect to our bank partner strategy, we had been implementing that strategy prior to Mr. Miller coming on the board. Mr. Miller provides us with terrific advice in general. But as a company, that was a strategic imperative for a number of years and many of our partnerships are outside the U.S. So that business, as I talked about in my presentation, is going very well. The second point I would make is that the company has some terrific assets for the digital marketplace. And what you shouldn't do is narrowly define those digital efforts. So for example, the fact that we have $130 billion of online spending, that's more than PayPal. And so you might say, "Well, is that the new business?" Well, the reality is we are reinventing our existing business. A number of the partnerships that I've talked about with Facebook, Foursquare were done in our existing business. Dan Schulman brings a level of skill and expertise that we highly value. And he is working on leveraging the assets that we have with the company. So what I want to emphasize to you is this is not a situation where our legacy business is going away. What we're doing is we're reinventing that legacy business. We are focused on digital across the entire company. So we have a number of leaders. Ed Gilligan has done a terrific job leading his team, but we have people all over the world. And so what I want to emphasize to you and you should have a level of confidence is we have a leadership team that is broad and deep, and is committed to the strategy that I've set out. So thank you very much.

Philip Berman

High-end luxury purchases by American Express cardholders was the most evident trend in the last year. Is there any material change in that trend affected by our AXP Business Insights division?

Kenneth I. Chenault

Well, we don't give out specific information on a regular basis on luxury spending. What I would say is that we have seen good billings growth across a range of spending categories. And the luxury sector has been an attractive category for us.

Philip Berman

Many banks have recently changed -- charged fees for formerly free checking accounts, which should be very opportunistic for the marketing of the new AXP Prepaid Card, which you didn't mention.

Kenneth I. Chenault

Well, I did. I actually talked about the Prepaid Card, that what we have done is eliminate activation and maintenance fees. We think the prepaid opportunity is a very substantial one. And that is clearly an opportunity for us because we're building off the Travelers Cheque platform. And the business model that we had, prepaid, fits in very well with the company and also fits in with our existing business and with what we're doing with Serve.

Philip Berman

Since we are now looking to attract the 17 million unbanked Americans, do you have any plans to enter the new government-contracted program set to start next year, whereby most government payments will be made via America's bank-issued direct debit prepaid card?

Kenneth I. Chenault

What I would say is we're looking at a range of opportunities. I can't comment specifically on any one. But simply to say that we believe we need to match the right product with the right customer segment. We need to be focused on what customer needs are. We also need to be focused on the risk profile of the company. And we believe we have a range of products that, in fact, will meet that criteria.

Philip Berman

How has the new 1099 pay form requirement affected your relationship with business customers? Or has it been transition-free?

Kenneth I. Chenault

I think our relationship with business customers is good, and there's not really a problem with 1099 with respect to our business customers. Mr. Berman, I just want to be cognizant of giving other people the opportunity. You're asking very good questions, so I don't want to stifle you. But good. Okay. All right, he's got 2 more, and then we'll move on.

Philip Berman

What have you brought to American Express from your experience of being on the IBM and Procter & Gamble board and the President's Jobs Council?

Kenneth I. Chenault

Well, I would say, on IBM, obviously, they are very, very involved in technology. They're a global company. And so I've learned a lot being on their board. Procter & Gamble is also a very global company, very focused on marketing and customer segmentation, understanding how different channels operate and that has been very helpful. And then the Jobs Council is clearly, the importance of creating an overall economy that will help in the stimulation of jobs.

Philip Berman

Some American companies have been receptive to hiring of veterans, which has boosted their corporate image. What has American Express been doing in this regard?

Kenneth I. Chenault

We are very involved with veteran networks. We attend job fairs for veterans. We are very cognizant of their service to this country, and we believe that we need to do things to help veterans. So we're very focused on that. And all right. Thank you very much. Mr. Korba?

Harry Korba

Yes. I want to make 2 comments in there. First of all, I made a boo-boo in reference to the comments about the directors. I want to make a comment about a very fine young lady on this here board by the name of Ursula M. Burns, 53 years of age. And the reason why I'm making this here comment is because she's the first African-American to be a Chief Executive Officer of a Fortune 500 company, the first African-American. And I'm going to ask 2 questions now on the auditors, PricewaterhouseCoopers. And I'm not reading from any kind of script or notes. I notice for 2011, Chairman Chenault, you paid this here company $1,415,000 more, number one. And the second comment is a very easy comment. For fiscal 2010, you told me you had 89 full-time lawyers on the payroll of American Express Company. What was the exact figure for 2011?

Kenneth I. Chenault

Let me give you that exact figure. Louise Parent, our General Counsel, will give that to you.

Louise M. Parent

112.

Kenneth I. Chenault

Any other questions?

Unknown Shareholder

[indiscernible]

Kenneth I. Chenault

No. We have talked through that. I gave you my response. I have nothing new to add.

Kenneth I. Chenault

Can I ask Carol if the inspectors of election have tabulated the votes?

Carol V. Schwartz

I was just going to go get them. So just give me one minute. In a moment, I will announce the votes, they will be preliminary. In accordance with SEC rules, we will file a report on Form 8-K with the SEC within 4 business days and that 8-K report will contain the final tabulation of the votes.

Okay. On the election of directors, the inspectors of election report that the 12 nominees of the Board of Directors listed in the proxy statement received the plurality of the votes cast. Each of the 12 nominees received at least 837 million votes or approximately 92% of the votes cast. On the ratification of PricewaterhouseCoopers LLP, the inspectors of election report that at least 1 billion shares or 99.83% of the votes cast were voted to ratify the appointment.

On the advisory vote on executive compensation, the inspectors of election report that at least 874,900,000 shares or 96.62% of the votes cast were voted to approve the compensation paid to the company's named executive officers. On the vote to approve performance goals and award limits under the 2007 compensation plan, the inspectors of election report that at least 884 million shares or 96% of the votes cast were voted for such approval.

On the proposal relating to the separation of Chairman and CEO roles, the inspectors of election report that at least 708,913,525 shares or 77.18% of the votes cast were voted against the proposal. On Mr. Lindner's shareholder proposal relating to the Code of Conduct, the inspectors of election report that at least 913 million or over 99% of votes cast were voted against the proposal.

Kenneth I. Chenault

As a result of this morning's voting results, I declare the slate of 12 director nominees recommended by the board are elected for a one-year term. The company's shareholders have approved and ratified the company's appointment of PricewaterhouseCoopers for 2012. A majority of the votes cast have approved the compensation paid to the company's named executive officers. A majority of the votes cast have approved the performance goals and award limits under the company's incentive compensation plan. The shareholder proposal on the separation of the Chairman and CEO role did not pass. I also declare that Mr. Lindner was not elected a director of the company and that his shareholder proposal relating to the Code of Conduct did not pass.

There being no further business to come before the meeting, I declare the meeting adjourned. Thank you very much.

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