American Express Co said it changed the annual compensation plan for Chief Executive Kenneth Chenault and will now pay him largely in restricted stock units instead of cash.

Chenault sold 170,000 of his American Express shares on Thursday for more than $7.5 million as part of his ongoing financial planning and in light of the change in compensation mix, the company said.

The sale amounted to 15.6 percent of his holdings in American Express, it said in a regulatory filing on Friday.

The credit card lender and processing network said the significant majority of Chenault's 2010 incentive compensation and portfolio grant payouts will be in the form of equity-based restricted stock units.

American Express said it previously paid Chenault his incentives primarily in cash. The change reflects the goal of further tying executive compensation more closely to long-term company performance, it said.

Chenault's new restricted stock units will vest in January 2012, and he will have to retain half of the resulting common shares until one year after he retires from American Express.

American Express shares were down 1.6 percent at $43.82 on Friday.

(Reporting by Maria Aspan; editing by John Wallace)

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