American Express Co Chief Executive Kenneth Chenault sold more than $7.5 million of his company's shares, as the credit card lender said it will now pay him largely in restricted stock units instead of cash.

Chenault sold 170,000 of his American Express shares on Thursday for between $7.54 million and $7.61 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 its board decided earlier this week that the significant majority of Chenault's 2010 incentive compensation and portfolio grant payouts would be in the form of equity-based restricted stock units.

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, American Express said.

Outsized Wall Street payouts became a target of widespread criticism and political scrutiny during the financial crisis. Now most financial companies are increasingly switching their senior executives' bonuses and other compensation from cash to stock.

Corporate governance experts say that stock-based payouts keep employees motivated by deferring pay -- an employee who has to wait five years before collecting their entire bonus has an incentive to keep working hard, and to avoid taking outsize risks that could weaken the company over time.

Chenault's base salary for 2010 was $2 million. He earned $17.4 million total in 2009, including a $1.2 million base salary, a $5.1 million cash bonus and $5.33 million in additional cash payments stemming from American Express' incentive compensation plan. [ID:nN16243478]

His 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.

Chenault sold his 170,000 shares on Thursday at prices between $44.36 and $44.75 per share. He still owns 917,624 shares of common stock, American Express said.

He is also due to buy 122,124 shares of the company's common stock when some of his existing restricted stock units vest on January 31.

American Express shares were down 1.5 percent at $43.88 on Friday afternoon.

(Reporting by Maria Aspan; editing by John Wallace and Gerald E. McCormick)