American Express Co. plans to reverse some of the compensation cuts it imposed seven months ago.

Annual merit increases and contributions to retirement plans will resume in January, and a 10% salary cut for managers in the senior vice president ranks and above will be rescinded, according to a memo Thursday from Chief Executive Kenneth Chenault to employees.

In December, American Express accepted $3.4 billion from the Troubled Asset Relief Program and cut compensation for its staff of about 60,700. The New York company repurchased the Treasury Department's stake in June.

Thursday's memo cited "a somewhat more positive outlook about economic conditions in the coming months." American Express will maintain cuts on expenses, including employee travel and entertainment, meetings, consulting and training.

"The challenges we face are far from over," Chenault said, pointing to "stubbornly high" unemployment, lower consumer spending and decreases in home prices. "Even after the recession ends, we are likely to see a prolonged period of slow economic growth."

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