Kenneth Chenault is stepping down as chairman and CEO of American Express after 16 years of what is widely regarded as steady stewardship through tough internal and external challenges. Its vice chairman, Stephen Squeri, 58, will take over on Feb. 1.
Chenault, 66, “guided the company through several seismic events, including the terrorist attacks on Sept. 11, 2001. The company's headquarters in Manhattan is next door to the site of the World Trade Center,” according to CBSNews.com.
“He also led the company through the financial crisis and subsequent Great Recession of 2008. While American Express did not hold any mortgages, its direct exposure to the U.S. consumer put significant pressure on its business model,” it continues.
“After a rough 2016” — including the loss of its Costco and JetBlue co-branding business — “AmEx has steadied the ship by cutting expenses and achieving much-needed billings growth,” writes Gilliam Tan for Bloomberg.
“Since hitting a low last February, AmEx shares have soared more than 80%, in part thanks to a two-year turnaround plan [Chenault] helped engineer as well as the prospect of a lower tax rate. One leg of the turnaround, which involved offering more attractive rewards to retain or lure commercial clients, showed its payoff in the company's third-quarter earnings released Wednesday: Profit from that unit grew 14%.”
“Trying to regain the company’s footing, Mr. Chenault increased its focus on areas like international and small business customers. Its Small Business Saturday campaign became a mainstay of the ‘buy local’ movement,” observes Stacy Cowley for the New York Times.
“It also sought out new deals targeting affluent travelers. In June, it scored a coup and teamed up with Hilton, for which it will be the exclusive issuer next year.”
But Chenault’s departure is a bigger story than the bumpy ride of one financial services firm since 2001. As the Wall Street Journal’s headline points out, Chenault’s “Retirement Shines Light on Lack of Diversity in CEO Ranks.” When he leaves, there will be only three African-American CEOs leading Fortune 500 companies — Roger W. Ferguson, Jr. at TIAA, Kenneth C. Frazier of Merck and J.C. Penney’s Marvin R. Ellison, the WSJ’s John Simons reports.
“The sunsetting of Mr. Chenault’s career occurs as many large companies are showing great concern for diversity. But even as top executives and boards devote more time and resources to improving ethnic and gender representation in their ranks, the number of black CEOs has remained relatively stagnant over the past few decades.”
“Ken never went for easy, short-term answers, never let day-to-day challenges distract him from what was right for the moderate to long term. No one does a better job when it really counts and he’s always done it with the highest degree of integrity,” Berkshire Hathaway chairman and CEO Warren Buffett says in a statement announcing the transition. Berkshire Hathaway is American Express’ largest shareholder.
Squeri has been at AmEx for 32 years and has served as CIO and head of M&A, among other roles, along the way.
“As I’ve learned from Ken, if great businesses don’t keep moving forward they fall behind.” he said yesterday, Alistair Gray and Mamta Badkar report for Financial Times. “Or said in my own words, you can’t seize the future if you’re stuck in the past.”
“Among other initiatives, the incoming chief said he wanted to expand its roster of corporate partners, serve more small and medium-sized businesses and also make ‘targeted acquisitions’ in technology,” Gray and Badkar write.
“Not everyone has been pleased with the leadership at American Express,” Danielle Wiener-Bronner writes for CNN Money. Shareholder Trip Miller with Gullane Capital Partner “had hoped that AmEx would tap an outsider to help the financial services firm lose its ‘older, stodgier’ reputation and become a stronger competitor to Millennial-focused companies,” she continues.
“Still, Miller feels good about AmEx. ‘American Express is still a great brand, regardless of who is running it or has been running it,’ he said. ‘It's stood the test of time.’”
But Millennials are, indeed, leaving home without it. Among the reasons, as the NYT’s Cowley reports, “the Chase Sapphire Reserve card initially courted Millennials with a large sign-up bonus of 100,000 points and a slew of benefits, attracting a wave of applications.”
There was a time, when TV advertising ruled image-making and Venmo was a gleam in nobody’s eye, that a famous face could top influencer marketing and online reviews. Those days have gone the way of Karl Malden and American Express Travelers Cheques.