Get Left Behind or Get Prepared – American Express CEO Reveals the Game-Changing Secret to Seize the Recovery!

Early April 2020 was a bleak time for many businesses. But American Express CEO Steve Squeri found himself facing particularly troubling circumstances.

Credit card billing had fallen 50 percent, the company feared that up to $11.5 billion in loans and credit card debt were at risk of default, and Covid-related lockdowns had devastated profits. of travel and entertainment that their clients valued most.

Even if the company hunkered down, made layoffs and slashed spending, it appeared to be on track to suffer a substantial loss.

Squeri, who had been CEO for two years, was not willing to play it safe. He wanted to keep everyone on payroll, keep an eye out for acquisition opportunities, and spend $1 billion on new types of rewards for cardholders stuck at home.

“It was based on the philosophy that we weren’t playing a short-term game,” Squeri recalls. “In any crisis, there is always a rebound. And if you are not prepared for the boom, you have lost the opportunity to move forward.”

But first he had to warn the group’s largest shareholder about the possible losses and get him involved. “I called Warren Buffett and said, ‘We’re probably going to lose $4 a share, and I’m not sure when revenue will come back.’ . . But I think what we need to do is take care of our colleagues. [and] take care of our clients. If we do that, I think we will have long-term viability for our shareholders.’”

Buffett, who bought the majority of Amex shares from Berkshire Hathaway in the 1990s and now owns a 20 percent stake, was sold. “’The most important thing you should take care of is your customers and your brand,’ he responded. ‘It’s difficult to get customers back. And once you damage the brand, it is damaged.’”

With support assured, Squeri moved forward. Amex began offering cardholders rebates on their transmission and shipping fees, which not only built loyalty but also prompted customers who had previously used the card primarily for travel and entertainment to start using it for online purchases. , subscriptions and daily expenses. Amex acquired Kabbage, an online banking platform, to expand its growing small business division. The reported price of $850 million was half its value at its previous fundraising in 2017.

“The pandemic turned us into a faster-growing company,” Squeri said.

Before Covid, Amex had targeted 8 to 10 percent revenue growth; Last year, when turnover recovered from the lockdown slump, it recorded a 25 per cent increase. This year, under more normal conditions, the company has been predicting another jump of between 15 and 17 percent thanks to its success in recruiting younger customers, millennials and Generation Z, who could drive growth for decades to come. .

To gauge the extent to which expectations have been reset, Amex announced record second-quarter revenue and profits, but its stock price still fell that day.

Some Amex watchers say they were pleasantly surprised by Squeri’s audacity.

I am an example of how anyone can reach the top with a lot of hard work.

Widely seen as an operations person, he was not originally in line to succeed previous CEO Ken Chenault, even though he had spent decades at the company. After working as CIO and head of corporate cards, Squeri admits that he planned to retire at age 60, around 2019.

Instead, Chenault turned to him when his heir apparent Ed Gilligan died of a heart attack in 2015, just as the company faced tougher competition and the loss of its partnership with Costco, the consumer grocer.

“One of the big questions when he arrived was whether he could focus on his operations and… . . Do you have a strategic vision of where to direct the company? “I think he’s shown over the last five or six years that he can,” says Ryan Nash, an analyst at Goldman Sachs.

Amex shares have risen nearly 80 percent since Squeri took over the company, and the board gave him a special bonus last year, bringing his total salary for 2022 to $48 million. The award placed him among the highest-paid bosses in the S&P 500. It also caused concern among investors. This year’s non-binding resolution on the company’s pay plan drew 46 percent opposition, with shareholders including BlackRock complaining that pay was not sufficiently aligned with performance.

Being labeled a corporate bigwig is at odds with Squeri’s perception of himself as someone who sits outside the privileged crowd that dominates professional services. He is the grandson of Italian and Irish immigrants and the son of an accountant who worked nights and weekends at Bloomingdale’s department store to make ends meet. During his studies at Manhattan College, Squeri lived at home and had never been on a plane until he joined a training program at what is now the consulting group Accenture.

Four years later he moved to Amex. There, his Queens accent and his cheap suits stood out so much that an executive took him aside. “You have a very sharp mind, but the rest needs a lot of work,” he said. “[Senior managers] “They tend to use all the letters of the alphabet when they speak.”

The mentor took Squeri shopping, organized elocution lessons and even arranged sessions with a cultural anthropologist so that the young manager would feel comfortable when he was sent to the group’s offices abroad. “I am an example of how anyone can get to the top with a lot of hard work and with people who run the company. . . “We’re looking at people broadly and not judging books by their cover,” Squeri says.

As CEO, he has been guided by his father’s example. “He treated everyone the same, regardless of whether they were ordinary people, superiors or peers. He treated them all with complete respect. And as a result, he got complete respect.”

Before taking the helm at Amex, Squeri met individually with 80 of the company’s top executives and asked them what they expected him to do and what they feared most. He also worked with a Harvard Business School professor and top Amex executives to formulate what he calls a “framework for winning”: a single page that lays out the company’s vision and strategy and continues to drive its decisions in the present.

“Steve is a great coach,” says Jeff Campbell, the company’s outgoing CFO. “He has a phenomenal talent for figuring out how to get along with all kinds of people and bring out the best in them.”

Squeri has restructured rewards across the company, eliminating qualifications for business units and dramatically expanding the bonus program. Now the entire workforce of 77,000 is eligible for a sizable annual payout based on their individual performance and company-wide results. Before the change, “you had a lot of people [whose] The motivation was to just keep the company going,” says Squeri. “Now their motivation is: how can we make it better?”

We get more out of our business model when all the oars are pointing in the right direction

He argues that the end of business unit ratings has improved strategic thinking because senior executives can focus on what will produce the best group results, rather than trying to build empires. “We get more out of our business model when all the oars are moving in the right direction,” she says.

That integration is already being tested by a new set of challenges. This year, Amex has more than tripled provisions for credit losses, as concerns grow that the economy will slow. Although the company continues to report record revenue and profits, it fell short of analyst expectations in the first and second quarters, sending the stock price tumbling.

“Steve has done an incredible job. . . but it is a very competitive space,” says Macrae Sykes, portfolio manager of Gabelli funds, which includes Amex among its top 10 investments. “In a more difficult economic environment, of course their profits are going to contract.”

Squeri, now 64, is optimistic about the vicissitudes of everyday life. “You have to look at what’s really happening and be willing to admit you’re wrong and turn around,” he says. “I make mistakes every day. . . “If you’re not failing, that means you’re not growing.”