Amex CEO Scraps Rivalry Incentives for Unity

American Express CEO Stephen Squeri has implemented a significant change to the company's executive incentive structure. Previously, bonuses were tied to the performance of individual business units, which Squeri observed fostered rivalries and discouraged enterprise-wide decision-making. This system often led executives to argue for more capital for their own units, even if other areas might have yielded better returns for the company as a whole.

Squeri's new model links executive bonuses to American Express's overall financial performance. Key company-wide metrics, including earnings per share, revenue growth, and shareholder return, will now determine bonus payouts. This approach aims to align senior leaders with the company's collective success, encouraging them to focus on the most profitable investments across the entire enterprise rather than within their specific divisions.

This strategic pivot, described by Squeri as "We're all going to sink or swim together," is designed to cultivate a more unified operating model. While the new system requires careful performance management to ensure accountability and address potential issues like weaker performers benefiting from strong years, it represents a decisive move toward prioritizing collective achievement over internal competition.