The beginning of April 2020 was a grim time for many companies. But American Express CEO Steve Squery finds himself facing a particularly worrying situation.

Credit card bills are down 50% and the company is concerned that as much as $11.5 billion in loan and credit card debt is at risk of default, while coronavirus-related lockdowns have disrupted the travel and entertainment benefits that customers value most.

Even as the company takes steps, lays off employees and slashes expenses, it still looks set to face huge losses.

Squery, who had been CEO for two years at the time, wasn’t about to play it safe. He wants to keep everyone on the payroll, keep an eye out for acquisition opportunities and spend $1 billion on new rewards for cardholders stuck at home.

“It was based on the philosophy that we don’t play the short-term game,” Squery recalled. “In any downturn, there’s always going to be an uptick. If you’re not ready for the recovery, you’re missing out on the opportunity to move forward.”

But first he must warn the group’s largest shareholder of the potential losses and get him on board. “I called Warren Buffett and said, ‘We’re probably going to lose $4 a share, and I’m not sure when the bills are going to come back . . . But I think what we need to do is take care of our colleagues (and) take care of us customers. I think if we do that, our shareholders will gain long-term viability.”

Buffett bought a majority of Berkshire Hathaway’s American Express shares in the 1990s and now owns a 20% stake, but has since sold it. “‘The most important thing is to take care of your customers and your brand,’ he responded. “It’s hard to keep customers coming back. Once you damage the brand, it’s damaged. “

After receiving support, Squery charged forward. American Express began offering streaming and shipping rebates to cardholders, which not only built loyalty but also prompted customers who previously used the card primarily for travel and entertainment to start using the card for online shopping, subscriptions and everyday spending. American Express has acquired online banking platform Kabbage to expand its growing small business unit. The reported price was $850 million, half its value when it last raised capital in 2017.

“The pandemic has made us a faster-growing company,” Squery said.

Before the coronavirus outbreak, American Express was targeting revenue growth of 8% to 10%; last year, billings grew 25% as they recovered from a lockdown slump. This year, under more normal circumstances, the company expects its sales to grow another 15% to 17% due to its success in attracting younger customers, Millennials and Gen Z, who are likely to drive sales in the coming decades. increase.

American Express announced record second-quarter revenue and profits, but its shares fell on the day as a measure of the reset in expectations.

Some AmEx watchers said they were pleasantly surprised by Squery’s bold move.

He was widely seen as an operations guy who was not initially suited to succeed former CEO Ken Chenault, despite his decades at the company. After serving as chief information officer and head of corporate cards, Squery admitted he plans to retire at age 60, around 2019.

Instead, when heir apparent Ed Gilligan died of a heart attack in 2015, Chenault turned to him for help as the company faced tougher competition and lost a deal with consumer goods warehouse Costco. ) partnership.

“When he came on board, one of the biggest questions was whether he could focus on operations… and have a strategic vision of where to take the company? I think he has proven his ability over the past five or six years.” Goldman Sachs said analyst Ryan Nash.

American Express shares are up nearly 80% since Squeri took over the company, and the board awarded him a special bonus last year, bringing his total compensation in 2022 to $48 million. The award ranks him among the highest-paid CEOs of S&P 500 companies. This also caused uneasiness among investors. This year’s non-binding resolution on the company’s pay plan was met with 46% opposition, with shareholders including BlackRock complaining that pay was not sufficiently aligned with performance.

Squery sees himself as someone outside the privileged group that dominates professional services, and being labeled a “corporate fat cat” contradicts his sense of self. The grandson of Italian and Irish immigrants and the son of an accountant, he worked nights and weekends at Bloomingdale’s to make ends meet. While studying at Manhattan College, Squery lived at home and had never flown on a plane until he entered a training program at what is now Accenture Consulting Group.

a day in the life

  • 5.45am wake up

  • 6 a.m. Leave the house and work in the car.Not many people wanted to talk then, but I could read emails

  • 6.45am Ride a stationary bike in the office for half an hour, then drink tea and fruit

  • 8 am The meeting started without much other typical happenings.Life is very fulfilling

  • 12 o’clock noon I eat pretty much the same salad every day, from Chopt.I eat at my desk

  • 12.30pm-5.30pm Just back to back. . .Sometimes I try to go to the cafeteria and get a snack so people can see me and break the monotony

  • 5.30pm-7.30pm Call on the way home and then have dinner

  • 7.30pm to 10.30pm I receive 150-200 customer emails per day. I read and answer every question. We say we are a membership model. How do you ignore them?

  • 10.30pm to 11.30pm Relax for an hour before bed.

I try not to work on Friday nights, but on Sunday I work from 6pm to 11pm. This is preparation for the week ahead. This is a 24/7 job.

Four years later, he moved to American Express. There, his Queens accent and cheap suits stood out so much that an executive pulled him aside. “You’re mentally sharp, but there’s a lot of work that other people have to do,” he said. “[Senior managers]tend to use all the letters of the alphabet when they talk.”

The mentor took Squery shopping, arranged speaking lessons and even organized meetings with a cultural anthropologist so the young manager would feel comfortable when sent to the group’s overseas offices. “I’m an example of how anyone can get to the top with a lot of hard work and running a company. . . . We look at individuals broadly and don’t judge people by their cover,” Squery said.

As CEO, he has always looked to his father as a role model. “He treated everyone equally, whether they were ordinary people, superiors or colleagues. He treated them all with complete respect. As a result, he was treated with complete respect.”

Before taking over American Express, Squery met individually with 80 of the company’s top executives, asking them what they wanted him to do and what they feared most. He also worked with Harvard Business School professors and top American Express executives to develop what he calls a “winning framework”—a one-page statement that lays out the company’s vision and strategy and continues to drive his decisions today.

“Steve is a great coach,” said Jeff Campbell, the company’s outgoing chief financial officer. “He has an extraordinary gift for figuring out how to get along with all kinds of people and get the best out of them.”

Squeri restructured rewards structures across the company, eliminating business unit ratings and significantly expanding bonus programs. All 77,000 employees are now eligible for large annual salaries based on individual and company-wide performance. Before the change, “there were a lot of people who were motivated by the fact that the company was going to stay in business,” Squery said. “Now, their motivation is, how can we make it better?”

He believes the end of business unit scores improves strategic thinking because senior managers can focus on things that produce the best group performance rather than trying to build an empire. “When all the paddles are moving in the right direction, we get more out of our business model,” he said.

This integration has been tested by a new set of challenges. This year, American Express more than tripled its provisions for credit losses amid growing concerns that the economy will slow. While the company continued to report record revenue and profits, first- and second-quarter results fell short of analysts’ expectations, sending shares lower.

“Steve has done an incredible job . one. “In a more difficult economic environment, their incomes will certainly contract.”

Squery, 64, is optimistic about the changes in daily life. “You have to look at what’s actually happening and be willing to admit your mistakes and make adjustments,” he said. “I make mistakes every day. . . . If you’re not failing, that means you’re not growing.”

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