Despite credit card giant American Express reporting another round of solid quarterly earnings, with revenue of $8.40bn beating expectations of $8.19bn, and generating EPS of $1.50, also above the $1.48 expected, and boosting its profit guidance for good measure, now projecting full year EPS of $5.80 to $5.90, up from $5.60 to $5.80 (above the consensus estimate of $5.75), AXP stock initially spiked, then immediately slumped back to unchanged, following news that the company's CEO since 2001, Ken Chenault, is retiring effective February 1, 2018.
The unexpected departure prompted Warren Buffett, the company's largest shareholder, to share the following parting words “Ken’s been the gold standard for corporate leadership and the benchmark that I measure others against. He led the company through 9/11, the financial crisis and the challenges of the last couple of years. American Express always came out stronger. 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.”
Chenault will be replaced by Stephen Squeri, who has been Vice Chairman since 2015 and prior to that was Group President of the Company’s Global Corporate Services Group.
Full press release below:
American Express Announces Stephen J. Squeri to Succeed Kenneth I. Chenault as Chairman and Chief Executive Officer
American Express Company (AXP) said today that its Board of Directors has appointed Stephen J. Squeri Chief Executive Officer and elected him Chairman of the Board, each effective February 1, 2018. Mr. Squeri, 58, will succeed Kenneth I. Chenault, 66, who will retire after a distinguished 37-year career with the Company.
Mr. Squeri has been Vice Chairman since 2015 and prior to that was Group President of the Company’s Global Corporate Services Group.
Mr. Chenault has served as Chairman and Chief Executive Officer since 2001.
“We are completing a two-year turnaround ahead of plan with strong revenue and earnings growth across all of our business segments,” said Mr. Chenault. “We’ve added new products and benefits, acquired record numbers of new customers, expanded our merchant network and lowered operating costs. We’ve dealt effectively with competitive challenges and redesigned our marketing, customer service and risk management capabilities for the digital age.”
“We’re starting a new chapter from a position of strength and this is the right time to make the leadership transition to someone who’s played a central role in all that we’ve accomplished,” Mr. Chenault continued. “Steve knows the industry. He knows the business and the brand. He knows the marketplace and how important the relationships we build with customers are to our success. He’s an excellent strategist and a strong leader.”
Robert D. Walter, Lead Director of American Express’ Board of Directors said, “Clear vision, sound judgment and the courage to make tough decisions are what define a leader. For 16 years we’ve had a great one in Ken Chenault. He’s met every challenge head on. He’s rallied the organization at times of crisis and he’s delivered for shareholders by making a great company even better.”
“Ken has also groomed an outstanding successor,” Mr. Walter continued. “Steve built commercial payments into one of our fastest growing businesses. He strengthened a world-class customer service network and transformed our technologies infrastructure. He’s led a reengineering program that lowered operating expenses and reallocated funding to the initiatives that are now driving growth across the business.”
“We’ve had a very thorough succession process underway for five-plus years that involved every member of the board and we are unanimous in our decision that Steve’s the best person to build on the progress under way at American Express,” added Mr. Walter.
Warren Buffett, chairman and chief executive officer of Berkshire Hathaway Inc. said, “Ken’s been the gold standard for corporate leadership and the benchmark that I measure others against. He led the company through 9/11, the financial crisis and the challenges of the last couple of years. American Express always came out stronger. 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.”
“American Express is a very special company, one in which I first invested 53 years ago,” Mr. Buffett added. “Ken built on its storied history – not by abandoning traditional strengths, but by building on them and adding new ones. He’s been a great CEO and Berkshire Hathaway shareholders owe him a huge thank you.”
“I’ve spoken with Steve and have been hearing about him from Ken,” continued Mr. Buffett. “From everything I’ve heard, he’s absolutely the right person for the job. He knows the business, has a great track record and appreciates what makes American Express special. Ken and the board have picked someone who is going to build on a great legacy of service and success.”
Berkshire Hathaway is American Express’ largest shareholder.
“It’s a privilege to lead one of the world’s most admired companies and I appreciate the expressions of confidence from the Board and our largest shareholder,” said Mr. Squeri. “Ken has been a terrific mentor. He leads by example and taught me, along with the rest of the organization, the importance of the personal connection millions of people around the world have with American Express."
“I feel very good about what we’ve accomplished and, while it’s a fast-moving competitive marketplace, I believe we’re in a strong position for the years ahead,” Mr. Squeri continued. “American Express is a unique brand and a franchise that’s unmatched by any one competitor. We have an impressive range of growth opportunities ahead of us. I’m going to be focused on innovating, building the brand around the strength of our customer service and partnering with merchants and businesses to take full advantage of the digital convergence that’s underway in the world of payments and commerce.”