American Express' 2015 financial performance resulted in a
26 percent year-over-year pay decrease for CEO Ken Chenault, according to a March
21 filing with the U.S. Securities and Exchange Commission. Amex's compensation
and benefits committee decreased Chenault's "total direct
compensation" owing to Amex's inability to reach goals set in 2015 for earnings
per share, billed business growth and return on equity goals.
"We have a robust process to evaluate the company and
CEO performance," an Amex spokesperson told BTN in an email. "CEO pay was tied to company performance,
which came below target." Amex's evaluation process considers shareholder,
customer and employee goals, as well as leadership contributions, the
spokesperson explained.
Chenault's target compensation was $22 million, which he
missed by 16 percent. His base salary of $2 million, unchanged since 2010,
represented 11 percent of his entire compensation. The remaining 89 percent is based
on performance.
While Chenault met employee and customer performance goals,
shareholder goals fell short, the SEC filing showed. Amex's 2015 adjusted
earnings-per-share price of $5.05 didn't make the minimum target price of
$5.18. Return on equity missed the minimum 25 percent goal by one percentage
point. And the reported 6 percent of foreign exchange-adjusted billed business
growth missed the minimum 8 percent goal by 2 percentage points.
During an earnings call in January, Chenault said he was
more disappointed
with the corporate card business in 2015 than with any other segment of Amex's
business. Card-billed business for Amex Global Commercial Services, which
houses the corporate card business, declined 2 percent to $182.1 billion. Net
income for totaled $666 million, down from 2014's $1.5 billion.
“We recognize that our 2015 performance was disappointing,”
Chenault said during an annual investors presentation on March 10. “I can
assure you, we’re not standing still.”
Industry Reaction
"We're in the middle of a soft market that
remains highly competitive," said GoldSpring Consulting partner Colleen
Black. "Amex is going to do whatever it needs to do to stay competitive …
even if that means cutting salaries. I applaud Amex on some of the decisions
they've made of late. They do appear to want to do their best for their clients."