Charge Off

Does Ken Chenault Deserve a Better Sendoff Than Jeff Immelt?

American Express's longtime CEO managed to steady the ship before his departure.
Photographer: Daniel Acker/Bloomberg
AMERICAN EXPRESS CO
+1.45
At Closing, February 23th
98.80 USD

American Express Co.'s Ken Chenault is (finally, some would say) retiring. The timing isn't bad.

Saving Face

Ken Chenault's legacy has been saved in part by the rally in U.S. stocks

Source: Bloomberg

*Chenault assumed top job at AmEx in April 2001

After 16 long years, the chief executive officer of the credit-card giant is handing over the reins when, in his words, the company is in a position of strength. While that's arguable (and it's unclear if there's more to the story behind the 66-year-old's departure than what the company is saying), he's at least leaving with his legacy intact, rather than tarnished -- which it would have been if he had abruptly stepped down during AmEx's tumultuous patch following the loss of its partnership with Costco Wholesale Corp. Even as that turn of events accelerated a decline of valuable market share, Chenault retained the support of Warren Buffett, which matters because Berkshire Hathaway Inc. is the company's largest shareholder.

Battle Zone

AmEx must continue to combat heightened competitive pressure, especially in the U.S.

Source: Bloomberg Intelligence

*Data shows U.S. credit charge and volume

As it happens, his tenure will end up being about the same as that of Jeff Immelt, another longtime corporate titan, who served as CEO of General Electric Co. from 2001 until this year. Immelt, under pressure from shareholders and an activist, stepped down in August as GE's stock languished and the company's direction was questioned.

Chenault, who also became CEO in 2001 and will stay on until Feb. 1, is leaving his shareholders on a more favorable note. Since hitting a low last February, AmEx shares have soared more than 80 percent, in part thanks to a two-year turnaround plan he helped engineer as well as the prospect of a lower tax rate. One leg of the turnaround, which involved offering more attractive rewards to retain or lure commercial clients, showed its payoff in the company's third-quarter earnings released Wednesday: Profit from that unit grew 14 percent. 

Turnaround Story

After a rough 2016, AmEx has steadied the ship by cutting expenses and achieving much-needed billings growth

Source: Bloomberg

While Chenault is leaving his investors in relatively good shape, his inability to take advantage of innovations in the credit and charge-card businesses sooner, and, perhaps, his simple longevity at the helm, may have done some permanent damage to an iconic company.

Competition isn't abating anytime soon, and his successor Steve Squeri has a tough task ahead. 

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

    To contact the author of this story:
    Gillian Tan in New York at gtan129@bloomberg.net

    To contact the editor responsible for this story:
    Beth Williams at bewilliams@bloomberg.net

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