AmEx Rejects Push for Independent Chairman by Slimmer Marginby
About 63% of ballots cast opposed splitting chairman, CEO job
CEO Chenault says returns not `at a level we would want'
American Express Co. shareholders rejected a proposal that would have pressed the credit-card issuer to name an independent board chairman by a narrower margin than a year earlier.
About 63 percent of votes cast opposed the shareholder-sponsored change, the New York-based company said Monday in a filing after its annual meeting. That compares with about 84 percent of votes cast in 2015 against a similar proposal. This year’s proposition would have given the board the option to begin the policy after Chief Executive Officer Ken Chenault, 64, who is also board chairman, steps down.
“Our total shareholder return has not been at a level we would want, declining 24 percent in 2015," Chenault said during Monday’s meeting in New York. “This performance was disappointing. It is not what we, or you, would have liked."
American Express last year announced it was ending its U.S. partnership with Costco Wholesale Corp., a relationship that accounted for 20 percent of worldwide loans. Chenault said Monday the firm stands by its decision to walk away from the deal after the two companies could not reach terms that would have made economic sense for AmEx.
Warren Buffett, whose Berkshire Hathaway Inc. is AmEx’s largest shareholder, offered the credit-card issuer a vote of confidence last weekend at his company’s annual meeting in Omaha, Nebraska. Berkshire owns a 16 percent passive stake in AmEx and Chenault is empowered to vote those shares.
“I personally feel OK about American Express, and I’m happy to own it,” Buffett said Saturday. AmEx’s position in the industry “has been under attack for decades -- more intensively lately -- and it will continue to be under attack. It’s too big a business, and too interesting a business.”
In a statement opposing the proposal, the board urged shareholders to give it the discretion as to whether separate the CEO and chairman roles.
"We believe that Mr. Chenault’s knowledge of the day-to-day operations of the company, perspective on competitive developments, understanding of shareholder interests, and relationships with customers, business partners, and employees allow him to provide effective leadership," the board said in its proxy statement.
American Express shares have slid 5.6 percent this year and 28 percent since Nov. 6, 2014, when Bloomberg News reported that Costco was considering replacing AmEx as its credit-card issuer in the U.S.