NEW YORK (AP) — Kenneth Chenault, one of the most prominent black corporate leaders and long-time chairman and CEO of American Express, is stepping down next year, the company announced Wednesday.
Chenault, 66, will be replaced on Feb. 1 by Stephen Squeri, who will take over as both American Express’ CEO and chairman of the board. Squeri, 58, is currently vice chairman at American Express.
Chenault took over as CEO in 2001 and guided the company through several seismic events, including the terrorist attacks on Sept. 11, 2001. The company’s headquarters in Manhattan is next door to the site of the World Trade Center, and it was severely damaged in the attack.
He also led the company through the financial crisis and subsequent Great Recession of 2008. While American Express did not hold any mortgages, its direct exposure to the health of the U.S. consumer put significant pressure on its business.
The company had to convert itself to a bank-holding company to access the Federal Reserve’s emergency lending programs. It also became much more tightly regulated after the crisis, having to go through the Fed’s annual “stress tests” like its bigger bank competitors like JPMorgan Chase and Bank of America.
But Chenault’s biggest challenge in his tenure would be new and fierce competition for its highly coveted, wealthy card members and credit card users.
Citigroup and Visa Inc. were able to steal away American Express’ long-time customer Costco two years ago, which was a major blow to the company since Costco represented one of AmEx’s biggest co-brand partnerships.
Meanwhile, Chase launched a new credit card called the Chase Sapphire Reserve Card that became a blockbuster hit and AmEx saw some of its Platinum Card customers jump ship to Chase. It caused other companies to announced their own “me too” high fee, high reward cards focused on going after AmEx’s customers.
However AmEx pushed back, upping the rewards and perks of the card and has been able to retain at least a majority of those customers.
“We have faced three major challenges and the reality is we have emerged stronger than we were before,” Chenault said in an interview.
Warren Buffett, the billionaire investor and largest shareholder of American Express through his company Berkshire Hathaway, praised Chenault’s performance.
“Ken’s been the gold standard for corporate leadership and the benchmark that I measure others against,” Buffett said in a statement.
Squeri joined American Express in 1985 in the company’s once well-known Travelers Cheques division. He rose through the ranks not in American Express’ consumer card business, but through the company’s merchant and commercial business divisions, working to get companies to use American Express’ corporate cards and getting merchants to join its payment network.
The announcement came as American Express announced its third-quarter results. The company posted a profit of $1.36 billion, or $1.50 a share, compared with $1.14 billion, or $1.20 per share, in the same period a year earlier. The results beat analysts’ expectations, who were looking for American Express to post a profit of $1.48 a share in the latest quarter.
The results were fueled by a noticeable rise in card member spending, and higher interest rates on balances customers were keeping on the cards. Unlike its competition, American Express makes most of its money on the fees it charges merchants to accept their credit and charge cards, the latter required to be paid off at the end of the each month.
The company did see a slight rise in the number of delinquencies and had to set aside additional funds to cover potential bad loans. However because AmEx primarily serves the well-to-do, its losses tend to be lower than the rest of the industry.