Inside the Amex bonus shake-up that ended its executive Hunger Games | Fortune

"The system was meant to sharpen performance. Inside Amex, it also sharpened rivalries. A leader with a fast-growing unit had every reason to argue for more dollars, even if the better return for the company might have come from sending that money somewhere else. The result, as one longtime executive put it, was tension that did not always make the company better."

"Stephen Squeri tells Fortune that he saw an even deeper problem. The incentive system was teaching senior leaders to think like divisional owners rather than enterprise builders. That became especially important during the pandemic when customer spending patterns changed abruptly, and the company had to decide quickly which parts of the business deserved fresh investment."

"So Squeri junked the scoreboard. Bonuses would no longer depend on how one unit performed against another. Instead, they would rise or fall with American Express's overall performance. The board would set targets around companywide measures such as earnings per share, revenue growth, and shareholder return, and the executive team would share in the results."

""We're all going to sink or swim together," Squeri recalls telling employees. By tying leaders' bonuses to the same companywide outcome, Squeri redirected the conversation among Amex's top executives from internal claims on capital to the highest-return uses of it across the company. The model still requires discipline."

Business-unit leaders previously competed for investment capital using a bonus system tied to relative unit performance. The approach aimed to improve performance but increased internal rivalry and could reward leaders even when better company returns might come from reallocating capital elsewhere. During the pandemic, changing customer spending patterns required rapid decisions about where to invest. The CEO replaced the unit scoreboard with bonuses linked to overall American Express performance. The board set targets using companywide measures such as earnings per share, revenue growth, and shareholder return, and executives shared in the outcome. This redirected leadership focus from internal capital claims to the highest-return uses of capital across the company, while still requiring discipline to avoid masking weak performance.

Read at Fortune