Why Amex’s CEO scrapped a bonus system that made executives compete for cash

At American Express, the old bonus season had a predictable rhythm. Business-unit chiefs came into the year ready to make their case, defend their turf, and grab as much investment capital as they could. The logic was simple: Grow your own kingdom faster than the others, and your reward got bigger. 

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. 

Amex’s CEO, 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........

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