AmEx Picks Squeri, 32-Year Insider, to Remake Credit-Card Giant
AmEx Picks Squeri, 32-Year Insider, to Remake Credit-Card Giant
(Bloomberg) -- Stephen Squeri helped American Express Co. Chief Executive Officer Kenneth Chenault lead the firm through the Sept. 11 terrorist attacks and the 2008 financial crisis. But Chenault said a less-historic moment 30 years ago illustrates why Squeri is the right person to succeed him.
Squeri, just a vice president at the time, met with senior executives in the 1990s to discuss a problem in the New York-based credit-card company’s merchant business. Chenault said Squeri proposed the right solution and carried out the strategy.
“He’s someone people want to follow,” Chenault said in a telephone interview. “What is amazing as you travel around the world with Steve are the personal connections that he’s formed even though sometimes Steve has had the assignment to take some very difficult, painful actions in the company.”
Squeri, who’s currently vice chairman, was named Wednesday to take over as CEO on Feb. 1 when Chenault steps down. He has largely avoided the spotlight during his 32-year tenure at American Express, as polished executives like Chenault assumed the public face of the company. Now, he’s taking the reins of a 167-year-old firm known for catering to the ultra-wealthy that is working to transform into a digital-age one-stop shop for consumers and businesses.
Squeri said that he plans to strengthen AmEx’s relationship with wealthy consumers through new lending products. He also hopes to expand the small- and middle-market commercial payments business, and help physical retailers navigate the increasing popularity of e-commerce.
“This is a company that has constantly reinvented itself,” Squeri said in a telephone interview. “It’s a culture that is used to reinventing itself from a business perspective, and I’m just really excited to be at the helm and to work with my colleagues to make that happen.”
Squeri was most recently assigned to cut roughly $1 billion in costs as AmEx struggled to regain its footing after failing to renew a partnership with its largest co-brand partner, Costco Wholesale Corp. The loss sparked the company’s worst stock slump since the financial crisis and forced it to go searching for new revenue.
Squeri joined AmEx in 1985 as a manager in the travelers-checks unit and later led company preparations for Y2K. One of his biggest contributions was consolidating the commercial operation that supported small, middle-market and large companies into one division that now represents 40 percent of spending on AmEx’s cards. The move helped AmEx solidify its rank as the largest commercial-card issuer in the world.
‘A Great Job’
“Now, our commercial businesses are one of the fastest growing business segments that we have in the company,” said Chenault, who’s been CEO for 16 years. “He’s done a great job from a re-engineering perspective.”
The lender, which gets the biggest share of its revenue from commercial cards, said Wednesday that spending on those products climbed 10 percent in the third quarter to $109.7 billion, the biggest increase in two years.
Before joining AmEx, Squeri worked as a management consultant for Arthur Andersen & Co. The 58-year-old is on the board of retailer J. Crew Group Inc. and is a trustee of the Valerie Fund, a non-profit that provides support and health care for children with cancer and blood disorders. He lives in New Jersey with his wife, and they have four daughters.
One big advantage Squeri and AmEx have: the support of Warren Buffett. The billionaire’s Berkshire Hathaway Inc. is the card issuer’s largest shareholder, with a stake valued at more than $13 billion. In the announcement on Wednesday, Buffett praised Chenault and said that Squeri was “absolutely the right person for the job.”
Even so, the challenges ahead for AmEx are many as technology and customer preferences change. Berkshire Vice Chairman Charles Munger underscored that point earlier this year when he told investors that people who think they know what’s going to happen in payment systems a decade out are “probably under some state of delusion.”
Hurdles Coming
Squeri faces other tests. He will have to lead the company through a face-off with the government after the U.S. Supreme Court accepted a case over allegations that AmEx thwarts competition by prohibiting merchants from steering customers to cards with lower fees.
Investors also worry that AmEx could lose its partnership with Starwood Hotels & Resorts Worldwide Inc. after the hotel chain was bought by Marriott International Inc., which has a co-brand deal with JPMorgan Chase & Co.
“There are challenges to face, including fierce competition, rapid changes brought about by technological advances and regulatory pressures,” Squeri said during a conference call with analysts on Wednesday. “However, I’ve never felt better about our ability to take on those challenges.”
To contact the reporters on this story: Jenny Surane in New York at jsurane4@bloomberg.net, Noah Buhayar in Seattle at nbuhayar@bloomberg.net.
To contact the editors responsible for this story: Michael J. Moore at mmoore55@bloomberg.net, Dan Reichl, David Scheer