Amex Moves to Unify Incentives Across the Enterprise
In a watershed shift for executive compensation, American Express has abandoned the old bonus framework that rewarded leaders based on how their business units performed relative to rivals. The change, led by CEO Stephen Squeri, replaces inter-unit competition with a single, companywide bonus pool tied to Amex’s overall results. The move comes as markets enter a period of heightened volatility and consumer spending patterns continue to evolve in a post-pandemic economy.
The core idea is simple on paper: align incentives with enterprise success rather than the fortunes of individual divisions. The new model sets targets around earnings per share, revenue growth, and total shareholder return. If the company meets or exceeds those targets, the executive team shares in the rewards; if not, the pool shrinks accordingly. Importantly, the board still reviews and approves the framework, with the compensation committee overseeing governance and risk controls.
As Squeri described the shift, the aim was not to shrink ambition but to reframe ambition around company-wide value creation. He has argued that the prior approach encouraged leaders to advocate for more capital for their own units—even when a broader allocation might have produced higher returns for the entire enterprise. The change, he notes, was as much about culture as it was about dollars: a move from divisional owners to enterprise builders.
The phrase that has circulated inside Amex since the pivot is blunt and unmistakable: we’re all going to sink or swim together. The company intends to use a single, enterprise-focused yardstick to evaluate performance, hoping to reduce internal frictions and accelerate cross-functional collaboration during periods of rapid change in consumer behavior.
Why the Change Was Needed—and Why Now
The pandemic years exposed fragilities in a system that rewarded growth in siloed pockets of the business. A unit that weathered a slump could still land a robust bonus if its performance index remained strong relative to rivals. In fast-moving markets, that dynamic could delay difficult but necessary reallocation of capital—precisely the kind of misalignment Squeri sought to remedy.
Industry analysts say the transition is timely. A broader shift in corporate governance has been pushing U.S. companies to emphasize long-term value and shareholder-friendly outcomes over short-term internal battles. In the payments and financial services sector, where consumer spend patterns, travel, and card usage swing with macroeconomics, tying compensation to the entire company’s trajectory helps senior leaders prioritize investment bets that serve the whole firm.
Analysts caution that the change could blunt some of the sharp drive that rewarded rapid unit expansion, at least in the near term. Yet the emphasis on enterprise performance is expected to sharpen decision rights across the leadership ranks, pushing executives to favor projects with broad, scalable returns rather than high-visibility wins for their own unit.
Market and Employee Reactions: Early Signatures
Early reactions from investors and current Amex executives have been mixed but largely constructive. Some market watchers welcomed the clear signal that the company would prioritize long-range growth and resilience over intra-corporate competition during a period of economic uncertainty. Others noted the risk that a universal payout pool could dilute incentives for standout performers who had previously driven outsized gains for their divisions.
Analysts at several research shops offered cautious optimism. Maria Chen, senior research analyst at Granite Ridge Partners, said: "This could improve cross-unit collaboration and speed up risk-aware, enterprise-level decision-making." She added that the change may require careful calibration to preserve an effective incentive for top leadership while avoiding free-rider dynamics if performance lags in some areas.
James Rivera, equity strategist at Northbridge Capital, noted: "If the company meets its targets, the payout reinforces a shared commitment to shareholder value. If it misses, the challenge will be to maintain accountability across a broader leadership group without triggering complacency."
From inside the firm, several veterans describe a cultural shift already taking shape. A former Amex executive who spoke on condition of anonymity noted that the old system often created a friction-laden dialogue during budget cycles, with leaders lobbying for capital to protect their turf. The new framework, in their view, should push teams to justify every major investment on a portfolio-wide basis rather than for a single unit's advantage.
What the New Plan Looks Like in Practice
Important elements of the redesigned incentive program include the following:
- Single, enterprise-wide bonus pool funded if company targets are met or surpassed.
- Board-set performance measures focused on earnings growth, revenue expansion, and total shareholder return.
- Executive leadership, including business-unit heads, sharing in outcomes based on the company’s overall performance.
- Governance and risk controls maintained by the compensation committee to prevent misalignment or unintended risk-taking.
- Implementation for the 2026 compensation cycle, signaling a concrete step away from the old divisional-based approach.
The shift also places more emphasis on cross-functional leadership—marketers, product managers, and operations leaders must collaborate more closely to optimize capital deployment and portfolio choices. In markets where consumer spending fluctuates due to inflation, interest rates, or geopolitical headlines, the enterprise lens can be a stabilizing influence, proponents argue.
Risks, Rewards, and the Path Forward
No major reform comes without potential drawbacks. A single bonus pool can, in some cases, reward average performers if the overall year is strong or leave higher achievers feeling they are carrying the burden for the group. Amex’s team has pledged to monitor performance density, adjust targets as needed, and maintain transparency so employees understand how the payout is derived.
Another risk is the potential for slower pace in rewarding exceptional, unit-specific breakthroughs that might have occurred under the old system. To counter this, the new framework allows for discretionary awards tied to extraordinary enterprise-wide feats, preserving some room for recognition of rare, high-impact contributions without undermining the enterprise focus.
Longer-term implications for retention and recruitment will play out over the next several quarters. If the approach proves successful, Amex could become a case study for boards seeking to curb internal competition while still offering meaningful upside for top leadership. If it falters, the policy could be rolled back or recalibrated in response to performance signals and market conditions.
What This Means for the Sector and Shareholders
The move signals a broader trend among large financial services firms reevaluating how to align leadership incentives with customer value and market realities. As consumer behavior shifts in 2026, more companies may consider enterprise-wide performance schemes to avoid counterproductive pay battles that complicate capital allocation.
Shareholders appear to be watching closely. The change is framed as an effort to reduce risk from misaligned incentives during periods of economic stress, and to boost the resilience of a payments giant with global scale. If Amex delivers on its promises, the approach could influence compensation design across the industry, potentially guiding equity plans and executive pay packages at peer institutions.
Bottom Line: amex’s scrapped bonus system and the Road Ahead
Amex’s scrapped bonus system marks a bold rethinking of how to reward leadership in a complex, fast-moving business. By tying executive pay to companywide performance, the firm aims to foster collaboration, discipline, and a shared commitment to long-term shareholder value. The path is not without risk, but the potential upside—stronger cross-functional decision-making, better capital allocation, and a more cohesive corporate culture—has supporters across the investment and corporate governance communities.
As the 2026 compensation cycle unfolds, observers will be watching closely to see whether amex’s scrapped bonus system translates into better investment choices, steadier growth, and improved risk management. If the results align with the intent, Amex could offer a blueprint for other major companies navigating a period of economic uncertainty and evolving consumer demand. In short, amex’s scrapped bonus system is more than a pay reform—it’s a test of how well a global brand can align its leaders around a shared mission in a changing world.
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