Leadership Has Its Rewards

Ken Chenault's low-key yet competitive style has pushed him up the executive ladder and to the CEO's chair

annuity plans to AmEx customers. In fact, one-third of new
clients have been card members. To shore up the variety of products it offers through its network of advisors, the company recently entered into an agreement with Fidelity Asset Management.

The unit’s success has been nothing less than sterling. It ballooned from $52 billion in assets owned, managed or administered in 1990, to $219.4 billion as of the first quarter of 1999. The unit has been growing by at least 20% annually.

According to analyst Steven Singleton: “[AmEx has] benefited from a great return on capital compared with the lower relative cost of capital in a hot market, so as a financial retailer, they’ve done well and will continue to do so in the foreseeable future.” Due, in part, to Chenault’s efforts, investors have made bets on AmEx: the price-to-earnings ratio for AmEx has outpaced the overall Standard & Poor’s Financials since 1992. Even with a drop in 1993, it continued to perform better than the average (see chart).

One concern, analysts say, is American Express’ tardy development of a comprehensive online retailer strategy. “The Internet is a huge retail shopping network, so the longer you wait, the higher the cost and lower the return. Chenault’s challenge will be to implement a sustainable Internet strategy,” says Singleton, who points to the $16.7 billion consumers spent in card purchases over the Net last year. (That amount is expected to increase tenfold to $178 billion by 2003.) “They’ve got to make their card more available to other portals.” For example, First USA paid America Online a staggering $500 million to be the preferred card on its network.

Chenault says American Express is developing its e-commerce strategy in a meticulous fashion. Thus far, the company has struck partnerships with and taken minority investment stakes in a range of companies, from direct consumer services outfits like Ticketmaster Online-City Search, which provides information guides and event ticketing, to a desktop travel management system.

Another technological initiative has been the creation of the Smart Corporate Card, which is defined as a “personal computer on a card.” The product, which looks like the company’s traditional card, has a computer chip embedded in the front that stores such information as a traveler’s profile and frequent flier account. Dick Tracy, eat your heart out. Maintains Chenault: “We need to invest in different types of technologies so we are covered. We are hedging our bets.”

In what has been nothing less than a stellar professional career, Chenault remains modest but confident-a man comfortable in his own skin. His ability to fit into whatever environment he moves in has been a critical part of his success. From his early school days through college, he has always been one of only a few African Americans-not unlike the situation on the executive floor where he currently presides. “I learned very early on how to move between both worlds and develop a level of comfort and confidence no matter what world I’m operating in,” reflects Chenault. He grew

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