Acts of terrorism. An economy in recession. A turbulent stock market. Waning consumer confidence. Rising unemployment. If it weren’t for scant inflation and low interest rates, corporate America would have steered right into the middle of a perfect storm. Like their white counterparts, America’s most powerful black executives are navigating their companies and divisions through treacherous waters nonetheless.
Take Kenneth I. Chenault, the hard-charging CEO of American Express. His $23 billion financial services giant has been hit by the equivalent of a tsunami. By mid-year, the company announced 5,000 layoffs and poor second-quarter results due to the weakened economy and an $826 million write-down of junk bonds in the investment portfolio of its financial services unit.
Then came another crashing wave in the form of the September 11 terrorist attacks. More than 5,000 employees were displaced when their corporate headquarters, adjacent to the World Trade Center area, was wrecked. To make matters more tragic: the company lost 11 employees.
The bad news didn’t end there. On December 12, the company further reduced headcount, this time eliminating 5,500 to 6,500 jobs in a move expected to result in expense savings of $230 million to $260 million pre-tax in 2002. This brings the total layoffs at the company to roughly 13,200 to 14,200, or about 15% of the company’s workforce since the start of 2001.
Most of the latest cuts were expected to lead to a fourth-quarter restructuring charge of roughly $150 million to $180 million (after taxes) due to severance and related expenses. In addition to creating “greater flexibility in our cost structure,” Chenault continues to focus on the development of innovative financial products and new ways to reach consumers. “Over the last few years — in addition to enhancing our competitive strength through the expansion of our product portfolio and the broadening of our distribution channels — we have engaged in a variety of initiatives to make our business model more flexible,” Chenault told BE. “Our objective is to improve our ability to manage through volatile times and to adapt to a wide variety of business conditions.”
The world has changed dramatically in two years. The last time we listed our top executives — defined as senior-level professionals who run major revenue-generating divisions or have been placed on the CEO track — the economy had entered its seventh year of expansion. The unemployment rate was at 4%. The Dow Jones industrial average was in spitting distance of the 11,000 mark, and the Nasdaq composite index skyrocketed past 3,000. Business spending was up, and consumer confidence soared.
By November 2001, the jobless rate rose to a six-year high of 5.7%. In fact, U.S. companies cut payrolls by 799,000 in October and November, the highest two-month payroll reduction since 1980. After pulling out of bear territory at the beginning of December, the Dow clung to 10,000, while the Nasdaq barely surpassed 2,000. There is no telling whether another event will send the indices into a downward spiral.
Most of the sectors represented by the top executives — from food and beverage companies such