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

American Express CEO Stephen Squeri eliminated a competitive bonus system for executives after recognizing that cash incentives created internal rivalry rather than collaboration. The shift reflects growing corporate awareness that certain compensation structures can undermine organizational health and long-term value creation.

Stephen Squeri's decision to dismantle Amex's competitive bonus framework represents a significant pivot in executive compensation philosophy. Rather than rewarding individual achievement through cash competition, the company recognized that such structures incentivized siloed behavior and short-term thinking at leadership levels. This mirrors a broader corporate trend toward collaborative metrics and holistic performance evaluation, where executives are evaluated on enterprise outcomes rather than departmental wins.

The competitive bonus model has long dominated Wall Street and financial services, rooted in the assumption that internal competition drives performance. However, this approach frequently generates unintended consequences: territorial disputes, information hoarding, duplicated efforts, and misaligned incentives across divisions. Squeri's move suggests Amex leadership concluded these friction costs exceeded performance benefits.

For investors and market participants, this shift carries implications beyond compensation optics. Companies that restructure incentive systems typically do so because they've identified operational inefficiencies or cultural challenges. The change may signal Amex's confidence in its strategic direction and willingness to prioritize sustainable performance over short-term bonus cycles. It also positions the company competitively for talent retention, as collaborative environments increasingly attract top-tier executive talent.

The broader financial services industry watches closely when marquee firms like Amex adjust compensation structures. If this model demonstrates improved operational metrics or shareholder returns, competitors may follow. Conversely, if collaboration-focused compensation proves suboptimal, it validates the competitive model's persistence. Squeri's experiment serves as a test case for whether modern corporations benefit more from alignment incentives than from traditional competitive frameworks.

• →Amex's CEO eliminated competitive cash bonus systems, prioritizing collaboration over internal competition among executives
• →The change reflects recognition that competitive incentives can create organizational silos and undermine long-term value creation
• →This shift aligns with broader corporate trends toward holistic performance metrics and collaborative leadership structures
• →The decision may provide competitive advantages in talent retention and operational efficiency if successfully implemented
• →Financial services industry outcomes from this model could influence compensation strategies across competitors