January 29, 2010
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News: Chenault Receives Monumental Raise
While the U.S. feverously works to recover from record breaking numbers of unemployment and Americans struggle to meet ends meet in the wake of a recession, credit card company executives are being rewarded for the mess they got this country in. American Express (AmEx) recently released certain details of their top executives' compensation packages. As Americans continue to feel the heavy hand of abusive practices by the credit card companies, Kenneth I. Chenault received a 60 percent increase in pay. Effective February, the credit card magnet's salary will increase to $2 million a year. The company will release additional details on the other aspects of Chenault's compensation package in February
Typically, credit card company executives receive a smaller base salary and earn the majority of their compensation from bonuses. The 2010 compensation package for Chenault reflects a shift in the way financial institutions compensate top executives as they increase base salary and decrease bonuses. According to AmEx's filing, Chenault will receive stock options to purchase 650,918 shares of the credit card company's stock at a cost of $38.10 each. The options will be available for him to sell for nine years between January 26, 2011 and January 26, 2020.
Most would agree that Chenault deserves the monumental raise since American Express remained the top performer throughout the credit card crisis. However, unlike other card issuers, AmEx has a dual role; they issues cards as well as process transactions. The company also caters to the more elite customers and requires they pay their card balances in full each month. The company had expanded their lending policy during recent years to include borrowers with less than perfect credit history. However, with the onset of the recession, high unemployment, and the mortgage crisis, the company experienced record breaking card defaults. AmEx performed higher than analysts expected as it reported better than expected earnings for fourth quarter. The company is traded on the New York Stock Exchange (NYSE) under the symbol "AXP".