BUSINESSWEEK ONLINE : DECEMBER 11, 2000 ISSUE
COVER STORY A Talk With Harvey Golub of AmEx By almost any measure, Harvey Golub's seven-year tenure as chairman and CEO of American Express Co. (AXP) has been a considerable success. Golub took AmEx back to basics, jettisoning some businesses and restructuring the ones that remained. The company logged record earnings of $2.5 billion in 1999 and is on pace to top that mark in 2000. Under Golub, AmEx shares have risen more than sixfold in value. In November, Golub, 61, announced plans to step down as CEO at the end of 2000 and as chairman the following April. He will be replaced in both posts by his chosen successor, AmEx President and Chief Operating Officer Kenneth I. Chenault, 49. On Nov. 20, Senior Writer Anthony Bianco sat down with Golub for a wide-ranging discussion of corporate management issues. Q: Does the increasingly short-lived tenure of CEOs suggest that the job is getting harder? A: I think that the job is about as hard today as it was two decades ago. The CEO still has the final say on major decisions and has to provide a vision for the corporation that is compelling to the people who work there and to the marketplace. The difference is that today measures of CEO performance are much clearer than they were two decades ago, and boards are more willing to act on the basis of those measures. Q: CEOs also make a lot more money than they did two decades ago. Has the runup in CEO pay created unreasonable performance expectations? A: CEO pay has risen a lot, but I think it is primarily a consequence of a rising stock market. Many people wanted to see CEO compensation tied more closely to corporate performance, and they got their wish. Q: Do you sympathize with CEOs who complain of undue pressure from Wall Street for quick results? A: I think the pressure applied by the markets for short-term results is appropriate and fair. On balance, it has made companies more competitive than they would be otherwise. If executives don't want to be subject to market forces, they should go to work for private companies or change professions. Q: Do investors who trade in and out of a stock undermine a company and its CEO? A: There have been occasions in my career where I wished we could have had two classes of shareholders. One would get a higher dividend. To get the higher dividend, investors would have to commit to not sell more than 10% of their holdings in any one month. This would save stocks from getting dumped and causing the markets to operate inefficiently for a time. Q: Did you ever attempt to implement such a system? A: No. The way we've dealt with it is to discourage certain investors from buying our stock, because we know how they think and how they trade. When we meet with them we smile less, we answer questions less expansively. In some cases, I have told people they probably wouldn't be happy with us and maybe they shouldn't buy our stock. Q: Is top-level management talent in short supply today? A: I think the depth of management talent today is greater than when I started working. Today, management talent comes in both genders. It comes in all religions, ethnic backgrounds, and even countries of origin. That makes the market for American CEOs a global, uniform market. It also makes it a deeper, more robust market for CEOs than exists in any other country in the world. Q: Many companies have come to grief by mismanaging CEO succession. Where do they tend to go wrong? A: I did a review of succession in other companies to see what worked and didn't work. In some cases, the successor feels the need to put his or her stamp on the company in a way that may turn out to be dysfunctional--almost a case of putting a stamp on the company for the sake of putting a stamp on it rather than dealing with real needs. Sometimes, the outgoing CEO tries too hard to make his last year the best year rather than making the first year of the successor a better year. Some CEOs won't let the successor expand responsibility very much before the changeover and therefore don't have an opportunity to provide at least some level of guidance. Q: You have said that you don't even want to keep a seat on the American Express board after you retire from management. Why? A: The dynamic of having the old CEO hang around in order to be helpful to the new CEO is almost always nonsense. It can create two problems. The successor may not want to make changes because he doesn't want to hurt the feelings of his predecessor. And the person who is being succeeded may feel resentment if something is changed. The old CEO ought to go away, and if the new CEO has a question, he can call him or have lunch with him. _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ BACK TO TOP					RELATED ITEMS The CEO Trap COVER IMAGE: The CEO Trap CHART: CEO Turnover TABLE: In--and Out CHART: Great Expectations TABLE: CEO Stats A Talk With Harvey Golub of AmEx INTERACT E-Mail to Business Week Online

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