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Executive bonus structures are being re-assessed, as organizations consider whether traditional performance incentives are still enough to encourage collaboration on strategic objectives, or are actually deepening internal rivalries.
At American Express, CEO Stephen Squeri concluded that the company’s long-standing approach to executive rewards was encouraging senior leaders to think more like rivals competing for territory than execs focused on the firm's business outcomes.
Under the previous model, business-unit leaders entered bonus season defending their divisions and competing aggressively for funding. The faster-growing units had strong incentives to argue for additional capital even when other areas of the company may have delivered stronger returns overall.
The structure was designed to drive performance, but also intensified competition between divisions and leadership teams.
Squeri believed the issue ran deeper than the structure of benefits packages, coming to the conclusion that it was reinforcing a culture where executives were prioritizing their own business areas ahead of broader company strategy and performance, creating friction and division around strategic decision-making.
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The challenge became more apparent during the pandemic when customer spending patterns shifted rapidly and the company needed to make faster decisions about where investment should be directed.
Companywide bonuses replace divisional rivalry
Squeri's solution was to abandon the internal scoring system entirely so that executive bonuses would no longer rise or fall according to how one division performed against another. Instead, leadership compensation is now tied directly to overall corporate performance using more traditional metrics such as earnings per share, revenue growth, and shareholder return.
“We’re all going to sink or swim together,” Squeri told employees.
The new policy has changed the focus among senior executives away from protecting their individual business units and towards determining where capital could generate the highest return across the organization as a whole.
It is part of an ongoing debate around how incentives are designed. Performance-driven reward systems can improve accountability and engagement, but can also encourage siloed behavior, internal politics, and competition for resources, while moving too far toward collective incentives also carries risks around individual engagement and retention.
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Leadership accountability remains critical
Company-wide bonus structures can leave stronger-performing teams feeling they are carrying weaker areas of the business while reducing the effectiveness of pay as a tool for managing underperformance. The new AmEx model places greater emphasis on leadership accountability and performance management rather than stoking rivalry among departmental outcomes.
For organizations facing disruption, the American Express approach illustrates how compensation strategy can become a lever for cultural change as much as financial motivation, creating a more unified operating model during periods of uncertainty and change.
