Post 5 — Sink or Swim Together
Every year, Amex's senior executives arrived at bonus season prepared to compete — for capital, recognition, a bigger share. They competed hard. The competition was with each other.
Every week I take one real case — a company, a government program, a league — and show how the reward shaped the behavior. Welcome to Behavior Follows Rewards.
American Express discovered its executives’ biggest competitor was each other.
American Express paid its divisions to beat their own targets, and they began competing with each other.
You’ve sat in the meeting that was supposed to be about strategy and became something closer to a gladiator event. Every senior leader arrived with a division to protect and a case to make. The bonus waiting at the end of the year meant the strongest argument in the room usually won — not the best use of the company’s money.
Stephen Squeri saw this at American Express. And he changed the rules.
The Diagnosis
Squeri's insight was structural, not cultural. The executives were not behaving badly — they were behaving exactly as the reward structure told them to. Each one was rational. The architecture was broken.
The old system had a built-in design flaw: the reward for individual divisional performance gave every executive an incentive to optimize for their own unit's outcomes, even when the enterprise-level return pointed somewhere else. Capital allocation meetings became annual negotiations between internal rivals rather than conversations about the highest-return use of company resources.
This became especially clear during the pandemic, when customer spending patterns changed abruptly and Amex had to make fast decisions about where to deploy investment. The last thing Squeri needed was senior leaders walking into those conversations defending kingdoms.
The Redesign
Squeri junked the scoreboard.
We’re All Going to Sink or Swim Together.
Bonuses would no longer depend on how one division performed against another. Instead, every executive's bonus would rise or fall with American Express's overall performance. The board set targets around companywide metrics: earnings per share, revenue growth, and return on equity. All senior leaders. Same scorecard. Same stake.
“We’re all going to sink or swim together, and I hope it’s swim. … The units aren’t rated independently.” — Stephen Squeri, Chairman and CEO, American Express
Starting in 2018 — his first full year as CEO — the Compensation and Benefits Committee adopted a single Company scorecard, replacing the multiple unit-level scorecards that had previously governed annual incentives.
The conversation in capital allocation meetings changed. Instead of executives presenting briefs for their own divisions, the conversation shifted to the highest-return uses of capital across the enterprise. The reward structure had changed. The behavior followed.
The Units Aren’t Rated Independently.
Squeri also put himself on the same system. In 2021 — American Express’s strongest post-COVID year — his total compensation reached $28.5 million, 39% above his target. In 2020, when the pandemic compressed results, it dropped to $19.96 million. He swam when the company swam.
Hang on this one a beat. Squeri didn't just redesign the bonus formula -- he put his own compensation inside the same structure he was asking everyone else to live under. That's a small detail with a large amount of information in it: the redesign only works if the person who built it is willing to sink or swim by the same math.
What This Is
This is the Design layer of incentive architecture.
Squeri did not launch a culture initiative or commission a leadership development program. He identified what the reward structure was producing, named the gap between the intended behavior and the actual behavior, and rebuilt the architecture to close it. The behavior changed because the reward changed.
The contrast with Sears is exact. Eddie Lampert applied the same unit-incentive logic at Sears in 2008 (Post 4) — more than 30 divisions, each operating as a separate business, each competing internally for capital, each measured on its own profit and loss. Lampert called it free-market discipline. The behavior it produced was identical to what Squeri inherited: executives optimizing for divisional outcomes at the expense of enterprise coherence. Kenmore lost floor space in its own stores. Sears filed for bankruptcy in 2018.
Squeri diagnosed the same architecture and redesigned it. Lampert doubled down on it. The difference is not strategy or culture. It is what the system made rational.
The Question Worth Asking
Every organization has a version of this meeting — the one where smart people spend their energy competing against the wrong opponent. The architecture that produces it usually was not designed to. It accumulated, through budget cycles and performance reviews and historical precedent, until internal competition became the default.
What version of this meeting do you have? And is that version producing the intended behavior?
Ask yourself: if you drew a line between every metric you track and every behavior it rewards, where does that line lead? Most organizations optimize the metric and hope for the behavior. Squeri reversed the order.
If you are working through an incentive design challenge in your organization — trying to understand why a policy, initiative, or team isn’t doing what you designed it to do — that is the work. Advisory Services →
Behavior Follows Rewards. The pattern shows up wherever people are measured and rewarded.
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—Wayne
Going Deeper
If you were an Amex executive the year Squeri replaced your divisional bonus with one shared scorecard — your pay now moving with results you did not control, delivered by people who did not report to you — would you have welcomed it? Or would you have spent that first year waiting for it to be reversed?
Last time: Eddie Lampert believed in free markets so deeply he built one inside the company he ran. The incentives he designed drove his own flagship brand off the shelves of its own stores.
Next: How Wells Fargo declared a customer-first strategy, built a reward system that measured something else, and produced an outcome which no one asked for.
In development — a government program that turned renewable heat into a bonfire; a pro sports league that rewarded losing so reliably that owners started doing it on purpose; a government program designed to incentivize the behavior it actually wanted, and then got it.
Sources
Umoh, Ruth. “Why Amex’s CEO scrapped a bonus system that made executives compete for cash.” Fortune, May 11, 2026.
Tully, Shawn. “The American Express CEO defied haters who said he’d never have the top job.” Fortune, May 6, 2026.
American Express Company. Definitive Proxy Statement (DEF 14A). Filed March 24, 2020. U.S. Securities and Exchange Commission, Acc. No. 0001193125-20-083487.
American Express Company. Definitive Proxy Statement (DEF 14A). Filed March 18, 2022. U.S. Securities and Exchange Commission, Acc. No. 0001193125-22-079264.
HR Grapevine. “American Express rewrites bonus structure to curb exec rivalries.” May 13, 2026.
Squeri, Stephen J. Tech Talks Business. Georgia Tech Scheller College of Business, New York City, September 16, 2025.
Squeri, Stephen J. “Make Self-Reflection a Habit.” How Leaders Lead with David Novak, Episode 188.
American Express Company. “2019 Investor Presentation.” Spring Shareholder Engagement, April 2019.
Corrections
July 19, 2026 — This piece originally cited Stephen Squeri’s Georgia Tech “Tech Talks Business” talk as delivered September 17, 2025, and his “How Leaders Lead” podcast appearance as Episode 180. Those citations have been corrected to September 16, 2025, and Episode 188, respectively, based on Georgia Tech’s event records and the podcast’s official episode listing.
BFR is written to be accessible, welcomed, and celebrated by every reader — not simplified, not elevated. Just clear.