Kenneth Chenault
Kenneth Chenault is an influential American businessman, best known for his leadership role as the chairman and CEO of American Express, where he served from 2001 until 2018. Born in New York City, Chenault was raised in a family that prioritized education and was deeply engaged with the civil rights movement. He attended Bowdoin College, where he earned a bachelor’s degree, and later graduated from Harvard Law School. His career began in corporate law before transitioning to American Express in 1981, where he rose through the ranks, demonstrating a strong ability to revitalize the company during challenging economic periods.
Under Chenault's leadership, American Express expanded its card offerings significantly and navigated financial crises, including the aftermath of the September 11 attacks, when he implemented measures to support customers and communities. His tenure at the company was marked by both successes and challenges, including increased competition from other financial institutions. After stepping down from American Express, Chenault became involved in venture capital and joined the board of Berkshire Hathaway, continuing his impact in the business world. His career reflects a commitment to corporate responsibility and innovation within the financial services sector.
Kenneth Chenault
Business executive
- Born: June 2, 1951
- Birthplace: Hempstead, New York
Chief executive officer of American Express
When Chenault was made the chief executive officer of American Express in 2001, he became the third Black American to lead a Fortune 500 company. During his long tenure at American Express, which lasted until 2018, he worked to restore merchant loyalty to the credit card brand after years of economic downturn had caused the card’s value and status to suffer.
Area of achievement: Business
Early Life
Kenneth Irvine Chenault was born in New York to Hortenius and Anne Chenault. His father was a dentist and his mother was a dental hygienist. Both of his parents attended Howard University, where they met and graduated at the top of their classes. Chenault was the second of four children. He grew up in the midst of the civil rights activism on Long Island and was very aware of the events unfolding, as his parents made a point of discussing the developments in the civil rights movement as a family.
When it came time for Chenault to attend school, his parents were unimpressed by the quality of education afforded to African American students at Hempstead’s public schools. Chenault and his siblings were sent to a private preparatory school, the Waldorf School of Garden City. He attended the school from kindergarten through twelfth grade and served as class president each of his last four years at the school. In his senior year, he also was captain of the school’s basketball, soccer, and track teams.
After graduating from high school, Chenault enrolled at Bowdoin College in Maine, where he earned his bachelor’s degree in history. While at Bowdoin, Chenault became very active at the Afro-American Center, where he spent countless hours debating current events with his friends and classmates. Chenault often was selected by his peers to represent them in negotiations between the students and administration. He was chosen for this job because of his likable personality rather than his views; Chenault believed that the cause of African American equality could best be promoted from within the establishment rather than by fighting it. After graduating from Bowdoin, he continued his studies at Harvard University, where he received his law degree in 1976.
Chenault passed the bar exam in New York and began a career in corporate law at the firm of Rogers and Wells. He worked at the firm from 1977 to 1979, before his experience in corporate law inspired him to take a position as a member of a business consulting firm in Boston called Bain and Company.
Life’s Work
In 1981, Chenault took a position in the merchandise service division at American Express, where he worked to sell a specific line of the company’s products to American Express cardholders through direct-mail service. In 1983, he was named vice president of the merchandise service division, a position that gave him additional responsibility over the company’s travel-related service division. He was promoted again in 1984, this time to senior vice president and service manager of merchandise services. In this new position, he was responsible for generating profits for the merchandise service division while still maintaining a high level of customer trust and satisfaction. Under his guidance, the card’s direct sales expanded to nearly $400 million by 1986, and Chenault was promoted yet again; this time, he was named president of the American Express Card Group, which gave him responsibility for card operations in all of North America.
Times became difficult for Chenault and American Express during the late 1980s and early 1990s because of nationwide economic struggles. Because of the weakened economy, Chenault was forced to reposition the card in order to make it competitive with credit card companies that allowed their customers to carry unpaid balances. American Express also required merchants to pay a 3 percent surcharge on card purchases, which discouraged merchants from accepting the card. American Express created a new card, the Optima, that was initially offered only to established cardholders, but this also caused problems when many Optima cardholders defaulted on their balances. These problems and others during the early 1990s caused American Express’s profits to suffer and damaged its image on Wall Street.
During this difficult time for the company, Chenault devoted himself to restoring the American Express card’s reputation and value. He did so by improving customer service and rebuilding merchant loyalty by emphasizing the long-standing traditional advantages that American Express cardholders enjoyed.
Chenault was promoted to president of the company in 1993, and under his guidance, the types of cards American Express issued increased from four to nearly sixty in just a few years. Many of the new cards being issued were cobranded, meaning that they carried the logos of joint issuers such as Delta Airlines, Peugeot Motors, and the New York Knicks basketball team. In 1995, he became vice-chairman of American Express, and in 2001, he became chairman and chief executive officer (CEO) of the company. He was the third Black American ever to reach that position with a Fortune 500 company.
By 2010, Chenault had shepherded American Express through another economic downturn, which involved applying to the US Federal Reserve to become a bank holding company and receiving over $3.3 billion in bailout funds in 2009. Later that year, the company announced that it would sell $500 million in stock in an effort to help pay back part of that bailout amount and prove that it could once again sustain itself without the aid of taxpayer money. He also served as cochair of the Business Roundtable, a director at IBM, and a member of the Council on Foreign Relations.
By 2015, however, American Express had begun to struggle once more. In addition to increasingly strong competition from companies such as Citigroup, Visa, Capital One, and MasterCard, which have been gaining strategic partnerships through lower fees and taking growing shares of American Express's typical wealthy customer demographic, the company has also broken ties with some of its biggest and longtime partners, including Costco and JetBlue Airways. By early 2016, it was reported that American Express's stock had dropped 27 percent over the previous year, one of the lowest in the Dow Jones Industrial Average. As a result of the loss of investors and decreased earnings, Chenault announced a plan to reassign senior managers and better concentrate marketing efforts. While some commentators began to criticize Chenault's leadership and reliance on the brand as part of the decline, Warren Buffett, CEO of Berkshire Hathaway—American Express's biggest shareholder—continued to express support for the CEO.
Ultimately, Chenault stepped down from his executive post with American Express in early 2018. Not long after, it was announced that he was joining the venture capital firm General Catalyst as chairman and managing director. Having relinquished his seat on IBM's board in 2019, by early 2020 he had become a member of the board of directors of Berkshire Hathaway.
Significance
As the head of American Express, Chenault managed to revitalize the company’s brand, increase its market share, and restore merchant loyalty. His leadership skill was tested early in his tenure by the September 11, 2001, terrorist attacks. In the aftermath of the attacks, Chenault took steps to boost the morale of his company’s clients and the nation as a whole. American Express forgave millions of dollars’ worth of fees and interest charges on credit cards in the months after September 11, and Chenault publicly announced that American Express would lend both financial and emotional support to the families of victims.
Bibliography
Bianco, Anthony. “Ken Chenault: The Rise of a Star.” BusinessWeek 10 Dec. 1998. Print.
Chenault, Kenneth. "American Express CEO Ken Chenault: 'There's a $25 Trillion Opportunity.'" Fortune. Time, 21 May 2014. Web. 22 Apr. 2016.
Heberling, Michael E., and Peggy M. Houghton. Modern Day CEOs: The Good, the Bad, and the Ugly. Flint: Baker, 2002. Print.
"Kenneth I. Chenault '73, H'96 to Receive Bowdoin's Highest Honor." Bowdoin, 30 Mar. 2021, www.bowdoin.edu/news/2021/03/kenneth-i-chenault-73-h96-to-receive-bowdoins-highest-honor.html. Accessed 22 July 2021.
Pierce, Ponchitta. “Kenneth Chenault: Blazing New Paths in Corporate America.” Ebony July 1997: 58. Print.
Sorkin, Andrew Ross. "For His Next Act, Ken Chenault Turns His Focus on Silicon Valley." The New York Times, 29 Jan. 2018, www.nytimes.com/2018/01/29/business/dealbook/kenneth-chenault-silicon-valley.html. Accessed 22 July 2021.
Surane, Jennifer. "AmEx CEO Chenault to Face Investors after Stock's 27% Tumble." Bloomberg. Bloomberg, 10 Mar. 2016. Web. 22 Apr. 2016.