American Express 2003 Annual Report Download - page 7

Once again, reengineering was a major focus for us in 2003. We surpassed our target of $1 billion of reengi-
neering benefits for the third year in a row. Across the company, we continued to improve our key business
processes to increase efficiency, reduce costs and create revenue-producing opportunities.
Over the past few years, an increasing portion of our reengineering benefits have come from Six Sigma process
improvement efforts. In 2003, we significantly expanded Six Sigma training across the company. We are not
only using Six Sigma to reduce errors in existing processes, we are also applying it in product development to
build quality in from the start. Six Sigma supports both our commitment to quality and to achieving best-in-
class economics.
Our continued efforts to control staffing levels also helped us effectively manage expenses. For the year, our
total employee count was up 4 percent including the acquisitions of Threadneedle Asset Management and
Rosenbluth International. Excluding these acquisitions, our employee count was actually down 1 percent year-
over-year, even with increased business volumes. We also continued to use technology, particularly the Internet,
to improve productivity and lower our servicing costs across our business.
Shareholder Returns
The financial markets clearly recognized our strong financial performance in 2003. American Express’ total
shareholder return was 38 percent for the year, compared with 28 percent for the Dow Jones Industrials, 29
percent for the S&P 500, and 31 percent for the S&P Financials. At year-end, our price/earnings ratio was higher
than any of the top 20 global financial services companies by market capitalization, a level that indicates both
the strength of our current financial performance and the market’s confidence in our future growth.
While we are gratified by the trust our investors have placed in us, we know that we must earn this trust every day
by delivering results and doing it the right way. Throughout the business world, we saw more ethical failures dur-
ing the year. Increased regulatory actions and greater scrutiny of corporate governance practices are now the norm.
In particular, 2003 brought increased scrutiny and regulatory action in the mutual fund industry because of
improper trading practices at a number of firms. In light of the heightened regulatory focus, we have been
reviewing our mutual fund business to evaluate our policies and practices, and to improve our compliance con-
trols. We have shared information with the regulators throughout the process and our efforts are still ongoing.
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