American Express 2014 Annual Report Download - page 7

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AMERICAN EXPRESS COMPANY | ANNUAL REPORT 2014 6
In both instances, we put most of the proceeds to work rather than
letting the money flow directly to the bottom line. We made additional
investments in marketing and promotion, made an up-front investment
to renew our longtime partnership with Delta Airlines, and recorded two
major restructuring charges (in the second and fourth quarters).
The two restructuring charges cover a range of actions designed to
make American Express more ecient. We are streamlining parts of the
organization, focusing our resources on growth areas, and adapting our
workforce to changing customer needs. Our aim is to contain operating
expenses and, as a result, have more funds available to invest in our future.
Adapting to change sometimes means eliminating jobs, and this,
unfortunately, is one of those times. We recently announced a substantial
number of job cuts across the company. Seeing valued colleagues have
their livelihoods disrupted is a part of business that nobody likes. We
will do our best to support our colleagues who are aected, whether by
reassigning them to other jobs at American Express where possible, or by
helping them with their transitions when there are no other alternatives.
As we reduce jobs in some areas of the company, we will be adding them
in others. For instance, in technologies and risk management, we are
bringing in more engineers and data scientists to help us innovate and
bring products to market faster. Another example: we are expanding our
teams involved in strengthening control and compliance to help ensure
that we protect our customers and our brand. It comes down to putting
people with the right skills in the right places at the right time.
I would like to be able to say that our strong earnings, healthy capital
position and business-building investments caused our stock to
outperform in 2014. However, that didn’t happen. Our total shareholder
return of 4 percent trailed the S&P 500 (up 14 percent) and the
S&P Financials (up 15 percent). However, as I noted earlier, we have
outperformed the market over the longer term, including five-year returns
that topped the S&P 500 and S&P Financials.
Although we manage the company for the moderate to long term, we
obviously have been disappointed with our recent stock performance.
Shareholder Returns