Good morning. Welcome to our 2014 annual meeting of shareholders. I am Ken Chenault, Chairman of the Board and Chief Executive Officer, and I will be presiding at this meeting. I am very pleased you could join us today. With me on the dais is Carol Schwartz, Secretary of the company, who will assist me in conducting the meeting. Before I begin, I remind you that the order of business and the rules of the meeting are set forth in the printed agenda handed out when you came in. Before I comment on the company's financial performance, Carol will read a statement called for under the securities laws.
The discussion today contains certain forward-looking statements about the company's future financial performance and business prospects, which are based on management's current expectations and are subject to risks and uncertainties. Factors that could cause actual results to differ materially from these forward-looking statements, including the company's financial and other goals, are set forth within the company's 2013 10-K and other reports on file with the Securities and Exchange Commission. The discussion today also contains certain non-GAAP financial measures. Information relating to comparable GAAP financial measures may be found in the presentation slides for today's meeting, as well as the earnings materials for completed periods that may be discussed, all of which are posted on our website at ir.americanexpress.com. We encourage you to review that information in conjunction with today's discussion.
Thanks, Carol. Let me begin today with our 2013 performance. I believe 2013 was a solid year for our financial performance. We generated good growth, while at the same time making substantial investments in our future performance. For 2013, we generated $5.4 billion of net income on revenues of $33 billion, which were up 5% when adjusted for foreign exchange rates, and a return on average equity of 28%. Given the modest global economic growth during the year, I am very proud of our performance. Our bottom line was strong. Our revenue growth was solid, particularly relative to our card-issuing peers. Our return on equity reflected the strength of our business model and our hard work to provide superior value to our customers, merchants, and shareholders. Our results in 2013 were driven by our strong business metrics. Our billings growth remained relatively strong given the global environment.
At just over $952 billion, billed business for the full year was our highest ever, as was our average spend of over $16,000 per basic proprietary card member. Cards in force continued to grow steadily. Our card base at the end of the year exceeded 107 million global card members, reflecting the continued strength of our brand, our increasing global relevance, and our commitment to providing premium value and service to our customers. Our loans grew modestly yet consistently during the year, with our focus on premium lending serving to drive not just balances, but billings as well. Our premium lending strategy also contributed to our credit metrics remaining near historic lows, while also being the best in the industry. On a relative basis, the strength of our performance was quite clear.
Our billings base continues to be the largest by far against our major issuing peers, more than twice the level of Chase and Citi, and our growth rate remained relatively strong. Our spend-based model means we're not overly dependent on loans to grow revenues, but we generated positive growth nonetheless. Contrasting our revenue performance over the last 4 years with that of our lend-based peers, you can see how our spend-based model has worked to our advantage. Over the last three years, our model has generated 6% revenue growth, while our lend-based peers reported a 2% decline. As we saw on the previous slide, while some peers have been able to grow billings at a good rate, this has not translated into revenue growth because of their lend-based models. Another important item impacting our performance was operating expenses.
After two years of high growth due to historic levels of investment spending, and in light of the slow growth environment, we set a goal to hold our annual operating expense growth to 3% or less for 2013 and 2014. Helped by our restructuring actions and our ongoing shift to online servicing in card and travel, we were able to hold our adjusted operating expense growth flat last year, while still investing appropriately in key areas such as control and compliance and infrastructure. Across the company, we remain committed to holding our operating expense growth to less than 3% for 2014, consistent with our stated goal. While we did tightly control expenses, the strength of our financial performance still allowed us to invest in our businesses at near record levels. Outcomes have included the acquisition of new card members and merchants.
For example, our signing of Ryanair in Europe last year. Premium card launches and upgrades that earned more business from high-spending card members. Programs designed to help merchants build their businesses, such as the fourth annual Small Business Saturday and our Offers mobile app. We signed major card issuing partnerships with two of the most respected banks in the U.S., Wells Fargo and U.S. Bank. This supports the bank partnership gains in the GNS unit that we continue to make outside of the U.S., particularly in China, where we now have issuing agreements with seven of the largest banks in the country. We also continue to partner with major digital players such as ShopRunner, TripAdvisor, Twitter, and Amazon to expand our capabilities and increase our value to card members and merchants.
Two of our major growth investments have been in the areas of rewards and alternative payments, both of which we believe have strong revenue potential over the moderate to long term. We continue to expand our geographic footprint and diversity through Loyalty Partner, a company that we acquired in 2011, which runs coalition reward programs in several international markets. At acquisition, Loyalty Partner brought 34 million customers into our franchise, all of whom were in countries outside of the United States. Since that time, we've leveraged Loyalty Partner's assets together with our own to accelerate the growth of this space to over 60 million collectors. We've been steadily expanding this business by adding one or two countries or co-brand products each year, the most recent being Italy, which we launched in January.
We believe there is substantial opportunity in this business, and our goal over the moderate term is to launch the program in one or two countries a year. Another key element of our growth strategy is the expansion of alternative payments on our Serve platform. We continue to invest in our Serve technology platform, which enables digital commerce innovations and options for people underserved by the traditional banking system. Reloadable prepaid has great growth potential both inside and outside of the U.S., and we're using multiple options to pursue this opportunity, whether it's through telecom partners such as LianLian in China or partnerships with major retailers such as Walmart. We believe reloadable prepaid has the potential for generating significant scale. Our objective for enterprise growth is to expand the range of the Amex franchise, and that's clearly what we're seeing.
90% of the customers we've acquired in enterprise growth are either completely new to our franchise or are former customers returning to the fold. While new products and services have been a key focus for us, we haven't lost sight of our heritage, and as such, we continue to strengthen our customer service capabilities. New and improved tools, along with the incredible service ethos and commitment of our customer care professionals and travel counselors, allow us to fulfill the promise of our brand each and every day. Because of their efforts, our card member recommend to a friend scores have improved by approximately 40% over the last four years, and our customer retention by 30% over the last five years. Our exceptional service and product value also earned us our seventh J.D.
Power Award in the U.S. last year and a number of other major service awards around the world. These awards are ultimately won by the commitment of our people, and I am incredibly proud of them. Another element of our 2013 financial performance was our strong capital position. In each of the last three years, we've exceeded our on average and overtime objective of returning more than 50% of the capital we generate to shareholders, and we've done so while maintaining one of the strongest capital ratios among large bank holding companies. We're committed to providing value to our shareholders, and I believe we've done a very good job at appropriately balancing our internal investment needs to sustain long-term growth, meeting our commitments to investors, and maintaining strong capital ratios.
Overall, our financial performance in 2013 allowed us to make substantial investments in our future growth, and I believe we did so productively. Our financial results and the progress we made against our growth objectives led to a good year in terms of the performance of our share price. Whether looking over a one, three, or five-year time horizon, our shareholder performance and our shareholder return was exceptionally strong, outperforming both the S&P 500 and the S&P Financials over each of those time frames. During 2013, we also increased our dividend rate by 15%. We know that many of you rely on our dividend, and it was important to our board that we try to fulfill these expectations. Our entire organization is very proud of the value we were able to provide to all of our shareholders for the year.
As we move into 2014, our company priorities are the same as they were in 2013. To drive growth, drive efficiency, and deliver superior service. Driving growth is critical to our profitability, our position in the marketplace, and our long-term success. Driving efficiency allows us to compete effectively and provides a funding source for future investments. Deliver superior service is about who we are as a company. It's about our customer commitment, and it provides us with a significant competitive advantage. While we have a great deal of work ahead of us, our first quarter results are a good sign of the momentum we've already generated against our goals. We generated $1.33 of EPS, up 16% from last year. Revenues grew by 4%, 5% on an FX-adjusted basis, and our return on average equity was 28%.
Worldwide card billings grew by 6% on a reported basis and 7% on an FX-adjusted basis. We were pleased to see strong growth in our international billings, which were up 10% on an FX-adjusted basis. Worldwide loans grew by 3%. In the U.S., our loan growth was 4%, which continues to outpace the industry average. Our global net write-off rate was 1.7%, down 20 basis points from the first quarter last year. Finally, our capital ratios continue to be well above regulatory requirements. Because of the strength of our business model and our balance sheet, we were advised in March that the Federal Reserve had no objections to our capital plan. This includes repurchasing up to $3.4 billion of company shares as part of the buyback program during the last three quarters of 2014 and up to a further $1 billion of shares during the first quarter of 2015.
The actual number of shares repurchased will be based on our business plans, financial performance, and market conditions. The plan we submitted also included a 13% increase in our dividend rate from $0.23 to $0.26 a quarter, which will be payable in the third quarter, subject to approval by our board. Assuming all the capital plans submitted to the Fed are fully executed, analysts estimate that we will have among the highest total payout ratio, dividends plus share repurchases of the U.S. financial services companies reviewed by the Fed. While the environment in 2014 has some ongoing challenges, I believe our performance in the first quarter keeps us in a strong competitive position. We grew our core businesses while also making progress in our ongoing digital transformation. Here are some examples. In February, we announced the launch of our newest product, the Amex EveryDay Card.
EveryDay is a no-fee credit card that rewards card members for the purchases they make every day in supermarkets, drugstores, and all the places they live their lives. If card members use their card for 20 or more transactions during a billing period, they earn 20% extra Membership Rewards points on those purchases. We believe this product will meet the payment needs of a range of consumers who want to be rewarded for their spending and who don't want to wait a year or more to earn and redeem an airline ticket. During the quarter, we also announced a new channel for the acquisition of small merchants in the U.S., a program we call OptBlue. Through OptBlue, we're partnering with major companies who acquire merchants such as Global Payments and Heartland to expand our base of smaller merchants. Partners in OptBlue acquire and service smaller merchants on our network.
Using these partners makes Amex acceptance much easier since they're able to provide merchants with a single statement for all payment networks, a single settlement process, and a single point of contact for servicing. We project that OptBlue will substantially increase our small merchant acquisition in the U.S. over the next several years. During the quarter, we also signed a deal to create a joint venture for our Global Business Travel unit. In the proposed transaction, we will retain 50% ownership with a group of outside investors owning 50%. By creating this joint venture, we have the opportunity to bring substantial investment funding into Global Business Travel, which we believe will provide increased value to all of our corporate clients. We have a strong group of investors, and they have a strong commitment to this business, as do we.
They see this as an attractive opportunity to accelerate the growth of a leading company in a growing industry. Helping our merchants grow their business is another important goal for us, and we made progress here as well. As I mentioned earlier, we launched Loyalty Partner in Italy, which we believe will drive new business into those merchants participating in the Payback program. We will continue to expand our offer programs with merchants around the globe, saving our card members millions of dollars through the redemption of the card link merchant offers we market through multiple channels. This represents great savings for our card members as well as more business for our merchant customers. I'm also pleased with the news that our company has risen to number 11 on Fortune's list of the world's most admired companies.
It's great to be recognized, of course, but our focus remains on providing exceptional value and service to our customers and investing in and growing our businesses for the moderate to long term for the benefit of our customers, our employees, and all of you. This list recognizes our financial performance and our business results, but it also recognizes how we achieve our results by being a good employer, a fair competitor, and a socially responsible corporate citizen. In closing, let me just say a few things. As I've covered with you before, my focus over the last several years has been on making sure our company navigated through challenging economic conditions in the best position possible relative to our payments and card-issuing competitors. Our business model and our assets, capabilities, and relationships are unique in the industry, and I believe they position us well for future growth.
We have sound strategies in place with excellent people implementing them. While we continue to face substantial competitive and environmental challenges, I'm very pleased and proud of the position of the company today. In 2014 and beyond, we're moving forward on transforming our 164-year-old company for the digital environment and extending our leadership position within payments, services, and commerce. With our commitment to shareholder value, our financial strength, our unique competitive advantages, the power of our brand, and most of all, the quality, character, and commitment of our people, I believe we're more than up to the challenge. Thank you. Let's now turn to the official business of our meeting. Because this is a meeting of shareholders, only shareholders should speak, and the comments should relate to the company's business.
To permit shareholders who could not be here today to listen to these proceedings, we are providing a live audio webcast of today's meeting. As chairman, I will be responsible for the conduct of today's meeting. In doing so, I will seek to have an orderly and formative session in which we get our business done, complete the voting and tabulating, and give shareholders the opportunity to ask questions that are relevant to the company's business. To accomplish this, I ask that each shareholder keep his or her remarks brief and to the point and not interrupt other shareholders. Please keep your remarks to two minutes unless you are presenting a proposal. Our goal is to assure that all persons who wish to speak get a chance to do so in an orderly way. Privacy considerations prevent me from answering at this meeting questions relating to any specific card member.
Four of our customer care professionals from Fort Lauderdale, Florida, are here and available to help anyone with any personal card matters after the meeting. They will be available at the table outside of this room after the meeting adjourns. Let me now introduce our board of directors. I will ask each to stand briefly while I mention their names. Please hold your applause until all have been introduced. With us today are Charlene Barshefsky, Ursula Burns, Peter Chernin, Anne Lauvergeon, Rick Levin, Rich McGinn, Sam Palmisano, Steve Reinemund, Daniel Vasella, Robert Walter, Ron Williams. Please join me in applauding this outstanding group of leaders. Also with us today is Lisa Sawicki, a partner of our audit firm, PricewaterhouseCoopers. All right, Carol, let's get on with the formalities.
Ken, I present a copy of the Notice of Annual Meeting of Shareholders dated March 21st, 2014, an affidavit showing that notice of this meeting was duly given. A copy of the notice and affidavits will be filed with the minutes of this meeting. All shareholders of record at the close of business on March 14th, 2014, are entitled to vote at this meeting. A certified list of the company shareholders of record is present at today's meeting and will remain open for inspection during the meeting. The minutes of the last annual meeting of shareholders are also here and are available for inspection. The company has designated Peter Descovich and James DiPaoli of Broadridge Financial Solutions to act as inspectors of election. The inspectors have taken their oaths to faithfully and impartially execute their duties.
All right, Carol, do we have a quorum, and may we proceed?
The inspectors of election have determined that holders of at least 918 million shares, or over 86% of the common stock of the company entitled to vote at this meeting, are present or are represented by proxy and constitute a quorum.
Fine. The meeting is now duly convened for the purpose of transacting business properly before it. At this point in the proceedings, we will move to the various proxy proposals. Please limit any comment at this time to matters relating to the proposals. We will have time in the program later for general questions. If you've already voted by proxy and do not want to change your vote, you need do nothing further. For those of you who haven't voted by proxy or for those of you that wish to change your vote, ballots will be handed out to you. Will any shareholder who wants a ballot, please raise your hand. The ushers will come to you to give you a ballot. If you are voting today by ballot, please vote on all items as submission of a ballot will revoke your prior proxy. We will now introduce the proposals.
I remind you that comments should pertain to the proxy proposals under consideration. We have the opportunity for general questions later after we close the polls. The first item of business is the election of the board of directors.
I propose the election of the 13 persons whose names and biographies appear on pages 60 to 66 of this proxy statement to be elected as directors of the company to hold office until the next annual meeting of shareholders and until their successors are duly elected and qualified.
The next matter is the proposal to ratify the appointment of PricewaterhouseCoopers to audit the company's accounts in 2014. The company's audit and compliance committee has appointed PricewaterhouseCoopers as the company's independent registered public accounting firm for 2014, and the board asks the shareholders to ratify the committee's commitment. Carol, would you introduce the resolution?
I offer the resolution appearing on page 68 of the proxy statement ratifying the appointment of PricewaterhouseCoopers LLP as the company's independent registered public accounting firm to audit the accounts of the company and its subsidiaries for 2014.
The next matter is the advisory vote on executive compensation. Carol, would you introduce the resolution?
I offer the advisory resolution to approve the compensation of the company's named executive officers as disclosed pursuant to Item 402 of Regulation S-K, which appears as item three on page 69 of the proxy statement.
The next proposal is a proposal submitted by the New York City Comptroller on behalf of the various New York City funds. The proposal relates to annual disclosure of EEO-1 data. It appears on page 70 of the proxy statement. Ms. Budhai is here to introduce the proposal.
Thank you. Good morning. My name is Millicent Budhai, and I am here on behalf of New York City Comptroller Scott M. Stringer and the trustees of the New York City Pension Fund. I am pleased to introduce the fund's proposal asking the company to disclose its EEO-1 data that break down its workforce by race and gender and which it currently provides to the Equal Employment Opportunity Commission. As long-term investors and consistent with the fiduciary responsibility of the boards of trustees to protect the retirement investments of fund members, the funds actively pursue the adoption and effective implementation of good corporate governance and corporate social responsibility reforms at companies in which they are invested.
Accordingly, while we commend the company for adopting diversity-related policies, the best way to evaluate the effective implementation of these policies and the company's commitment to diversity is to examine the data which the company does not currently disclose. The financial services industry, of which the company is a part, is characterized by persistent and pervasive underrepresentation of minorities and women, particularly in senior positions. As Commissioner Aguilar argues, the industry must do substantially better. Some companies in the industry are striving to improve the situation. However, absent comprehensive disclosure of quantitative data, it is difficult for shareholders to evaluate and benchmark the effectiveness of these efforts. American Express discloses limited information on the diversity of its workforce. Some of the company's peers in the financial sector are responding to investors' desire and publicly disclosing this data, including Citigroup, Goldman Sachs, and JPMorgan, sorry, MetLife, and Morgan Stanley.
We strongly believe that American Express should leverage diversity to build value and a competitive edge. A survey of 506 U.S. businesses indicated that for every percentage increase in racial and gender diversity, sales revenue increased by 9% and 3% respectively. Similar results are found at companies with more diverse boards. It is simply good business to have organizations reflect the world they market to. We urge American Express to reveal its EEO-1 data to reassure shareholders that it is leveraging diversity to enhance long-term value creation and minimize reputational harm. Thank you.
Thank you, Ms. Budhai. The board of directors' reasons for opposing this proposal appear on pages 71 and 72 of the proxy statement. The next proposal is a proposal of Steven Matthew Schulman relating to a report on privacy, data security, and government requests. It appears on page 73 of the proxy statement. Michael Connor will now introduce the proposal on his behalf.
Morning, Mr. Chairman, members of the board, shareholders. My name is Michael Connor, I'm here on behalf of Arjuna Capital and Baldwin Brothers client, Steven Matthew Schul, to move proposal number five, which focuses on privacy and data security. Specifically, we're asking the board to publish a report on consumer privacy, data security, and requests for customer information by U.S. and foreign governments. Privacy and data security, as many of you know, are now among the most critical business and social issues of our time. They're the focus of national and international discussion and debate. Addressed as top-level priorities by heads of government and legislatures around the world. Our company's past and future growth is dependent on personal information from our customers.
Major hacks of confidential customer data, often involving credit card data, and disclosures of extensive government surveillance, reportedly involving requests of data from credit card companies, have heightened public concern over these issues and have increased potential legal, financial, and reputational risk for the company. In order for shareholders to have the necessary understanding of how American Express is responding to these issues, we believe the company should issue a report providing much greater detail. One American Express peer company, Mastercard, has responded proactively to shareholder concerns by issuing a privacy and data protection report, which addresses government surveillance, privacy, and data security concerns. Most leading consumer-facing internet companies, specifically Google, Facebook, Microsoft, Yahoo, Twitter, and LinkedIn, as well as the leading U.S. telecommunications carriers, AT&T and Verizon, now regularly publish transparency reports which detail government and law enforcement requests for confidential customer data.
As one of the world's leading financial services companies, American Express, we believe, has a duty to protect both customer privacy and the security of customer data. A failure to do so carries significant business risks, these are outlined in the company's 10-K disclosures as including potentially significant regulatory actions, governmental investigations, litigation, fines, sanctions, and damage to our global reputation and our brand. Given how important brand value is to our company's growth and the risks that data privacy and security present, we believe our company's current level of disclosure is inadequate. I'd like to urge shareholders to support this proposal and invite our company to meet with us further to discuss this strategically important issue. Thanks for your consideration.
Thank you, Mr. Connor. The Board of Directors' reasons for opposing this proposal appear on page 74 of the proxy statement. The next proposal is a proposal of Myra Young relating to action by written consent. It appears on page 75 of the proxy statement. Mr. Connor will now introduce the proposal.
Day for me. My name is Michael Connor still. I am here to move item number 6, Shareholder Right to Act by Written Consent, and it is sponsored, as you said, by Myra K. Young of Elk Grove, California. The proposal states resolve, shareholders request that our board of directors undertake such steps as may be necessary to permit written consent by shareholders entitled to cast the minimum number of votes that would be necessary to authorize the action at a meeting at which all shareholders entitled to vote thereon were present and voting. This written consent is to be consistent with giving shareholders the fullest power to act by written consent in accordance with applicable law. This includes shareholder ability to initiate any topic for written consent consistent with applicable law. Mr. Chairman, this proposal topic won majority shareholder support at 13 major companies in a single year.
This includes 67% support at both Allstate and Sprint. The shareholders of Wet Seal successfully used written consent to replace certain underperforming directors in 2012. This proposal would empower shareholders by giving them the ability to effect change at our company without being forced to wait until an annual shareholder meeting. Shareholder action by written consent could save our company the cost of holding a physical meeting between annual meetings. This proposal should also be more favorably evaluated due to our company's clearly improvable environmental, social, and corporate governance performance as reported in 2013. GMI Ratings, an independent investment research firm, recently gave American Express an F for its board. Three directors had 11 to 15 years long tenure, which detracts from their independence. Several others were over-boarded with tenure on four company boards each.
Three directors were not independent. American Express had not incorporated links to environmental or social performance in its current incentive pay policies and was not a UN Global Compact signatory. We would therefore urge shareholders to please vote to protect shareholder value by voting for proposal six, Shareholder Right to Act by Written Consent.
Thank you, Mr. Connor. The Board of Directors' reasons for opposing this proposal appear on pages 75 and 76 of the proxy statement. The next proposal is a proposal of Kenneth Steiner relating to a request for executives to retain significant stock. It appears on page 77 of the proxy statement. Mr. Steiner will now introduce the proposal. Mr. Connor, excuse me. You will now introduce the proposal.
The last time today. I'm here to move item seven, which concerns executives to retain significant stock. It is sponsored by Kenneth Steiner of Great Neck, New York. The proposal reads resolve, shareholders urge that our executive pay committee adopt a policy requiring senior executives to retain a significant percentage of shares acquired through equity pay programs until reaching normal retirement age and to report to shareholders regarding the policy before our company's next annual meeting. For the purpose of this policy, normal retirement age would be an age of at least 60 and determined by our executive pay committee. Shareholders recommend that the committee adopt a share retention percentage of 50% of net after-tax shares. This single unified policy shall prohibit hedging transactions for shares subject to this policy, which are not sales but reduce the risk of loss to the executive.
This policy shall supplement any other share ownership requirements that have been established for senior executives and should be implemented so as not to violate our company's existing contractual obligations or the terms of any pay or benefit plan currently in effect. Mr. Chairman, requiring senior executives to hold a significant portion of stock obtained through executive pay plans would focus our executives on our company's long-term success. A Conference Board task force report stated that hold-to-retirement requirements give executives an ever-growing incentive to focus on long-term stock performance. For that reason, we'd ask that shareholders please vote to protect shareholder value by voting in favor of proposal number seven, executives to retain significant stock. Thank you for consideration.
Thank you, Mr. Connor. The Board of Directors' reasons for opposing this proposal appear on pages 77 to 78 of the proxy statement. At this point in the meeting, please turn in your ballots so we can tabulate the votes on the proposals introduced today. The ushers will now collect the ballots. If you have brought your proxy to the meeting and haven't turned it in, you may do so now. Has everyone who wishes to vote done so? Everyone who wishes to do so having voted, I declare the polls closed and ask the inspectors of election to collect and tabulate the ballots. I will now take general questions while the inspectors of election count the votes. Yes.
Philip Berman, portfolio manager and shareholder. Some comments and questions together.
Yes.
Firstly, Jan Leschly and Ed Miller deserve an honorable mention for their contributions and many years of service at American Express. Now some questions. How does the growth in the affluent individual consumer luxury purchase category compare to pre-recession revenues?
Well, to your first point, I would just join you in commending Jan Leschly and Ed Miller. They certainly were outstanding directors, and we're very pleased that Ed Miller is working with our bank boards and is an observer on our board of directors. Let me say that while I can't give you specific numbers because we have not disclosed, certainly pre-financial crisis, the overall economy was growing at a higher rate. Post the financial crisis, the GDP growth rates, as you know, have dropped. That said, we believe that we have retained a very strong position in the premium segment. One of the reasons why, Mr. Berman, is because we've been very consistent in our strategy of being very focused on the premium customer, both with respect to our charge card products and our revolving credit card products. We believe we have a strong position with this segment.
We believe that we have strengthened that position, and we're constantly innovating because this customer segment, in fact, wants to use our products and services, leveraging a wide range of channels, both online and offline. We believe we are a strong leader in this space, and we intend to continue to be a strong leader.
Okay, what was the profit contribution of the new Serve and Bluebird products to earnings? At what point would they be able to function as standalone companies if spun off today, let's say?
I think what's very important is we're managing our business for the moderate to long term. We have not released specific profitability numbers for Serve, what I will simply tell you is we think the platform is a terrific platform. It has worked out very well. We think the way that we have structured our strategy with Serve going after the non-affluent customer and the underserved customer presents a very substantial opportunity where we're meeting a real customer need, and we're doing it with attractive economics. We are encouraged by the signposts, we've made very clear from the beginning that this is not a short-term investment. I would take you back to other investments that we've made, our bank partnership business, our corporate card business.
It takes several years for these investments to really generate substantial profits and revenues, we are very pleased with the progress that we're making, and we think that we have a strategy that will actually allow us to achieve good growth in the moderate to long term.
Has American Express given consideration to adopting the new safe electronic chip technology, notwithstanding the fact that we now already have the best safeguards today?
This is an area that we are constantly innovating in. I think what is important, whether it's EMV, whether it's tokens, we are going to be very much focused on being a leader in this space. The reputation of our brand is critical. I think we have an advantage with our closed-loop system. Given the excellent people that we have in our card area, our operations area, our security area, our technology area, I'm confident that we are doing all that we can to safeguard the needs of our card members.
With respect to small businesses, which are very important profit contribution to American Express, can you tell us at what stage we are with respect to this category to eclipsing the pre-recession profit level?
What I would simply say is, I think for the entire company, we have more than recovered from the financial crisis. We are performing better as a company. This is not an issue that we are catching up to where we were before the financial crisis. We, in fact, have exceeded where we were in the financial crisis. Small business represents a very strong growth opportunity for the company. We're very pleased by the progress of small business, and we think that the growth of that business will be with us for the moderate to long term.
Just one last comment. Maybe by next year, everyone can work a little bit even harder in order that our ranking advances even further to number 1 or number 2 would be good too.
Well, we are striving. We're never satisfied. That's the right attitude, that we're going to keep on focusing to try to be the best. Thank you very much. Yes.
Yes. Good morning, Mr. Chairman, fellow shareholders. My name is Howard Turnbow, individual stockholder. I just basically have three questions. Earlier this year, the stock markets here were rattled because of the emerging markets. I would just like to know what % of the revenues from American Express are from the emerging markets, and specifically, do you have any type of hedging on the currencies? Third, and finally, in regards to the subsection of the emerging market, Russia, just in case if the President or Congress should pass, either by executive order or congressional legislation, sanctions with Russia prohibiting companies like American Express to do business with Russia, how much of an impact or would that affect American Express, not only in revenues but elsewhere? Thank you.
A few points I'd make. One is we do not disclose specifically our business metrics for those markets. The emerging markets are very important. Obviously, when you look at the growth rates in those markets, they're substantial. We are very well-positioned. The point that I would make is the diversified business model that we have. We not only are operating our proprietary business in these different markets, but we're also operating our bank partnership business. What's important about this business, if you look at China and Russia, for example, we in fact are partnering with three banks. We do not operate a proprietary card business in China or Russia, and we are not heavily dependent on Russia. The three banks that we work with are not covered by the sanctions. We do not put capital. We do not have a credit risk.
However, if sanctions are put in in some way that impact us, we will obviously comply with those sanctions. I think what you should feel very good about, because at the end of the day, we don't want to get into the hedging game. We, in fact, want to make sure that we're using the diversified business portfolio that we have so that we can have a very good risk profile. That I think is very important in how we operate in the emerging markets, that we have a variety of choices. As a result of what is happening in Russia because of the scale of our business there, we don't have a sizable business, but we're also protected because of our bank partnerships so that they carry really most of the risks. Sure.
If I can elaborate about the security issue. I'm just curious, the folks in Europe with the American Express cards, do they have the same magnetic strips as here in the U.S., or does it differ? Or do the governments there require a stricter type of security as mentioned with the chip security, which you said-
Yeah
contemplating.
It really varies. In a number of European markets, the EMV chip is used, and we, in fact, are issuing EMV in Europe. We are also issuing EMV to segments of card members who travel outside the U.S. and travel in Europe. What I'd also emphasize is that our fraud rates are 50% lower than Mastercard and Visa. We have a number of security protocols. The ability of our closed loop, which really links the data from the issuing side of the business to the merchant side of the business, also allows us to run our business in a very efficient way and safe way.
Thank you.
Thank you. If there are not any other questions. Yes, one question in front.
Oh, thank you. Hi, my name is Chris Edwards, and I am an independent shareholder. I wanted to ask about the consumer internet bank and how that is going.
The reality is when you are talking about a consumer internet bank, we are not in the banking business. We do not have a consumer internet bank. What we do do, and this is very important, which I think your question is probably getting at, is we have the Serve platform, which enables us to offer a reloadable prepaid account to customers. What is important, as I said, there are 70, 80 million people in the U.S. and many more around the world who in fact are paying very substantial fees to maintain a checking account. This is a low-cost alternative to those customers, and it is opening up a substantial opportunity, not just meeting some of their basic financial needs, but it also allows them to transact business on the Internet because now they have a card that they can use.
This is something that we believe is very exciting, meeting a real customer need, and also we are doing it under attractive economics, but we are giving the customer terrific value at a very low price relative to other alternatives. Thank you. Yes, way in the back.
Hi, good morning, Mr. Chairman. My name is Todd Paisley, I wanted to know, I have been a shareholder for a little over 5 years, and I believe there have been many favorable developments at American Express over this time period. One area that my expectations have not quite been met is in the Global Network Services business. I think that is a great business, I just wanted to see if you would comment upon where it ranks in terms of your priorities for growth. One, how business challenges affect that business and what the competitive dynamics are for that business, and where do you see that business in 5 years' time? Particularly the domestic business. I know you have made some recent announcements with Wells Fargo and U.S. Bank.
Yeah. Let me be very clear for everyone. The global network services business is our business with bank partnerships. That business is doing terrifically well. I am incredibly pleased with that business. What's important is, one, to understand that that is allowing us to get more relevance and scale in a range of international markets. It is performing very well. We have had strong double-digit growth for years. It is allowing us to expand our number of customers who carry an Amex branded card, as well as dramatically expand our merchant coverage. In the U.S., we have also a very good strategy. Obviously, we're excited about Wells and U.S. Bancorp, we also have a range of deals, and we're growing that business.
What I would emphasize to you is GNS has had very good performance over a substantial number of years, the trajectory of growth has been good. That should not be an area of concern. We're seeing good growth. The partnerships are very solid, we're expanding. What's critical is we're very selective in the partners that we work with because we want to make sure that they will adhere to providing strong value for our customers and meeting the service needs of our end-user customers, our card members, and our merchants. Thank you. I think that now concludes the question and answer session. Carol, if the inspectors of elections have completed their tabulation, will you please report the results?
Yes. In a moment, I will announce the votes. The votes I am about to announce are preliminary. In accordance with SEC rules, we will file a report on Form 8-K with the SEC, that 8-K report will contain the final tabulation of the votes. On the election of directors, the inspectors of election report that each of the 13 nominees of the board of directors listed in the proxy statement received a majority of the votes cast. Each of the 13 nominees received at least 775 million votes or approximately 93% of the votes cast. On the ratification of PricewaterhouseCoopers LLP, the inspectors of election report that at least 912 million shares or 99% of the votes cast were voted to ratify the appointment.
On the advisory vote on executive compensation, the inspectors of election report that at least 804 million shares or 97% of the votes cast were voted to approve the compensation paid to the company's named executive officers. On the proposal relating to the annual disclosure of EEO-1 data, the inspectors of election report that at least 581 million shares or 74% of the votes cast were voted against the proposal. On the proposal relating to the report on privacy, data security, and government requests, the inspectors of election report that at least 612 million shares or 78% of the votes cast were voted against the proposal. On the proposal relating to action by written consent, the inspectors of election report that at least 534 million shares or 64% of the votes cast were voted against the proposal.
On the proposal relating to a request for executives to retain significant stock, the inspectors of election report that at least 659 million shares or 79% of the votes cast were voted against the proposal.
Thank you, Carol. As a result of this morning's voting results, I declare the slate of 13 director nominees recommended by the board of directors are elected for a one-year term. The company shareholders have approved and ratified the company's appointment of PricewaterhouseCoopers for 2014. A majority of the votes cast relative to the compensation paid to the company's named executive officers. The shareholders' proposal relating to annual disclosure of EEO-1 data did not pass both of those proposals. The shareholder proposal relating to the report on privacy, data security, and government requests did not pass. The shareholder proposal relating to action by written consent did not pass. The shareholder proposal requesting that executives retain significant stock did not pass. There being no further business to come before this meeting, I declare the meeting adjourned. Thank you very much.
Before we adjourn, I just want to acknowledge the passing of one of our long-term shareholders who attended every meeting who passed away last year, Harry Korba from Yonkers. We certainly miss seeing him, and we certainly give our sympathy to his family. Thank you very much.