Sanford I. Weill stood alone on the great Carnegie Hall
ballroom stage looking at his watch. His gray suit stretched to accommodate his
paunch, his tie shined a bright power red. Before him sat a rapt audience of
shareholders-patient, expectant, ready. It was just past 9 a.m. on April 17,
and Mr. Weill was ready to call to order his first shareholders’ meeting as
sole chairman and chief executive of Citigroup.
“As soon as we find our board, we will start,” he said to
some colleagues. “Anyone seen them?” Almost as if on cue, a side door by the
stage opened. Fourteen dark-suited men and one woman filed quietly into the
ballroom and filled up the first two rows of red mohair seats.
“I was beginning to think you guys mutinied,” he said, sotto
voce, to his directors as they settled into their seats. Then he laughed, his
face flushed with pleasure. Mr. Weill reached for the microphone. His
opera-singer chest seemed to expand. “I apologize for being late,” he said to
the packed hall. “But as you can see, my board is truly independent. They
thought the meeting started at 9:05.”
The audience laughed.
Mr. Weill then introduced his starting line-up.
“Mike Armstrong, Ken Bialkin, Ken Derr, John Deutch, Ann
Jordan, Bob Lipp,” he said, “Reuben Mark, Mike Masin, Dudley Mecum, Richard
Parsons, Andy Pearson, Bob Rubin”-at this there were cheers and a few hoots
from the gallery, and he went on booming into the microphone-“Frank Thomas and
Art Zankel.” Each director, save Mr. Rubin, who was used to the exposure,
offered a weak hand-wave. Then Mr. Weill introduced “our honorary director,
President Gerald Ford,” and the wizened 87-year-old ex-President turned to face
the applause and waved.
Sandy Weill had presented his all-star team. It is a team
that, by almost any accounting, is the most powerful board in the city. For the
first time in his career, Mr. Weill has a monster balance sheet, a monster
brand and a monster board to feed his still restless ambitions. And what does
such a board give Mr. Weill? It makes him a true insider. It’s one thing to be
a takeover king; it’s another to preside over such a board. To hobnob with Bob
Rubin, to hop on the jet with Mike Armstrong, to ponder China with ex-C.I.A.
head John Deutch-this is the real stuff. While Wall Street’s top executives
still worry, sweat and scheme, Mr. Weill seems finished with the dirty work.
It’s his moment to achieve something beyond raw power, which is buyable, to
affect some of Mr. Rubin’s effortless boardroom cool. Mr. Weill is now defined
by the very classy board that surrounds him, a board that shows he has come
further than the Icahns, the Perelmans, the Steinbergs-all the others who have
tried to buy their way into the inner circle. To have a board like his is the
real gauge of power in New York. When you’ve got it, flaunt it.
It is a unique conglomeration: nine Travelers holdovers, six
members of the former Citicorp board and Mr. Rubin-heavyweights one and all.
And when you compare his board to other Wall Street boards-there is no comparison. Morgan Stanley,
Merrill Lynch, J.P. Morgan Chase or Bear Stearns-the Street’s biggest power
brokers are choosing boards that are meek, packed with company insiders you’ve
never heard of. Surviving at the top of a Wall Street firm is no walk in the
park these days. Ask Goldman Sachs’ Jon Corzine, Morgan Stanley’s John Mack and
even Mr. Reed. It’s much easier to pack your board with go-to guys who will
stick it out with you in the boardroom foxhole.
So, at the Bear Stearns shareholders’ meeting a month ago,
chairman Ace Greenberg didn’t give a big introduction to 74-year-old director
Carl Glickman ( who’s he? -private investor),
or to William Mack (founder and managing partner of the Apollo Real Estate
Funds). Star power? Four of the 11
directors are Bear Stearns executives.
At Morgan Stanley’s recent shareholders meeting, chairman
and chief executive Phil Purcell talked a lot about the choppy markets, but
aside from his president, Bob Scott, his board was not even there, and the
missing were mostly relatively obscure retired C.E.O.’s anyhow, with
long-standing ties to Mr. Purcell.
But the Citigroup board-well, that’s a different story:
rainmakers, luminaries and corporate chieftains, plus a couple of well-placed
cronies. And in this season of market anxiety, the power that 50- and
60-year-old men in suits wield, particularly when placed behind burnished oak
tables, may be just what the doctor ordered.
The Wise Men are back. Wasn’t that the message on April 18
when the king of all boardrooms, Fed chairman Alan Greenspan, snapped the
markets out of their slumber with a surprise .50-basis-point rate cut? It was the ultimate boardroom act:
super-secretive, incisively aimed, dramatic-Greatest Generation
sleight-of-hand, safely back where it had long resided, in wood-paneled closed
In that respect, there was something reassuring about Sandy
Weill’s board. And not just to Sandy Weill, but to the spectator. As theater it
was wonderful, and think about what it did for Mr. Weill.
The board itself is the result of the 1998
Travelers-Citicorp merger. It was made up of 19 members, eight each from
Travelers and Citicorp, plus Mr. Reed, Mr. Weill and President Ford, the
honorary member. Three years later, Mr. Reed has gone, and so have two others,
leaving the current 17, with the addition of Mr. Rubin. It is a board that
reflects the wild and varied history of Mr. Weill’s career: Shearson Loeb
Rhoades, Commercial Credit, Primerica, Travelers and, of course, Citicorp-just
about all the stops along Mr. Weill’s magical Wall Street tour.
And it truly is his board. That was made clear last March
when, in an all-day session called by the directors for the inevitable showdown
between Citigroup’s incompatible co-chairmen, the board chose the 68-year-old
Mr. Weill over the 61-year-old Mr. Reed, after having heard presentations from
both. No one was surprised. Just as no one ever expected Mr. Weill to live
forever in harmony with American Express chief executive Jim Robinson following
AmEx’s 1980 takeover of Mr. Weill’s Shearson Loeb Rhoades, no one really
believed the cheery corporate spin of Sandy and John, co-chairs and C.E.O.’s,
having a blast together in the executive suite.
Having been forced out by Mr. Robinson in 1985 taught Mr.
Weill a lesson. Early on after the merger, he made his move against the cold,
removed and technocratic Mr. Reed, putting his people in place and selling himself
and his vision to the six Citicorp directors on the Citigroup board. That left
Mr. Reed with no real base on his own board and the directors a natural choice:
Suddenly, Mr. Weill’s directors had morphed from a select
group of his friends with a small sprinkling of stars to a weighty cluster of
power brokers. Indeed, from 1964 through 1980, when he was bought out by
American Express, his boards have grown and evolved through all the
acquisitions-more than 15-in which Mr. Weill has engaged.
Which is not to say that his boards automatically signed off
on everything he did. “For Sandy, his board was not just a rubber stamp,” said
Peter Cohen, former Shearson C.E.O. and a member of Weill boards in the 1970’s
and 1980’s. “When there was to be a board action, he would make his case, but
there would always be a thorough, healthy discussion.”
At the Citigroup board’s core are Arthur Zankel, Dudley
Mecum, Andrall Pearson, Kenneth Bialkin and President Ford, true-blue Sandy
Weill supporters, all of whom signed up with him in October 1986 when Mr.
Weill-emerging from his post-AmEx purdah -took over as chairman and chief
executive of Commercial Credit Company, a down-market consumer-finance concern
based in Baltimore. Going back even further are Mr. Bialkin and President Ford.
Mr. Bialkin, a partner at Skadden, Arps, Slate, Meagher & Flom and long
recognized as one of the top M.&A. lawyers on the Street, had been
arranging Mr. Weill’s deals since the 1960’s-including two of the biggest, the
1979 sale of Shearson to American Express and Commercial Credit’s 1988
acquisition of Primerica.
President Ford became the first celebrity member of a Sandy
Weill board in 1980, when he joined up with Shearson Loeb Rhoades.
As for Mr. Zankel and Mr. Mecum, call them “Pals of
Sandy”-every chairman needs a few. Mr. Zankel, 69, is a small-bore private
investor who, together with Mr. Weill, has been a big donor to Carnegie Hall. A
wing is named after him there, and he serves as vice chairman. (Mr. Weill
serves as chairman.) Mr. Mecum, 66, is a managing director at Capricorn
Holdings, a small L.B.O. firm based in Greenwich, Conn.
Also very close to Mr. Weill is Robert Lipp, who has been a
key No. 2 executive since the Commercial Credit days. He now chairs the board
of Travelers Property Casualty Corp.
As Commercial Credit grew, evolved and prospered, Mr. Weill
added names to the Weill establishment ranks. In 1989, Ann Biddle Jordan, the
well-connected wife of Clinton buddy Vernon, was appointed to what, by then,
had become a Primerica board. In 1993, AT&T’s Mr. Armstrong joined; he was
then chairman and chief executive of Hughes Electronic Corporation.
In 1997 Michael Masin, vice chairman and president of
Verizon, became a member of what had become the Travelers board. In April 1998,
Travelers merged with Citicorp, and John Reed and Mr. Weill agreed to combine
their respective boards. So from Citicorp came a group of corporate insiders
hand-picked by Mr. Reed: Alain Belda, chairman and chief executive of Alcoa,
successor to Treasury chief Paul O’Neill; retired Chevron chief executive and
chairman Kenneth Derr; former C.I.A. director John Deutch; and Reuben Mark,
chairman and chief executive of Colgate Palmolive. For media glitz, there was
Richard Parsons, co-chief operating officer for AOL Time Warner. For classy
not-for-profit clout: Franklin Thomas, Ford Foundation head from 1979 to 1996.
Then the personification of prosperity showed up in October 1999, when Mr.
Rubin succumbed to Mr. Weill’s advances and signed up as a member of the office
of the chairman and a director as well.
So Mr. Weill has the best of both worlds: a core group of
longtime friends and Citicorp members, giving the board the feel and look of
being truly independent. That being said, Mr. Weill now truly seems to be
calling the shots.
Since Mr. Reed’s departure, the issue of who will succeed
Mr. Weill-now 68-has been much discussed. Supposedly, Mr. Weill and the board
are to come up with a plan by 2002. But at the shareholders meeting, when he
was asked about progress on that front, Mr. Weill was opaque: “We have a
dialogue between myself and the board of directors, the compensation committee
of the board, about succession. I think the board knows my thoughts, and I
think the board is actively engaged in thinking about what is the most
appropriate thing to do in this process and how we do it in the most seamless
way.” To paraphrase, but not very much: The board is thinking, but not doing.
Not that the shareholders seem to care much. Yes, there were
speeches from activists holding Mr. Weill and Citigroup responsible for
everything from predatory lending in low-income neighborhoods to
money-laundering in Russia to the destruction of the rain forests to the Asian
financial crisis. But the fans still had the final say.
“Are there any more questions?” Mr. Weill asked the crowd. A
middle-aged woman, dressed all in red, stepped up to the microphone.
“I just want to thank you, Mr. Weill,” she said, “for being
the best possible C.E.O. that a company could have.” Her quavering voice rang
through the hall. “Only a great leader chooses greatness. You have been able to
get Mr. Rubin for your board and to have President Ford … what else can I say?
What an honor.”
The crowd applauded; there was a big, broad grin from Mr.
Weill, and the meeting was over. The directors stood. President Ford and Mr.
Rubin signed some
autographs, while the rest filed to the long line of dark cars outside Carnegie
Hall, murmuring and laughing along the way.
“Hey, Ken,” Mr. Weill called out to former Chevron chief
executive Mr. Derr. “What about those pipelines?” He was referring to a
shareholder’s long harangue about Citigroup’s supposed financing of pipelines
in Burma. Mr. Derr smiled and shook his head. The stratosphere smelled sweet.
The directors’ business done, they had drifted away. But
Sandy Weill dove into the crowd, grasping hands here, posing for snapshots
there, before finally-and very reluctantly-exiting stage left.