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Prince replaces weill citigroup Original Source Link: (May no longer be active)
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Prince's Task at Citigroup: Loosening Weill's Reins (Update1)
July 17 (Bloomberg) -- Charles Prince works out, drives snowmobiles and even diets with Sanford Weill, his mentor of 17 years, who told investors yesterday that Prince will succeed him as chief executive officer of Citigroup Inc.
Prince bought a $4.5 million, six-bedroom house three months ago, less than 10 minutes' drive from Weill's home in Greenwich, Connecticut. Every March, Prince organizes a ``surprise'' birthday party for Weill. They once appeared together as knights in armor, according to Harold Levy, former head of compliance at Citigroup.
Now Prince will have to find room to maneuver independently as Weill completes his plan to relinquish power, along with the chief executive's title, at the end of this year. Weill, 70, the oldest chief executive on Wall Street, had come under fire from investors for not announcing a succession plan. He will give up the title of chairman in 2006.
``It's hard to believe that if he remains as chairman he's not going to have an active view on managing the company,'' said Gordon Fowler, chief investment officer at Glenmede Trust Co., which manages $13 billion. ``This isn't a person who steps easily to the side.''
As they announced yesterday that Weill would remain chairman, the two men joked about whether he could actually loosen the grip that helped him cobble a disparate group of companies into the world's largest financial services corporation. Prince, 53, suggested that Weill would no longer ``come in and nag us every day.'' Weill put Prince and his team on notice they'd ``better not screw up.''
``Will Sandy be a problem for him?'' asked Jon Burnham, chief executive officer of Burnham Asset Management in New York, who has known Weill since 1959. ``There's a chance that it could happen because Sandy's such a powerful person, but it's up to Sandy. They have always had a fine relationship.''
`Totally Devoted'
Weill has left a string of rejected partners behind in his 50-year career. Along the way, he built a company with a market value of $241 billion, $1.2 trillion in assets and earnings that haven't had a yearly decline since 1998. Citigroup, with 260,000 employees in more than 100 countries, earned $4.3 billion in the second quarter.
In 1998, Weill dumped Jamie Dimon, the president of Travelers and a former protege he once called ``Robin to my Batman.''
In 2000, Weill pushed out John Reed two years after the former Citicorp chairman became Weill's co-chief executive when Weill's Travelers and Reed's Citicorp merged.
First Assignment
Last September, Weill ousted Michael Carpenter to install Prince as head of Citigroup's global corporate and investment bank. Running the former Salomon Smith Barney Inc. was Prince's first assignment overseeing a revenue-generating business.
Prince helped forge the $138 billion in acquisitions that built Citigroup. As the former chief counsel to the company as well as head of its investment-banking unit, Prince negotiated Citigroup's part in a $1.4 billion agreement in April between 10 banks and regulators. The accord settled claims the firms had misled investors with biased stock research in order to win banking business. Citigroup paid $400 million, more than any other firm, and received the stiffest restrictions. They included a ban on any direct contacts between Weill and analysts that hadn't been approved by Citigroup lawyers.
Gordon Andrew, who worked for Weill as head of public relations at Travelers Group Inc., said: ``Chuck is totally devoted to Sandy.''
Before that, Prince was chief operating officer for Weill, running the company's operations, technology, finance, risk management, legal, government relations, human resources, public relations, audit and community-relations functions.
Back to Baltimore
The relationship between the two executives stretches back to 1986. That's when Weill acquired control of Commercial Credit, a consumer finance company in Baltimore where Prince had joined from U.S. Steel Corp.
From that base, Weill spent $138 billion to build Citigroup. As head of Travelers, Weill bought Salomon Inc. for $9.2 billion in 1997.
By the time Travelers President Dimon resigned after a management conflict in 1998, Prince had become Weill's closest adviser.
``Chuck was called `the consigliere' at Travelers Group and Sandy was `the Godfather,''' said Andrew of Travelers. ``Chuck was the guy people would go to get a message to Sandy and he did Sandy's dirty work.''
As an insider, Prince already has ``the confidence of the organization,'' and is probably ``more conservative'' than Weill, said Arthur Levitt, former chairman of the Securities and Exchange Commission.
Weill's presence ``might have made things difficult for an outsider, but Prince has been a disciple of Sandy and understands Sandy as well as anybody,'' Levitt said. ``It's probably time for that institution to have a period of digestion and internal rather than external growth.''
Under Prince last year, Citigroup displaced Goldman Sachs Group Inc. as the leading fee earner for investment banking, according to Freeman & Co., a Wall Street consulting firm.
Grubman Relationship
``He's proven himself in a lot of the work that's been behind the scenes, putting his imprint on the company,'' said Tanya Azarchs, Standard & Poor's senior financial services analyst who rates Citigroup debt. ``Not just the corporate governance but changing the management structure and how that plays together with how you manage financial accountability.''
Citigroup President Robert Willumstad, 57, will become chief operating officer under Prince. He has been head of the consumer division, which generated more than half of Citigroup's second- quarter profit.
Prince's experience as a lawyer may help shore up confidence in the bank after regulatory probes that culminated in April's settlement and the focus on Weill's relationship with former analyst Jack Grubman.
``It takes a lot of the issues that have been plaguing Citigroup and now clearly places them in the rearview mirror,'' said Jeff Kleintop, chief investment strategist at PNC Bank of Philadelphia, which manages $55 billion in assets including 6.2 million Citigroup shares. ``Sandy has been tainted a little bit,'' he said in an interview with Bloomberg television.
Weill chose Prince with the unanimous support of the board, according to Richard Parsons, chief executive officer of AOL Time Warner Inc. and head of Citigroup's compensation committee.
`Time for Myself'
``Sandy Weill is a legend and I will tell you a gifted, gifted, gifted executive in this space. But nobody lives forever,'' Parsons said in an interview.
Weill said in a television interview with Bloomberg News his successors would handle day-to-day operations and that he wants ``to have time for myself.''
Other U.S. financial services companies have picked insiders to replace retiring chief executives this year. David Komansky, 64, chief executive of Merrill Lynch & Co., stepped down in April, and was replaced by Stanley O'Neal, 51.
Charles Schwab, 65, the pioneer of discount stock trading, stepped down as co-chief executive of Charles Schwab Corp. in May, handing over to his co-chief executive David S. Pottruck, 54.
American International Group Chairman and Chief Executive Officer Maurice ``Hank'' Greenberg, 78, said in January that his successor at the world's biggest insurer has been chosen and is a current company executive.
Last Updated: July 17, 2003 09:47 EDT
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