5

Sandy’s Family

When I first set foot on Cornell’s campus as a sixteen-year-old, my feelings were appreciation for something wonderful mixed with determination to make the most of it. When the elevator doors opened onto the lobby at Arthur Young in 1974, that same twin feeling of appreciation and ambition filled me. It happened again when I walked into the lobby of the soaring glass tower of the John Hancock Building in Boston, when I joined TIAA-CREF as chief financial officer, and when I arrived at Travelers Group as its CEO of Smith Barney Asset Management in 1997. This was the Big League of Wall Street. The New York Times, the Wall Street Journal, and Business Week all ran major stories covering me and my move from TIAA-CREF to Travelers. Press and pressure, and the great potential for success or failure, had the same effect on me as always: I resolved to do the best job I was capable of.

Among the resources at Travelers were many brilliant financial minds. In my first few weeks there, I was nearly always in one-on-one meetings with Smith Barney Asset Management’s (SBAM) money managers and department heads—the people whose work I would oversee. On my second day, I called Joe Deane, one of the best fixed-income bond managers in the country, and asked if he was free to meet with me. Down on his floor, I introduced myself to the entire bond team, asked questions to get to know them, and then I sat with Joe. He ran the tax-exempt side of the fixed-income bond operation and was responsible for a series of long-term-bond mutual funds. A Staten Island native, he’d started with E. F. Hutton in 1972, which then merged with Shearson, which was later bought by Smith Barney. He graduated from college in New Rochelle in 1969, the same year I graduated from Cornell. To keep himself from being drafted and sent to Vietnam, he joined the Army Reserve and started working in finance right out of school.

Another particularly talented member of my team was Henry “Hersh” Cohen, senior stock portfolio manager. Hersh had come over to money management from an earlier career in neurobiology. He had a Ph.D., but during his postdoctoral work at Albert Einstein College of Medicine, he’d realized two things: he couldn’t spend every day in a lab by himself, and he loved making money in the stock market. He’d invested small amounts of his university stipend on Kodak, RCA, and Exxon and done well. After leaving academia, Hersh joined a new asset management and brokerage firm in 1969, Hornblower & Weeks. By the time I met him, he was already a Wall Street legend for the good performance of his stock mutual funds. I liked his passion and single-mindedness, as well as his natural leadership with the other money managers on the team. Joe and Hersh were SBAM’s investment leaders, in terms of both their investment performance and their personalities.

In my first weeks, I also had individual introductory meetings with my fellow business unit senior executives including Jamie Dimon, Mike Carpenter, Joe Plumieri, Bob Willumstad, Bob Lipp, and Marge Magner, all of whom I would be in close proximity to for longer periods of time than I might have anticipated thanks to Sandy Weill’s management style.

The Travelers Planning Group meetings were held once a month at the company conference center in Armonk, New York, a wealthy town one hour from the city in Westchester County. The meetings started with cocktails and dinner on the first day, and continued for a full day through dinner on the second night. The entire top management team of approximately fifteen line and staff executives were mandatory attendees and stayed overnight at the conference center. Starting in the morning in the mountain lodge–style great room, we’d sit by the fireplace on comfortable lounge chairs and couches arranged in a circle, which Sandy intended to create a sense of teamwork and partnership. Each business unit head presented current performance against key financial, operations, and strategic metrics, and anyone from any other unit could comment on any aspect of a business unit’s performance—a practice that had the potential to gather valuable input and foster a sense of camaraderie and engagement on major strategic initiatives. But it also allowed for political gamesmanship to abound and territorial tension to grow.

At my first Planning Group meeting, in September, Sandy disclosed to us that he was engaged in merger discussions with the investment bank Salomon Brothers, pioneer of the mortgage-backed security. This would represent a dramatic change in the company I had just joined. Sure enough, one week later, on September 24, Travelers Group announced the merger, a $9 billion deal to purchase Salomon. The October 6 Business Week cover story was headlined “Sandy’s Triumph: By Buying Salomon, He Thrusts Travelers into Wall Street’s Top Tier.” We would now become, by Sandy’s estimation, among the top three or four global investment banking firms in the world.

If there was one skill set Sandy had demonstrated in his career, it was extraordinary and disciplined cost cutting. He was good at buying companies in trouble and immediately taking cost out of them by reducing headcount, office space, and other overhead expenses. As the Business Week story put it, “His modus operandi has been to buy cheap and then cut deep.” Because the lion’s share of expense cuts is to personnel—including top management, whose salaries and benefits are considerable—the merger meant that some top people at Salomon suddenly didn’t have the job security they’d enjoyed the day before. The question hung in the air: Who will survive the cuts? And the more significant question for the business’s future was: How will the newly merged companies be managed? How will they work together?

It was time for me to take stock of my counterparts at Salomon and see just that: how we could work together. On September 24 I had dinner with Thomas Brock, CEO of Salomon Asset Management. My purpose was to forge a personal relationship, discuss the relative strengths and weaknesses of our two asset management businesses, and develop a roadmap of the synergies we would try to achieve. Even though I’d been around Wall Street for years, I was naïve. This was my first merger. What I didn’t know was that mergers bring out Wall Street culture at its coarsest. In some respects it is life or death, a street fight. I had not been privy to that process before and wasn’t even aware at first that a fight was under way. I did not fully understand that the only thing someone like Thomas Brock would be reaching out with now that he was heading a redundant department in a bought-out company was a knife. Two weeks later we met again. This time he’d brought with him his two top lieutenants–chief operating officer Michael Hyland and general counsel Gary Shapiro. Brock made it clear that he thought he, not I, should be the surviving CEO of asset management. I immediately shifted my focus to developing relationships with the three best-performing Salomon investment management teams, led by Peter Wilby, Ross Margolies, and Rick White. Brock met with Sandy Weill to press his case to be named CEO of asset management and then accepted a severance package when told that Weill wanted me to be CEO. Mike Hyland was also let go, along with most of Salomon Asset Management’s administration and operations units. Most important, however, was that we were successful in retaining virtually all of Salomon’s key investment managers and assets under management while eliminating significant operating costs.

Just as I had faced a media “baptism of fire” in 1993 when I was named president of TIAA-CREF, I now encountered a new round of media scrutiny. In November 1997 the Wall Street Journal ran a front-page article about my older brother Edward and me which carried the headline “All in the Family: The Jones Brothers Frame a ‘Great Debate’ over Success and Race. Can Blacks in Corporations Be True to Themselves? Ed Says No, Tom Says Yes. Vietnam Vet vs. ’60s Radical.” The story, which was written by Jonathan Kaufman and Anita Raghavan, was extraordinarily long; it filled the entire right-hand column on the front page plus a full page inside the first section of the paper. I had known the article was coming, of course, because I’d given interviews to the reporters, but that morning, when I first saw it on my desk at work, I was surprised that the most important business newspaper in America had given such prominence to this black family/human interest/American racial-progress story, a story that revealed so much about my family dynamics. The fundamental fairness of the tone and content deepened my respect for the journalistic quality of the Wall Street Journal, at that time under Bancroft family ownership.

This story, which detailed my career, my brief stint as a campus radical, and my philosophy on race and achievement as contrasted to my brother Ed’s career and philosophy, had an important unintended bonus of introducing my new colleagues at Travelers to me in a way that reinforced their perception of me as a successful and important figure. Their respect made it easier for me to be effective in doing my job. Also, I was pleasantly surprised by the numerous expressions of sympathy I received from people who perceived me as having to manage what struck many readers as a difficult brother’s jealousy and ill will. It was comforting to realize that outsiders had come to the same conclusion I had—that my brother was too bitter to be proud of or happy about my success and that he’d ceased being my friend.

My brother Ed was unable to see that his ego was his biggest barrier to success, and he was unwilling to acknowledge that he had been treated very generously by corporate America. In the early 1970s, following his military service in Vietnam and in the early days of corporate affirmative action, Ed was a junior executive at New York Telephone Company, where he was designated “high potential” by the CEO and sent to Harvard Business School, all expenses paid. To Ed’s credit, he did well at HBS and graduated with high honors as a Baker Scholar. But Ed got so cocky and full of himself that he became an ineffective leader because other highly talented people did not want to work for him. His career stalled and he grew embittered. In his own eyes he was more qualified than anyone else, but he never rose to the top. He chose to blame racism rather than blame himself.

In any event, I focused all my energies on my job. I concentrated on business performance. The key to growing asset management revenue and earnings was to increase our sales volume in the various Travelers Group distribution channels. To increase the market share of proprietary mutual funds and managed accounts, I maintained an intense pace of “due diligence meetings” with the sales organizations at the brokerage firm Smith Barney and the insurance company Primerica. My standard agenda was to discuss my commitment to excellence in the asset management business, highlight our best-performing investment products, and ask for their support in increasing sales of proprietary products so that we would have the financial resources to invest in building excellence. I asked them to give me the benefit of the doubt, to trust me to deliver on my promises. I would usually be accompanied by two or three of our top portfolio managers—Joe and Hersh, for instance—who would discuss the current investment climate and outlook for the stock and bond markets. I was also invited to make presentations at the Smith Barney and Primerica rewards and professional development meetings for top sales producers. My “road show” usually attracted one hundred to two hundred sales professionals to each due diligence meeting. In 1998 I presented at approximately twenty-five events in New York City, Atlanta, Boston, Chicago, Los Angeles, San Francisco, Minneapolis, Denver, Miami, Rochester, Rye, New Brunswick, Bermuda, Atlantic City, Dana Point, Lake Tahoe, Beaver Creek, and Boca Raton.

In January of 1998, Travelers and Salomon senior management was invited to a Planning Group dinner with our spouses at Armonk. It felt like the Godfather movies: food, wine, music, the mixing of business with family. I knew the idea stemmed from Sandy’s genuine desire to inculcate teamwork and a family-like culture among his top management team. He wanted us to bond personally as well as professionally. Unfortunately, professional and personal animosities between “Travelers people” and “Salomon people” simmered just beneath the surface. Addie, an astute observer with a world-class poker face, noticed the tension but never for a second let on through word or gesture that these dinners were anything less than perfectly comfortable. She made conversation effortlessly. “Maybe you should have been a talk show host,” I teased her one night after a company dinner. She would have made an excellent TV personality if she’d had any interest in that, because Addie is a person who always has her nose in a book or a magazine, knows about all the latest films and museum shows, and can speak with nearly anyone on any topic.

Just a few months into the Travelers-Salomon merger integration efforts, Sandy called all of us in his senior management team to attend an urgent dinner meeting at the Armonk Conference Center on Sunday, April 5, 1998. “I’ve come to an agreement with John Reed,” he announced when he had us all gathered. “We’re going to do a merger with Citibank. We’ll announce the Travelers-Citibank merger agreement tomorrow, Monday morning.” This news was stunning in its audacity. The combined entity would have approximately $700 billion total assets, $75 billion annual revenues, and $6 billion annual net income. In addition to being on this unprecedented scale, the proposed merger also broke new legal and regulatory ground by proposing to overcome the depression-era Glass-Steagall Act, which separated commercial banking and investment banking. As was his custom, Sandy once again pulled spouses into the fold by hosting a Travelers board and senior management dinner on April 22 at Carnegie Hall.

I was named CEO of the combined Travelers-Citibank-Salomon asset management businesses, contingent upon the merger receiving the requisite regulatory approvals. I had been confident that Sandy would be loyal to me, barring an overwhelming case favoring my Citibank or Salomon counterparts—and there was no such case.

As soon as my new position was announced, I reached out to the various parts of the Citibank and Salomon investment businesses around the world. I met with Peter Carman, my Citibank Asset Management counterpart on April 6. In May I visited the London offices of both Citibank Asset Management and Salomon Asset Management. In June I traveled to Frankfurt, London, Melbourne, and Sydney. In July I visited Tokyo, Singapore, Hong Kong, and Beijing. I went to London again in September, and to Tokyo again in both September and November. My goal was to make the key people in these asset management business units feel that they were important to the future of the new combined business, and to let them know that they had a personal relationship with the asset management CEO. Asset management is a talent-driven business, and it was important to stabilize the organization. I knew that our most talented people were probably receiving calls from headhunters exploring their willingness to consider outside employment offers. I didn’t want any of them to say, “It’s been months since the merger announcement, and I haven’t even met the guy who’s supposed to be my boss.”

The Travelers-Citibank merger received all required regulatory approvals and was completed on October 6, 1998. The Wall Street Journal ran an article on October 15 by Paul Beckett titled “Citigroup Is to Name Asset Managers and, Again, Most Are from Travelers.” The article read in part:

On October 21–25, 1998, the new Citigroup senior management team, plus spouses and significant others, met at the Greenbrier, an exuberantly decorated golf resort sprawling over a few hundred acres in a natural mineral spring town in West Virginia. Since its original founding in 1778, the Greenbrier has hosted twenty-seven U.S. presidents and many members of Congress. While Greenbrier County is virtually all white, much of the resort’s staff is recruited from Jamaica, Asia, and eastern Europe, so one has the interesting experience of being waited on by West Virginia mountain people whose families have worked at the Greenbrier for generations, along with blacks, Cambodians, and Ukrainians. We rented out the entire resort and had the wide hallways—which were covered in carpets printed with over-the-top floral patterns in bright colors (clashing wildly with the wall-papered walls)—and dining room and ballroom to ourselves.

It seemed to me that intimacy and teamwork were values Sandy pretended to himself we already had, but we didn’t. We on his team usually didn’t follow those practices with one other. We were running separate businesses, and in the end, everybody knew you’d better get your numbers done.

That weekend there was a significant undercurrent of tension and uncertainty. Regarding the strategic roadmap for combining the businesses, almost none of the important decisions had been made. For one thing, both the Travelers and Citibank management teams had been in limbo while awaiting regulatory approvals since the merger announcement in April. And there had been little detailed merger integration planning or collaboration during the intervening six months because Travelers and Citibank were still legally competitors. Since the proposed merger might not receive the required approvals, the two companies could not legally work together yet on business strategies, lest it be deemed collusion. A second major source of underlying anxiety was the yet to be completed “work in process” merger integration between Smith Barney and Salomon, which was now overlaid with integrating the Citibank corporate client businesses too.

The merger was what one Business Week reporter would later call “a vast, audacious project.” Indeed, a global company that was selling insurance, credit cards, corporate banking services, investment banking services, and mutual funds hadn’t yet ironed out who was in charge or what processes and business rules would be followed.

On Saturday evening after dinner, Addie and I swayed to the music on a dance floor crowded with my colleagues and their wives. We heard loud talking, and suddenly it got even louder and angrier. It was coming from only a few feet away, near the center of the dance floor. Jamie Dimon and former Salomon Brothers CEO Deryck Maughan had been shouting at each other, and now they were actually pushing each other back and forth, like boys on a schoolyard. I glanced at Addie and her expression was carefully neutral, but I knew from living with her for so many years that she was thinking something along the lines of an unimpressed “Are they serious?” Jamie’s lieutenant Steve Black had apparently asked Deryck’s wife, Va, to dance, and Deryck hadn’t reciprocated with the expected gallantry by asking Debbie Black to dance. Steve Black’s intended goodwill gesture had morphed into insult and anger at the perceived slight. Jamie intervened to confront Deryck over the insult to Steve, and angry words and shoves commenced.

I’d noticed Steve dancing with Va and thought in passing, “That’s nice,” although I myself wasn’t going around asking other men’s wives to dance. Sure, maybe to Steve’s mind he was making a nice gesture. But how could he be so certain Deryck had understood? Maybe Deryck had been too engrossed in conversation even to notice! For all I knew, Deryck, when confronted about not asking Steve’s wife to dance, might have replied, “What the fuck are you talking about?” It wasn’t obvious to anybody outside that little group what was happening. All we knew was that our spouses had been there to see and hear it unfold, and that it was embarrassing.

This confrontation had the effect of ending the first Citigroup senior management retreat on a sour note. Jamie had been evincing significant frustration with the Salomon situation for several months and clearly believed Sandy had overpaid for the Salomon acquisition. He had voiced comments along those lines in several Planning Group meetings, to such an extent that I had taken it upon myself to suggest that he try a more circumspect approach. “Be careful,” I told Jamie. “You might be close to creating an untenable confrontation with Sandy. Don’t force his hand.”

Jamie was frustrated by the difficult merger integration challenges facing his business unit, Corporate and Investment Banking. It was what was called a client coverage business model, in which bankers sought to forge advisory relationships with senior executives—especially CEOs—at client companies. If both Travelers and Salomon investment bankers had such relationships at a particular company, it was likely that the company would find it time-consuming and confusing to have both bankers continue calling to present the combined Travelers-Salomon platform. While it was necessary to rationalize the client coverage model, it was by no means assured that the combined Travelers-Salomon unit would retain all the business that a client had awarded previously to the separate firms. It was not uncommon to encounter negative merger synergies, that is, when one plus one equaled … one (as opposed to positive synergy, in which the sum of one and one can equal three). It was possible that the acquiring company in the merger was paying for business revenue and earnings that would evaporate post-merger.

This unresolved challenge facing Jamie was compounded by the Citibank merger, because Citibank had its own client coverage model for many of the same corporate clients. While I sympathized with Jamie’s frustration, I thought it was unwise and undisciplined for him to be as vocal as he was. It was clear to me that Sandy was interpreting Jamie’s complaints as personal criticism.

I liked Jamie and thought he was very talented, and I appreciated that he and his wife, Judy, had graciously invited Addie and me to dinner twice in the prior year to help make us feel welcome in the company. But Jamie’s frustration continued boiling over. The unfortunate outcome was that Sandy Weill and John Reed requested Jamie’s resignation in early November, presumably to send a message to the senior management team that interpersonal conflicts would not be tolerated.

Michael Carpenter from Travelers and Victor Menezes from Citibank were named co–chief executive officers of the Global Corporate and Investment Bank, as successors to Dimon. The Global Consumer business unit also had co-heads, with Robert Lipp from Travelers and William Campbell from Citibank as co–chief executive officers. So the two largest business units were led by co-heads, mirroring Sandy Weill’s and John Reed’s titles as Citigroup co-chairman and co–chief executive officer. I was the exception, as sole CEO of Citigroup Asset Management, but I was hearing rumors that Peter Carman from Citibank was agitating behind the scenes to be elevated to co-head status as well. This unwieldy management structure generally slowed decision making throughout the company, as all significant issues in the two largest business units required agreement between co-heads.

I made good progress with the asset management merger integration, and we retained almost all our significant client accounts and talented managers. I was pleased when the Citigroup 1998 annual report called out some of our unit’s accomplishments:

Sandy continued trying very hard to bring the senior management team together in a “family” culture. He would talk about family and the importance of knowing one another and knowing the other executives’ spouses, for all of this, he explained, creates a team. I think he saw himself as the father, the Godfather figure, of a team that was close-knit. Of course, the people who were cut every time a new company was acquired—they weren’t part of the family. We were getting rid of the mess, cleaning up the inefficiencies. But now, after that cleanup, whoever was left was supposedly “part of the family.” I understood, however, that only his very loyal inner circle was really part of the family.

In January 1999, we held a five-day retreat with spouses at Saranac Lake in the Adirondacks, where Sandy and Joan had a lodge and camp. In March, we had a dinner with spouses to celebrate Sandy’s birthday. In April, Sandy took a group of his senior executives to Augusta National Golf Club for a weekend of golf shortly after the Masters Tournament. And in September, Sandy and Joan hosted a family apple-picking picnic at their estate in Greenwich, Connecticut. We were all familiar with one another’s complete wardrobes by now—from formal wear to apple-picking jeans to golf shorts. We had danced together, eaten together, swum together, and chatted with one another’s spouses. Despite it all, Wall Street generally perceived Citigroup to be struggling with management and culture conflicts. At one of the Planning Group meetings, following tense discussions on business unit strategies and performance, Citigroup general counsel Charles Prince asked an ironic rhetorical question: “If we held a reunion twenty-five years from now, I wonder how many of us like each other enough that we would attend?”

The June 7, 1999, Business Week cover story was titled “Citigroup: Is This Marriage Working?” illustrated by photographs of both John Reed and Sandy Weill. The story hinted at tension between Sandy and John and pointed to their stark differences in leadership style. Sandy was a cost cutter who “lives for the next acquisition,” the writer pointed out, whereas John Reed was a long-term visionary who believed that good business processes and smart spending were the way to go.

I liked John Reed. He was a tightly contained man who looked like a marathon runner. At the Godfather meetings, he avoided the buffets and seemed impatient for the wining and dining to end and the work to start. He had a reputation for being coldly analytical, but I respected his rationality and his focus on results. In the 1980s, he’d been the whiz kid responsible for the development of the Citibank ATM network, and his success at pulling that off had propelled him to the top. Being on his team was not about being his friend. In fact, historically the people below him who seemed to be likely successors somehow had a habit of disappearing. He was not magnanimously grooming his own replacement.

The one thing I knew John particularly prided himself on was his technique for running a global organization. It was a technique that had led to Citibank earning a wonderful reputation over the years before its merger with us for attracting and developing the very best young talent out of each country—India, Latin America, Asia, and throughout Europe. Early in their careers, people with special potential would join Citibank’s international services organization. Like diplomats in the Foreign Service, they would go through a series of postings, gaining experience in different countries and different businesses and, over the years, becoming a cadre of elite global citizens who could see the big picture, beyond the perspective of any particular country or business unit. Not only that, but also they developed a deep loyalty to Citibank, and an affinity for the Citibank business processes. In this way, John Reed had built a global corporation that adhered, no matter where in the world it was operating, to a common set of business standards and procedures.

The bedrock of Citibank’s business process was something called the “six-quarter roll.” These were quarterly business reviews that required each business to come to the New York headquarters for two-to-three-day meetings a couple of weeks before quarterly earnings were released. The six-quarter roll meant that they would present financial statements and other key metrics for the two most recent past quarters, the current quarter, and three quarters going forward, for a total of six quarters. In effect: Here’s what we looked like two quarters back. Here’s what we look like now. Here’s what we’re predicting we’ll look like next quarter and two more quarters beyond that. John developed this practice so he could really see the businesses—really get a picture—and all the pictures had to be painted with the same-size brushes, on the same canvas, following the same rules. The six-quarter roll addressed the problem of having multiple businesses spread across every corner of the globe, letting senior management look at each unit’s key variables, risks, and financial characteristics.

But the Travelers people hated the six-quarter roll. They grumbled that it was too much bureaucracy. “This is all just b.s.,” many thought. They resented the control that is imposed by that kind of process—the control of transparency. Of course, under Travelers’ old method, they also had to talk about what the future earnings results were going to be, as with the six-quarter roll, but they could more or less choose which aspects of the future other than earnings they were making projections about. But under Citibank, those aspects were strictly defined by corporate. This can be a really binding system when you’re talking about risk dimensions. What exactly are going to be the risk characteristics of your loan portfolio, your credit loss experience, the precise characteristics of your borrowers, their credit scores? The Citibank method required business heads to have transparent command of their business at a granular level, which appealed to me. It seemed to me that transparency and accountability were the path to a world-class operation.

While I was concerned with the lack of cohesion between Sandy and John, I was pleased that asset management was making good progress. I maintained my focus on trying to drive revenue growth momentum through sales growth in affiliated channels and through retaining and growing our institutional client assets and trying to build a sense of connection and teamwork with key leaders around the world in our global business. My 1999 travel schedule was intense and demanding, including twenty Smith Barney financial consultant and branch manager “due diligence” meetings across the United States. My international travels included many institutional client meetings to reassure clients that our existing investment teams were stable, and to build momentum for winning new business. My itineraries included three trips to Europe, two to Asia, two to Australia, and one trip to South America.

One day, on the corporate jet on a flight from New York to California, Joe Deane and I were sitting opposite each other, reading our newspapers. I glanced over at him and suddenly wondered what he thought about my involvement with the takeover of Willard Straight Hall at Cornell. Joe and I spent hundreds of hours in close proximity to each other every month, played golf occasionally, worked as a team looking at new investment issues, talking about bonds in the secondary market, pitching institutional salespeople all over the country and the world, but I didn’t know how he’d reconciled my Cornell history with what he knew of me in the present, as his boss.

“Joe,” I said. He looked up from his paper and lowered it to his lap. “Yeah?” he asked.

“Do you have a problem with what went on at Cornell?”

Joe was quiet for a beat. Then he said, “Yes, I do. You knew you were going to probably get arrested, right?”

“Yes,” I said.

“And you must have known you’d be photographed. Then what were you doing wearing those red high-top Converse sneakers? After you bought your pair, they gave the rest to charity they were so ugly.”

So, he’d studied the famous photograph of us leaving the Straight with our weapons, followed by the university officials. We laughed and both turned back to reading our papers.

In August I was rewarded for my hard work and team-building efforts by having Citigroup’s private banking unit moved under my leadership. This would represent a doubling of assets under my unit’s management. A Wall Street Journal article by Paul Beckett headlined “Citigroup Merges Asset-Management, Private-Banking Units in Boost to Jones” detailed the move and speculated on my chances of eventually becoming Citigroup’s CEO, “though neither of the current co-chief executives, Sanford I. Weill and John S. Reed, are expected to leave soon.”

The Citigroup 1999 annual report showed my new business, Global Investment Management and Private Banking Group (GIMPBG), with revenues that year of $2.7 billion and net income of $604 million. The text read in part:

There was a Citigroup Management Committee retreat at the Boulders resort in Scottsdale, Arizona, February 9–13, 2000. Each business unit and corporate function reported progress against key strategic and financial objectives and three-year-forward plans. We had multiple meals together, and time for recreation. There was nothing unusual or remarkable about this retreat until the last afternoon session on the next-to-last day, when Sandy insisted on going around the room and having everyone say what was uppermost on our minds. Bob Lipp, co-head of Global Consumer, was the second or third person to speak. He said that the co-CEO situation with Sandy and John was creating a heavy burden for their direct reports, who often received conflicting directions and signals. This management confusion was making it difficult for business units to make crisp decisions and react quickly to marketplace dynamics. He said furthermore that in his opinion, the co-CEO structure should be ended and resolved in favor of one or the other—John or Sandy—and that the same consolidation of power should happen in every business unit that was now burdened with dual leadership.

My ears perked up immediately. This was highly unusual. A supposedly unscripted challenge to the prevailing management structure thrown down in an open discussion forum? I didn’t buy that it was coincidental or spontaneous. My suspicions were reinforced when Sandy immediately pounced on Lipp’s comment and said he would like to hear what everyone else in the room thought. One by one we spoke, with every former Travelers executive and most former Citibank executives saying they agreed with Lipp. I suspected that this might have been planned by Sandy and Lipp. When my turn came, my maverick personality wouldn’t let me just quietly go with the flow. Not only did I disagree with Lipp’s analysis, but also I didn’t like the idea of being bullied into compliance by mob action.

“You know, I think the current managerial stalemate is okay,” I said. “At this stage in our evolving merger, it’s probably best for the company to tolerate stalemate a bit longer, to allow enough time for employees to discern and absorb the best elements of each company culture.” Sandy was watching me hard. The others were very still. “For instance,” I went on, “Travelers is probably better at managing businesses and achieving superior business execution, while Citibank is probably better at attracting talent from diverse cultures around the world, training them to a common and consistent set of operational processes and corporate values, and implementing oversight and control processes that allow decentralized decision making twenty-four hours a day around the globe. If we end this co-CEO stalemate too early, it might appear that one culture has won and the other culture’s lost, which would hurt our ability to retain the best elements of the losing culture.” The room was momentarily silent after I spoke, then it was the turn of the next person in the circle to weigh in.

My comment almost got me fired. On the way to dinner that evening I encountered Sandy in the hallway. He looked at me angrily and said, “So stalemate is okay, huh?” and kept on walking. Back in New York three days later, I was summoned early in the morning to go see Sandy. His assistant told my assistant that I was to report to Sandy’s office “immediately.” I had just arrived at work, and my diary says it was 7:15 am.

Sandy was sitting behind his desk, and his eyes were very cold as he looked at me. He didn’t invite me to sit down. Without preamble, he said again with a chill in his voice, “So you think stalemate between me and John is okay?” It suddenly flashed through my mind: He’s going to fire me! All these years later, I’m still sure that my hunch was correct. I steeled myself to speak slowly and quietly. I said, “Sandy, you’re surrounded by people who tell you what they think you want to hear. I don’t do that. I tell you honestly what I think. I may or may not be right in my opinions, but I’m honestly trying to help you. And I think you’re better off having someone like me around you. But if you think that firing me is going to make things better, then so be it. It won’t be the end of my life. I’ll survive.” There was a long silence, with Sandy staring intently at my eyes and face. I met his gaze and my eyes didn’t waver. I was not afraid. I felt both calm and alert. It seemed as if the silence lasted for at least two or three minutes. Finally, Sandy said, “You’re right, I’m better off with you than without you.” Then he half-smiled and waved me away. Our meeting was over.

Sandy got his way in the end. John Reed was out. He announced his retirement in February. For two years he’d hung on as co-chairman, but in January, Bob Lipp, who headed the largest part of the business (global consumer banking), threatened to leave Citigroup if the dual leadership situation wasn’t resolved. An emergency board meeting was called, and John proposed that both he and Sandy step down simultaneously. But Sandy had been working behind the scenes, I suspect, to line up his own support on the board, and the board decided that since John had been willing to leave, albeit along with Sandy, he should be willing to take a demotion. A front-page Wall Street Journal story on April 14, 2000, titled “Alone at the Top: How John Reed Lost the Reins of Citigroup to His Co-Chairman” by Charles Gasparino and Paul Beckett described those final moments of the board meeting:

In the same month, I attended both Sandy’s sixty-seventh birthday party and John Reed’s retirement party. Sandy’s party was uproarious, celebratory. He wore a fake white beard, to go along with the biblical theme he’d decided on, and Charles Prince as master of ceremonies and narrator recited these lines, obviously alluding to the co-chairmen situation we’d just exited: “We have been lost now for two years, wandering in the desert. Now Moses saves us and brings us to the Promised Land!” The Wall Street Journal noted that Prince later that night added an aside: “You know, Sandy, Moses never made it to the Promised Land.”

John Reed’s retirement cocktail party had a much different vibe and theme. It was smaller and more somber, held in a conference room in the iconic Citibank building on Lexington Avenue. There were drinks and hors d’oeuvres, but no music. The only speeches were made by veteran Citibank executives, none from the Travelers side of the family, and very few Travelers people were even in attendance.

Paul Collins, John’s longtime vice chairman at Citicorp, praised him by saying that his legacy was fourfold, consisting of: (1) a great global consumer business; (2) a culture of intellectual rigor, high standards of excellence, and absolute integrity; (3) the Five Point Plan in 1990–1992 to rebuild Citi-bank from the brink of insolvency; and (4) the Citigroup merger, which had potentially created the dominant global financial services company. I felt that Paul’s remarks were thoughtful and gave a fair assessment of John’s career; it was clear they were appreciated by John. And although I didn’t know it at the time, Chuck Prince’s humor was ironically accurate. In some respects Sandy never did enter the Promised Land with Citigroup, because regulatory investigations soon began to engulf the company.

Arguably, the year 2000 was the pinnacle of Citigroup’s overall success. The Citigroup 2000 annual report was titled Lead. By Example. The “Financial Highlights” page showed Citigroup’s net revenue of $77.7 billion and a core income of $14.1 billion, up 14 percent and 25 percent, respectively, over 1999. Sandy Weill’s letter to shareholders read, in part:

The final paragraphs of Sandy’s letter recognized senior managers and directors who retired in 2000, including Paul Collins, Edgar Woolard, Keith Hughes, and Bob Lipp. It did not say a word about John Reed.

The 2000 annual report showed my business, GIMPBG, with $3.3 billion total revenues, up 22 percent from 1999; a net income of $674 million, up 12.5 percent from 1999; and assets under management of $401 bil lion, up 6 percent from 1999 in a difficult stock market environment. The report also emphasized the success of GIMPBG cross-marketing initiatives. “Sales of proprietary mutual funds and managed accounts rose 30% to $21 billion in the Salomon Smith Barney (SSB) brokerage channel and represented 41% of SSB’s total retail channel sales for the year. Sales of mutual funds through Global Consumer Bank were $13 billion, representing 56% of total channel sales. Primerica sold $1.8 billion of proprietary mutual funds in 2000, a 10% increase from 1999 and comprising 50% of total channel sales.”

I was proud to be part of Sandy’s top team at Citigroup and appreciated his feedback that he was pleased with my performance. The opportunities and challenges of global financial services businesses were as interesting and intellectually engaging as I had anticipated when I left TIAA-CREF to join him.

Addie and I were enjoying the best of New York’s cultural and social life. Our family, which didn’t see a whole lot of one another during the work week, was making up for it by taking exciting vacations together, including regular ski trips to Vail and Steamboat, winter vacations at Club Med resorts in the Caribbean, Christmas holidays in Maui in 1998, and a South African safari in 1999.

Our older daughter, Evonne, graduated from King Low Heywood Thomas School (known as King), a co-ed private day school in North Stamford, near our home in New Canaan, Connecticut, and enrolled at Georgetown University in September 2000. Our two youngest children, Michael and Victoria, were also doing well at King, where Addie was president of the board of trustees, presiding over a successful capital campaign to fund a new middle school building. We personally contributed $500,000 to that project, and the school named an atrium in our honor.

When Nigel graduated from Harvard in 1991, he was drawn to service in the marines. He wanted to do something where success depended entirely on character and determination, and not on family background or economic class or social status. He asked me what I thought. I replied that it’s very honorable to serve in the marines, but that he should think carefully about the responsibilities of marine officers. I asked him to consider the possibility that he and his men could be trapped in a war zone or so-called police action like Grenada, knowing the fight they were facing meant little in the span of history. Most of his “men” would be teenagers who enlisted seeking economic and educational opportunity, and they would be scared. It would be his job as their officer to rally these young men to fight like marines, to fight for each other, and to face death with honor. I told Nigel that if he had the stomach for that, then he should go ahead. But if not, he should leave it alone.

Nigel did a four-year tour in the Marine Corps, and became a captain in the Force Reconnaissance Company, the marine equivalent of the Navy SEALs. After graduating from Stanford’s business school with an MBA in 1997 and working at Goldman Sachs for several years, Nigel joined the Carlyle Group in 2000 to work in private equity investing.

Addie was actively involved with the Alvin Ailey American Dance Theater, the modern dance company founded in 1958 by the famous African American dancer and choreographer. We gave $500,000 there as well, to support their $50 million capital campaign, led by Joan Weill. The successful fund-raising resulted in construction of the Joan Weill Center for Dance at the corner of Ninth Avenue and West 55th Street in Manhattan, in Hell’s Kitchen, a once gritty neighborhood that was becoming more vibrant and attractive by the year. The new rehearsal studios, with large windows looking out onto the busy southbound traffic on Ninth Avenue, allowed dancers to see the city, and pedestrians and people in passing busses and cars to see the beautifully athletic and graceful dancers—many of them black or brown—as they leapt, stretched at the barre, and danced. One of those rehearsal studios was named for Addie and me. Joan and Sandy’s leadership of this important philanthropic initiative for the leading African American dance company illustrated a primary reason why Addie and I liked them so much. Joan and Sandy were generous, and their vision of America was inclusive.

Figure 16 / Vicky, Tom, Nigel, Michael, Evonne, and Addie (left to right) at Nigel’s graduation from Harvard, June 1991

Figure 17 / Nigel, Nigel’s mother Stephanie, and Tom’s mother (left to right) at Nigel’s graduation from Marine Corps Officer Candidate School, August 1991

Figure 18 / Nigel, Addie, Vicky, Evonne, Michael, and Tom (left to right) at home in New Canaan, December 1993