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The 1998 Travelers-Citicorp merger defied federal law, caused adramatic CEO power struggle, and changed the landscape of thebanking and insurance businesses forever-in other words, justanother day at the office for Citigroup CEO Sandy Weill. Financialwriters Amey Stone and Mike Brewster recount how a middle-class boyfrom Brooklyn transformed himself into the consummate corporatedeal maker in the riveting King of Capital.
The seeds of the historic Citigroup merger were sown early inWeill's career. Working in the 1960s and 1970s with an all-starcast that included future New York Observer publisher ArthurCarter, future Broadway mogul Roger Berlind, and future SECchairman Arthur Levitt Jr., Weill devised a winning blueprint foracquiring companies: buy a struggling firm with a prestigious nameon the cheap, adopt its brand name, close under-performingdivisions, integrate its operations into the existinginfrastructure, and slash costs.
In 1970, Weill's modest, startup brokerage firm CBWL acquiredtroubled but venerable Hayden Stone, a firm many times its size.This acquisition set the foundation for the building of Weill'sprize gem, Shearson, named after Stone acquired Shearson Hamill.Ten years and fourteen deals later, Weill sold Shearson to AmericanExpress, establishing himself as one of the top chief executives ofhis era.
Weill, though, could never be content as a "deputy dog" to Amex CEOJames Robinson III. He left the company in 1985 and startedover-essentially from scratch-as CEO of the struggling CommercialCredit, a modest firm based in Baltimore, Maryland, that in alittle over a decade morphed into the Travelers Corporation. In1998, Weill defied federal regulations by masterminding the mergerof Travelers with Citibank. Stone and Brewster explain thesophisticated structure of this conglomerate and how Weillaggressively lobbied Congress and the President to ensure itslegality. Stone and Brewster also offer insight into the evolutionof Citigroup's inner circle following a power struggle betweenWeill and co-CEO John Reed and how Citigroup plans to address thethorny issue of succession as Weill enters his seventies.
Weill's unprecedented achievements have been tempered by keypersonal and professional relationships, public defeats, andconsumer criticism. However, with the unwavering support of Joan,his wife of more than forty years, Weill remains at the peak of hisprofession, forever on the lookout for the next megadeal. Discoverhow a disregard for the impossible and maniacal attention to thebottom line created a financial empire for the incomparable King ofCapital.
"...the authors tell an interesting story." (Traders Magazine, May2002)
"This is a rags-to-riches-to-greater-riches story, recountingWeill's rise from a middle-class Brooklyn boyhood to primacy onWall Street." (BusinessWeek, July 2002)
When Weill was 65, instead of retiring, he set about creating the epic merger between Travelers Group and Citicorp. Soon after, he was aggressively lobbying Congress and the president to pass the Financial Services Modernization Act to make the deal legal. With the passing of this piece of legislation a little more than a year later, companies could legally sell insurance, issue securities and provide banking services under a single umbrella for the first time.
King of Capital also describes how Citigroup CEO Sandy Weill is not a universally loved figure. Despite the hundreds of millions of dollars he has donated to charities, there are many former partners and underlings who seem to have mixed feelings about the man who is said to have fired more friends than some people ever make, and is criticized as being an "abrasive and insensitive" leader.
A Titan's Modest Roots
Weill grew up in a modest house in Bensonhurst, Brooklyn, with his parents, sister, aunt, uncle and grandparents who had immigrated from Poland. While living there, he watched his father and grandfather build a successful dressmaking business that lasted for 40 years. Weill learned discipline and academics while at Peekskill Military Academy, where a clear system for rewarding accomplishment shaped him to become a successful student of government at Cornell. After graduating, he had a slow start as a low level messenger on Wall Street, but was soon working as a broker. Five years later, in 1960, he started his own firm; his partners were some of the most extraordinary talents available.
One of Weill's first major deals was the 1970 purchase of the 100-year-old brokerage firm Heyden Stone, which was moments away from being dissolved for insolvency. This firm was 10 times the size of Weill's firm. The new brokerage firm continued to follow this prototype: Buy a struggling company with a prestigious name for cheap, adopt its brand name, close weak divisions, integrate its operations into the existing infrastructure, and cut costs.
Three years later, Weill was the CEO of Heyden Stone. Next, the firm purchased Shearson Hamill, which doubled the size of the company. By 1979, Shearson Hayden Stone purchased Loeb Rhoades, which doubled its size again and made it Shearson Loeb Rhoades.
After 14 deals, Weill's original brokerage firm had become Shearson, the second largest brokerage firm on Wall Street. Its focus, which started as retail, had expanded to research, investment banking and building the business. By the time he sold Shearson to American Express in 1981, he was ready to step into AmEx as a top manager.
Time to Quit
Now a multimillionaire, he was not satisfied as an underling to the company's CEO, and remained unhappy even when he was named the company's president in 1983. Two years later he quit American Express to seek new challenges.
When he took the helm of the failing customer credit company Commercial Credit in 1986, nobody believed he could do much with it. Over the next 12 years, he turned around that company and used it as a base for building a financial services conglomerate that would rise above its competitors. In 1988, Weill purchased Primerica, which owned the retail brokerage firm Smith Barney, which returned him to his roots in the securities business. Over the following years, Weill acquired a percentage of Travelers Insurance and bought back the struggling Shearson from American Express. By 1997, Weill had acquired the rest of Travelers and the investment bank Solomon Brothers.
Weill soon dwarfed these mergers with a $70 billion deal that merged Citicorp and Travelers, and placed him on top with a co-CEO who would last only two years before being forced out in a boardroom showdown.
In 2001, Weill's Citigroup was worth more than $1.5 trillion. With profits near $15 billion, Weill's company is one of the most profitable corporations in the world.
Why Soundview Likes This Book
King of Capital is a gripping tale of an amazing man who was able to rise above controversy and competition and attain a position of power and influence equalled by few others. Citigroup's current financial problems does not diminish the strength, determination, perseverance and deal-making skill of this visionary CEO. Copyright (c) 2002 Soundview Executive Book Summaries
Their respective presentations delivered, their visions for the future of Citigroup outlined, Sandy Weill and John Reed sat alone together, tensely watching television at Citigroup's 399 Park Avenue headquarters in New York City. The day was Sunday, February 27, 2000. Weill and Reed, co-CEOs since the historic merger of Travelers and Citicorp 16 months earlier, had called a special board meeting because their vastly different styles and disintegrating relationship were hurting the company. Even Citigroup's largest shareholder, Prince Alwaleed bin Talal of Saudi Arabia, had recently expressed concerns that the two couldn't work together. The joint leadership arrangement was clearly failing and Weill and Reed each came to the meeting with a solution to the problem.
Reed, 61, made his presentation first. His view was that the time had come to find a successor. He and Weill had forged a new company out of the merger and should gracefully bow out together. Weill, 66, told the board that he wanted to stay and put his imprint on the sprawling firm. Anyone who knew Weill or followed his career might have predicted that would be Weill's take on the situation.
Forty years earlier the Brooklyn-born, scrappy Weill had started a small brokerage firm with three other brokers. Now, after a lifetime of deals and achievements he stood on the verge of running--on his own--the Holy Grail of financial services. Reed, the cold, brilliant engineer, was no stranger to boardroom duels, of course; he had run Citicorp for 14 years before the merger with Travelers. But he had never faced an adversary like Weill.
Over the past several months, the relationship between Weill and Reed had become so strained that they could barely tolerate one another's presence. Now, awaiting their fate together, Weill and Reed took solace in one of the few things they had left in common: golf. Superstar Tiger Woods was playing Darren Clarke of Northern Ireland head-to-head in the World Match Play Championship. In match play, the winner moves on to face the next challenge; the loser goes home.
Reed and Weill, embroiled in their own high stakes match, weren't the only ones nervously waiting. Ex-Treasury Secretary Robert Rubin, who had been hired at Citigroup several months earlier to act as a peacekeeper of sorts between Weill and Reed, sat in another room watching the New York Knicks play the Philadelphia 76ers. Rubin, perhaps suspecting that his judgment would be called on to help make the final decision, steered clear of Weill and Reed.
Back in the boardroom, director Franklin Thomas led the debate, which dragged on for over eight hours. The board was having so much trouble deciding what to do that at it one point a director proposed that Rubin, the former head of Goldman Sachs, take the CEO job. He refused, saying the company would best be served with Weill at the helm.
"It was very tense," Weill said in an interview with the authors. "I think we tried to make it less tense, but obviously it was tense and nobody knew what was going to happen." At one point, Weill and Reed were summoned individually to the boardroom. "One of the directors asked John to go in and then one of them asked me to go in and they asked me some questions," Weill says. When Reed was called into the boardroom, Thomas asked him if he would stay on for a year in a ceremonial chairman post. Reed declined. For the second time that afternoon, the board had one of their proposals turned down.
Eventually, the board was running out of scenarios, save one: Weill would lead the company on his own. A board member entered the room where the two co-CEOs watched the golf tournament and told them that Weill would soon take over as sole chairman and chief executive officer of the massive financial services conglomerate. Reed would resign. Just like that it was over.
A statement was released in Reed's name announcing his resignation: "My decision was a deliberate one that I have discussed fully with the board, and I leave the company knowing we have put into place a truly outstanding management team and a sound strategy."
"It was obviously a very emotional time and John was a perfect gentleman," Weill said in an interview. "He was extremely cooperative, a great gentleman."
Weill's graciousness notwithstanding, his triumph was nothing short of astounding. It had been under two years since he first thought seriously about buying a bank. Now he had displaced one of the most well-known and highly respected bankers in the United States and was running the country's biggest financial services company. As Winston Kulok, a high school friend, puts it, "Think about it. A regular guy from Brooklyn out-foxed John Reed."
Weill's favorite response to inquiries about the co-CEO arrangement during the prior 16 months--"I'm a lot happier with John in the organization than not"--belied his ambition to run the company his way. To Weill, Reed and other managers of the former Citicorp must have stood as living symbols of fiscal laxness: a culture defined by ubiquitous and costly bank branches dotting the streets of major cities, excessive spending on experimental technologies, generous benefits, and few restrictions on business travel and expenses. Once firmly in control, Weill set about doing what he always had done after a merger: putting his people in place, cutting costs, and dismantling perceived boondoggles.
Even though few on Wall Street expected the co-CEO arrangement to work, given Weill's age and Reed's tenacious hold on power, few industry executives, members of the press, or even executives involved in the deal would have bet that Weill would ultimately ascend to the top spot. Even more to the point, perhaps no one quite understood that for Weill, this huge merger was not the peak achievement of his long career, but instead something closer to his heart: a chance to reinvent himself once again.
In the spring of 1998, even as details about the upcoming merger with Citicorp percolated in his head, Weill summed up his feelings about achievement:
I don't view anything we have done, any acquisition, any achievement, as an end, only as a building block for the future. We always get to a point and throw the rope out a little further and then throw it out a little further again. You can't stop doing that. You can't stop looking ahead, thinking a little bit about doing something differently. You've got to look at something as a building block for the future. Not the end in itself, but as a way to create a new future. 1
Throughout his life, Weill has never hesitated in creating a new future for himself. If you were to draw an arc of Weill's nearly 50-year career, an accurate picture would consist not of one great, glorious sweep, but a series of slowly building peaks and modest valleys marking Weill's many victories and occasional setbacks. The graph would show that Weill has had his share of slumps, particularly in the mid-1980s when he quit as the president of American Express and took nearly a year to find his next deal.
But if you examined the chart a little closer, you'd find a sharp spike after every setback, an indicator that after defeat Weill came back more determined than ever, even if it meant starting over from scratch. It is this legendary ability to create--a new company, a new persona, a new brand--that distinguishes Weill from less celebrated CEOs.
The talent for reinvention is often viewed as a quintessentially American trait. But Weill's gift was brought to the shores of America from Russian-occupied Poland and handed down to him by two remarkable people--his maternal grandparents, Etta and Philip Kalika.
In the first decade of the twentieth century, Jews in Poland faced a deadly new strain of anti-Semitism and grew more and more desperate to escape.
Spurred by the first Russian Revolution, the pogroms of 1905 to 1907 terrorized Jewish residents in hundreds of towns and cities in Russia and "Congress Poland," the area of Poland incorporated into the Russian Empire when the country was partitioned late in the eighteenth century among Russia, Austria, and Prussia. Numerous Jewish families were massacred in Poland during this extraordinary outburst of hatred. The number of Jewish emigrants from the Russian Empire to the United States jumped from 74,000 in 1904 to more than 100,000 in 1906 and 1907.
Philip Kalika and Riwe Schwartz came from the small village of Sierpc, 70 miles northwest of Warsaw. Sierpc was one of the few Jewish strongholds in rural Poland, which at the time was 90 percent Catholic. With just 7,000 people at the start of the twentieth century, Sierpc lay within the heart of Congress Poland. So Philip and Riwe, despite their Polish ancestry, were not Polish but Russian citizens.
Philip and Riwe married and Philip immigrated to the United States and established his own dressmaking company. Philip sent for his wife and their three young children in 1908. Riwe and her children made it to Liverpool, England, most likely by train, where they boarded the Umbria, one of the oldest and by far the slowest steamships in the famous Cunard line. After a 10-day journey, the Umbria arrived at New York Harbor on June 11, 1908, one of 23 steamships and merchant ships that landed there on that busy day. It was still daylight when the Umbria made port with Riwe, her children, and the other 383 passengers.
They had started a new life in the United States, and neither Philip nor Riwe ever went back to Sierpc again. During the Holocaust, the Nazis went from village to village in rural Poland rounding up Jews, killing many and shipping others off to the death camps. Today, according to official records, the Jewish population of Sierpc--like many Polish towns that once had significant Jewish populations--is zero.
When Riwe arrived at Ellis Island for processing, she had $1.50 to her name. Accompanying her were her six-year-old son, Lieb, three-year-old daughter, Ettel, the future mother of Sandy Weill, and two-year-old daughter, Rachel. Like many immigrants, they Americanized their first names. Riwe became Rebecca, Lieb became Louis, and Ettel became Etta. Philip and Rebecca had two more children in the United States, Irving and Rose.
As did many Polish immigrants in New York at the time, the Kalikas settled in Brooklyn, eventually buying a large home in Bensonhurst in 1919. The purchase must have been a triumph. The large, two-family structure has a crow's nest on the third floor and a small front yard and a larger side yard. Throughout his career, Weill has kept a photo of his childhood home in his office.
On February 27, 1926, Philip incorporated his company, P. Kalika, and named himself and three others as directors. Louis, now 24, joined his father in the business, as did two others, a married couple from Manhattan. The articles of incorporation for the Manhattan company described its purpose as the "business of jobbing, manufacturing, producing, repairing, buying, and selling and otherwise dealing in all kinds of wearing apparel." The four directors divided 350 shares of common stock at $100 apiece, giving the company a value of $35,000. It was certainly an odd board of directors: a father and son and a married couple. Yet, P. Kalika became a very successful business, and Philip's death on April 29, 1954 warranted an obituary in the New York Times. Making business a family affair worked for Philip Kalika, and he would pass that ethic on to his grandson, Sandy Weill, who would later use it to his great benefit.
Weill grew up in the same house as his grandparents, and surely knew well their story of fearlessness, ambition, and pursuit of a better life. In an interview, Weill affirmed that his grandfather was an important figure in his childhood.
What did he learn from Philip Kalika? Perhaps to be decisive and unsentimental about change, even when personal allegiances came into play. Perhaps he learned to be generous to his greater community. Perhaps he learned to integrate family and business, which he carried to his own life by so heavily involving his wife and children in his business dealings. But most of all, perhaps he learned to let go of the past and start anew--something Weill has managed to do countless times in his career.
It is likely that Etta, Sandy's mother, learned from Philip and Rebecca--her parents--as well. She went to school, started a career, and became a U.S. citizen as soon as she could. On her application for citizenship in 1923, Etta listed her profession as "bookkeeper." She was slight, just five-foot tall and 100 pounds, with brown hair and brown eyes. It would not be long before she would meet and marry Max Weill, generally known as "Mac," with whom she would have two children, Helen and Sanford. To say that her son, born on March 16, 1933, would inherit Etta's apparent affinity for working with numbers would be an understatement.
The early months of 1933 marked the nadir of the Great Depression and the worst period in history for the nation's banks. Unemployment peaked at 25 percent, and the nation's economic output had dropped by nearly a third. During the first few days of March, a particularly dramatic bank run took place in Michigan, with depositors resorting to panic unseen since the first decade of the 1900s--showing up at their bank and demanding cash. Like Frank Capra's widows and farmers populating the fictional Bedford Falls in It's a Wonderful Life, they formed long lines at their local branches to collect their savings.
No institution epitomized banking's troubles more than the National City Bank, the precursor of today's Citibank, which opened in 1812. In February 1933, the bank's president, Charles Mitchell, soon to face tax evasion charges, was the Senate Banking Committee's lead witness in hearings to gauge the culpability of the industry in bringing about the Depression. Although historians today find many other causes for the length and severity of the Great Depression--including some ill-advised moves by the new Federal Reserve, which hiked interest rates instead of cutting them--banks then bore the brunt of the blame, for transgressions both real and imagined.
Mitchell and other prominent bankers were forced to resign. They were pursued with criminal charges. One Senator from Montana proposed that the best way to clean up the banking industry "is to take these crooked presidents out of banks and treat them the same as they treated Al Capone when Capone avoided payment of his tax."2
When Franklin D. Roosevelt took office on March 4, 1933, restoring order to the nation's banks was his first priority. To halt the number of failing institutions, President Roosevelt took the unprecedented step of closing all American banks on March 6. His plan to certify the soundness of every bank was welcomed after more than three years of perceived inaction on the part of the Hoover Administration. Before they could open, banks were required to have their soundness affirmed by federal or state authorities.
Banks were eventually punished harshly through legislation passed later in 1933. The landmark Glass-Steagall Act--enacted the year Weill was born--was one of the defining pieces of financial legislation in American history. More than just a law, the Act was a regulatory broadside at the banking industry. It divided the financial world into investment banks, which under-wrote and traded securities, and commercial banks, which took in deposits and lent companies money.
The law would stand essentially unchanged for 65 years until Weill devised the epic merger that created Citigroup and pushed Congress to repeal the anachronistic legislation.
Despite the gloom of the era, on March 16 good news leapt off the pages of the morning papers. The majority of the nation's banks had been successfully certified and reopened. In New York, for example, out of the 585 banks that were members of the Federal Reserve, 473 had reopened.3 Also, Congress passed the "beer bill," ending prohibition by legalizing the sale of beer and wine with low alcohol content. This news was met with spontaneous celebrations around the country.
For Etta and Mac Weill, however, the glad tidings on this clear, cold day in Brooklyn, New York, had much more to do with the birth of their first child, Sanford I. Weill. Etta gave Sandy the middle initial without it standing for any particular name. "How did it happen?" Weill said in an interview. "Maybe the same way it happened to Harry S. Truman. My mother wanted to name me after somebody whose name started with an 'I,' but she couldn't think of a name she liked. So she gave me the initial with the idea that after I was 21 I could choose whatever middle name I wanted." Weill never did get around to it.
The addition of a new baby made for close quarters. The Weill family shared the large house on Bay 26th Street with the extended Kalika clan (both the 1933 and 1939 Brooklyn city directories show that living in the two-story home were Mac and Etta, Philip and Rebecca, Etta's sister Rose, and Etta's brother Irv, a student at that point). Sandy's birth also must have added pressure on the family financial situation, which was still tenuous in 1933. At that point, Mac longed to start his own business. While the Depression had ground industry to a stop in much of the country, Brooklyn was still an industrial giant. The teeming borough had more than 37,000 stores, 5,000 manufacturing plants, 26 freight terminals connecting to 14 railroads, and piers berthing ships from more than 70 steamship lines. There was business to be done, and Mac was ready to make his fortune.
It was his father-in-law's dressmaking connections that would help Mac launch his first business. Louis Kalika and Mac started Kalika and Weill Dress Manufacturers together in 1936. The business operated out of 501 Seventh Avenue, in the heart of the garment district. The fact that Weill's father got his start from his father-in-law should be no surprise. Not only were many immigrant Jews at that time involved with the "rag trade," but Polish Jews were particularly known for co-mingling family, business, and religious ties.
That first year in which Kalika and Weill started doing business was a tumultuous one for the dressmaking industry. Just five days after the company opened, one of the biggest nationwide garment strikes in history took place. Despite President Roosevelt's request to the nation to avoid labor unrest during the Depression, 10,000 garment workers went on strike on November 10 as part of a coordinated campaign for higher wages and better working conditions. On the same day in Washington, D.C., the International Ladies' Garment Workers Union committed $500,000 to organize a nationwide lobbying campaign for labor legislation. Garment workers, mostly women, were extremely low paid. In one November strike that year in Bayonne, New Jersey, workers' demands included a 35-hour work week, a minimum of $44 per week for cutters, $1.25 an hour for pressers, and 85 cents an hour for operators.
The turbulent time was a harbinger of sorts for Mac Weill's business career. Mac was in and out of business, as well as in and out of trouble, during Sandy's childhood. Kalika and Weill Dress Manufacturers eventually became Hilma Women's Dresses, with Mac as president. In 1944, when Sandy was 11, Mac pled guilty to wartime price gouging, violating federal Office of Price Administration rules. Hilma Women's Dresses had overcharged retail shops $8,129 on "materials for women's low-priced dresses."4 Mac received a $10,000 fine--which he managed to pay in three installments over several months--and a suspended three-year prison term. The real financial toll on Mac and his family, however, resulted from a civil action by the retailers who bought the materials. On April 12, 1944, Mac settled out of court, agreeing to pay the shops a sum total of three times the price he had overcharged them, which came to $24,389.16. Mac soon left the dressmaking business for good.
Mac Weill may have been a victim of bad timing or bad luck, or he simply may have been a bad businessman. But one thing is clear: Sandy Weill's business approach and success more closely resembles his maternal grandfather's than his father's. Weill retained great affection for his father throughout his life, even employing Mac part-time after he had retired. But if he learned anything from his father, it was most likely what not to do. Weill--by every account--is straightforward in both his business dealings and his personal life.
Weill has characterized his Brooklyn boyhood as rough-and-tumble. He delivered newspapers and played stickball. It was obvious even then he liked winners. His favorite baseball team was the New York Yankees, who played in the Bronx and inevitably clobbered "Dem Bums" from Brooklyn in the World Series year after year. He has said he was a mediocre student in the public schools he attended, was a "sissy," and that his mother would rescue him from fights on the streets of Bensonhurst. Weill said that avoiding rather than embracing confrontation, as he now so famously does, only "postponed the inevitable."5
But those days ended when, perhaps because of Mac's arrest or perhaps because of Mac's new steel-importing venture, the family moved to Miami Beach, Florida, in 1945. Weill later described the move as a disaster and said he did poorly in school there. After two years, the family moved back to Brooklyn, settling in their own house on 12th Avenue, near the boundary of Flatbush and Borough Park.
In the fall of 1947, Weill was sent to Peekskill Military Academy (PMA), a well-known boarding school not far from the U.S. Military Academy at West Point. The school's slogan was, "Quit You Not."
Peekskill is a town on the Hudson River about 30 miles north of New York City. Arriving students and their parents would drive into the center of the town, turn on Hudson Avenue at the train station, drive up the hill two miles or so from the river to the gates of the school. The yellow bricks that, for a time, adorned Hudson Avenue inspired former PMA student L. Frank Baum's famous Yellow Brick Road in his novel The Wizard of Oz.
The 53-acre campus, which closed in 1968, is today occupied by the town's public high school, an institutional gray building without charm. PMA's five impressive brick buildings, all but one of which was razed in 1969, were centered on the northern and western edges of the campus. The teachers at PMA lived in a row of well-kept cottages along the eastern edge of the campus. While very little physical evidence remains of PMA, the most important feature of the school to many alumni still stands. The iconic figure of PMA was the Old Oak, where an American spying for the British was hanged on January 27, 1776. The historic tree, which stands at what was the center of the parade ground, is today fortified by supporting cables.
Military school may seem a strange choice for a middle-class Jew from Brooklyn. But it was not necessarily seen as punishment, and many students, like Weill, were sent there because of family discord. "I think she [Etta Weill] thought this was a place to get a good education and maybe learn about life," says David Miller, who was one year behind Weill at PMA. "In those days, military education was not viewed as something punitive. The classes were small, and you got a ton of one-on-one attention."
Stuart Fendler, one of Weill's roommates at PMA, says that many of the boys sent to PMA were in need of either reining in or building up. " We went there because every kid was a problem," he says. "I was a hyper type of kid. Sandy's parents had a marriage that wasn't going too well." Miller recalled that Weill's mother sent Sandy to PMA so he would be removed from the marital discord at home. Mac and Etta Weill's marriage would eventually unravel completely during Weill's last year of college.
The time period in which Weill attended PMA, immediately following World War II, was marked by intense Cold War rhetoric, and the military aspect of such a school was taken very seriously. In the strict military regime in place at the school, the boys wore their uniforms at all times. In fact, they were not even allowed civilian clothes on campus. The youngest students at the school--seven and eight-year-olds--were given toy rifles made out of wood so they, too, could practice the drills and maneuvers. First call was at 6:45 A.M., reveille at 6:55, morning formation at 7:05, and breakfast at 7:15. Classes ran until 3 P.M., followed by athletics and additional military activities from 3 P.M. until 6 P.M. After dinner, students were in study hall from 7 P.M. until 9 P.M., then had an hour of free time before lights out at 10 P.M.
According to fellow students at the school, Weill embraced the routine. He thrived under the regimented system of defined activities and a strict system of tangible awards for every achievement. As plebes, though, the first hurdle was the brutal hazing by older cadets. "At that time there was some very serious hazing," Fendler says. "Sandy shrugged it off. He hung right in there."
The four years he spent at PMA were defining ones for Weill. He found a niche in several activities at the school, and excelled academically. Perhaps most important, he was rescued from having to watch his parents' marriage deteriorate. It seems Weill found a second home among the students and teachers at PMA.
Weill quickly made a name for himself in the classroom, on the tennis court, and as a drum major in the band. He developed an uncanny ability to assess his surroundings and do what it took to rise to the top--a skill that came in handy in the business world.
"Sandy was smart. He looked around and figured out how to get ahead here," David Miller recalls. "There were three big things: grades, sports, and the band. Sandy got good grades. But Sandy wasn't much of a musician, and he didn't play contact sports. So he decided to get ahead by doing whatever he could in these areas." For example, he took up the bass drum. "It's not too hard to bang that drum, but he kept good tempo," says Miller. "I can still see him leading the battalion. He was a very determined type of person."
Weill himself believes that PMA was a major influence on him. He said in an interview, "The academy was great for me. The discipline was important and the success I had there did give me a lot of confidence."
A significant achievement was Weill's tennis prowess. PMA prized athletic skill, with swimming the most important sport (amazingly enough, the tiny school produced several national champions and a 1964 Olympic gold medalist). No swimmer, Weill knew that he had to develop some kind of athletic skill. Ironically enough, after two years spent in Florida without picking the sport up, Weill chose to devote himself to tennis. His senior year he won the Westchester public/private school championship, and was invited to try out for the Eastern U.S. Junior Davis Cup team.
"We both picked up the game at the Academy," Fendler said. "We just hit ball after ball. We'd just keep playing. I could never beat Sandy in tennis. I wanted to beat Sandy in everything we did. But I couldn't." That competition extended to academics, which came easily to Weill in his new environment. As Fendler recalls, "He got the As, I got the Bs. He wasn't a grind either; he didn't study much at all." Weill earned high honors in algebra, geometry, science, Latin, and French. As a senior, he was one of five students named to the National Honor Society.
Weill emerged as one of the leaders of the school, becoming an "officer" in both his junior and senior years. He was a second lieutenant his junior year and a first lieutenant his senior year. Only eight students in the school served as officers at any given time, making student officer positions both coveted and respected. Weill later said about the school, "I tried harder because of the discipline and competition."6
Weill would later mirror the PMA approach of providing tangible rewards for achievements when running his own business. "It wasn't like other schools," his friend Fendler said. "Everything was based on achievement. If you accomplished something, you were awarded a rank. The discipline, the military atmosphere, it just formed you."
Being an officer also meant that Weill had to be, at times, fairly stern and serious with his non-officer classmates and the underclassmen. The student corps, though it had an adult commandant, was largely self-governing, according to several PMA graduates. That meant Weill, like the other officers, inspected other students' uniforms, made sure they attended formation, and held room inspections. If someone failed an inspection, Weill handed out a demerit, which the unlucky student would have to work off by shining a brass doorknob or other such task.
But Weill had a sense of humor as well. As a member of the yearbook staff his senior year, "Duck" Weill (as he signed himself) penned the senior class "Last Will and Testament," a humorous send-up of his fellow graduates.
Another aspect of the PMA culture was that teachers were encouraged to open their homes to students. For Weill and Fendler, tennis coach and language teacher Clair Frantz became a trusted and respected mentor. Frantz was an accessible male presence for Weill, who often went to his on-campus home for dinner. "Sandy's father was sort of an aloof guy," Fendler said. "I think Sandy really connected with Clair Frantz."
Weill also became a leader among the small coterie of Jewish boys at the school, recalled Winston Kulok, a student at PMA two years younger than Weill. Kulok has fond memories of Weill leading trips into town where the boys, craving lox, would buy pickled salmon. That night, Weill would soak the fish in a pail of water, dumping out the salty brine and repeating the process again and again until the fish at least approximated the taste of the lox available in Brooklyn.
Along with authentic Brooklyn lox, Weill must have missed his parents as well. Friends cannot recall Etta ever coming to the school, but on occasional Sundays (every one of which was a visiting day), Mac Weill would drive up to Peekskill, watch Sandy play the drum in the formal parade, and take his son and Fendler out for lunch. The hulking image of Weill's father still remains with Fendler. "He'd walk up the hill, this big guy smoking cigars," Fendler recalls. "He seemed a hard, serious guy."
Despite the closeness and camaraderie at PMA, none of his fellow students guessed that Weill would eventually vacation with U.S. presidents and take private jets all over the world. While he was well-liked and respected as one of the school's officers, he was not, for example, voted "Most Likely to Succeed," but instead earned the moniker "Mr. Five O'Clock Shadow." Kulok says he saw signs of Weill's drive back then, but it was understated. "He had ambition," says Kulok, "but it didn't sit on him like a deformity."
Fendler, too, says he didn't foresee Weill's great business success as a youth, but once his friend started to achieve in the corporate world, he knew it would be smart to invest in whatever company Weill was running. "I didn't really expect this kind of business success," Fendler says. "But whenever Sandy got to be the head of something, I'd buy it. When he bought Primerica, I'd buy it. I've got a ton of Citigroup stock. My father would buy the stock, too, because he met Sandy at the school, and he was impressed by him."
Weill graduated third in his class from PMA in 1951. Intrigued by the dawn of the Space Age, Weill decided to pursue engineering. He was admitted to both Harvard and Cornell, but he decided on Cornell. "It had an engineering school and Harvard didn't," he said in an interview.
In one way, Weill's military surroundings followed him to Ithaca. As a land-grant college, Cornell was subject to requests by the government to supply things such as space for military training. First-year male students, including Weill, lived in the barracks that had been built for training soldiers during World War II, perhaps lending him some continuity from PMA.
The early-1950s was a golden age of sorts for Cornell. The school was far more progressive than other Ivy League schools. Women were admitted to the school and, according to several classmates of Weill's, blacks and Jews were more welcome than they were at universities such as Harvard, Yale, or Princeton. Cornell was academically rigorous, with a notoriously difficult engineering program. During Weill's years there, the school lured some of the intellectual giants of the day to its campus. For example, Vladimir Nabokov, the Russian novelist most famous for writing Lolita, taught a wildly popular literature course.
The rigorous Cornell engineering program proved difficult for Weill. He struggled with physics and nearly flunked out before switching to government, which he later called "a good bullshit major."7 (John Reed, incidentally, had little trouble earning his undergraduate degree in physical metallurgy from MIT, and then went on to earn a master's at the school.)
Weill's years at Cornell, while academically undistinguished, served as an intermission of sorts between the intense military academy experience and what would be an even more intense working life. According to his senior yearbook, Weill played on the varsity tennis team at Cornell and served in student government. He joined a fraternity, Alpha Epsilon Pi, made up predominantly of Jews. Though he never lived in the fraternity house, Weill was active in both its community service programs and its all-night poker games.
The big difference in those days between Cornell and the other Ivy League schools was that Cornell admitted women. Weill had at least one steady girlfriend during his first two years at Cornell, but on a blind date on April Fool's Day in his junior year, he met Joan Mosher, an education major at Brooklyn College. Slender, with auburn hair, an engaging smile, and a quick wit, Joan quickly captured Sandy's heart.
While Sandy and Joan's relationship was just getting started, Weill's parents' marriage came to an end. His father left his mother for a younger woman in February 1955, his senior year in college. Weill would always recall this as a traumatic event. He left school to try to convince his father to return to his mother and, as a result, failed to take a cost-accounting exam. Without enough credits to graduate, he would not receive his diploma until September. Indirectly, his father's situation led Weill to the brokerage business, because his delayed graduation cost Weill an assignment in the Air Force.
Joan Weill would reflect that Mac's desertion of Etta taught Sandy to always value loyalty. To this day, one of Weill's dominant characteristics as a manager is that he surrounds himself with people who are intensely loyal to him. Not surprisingly, Weill is also known for discarding close associates who show any sign of disloyalty.
This difficult time for Weill did nothing to endear him to his future in-laws. In what now seems one of the all-time great father-in-law misjudgments, Joan's father was worried about Sandy's future prospects. He was concerned that Sandy failed to graduate with the rest of his class at Cornell and was also troubled by the failure of Sandy's parents' marriage. The Moshers urged Joan to break off the relationship.
Joan was undeterred and in June 1955, Joan and Sandy were married in a Conservative Jewish ceremony. Weill's father, who was married for the second time the day after Sandy's wedding (he would ultimately be married a third time), did not attend the ceremony. There was a small reception at the Essex House in Manhattan. Perhaps as a peace offering, Joan's parents gave the young couple $3,500, just about all the money the newlyweds had. Their honeymoon was a one-week stay at the Concord Hotel, a famed Borscht Belt resort in the Catskill Mountains.
Even though he had just been married, the summer of 1955 was a strangely aimless time for Weill. He had no degree, no job, and no immediate prospects. His college friends had all graduated, and many of his fraternity brothers had gone into the military--the plan that Sandy had to scrap. Sandy had plenty of work ahead of him to impress his in-laws, with whom he and Joan lived after their marriage.
Weill began to look for a job. He finished his coursework in the fall of that year, becoming the first in his family to earn a college degree. Although he had little money and hadn't had much luck with his job search yet, Weill had made what some consider to be one of the most significant business decisions of his life: Marrying Joan. From that moment on, Joan proved a major asset to what would become a remarkable career. As Weill confirmed in a recent interview, "I think my greatest accomplishment was marrying my wife."
|Introduction: Meet Sandy Weill||1|
|1||The Past Is Gone. The Future Is Limitless||15|
|2||The Best and Brightest||37|
|3||Hayden Stone: The Prototype Deal||71|
|7||Back in the Big Leagues||181|
|8||Deal of the Century||217|
|9||Weill on Top||245|
|10||Citigroup, Post-September 11||271|
Posted October 20, 2002
Sandy Weill's story make for a good read. The dealmaker produced much larger, much more efficient and profitable business by successfully merging with one new company after another - all the while swallowing a company larger than his current. After leaving American Express, many would have though his CEO days were over. The story of the building of Citigroup is fascinating. By beginning with a troubled company, he turned it around and began the acquisition game again. When Travellers and Citicorp merged to form Citigroup it was a personal triumph for Sandy. The story in the book ends with Sandy still in charge at Citigroup and leaves the readear wondering the future hold for boy Weill and his company. Those stockholders who tagged along for the ride with Mr. Weill were very well rewarded.Was this review helpful? Yes NoThank you for your feedback. Report this reviewThank you, this review has been flagged.