Weill Quit as President of American Express After Deal Fell Through
“It was a funny experience,” said Sanford I. Weill, as he twirled his ubiquitous cigar with his fingers. “I’d worked for American Express from the day we sold Shearson in 1981. But now I was doing my own thing, trying to get things together and make them work, thinking about the future, and I realized how happy I was.”
Two days after announcing his resignation as president of American Express, as the flood of phone calls wishing him well and offering him jobs subsided, Weill seemed relaxed as he talked about his attempt to organize a private buy-out of American Express’ troubled Fireman’s Fund unit.
His proposal was ultimately rejected by American Express, which triggered his decision to resign. But putting the offer together helped crystalize his feelings about what he didn’t like about working for American Express.
When the company acquired Shearson Loeb Rhoades, a firm Weill had built almost from scratch into the second largest on Wall Street, Weill hoped to run American Express someday. But Chief Executive James D. Robinson III, at 49, three years Weill’s junior, made it clear he had no intention of turning over the reins anytime soon. Weill found himself trapped as the company’s No. 2 with relatively little executive authority.
Word of Weill’s growing unhappiness began leaking out last year and speculation that he intended to leave became widespread when he sold most of the American Express stock he had received from the Shearson deal.
“The speculation helped cause what happened,” Weill said. “It created a sense of paranoia. Jim and I were good friends, but nobody believed we could get along from day one. I’d hear things about what Jim was supposed to be thinking, and it would make me nervous.”
Late last year, as Weill was wondering about his future at American Express, the company began a broad analysis of Fireman’s Fund, and concluded that its loss-plagued property-casualty operation did not fit with American Express’ orientation toward consumer financial services.
Weill, who had been instrumental in reorganizing Fireman’s Fund’s management, saw a way to solve both his and American Express’ problems. He put together two leveraged buy-out proposals, the first of which was rejected immediately. The second, which was considered seriously, would have included such investors as Warren Buffett, chairman of Omaha-based Berkshire Hathaway, some of the senior Fireman’s Fund executives, and American Express itself.
On June 19, Robinson called Weill, who was vacationing in Europe with his wife, to say that a special committee of American Express directors would not accept the second proposal. The basic problem, according to Robinson, was that it would have burdened a highly cyclical company with excessive debt and would have required that American Express give up too much of its interest in Fireman’s Fund.
Weill had become so excited by the idea of “being my own boss” that “when that didn’t fly, I decided the best thing for me was to disengage while we were all still friends.”
The following weekend, in a day-long session, Robinson tried to interest Weill in running Fireman’s Fund under a new plan, which was eventually adopted, under which American Express would make a public offering of a portion of its Fireman’s Fund interest.
Weill rejected the offer. “Under my idea, I’d be the owner,” he said. “Under theirs, I’d just be an employee.”
Though Weill’s Wall Street reputation is that of a deal maker, he said “I’d much rather be a hands-on manager. I love people, creating a team atmosphere, getting everyone to say, ‘Let’s go get ‘em!’ ”
Beyond the likelihood that he will be running his own company--perhaps, he said, with some of his friends at American Express as investors--Weill said that, at least for now, “I have no idea what I want to do. I just want to put my feet up, relax, and start thinking.”
