Weill Is Back as Major Player in Financial Field

When Sanford I. Weill left the No. 2 job at American Express in 1985 after losing a power struggle, he vowed--in grand Gen. Douglas MacArthur style--to return, as head of his own financial services firm.

“I want to do my own thing, to run and build something again,” Weill said, when asked why he was leaving.

On Monday, Weill not only made his vow stick--he took what may be the first step toward changing the competitive balance on Wall Street.

The planned $1.7-billion merger of Weill’s Commercial Credit Group with the financial services conglomerate of Primerica Corp.--with the 55-year-old Weill as chief executive--fulfills his dream to head a broad-based financial service powerhouse that could rival such giants as American Express, Merrill Lynch and Citicorp. The combined firm will have under its umbrella such businesses as insurance, mutual funds and consumer lending as well as brokerage and investment banking through Primerica’s Smith Barney, Harris Upham unit.

The merger marks the comeback to Wall Street of a man who already has proven his mettle at building one brokerage powerhouse--what is now Shearson Lehman Hutton--and could easily build another.

The deal also shines the spotlight back on a hard-driving executive who is widely recognized as one of the few truly charismatic and motivational leaders in financial services, a man equally comfortable talking deals on Wall Street or sharing beers on Main Street.

“He’s a man with broad vision, he has great inspirational leadership qualities, he’s forceful, and what he’s building is going to be a formidable competitor in the financial services business,” said Charles R. Schwab, the discount brokerage chief who, while a director of BankAmerica Corp., supported Weill’s unsuccessful 1986 attempt to acquire that ailing banking firm.

“Sandy is a man of great energy and intellect, a real charismatic leader. When Sandy yells, ‘Hit the beaches,’ everybody hits the beaches,” said Jeffrey B. Lane, president and chief operating officer at Shearson Lehman Hutton, who has known and worked with Weill since 1969.

An Early Failure

Weill also is described as a tough competitor who hates to lose, whether on the acquisition trail or the tennis court or golf course, where he spends much of his free time. “Sandy feels the same way about tennis as he does about business--he doesn’t like to lose in either,” said Lane, a recent tennis victor over Weill.

Despite an abundance of victories, however, Weill is no stranger to losing. Born of Jewish immigrants from Poland and raised in middle-class environs in Brooklyn, N.Y., the Cornell University graduate actually failed in his initial foray in the mid-1950s into the Wall Street jungle. His first choice as an employer, Merrill Lynch, turned him down and he ended up as a $150-a-week runner at a much smaller investment firm.

But that didn’t stop the persistent Weill, who soon began to move up in the business. In 1960, he and three partners founded Carter, Berlind, Potoma & Weill--the forerunner to Shearson--with $215,000 in capital, $30,000 of it his own.

Over the next 20 years, Weill directed a dizzying sequence of some 20 acquisitions of rival brokerages, usually firms undergoing financial difficulties that Weill thought had good underlying value. Through those acquisitions, he gained a reputation as a tough negotiator and conservative risk taker who also had a short temper and little tolerance for overstaffing and staff inefficiencies.

“He had a discipline and would stick to it,” says Perrin Long, brokerage analyst at Lipper Analytical Securities. “He would take the best from both companies and move ahead,” Long noted, even if that meant letting go of some Shearson people. “That kept people on their toes.”

Ruffled Feathers

By 1981, Weill’s modest partnership had grown into Shearson Loeb Rhoades, the nation’s second-largest brokerage when it was acquired that year by American Express.

But while he is credited with injecting an entrepreneurial spirit into American Express, Weill was no longer the top dog. Given the No. 2 slot as president behind American Express Chairman and Chief Executive James D. Robinson III--but with few real operational responsibilities--Weill felt trapped and restless. And his temperamental, confrontational style--plus his making no secret of designs for Robinson’s job--ruffled a few feathers on American Express’ board, insiders say.

Finally, in 1985, after helping to reorganize the management at American Express’ troubled Fireman’s Fund insurance subsidiary, Weill proposed to acquire the unit from American Express through a leveraged buyout. When the American Express board rejected the offer as too low, Weill felt he had no choice but to resign.

But the Fireman’s Fund experience injected Weill with a new dose of entrepreneurial adrenaline, and soon he began to search for other opportunities while being touted by some in the media as Wall Street’s most qualified unemployed executive.

“Clearly, he definitely wanted to run his own company and wanted to be in financial services because that’s what he’s done all his life,” said F. Gregory Fitz-Gerald, who left his post as treasurer at American Express soon after Weill departed.

While trying to plan his next move, Weill also spent more time with his wife, Joan--said to be his best friend and confidante--and his son and daughter, both employed at Shearson in asset management. He also took on the co-chairmanship of the drive to restore New York’s famed Carnegie Hall, a project to which he personally donated $2.5 million.

Won Chief’s Post

Then, in early 1986, Weill re-emerged in national headlines when he launched a bid to gain control of troubled BankAmerica in a deal in which he would inject $1 billion in capital in exchange for the chief executive post. The BankAmerica board refused to hear his formal offer.

Finally, in late 1986, Weill re-emerged again. This time he was named chief executive of Commercial Credit, a sleeping consumer finance firm that primarily made loans to middle-income Americans.

Soon Commercial Credit went public after being spun off by its parent, Control Data Corp. And Weill began to build Commercial Credit into a financial services miniconglomerate that, he said, would serve Middle America.

To spur the firm’s sales force, he introduced Wall Street-type bonuses for top producers--a procedure unheard of in consumer lending. He surrounded himself with top managers, including several former colleagues at American Express.

But one of the pieces still needed was a full-service brokerage. And last November, he bid for troubled E. F. Hutton Group, only to be outbid by his former firm, Shearson Lehman.

Now, with troubled Smith Barney and the other Primerica businesses under his wing, Weill has turned his miniconglomerate into a megaconglomerate. Turning around Smith Barney, and making the whole package work, could be his crowning achievement.

It won’t be easy. Analyst Long says Weill must overcome a continuing poor environment for retail brokerage following last October’s market crash. Rising interest rates and a heavy debt load at Primerica also pose risks, Long said.

“But if things fall into place, you may be looking at the next American Express,” Long said.

Attention to Detail

Many colleagues, friends and competitors agree. His short fuse serves to motivate many others, associates say. And even though his reputation is as a tough deal maker, Weill also is a hands-on manager who spends a great deal of time rallying troops in the field. Commercial Credit colleagues note that he throws parties for lower-level employees at his suburban home in Greenwich, Conn., and attends company softball games.

“He gives incredible attention to detail. (He) gets roadblocks out of people’s way,” said former American Express official Fitz-Gerald, who followed Weill to Commercial Credit and now is executive vice president for corporate staff and services there.

“If I were a betting man, I’d bet that a lot of people will transfer from Shearson” to Primerica, discount brokerage chief Schwab said.

“With one fell swoop, he’s building a full-range financial services company,” Schwab added. “He’s going to shake the balance of power in the business.”