Power Brokers Commit to Power Sharing
One is a restless entrepreneurial spirit, a deal maker with a long history of buying companies on the cheap and handing off management duties to a coterie of loyal lieutenants.
The other is a long-term company man, a cerebral technocrat who has been with Citicorp ever since graduating from Massachusetts Institute of Technology 33 years ago.
But now these two vastly different corporate titans, Sanford Weill of Travelers Group, and Citicorp’s John Reed, propose to work together as co-chief executives of a merged organization. Can this marriage work?
Most management experts figure that two strong egos in this kind of relationship is one too many, a fact demonstrated time after time at other companies. Still, if Weill and Reed can somehow mesh their contrasting personalities and blend their complementary expertise, the partnership will have an outside chance to succeed.
At the New York news conference announcing the proposed $83-billion Citicorp-Travelers merger, Weill, 65, and Reed, 59, praised each other and displayed a comfortable rapport. They explained that they have known each other about 25 years, back to when they served together on the board of a then-struggling real estate company.
“If you want to go into combat, you have to bring someone you trust,” said Reed, a Chicago native who served in the early 1960s as a lieutenant in the U.S. Army Corps of Engineers in South Korea.
The Brooklyn, N.Y.-bred Weill, known for his wit, said: “I’m used to sharing power and responsibility. I’ve been married to my wife 43 years. I’m used to being told what to do.”
Still, Weill also knows from first-hand experience how relationships can fray under business pressures. After starting from scratch in the securities brokerage business in the 1960s and eventually building the big firm once known as Shearson Loeb Rhoades, Weill sold his organization in 1981 to American Express Co. He initially stayed on with the combined company and has been quoted as saying he wanted to “go beyond Wall Street to build a great American institution.”
By 1985, however, Weill was out of a job, having failed to work out his differences with James D. Robinson 3d, then-chairman of American Express.
Weill gained another poignant lesson in workplace personal relations just last year when he lost the services of one of his top executives--his daughter, Jessica M. Bibliowicz.
As head of the mutual fund business at Travelers’ Smith Barney unit, Bibliowicz was one of the top-ranking women in her field. But she left to become president of a far smaller investment firm after apparently clashing with James Dimon, a longtime Weill deputy and chairman of Smith Barney.
For the most part, however, Weill’s career has been a success story of building empires from other companies’ castoffs.
A year after leaving American Express, Weill became chairman of Commercial Credit Co. He then led the company on an acquisition binge that included the purchases of Primerica Corp. and Travelers Corp., which gave Weill’s company its current name.
Last year, Weill added two more important acquisitions, Salomon Inc. and Security Pacific Financial. Travelers’ stock, meanwhile, climbed 78% last year, the best showing among the 30 stocks in the Dow Jones industrial average.
Reed, too, has known both good times and bad. He was elevated to his current post in 1984, winning a competition within the Citicorp organization to succeed the legendary Walter B. Wriston.
In the late 1980s and early 1990s, though, disaster struck. Citicorp was buffeted by bad real estate loans and was thought to be on the brink of collapse. Things hit a low point in 1991, when Citicorp lost $457 million.
Still, by 1995, Reed had engineered a remarkable turnaround that produced a then-industry- record profit of $3.5 billion.
Reed, in contrast to Weill, can come across as stiff in public. Asked by a reporter Monday to describe himself, Reed simply said he is a “golfer.”
One of the few factors working in favor of Reed and Weill succeeding as co-CEOs and co-chairmen, observers said, is that neither is an expert in the other’s businesses.
A Citicorp spokesman, however, said dthe two men would share all of their responsibilities and would not specialize in their areas of expertise.
Reed and Weill, however, would tackle those responsibilities with differing styles.
“John Reed is more of an abstract thinker, and Sandy is more of a people thinker. Both look at the long term, but I think John Reed sees it in almost an engineering way, and Sandy sees it in terms of customers,” said Wall Street watcher A. Michael Lipper, president of Lipper Analytical Services in Summit, N.J.
“The idea of co-CEOs is very limited,” said Warren Bennis, a USC management expert and author of books on business leadership. “I don’t know of many examples where it’s worked out.”
“You’ve got two far-sighted guys, but you’re talking about a corporate guy, and the other is an entrepreneurial spirit,” Bennis said. “I’m not sure if that kind of class conflict is going to work out unless their personal chemistry can transcend it.”
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Times staff writers Debora Vrana and Thomas S. Mulligan contributed to this report.
