Citigroup CEO Weill to Step Down Oct. 1
In a sudden and unexpected move, Citigroup Inc. on Tuesday said Sanford Weill would step down as chief executive on Oct. 1, three months earlier than planned, and be succeeded by Charles Prince.
The news comes two months after Citigroup tapped the 53-year-old Prince as Weill’s successor. Prince currently runs the company’s corporate and investment bank after having been Citigroup’s top lawyer.
The July announcement ended months of speculation about who would replace Weill, and Prince’s promotion was to take place by Jan. 1.
“It looks as if they decided to reassure investors by moving forward a little more quickly,” said Michael Holland, who has known Weill for more than 20 years and whose Holland & Co. owns Citigroup shares. “Whenever Sandy Weill walks out the door, he will continue to have influence, but the passing of the baton takes some of the uncertainty out of the stock.”
Citigroup, the world’s largest financial services company, did not immediately return calls for comment. In the July announcement, the company also named consumer bank head Robert Willumstad, 58, as chief operating officer.
In a statement released Tuesday, the 70-year-old Weill said the partnership between Prince and Willumstad “is working better than ever,” and that speeding up the transition would help Citigroup.
Weill, who has led Citigroup since 1998 when he merged his Travelers Group with its predecessor Citicorp, is a legend in the financial services industry. He will remain chairman until Citigroup’s 2006 annual meeting.
“Moving ahead with the transition will enable the company to benefit from enhanced clarity of the management and reporting,” Weill said in the statement. “And so, we’ve decided to complete the succession process now, rather than later in the year.”
Prince takes over what is now the nation’s largest bank, one that has more than 200 million customers in more than 100 countries and employs more than 260,000 people.
“When you have someone who is a lame duck in an operating role, as you get closer to the end of that individual’s tenure, it’s better to get on with the changes,” said Marshall Front of Front Barnett Associates in Chicago. “I’m not aware of any [other] reasons for the change, and we keep pretty close to the company.”
Citigroup said Weill, who is also Carnegie Hall’s chairman, would retain at least 75% of his 22.4 million shares under Citigroup’s stock ownership plan. That ensures he will retain a big financial stake in the company’s future.
“Sandy Weill appears to be ready to let go sooner than perhaps he thought, [but] it’s not like he’s disappearing,” said Jim Lyon of Oakwood Capital Management in Los Angeles.
Weill’s stake in Citigroup totaled 22,399,475 shares as of July 1, a securities filing shows. That was worth just over $1 billion on Tuesday, based on Citigroup’s $44.70 closing price on the New York Stock Exchange. The shares rose 54 cents on Tuesday, and have risen 27% this year.
In announcing the promotions of Prince and Willumstad in July, Weill joked: “Let there be no question that ... these will be the guys running the business, and they better not screw up.”
