In the years since Sandy Weill had been forced to resign from American Express, Peter Cohen, his former acolyte, had been moving aggressively to put his own stamp on the credit-card giant’s Shearson Lehman Hutton subsidiary. His biggest triumph, of course, had been beating out Sandy and Commercial Credit in the bidding war to buy EF Hutton. That acquisition put Shearson in a position to challenge Merrill Lynch as the nation’s largest retail brokerage firm.
But the triumph also carried the seeds of Cohen’s destruction. Hutton had cost Shearson $1 billion—a sum that Sandy felt would have risked Commercial Credit’s very existence—and Cohen had borrowed heavily to pay for it. Shortly after Shearson had taken on the huge debt, Wall Street slipped into another of its periodic funks. Investors drew in their horns, and the phones that had been ringing with buy and sell orders once again fell silent. At the same time, both the real-estate market and the market for junk bonds—the risky borrowings that had financed much of the mergers-and-buyouts boom—slumped, leaving Shearson holding millions of dollars of bad loans.
Although he had been brought up at the feet of the master of cost control, Cohen got caught up in the quest for power and fame. Encouraged by his American Express bosses, Cohen built a new company ski lodge in Vail, Colorado. At the same time he managed the firm’s various departments and branches, he took on the role of Shearson’s jet-set investment banker. In doing so he was challenging such established and powerful Wall Street figures as Bruce Wasserstein and Henry Kravis. When Cohen won the post of advisor to the management of RJR Nabisco Inc. in its fight against the powerful leveraged buyout firm of Kohlberg Kravis Roberts & Co., he found out just how cutthroat and arduous battle was on that level. The $25-billion fight, chronicled in the best-selling book Barbarians at the Gate, became symbolic of Wall Street’s unprecedented greed and ego and the disdain with which investment bankers and corporate chieftains regarded employees and investors. At the end of all the name-calling, mudslinging, lawsuits, and press leaks, Cohen and Shearson were beaten. Sandy’s former protégé emerged in the popular press and in the book as a tough-talking arrogant bully who lacked the skills to back up his braggadocio. Even the close relationship between Cohen and American Express chairman James Robinson unraveled as each blamed the other for Shearson’s decline. Cohen insisted that the firm’s balance-sheet problems were due to American Express management’s directive to pay cash for Hutton, and that he nevertheless had maintained Shearson’s earnings during difficult times. But not long after, with American Express reeling under the impact of a $1-billion loss, Robinson fired the forty-three-year-old chief executive.
Sandy, of course, had sources and spies throughout Wall Street, and he kept close tabs on his former empire. He was horrified at how Cohen and American Express had run Shearson in a futile quest for glory. But he also made no secret that he coveted regaining that old empire. Apart from its sentimental value, Shearson had two qualities that Sandy found nearly irresistible—it was very big and very troubled.
At home the night he was fired, Cohen was humiliated and despondent. He refused all calls, particularly from the press reporting on his ouster. Then came the phone call he least expected: Sandy Weill was on the line. That was a call he would take.
“You’re better off,” his old boss told him. “The people at American Express are really horrible.” Sandy offered to take Cohen to lunch “as soon as possible.” Stunned by the call, Cohen hung up the phone and thought to himself, There’s a decent side of Sandy. He’s been through this, and he’s extending his hand to me.
Two days later Sandy and Cohen met at the Four Seasons for lunch. Over cocktails, fine wine, and plentiful food, Sandy grilled Cohen for hours, probing for every detail about Shearson’s operations and financial situation. Cohen’s heart sank. Sandy wasn’t commiserating with him; he was using him to find out everything he could about his next target.
Cohen was right. Within weeks Sandy had begun informal talks with Robinson about the possible purchase of Shearson or, as an alternative, a possible joint venture with American Express. Robinson, whose courtly demeanor and youthful appearance masked a driving ambition, was feeling tremendous pressure from American Express directors. His dream of creating a “financial-services supermarket” wasn’t working. The directors were concerned that the American Express card was losing its cachet under a brutal assault from banks issuing millions of Visa cards and Master-Cards and that American Express was losing its focus as a company. Eager to be rid of the brokerage albatross hanging around his company’s neck, Robinson seemed receptive to some kind of deal. But before anything could be concluded, someone privy to the talks leaked. There on the front page of The New York Times was an article extolling Sandy’s possible return to Wall Street’s big leagues. It was one thing for Sandy and Robinson to quietly negotiate a deal that solved Robinson’s problem while salving his ego; it was quite another to be heralded as the savior of Shearson, pulling a fast one on the image-conscious American Express chief. “There goes that deal,” Sandy told his executives when he saw the Times that morning. Sure enough, Robinson promptly called off the talks.
Okay, as long as Robinson was running American Express, Sandy probably couldn’t get his hands on Shearson. But in his long career Sandy had always found ways around roadblocks. If he couldn’t have Shearson outright, maybe he could have the next best thing: Shearson’s people. One of his first calls went to Robert Druskin, Shearson’s chief financial officer. Druskin had been a valuable resource in building a framework that enabled Sandy to create the “salami slicer” back office at Corned Beef With Lettuce. The modern and efficient back office had been a key factor in Sandy’s ability to take over bigger firms that were in trouble. Sandy wanted Druskin to leave Shearson and come to the much smaller Smith Barney to oversee the development of an infrastructure that could handle thousands more daily transactions, all part of Sandy’s plan to get bigger and better. “Let’s build a system that can double our capacity within thirty days of making an acquisition,” Sandy told Druskin. Excited at the prospect of working once again with Sandy, Druskin accepted on the spot. When he arrived home that night, his wife was admiring a magnificent flower arrangement.
“Welcome back to the family,” read the card, signed, “Sandy.”
“It’s classic Sandy,” Druskin told his wife. “He’s ready to build another family, another financial powerhouse.”
Many calls followed, and a steady stream of Shearson employees left their jobs to join Sandy at Primerica. Wall Street veterans, noting the parade of executives from Shearson’s downtown Wall Street offices to Smith Barney’s midtown headquarters, called the Smith Barney building “Shearson North.”
But Sandy wasn’t able to lure away every Shearson employee he wanted. There was, for instance, his thirty-one-year-old daughter, Jessica Bibliowicz, who had continued working in Shearson’s asset-management division despite her father’s resignation from American Express. Vivacious and attractive, Jessica had two young children. When her father offered her a job at Smith Barney, the ambitious young manager decided to explore her options. A graduate of Cornell University like her father, Jessica called on Hardwick Simmons, whom she had gotten to know when her father took over Hayden Stone, Simmons’s family firm. Now the head of Prudential Securities, Simmons knew talent when he saw it. Rather than offer Jessica advice, he offered her a job. She could head up sales and marketing for Prudential’s mutual funds. Teasingly, she called her father to tell him that his offer was “too low” and took Simmons’s offer
Sandy also wanted to promote his thirty-four-year-old son Marc, whom he had wooed away earlier from Shearson with an offer to become an investment banker at Smith Barney. Marc had excellent credentials: an economics degree from Vanderbilt University and an MBA from Columbia. And while he was known around Smith Barney as a likable sort, colleagues considered him too prone to engage in youthful pursuits and lacking his father’s shrewd mind and forceful will. Nevertheless, Sandy elevated him to the high-level post of vice president of investments for the parent company.
But by far the most important relationship within Primerica was between Sandy and Jamie Dimon. Over the years Dimon had gone from being Sandy’s understudy to his full-fledged alter ego. Had the pair been painting a mural instead of building a company, Sandy would be making the broad brushstrokes to set the theme; Dimon would fill in the details with perceptive and precise specifics. When Sandy had an idea, he would turn to Dimon: “What numbers are we talking about?” Dimon, capable of calculating several transactions in his head simultaneously, would quickly give Sandy the exact answer he wanted. In their rapid-fire banter, the two executives frequently would complete each other’s sentences. They even developed their own unconscious forms of verbal shorthand. One needed to speak only a few words of a sentence for the other to understand completely what was left unsaid. When Sandy and Dimon were firing on all cylinders, the other Primerica executives could only listen in baffled silence and wait for Dimon to explain it all later. Dimon also served the other executives well by being confident enough to stand up to Sandy’s wrath, even to the extent of engaging in extended shouting matches with his boss.
“You’re a fucking asshole!” Sandy screamed at Dimon one day.
“No, you’re the fucking asshole!” Dimon shouted back.
The fiery exchange echoed down the corridors, causing visitors in Treacy Beyer’s nearby office to wince. “That’s just our chairman and CFO having a meeting,” their host explained with a shrug.
Dimon traveled nearly everywhere with Sandy, providing on-the-spot commentary and analysis in business meetings. At public meetings or in front of employee groups, Dimon served as an effective warm-up act, regaling the audience with funny stories about their climb from exile that also conveyed the culture and philosophies they lived by, much to Sandy’s delight. When introducing Sandy to groups, Dimon would often throw in a silly story about Sandy to humanize him. Dimon’s storytelling and introductory remarks also served the valuable purpose of substantially reducing the amount of time a still-nervous Sandy had to spend at the podium. Invariably, Sandy’s growing reliance on Dimon and their constant presence together prompted remarks about a “father-son” team, remarks that discomfited both men. Sandy told BusinessWeek in one profile, “I have a son, and he has a father. It’s not a need that has to be filled. But there’s a lot of love there.”
In September 1991, Sandy relinquished his title as president of Primerica, bestowing it on Dimon, who continued to hold the post of chief financial officer. At age thirty-five, Dimon became one of the youngest presidents of any Fortune 500 company. “When somebody does something very, very well, they’re going to be rewarded,” Sandy explained. But he also made it clear that he was still in charge. Asked by reporters if Dimon’s elevation portended a succession plan, Sandy, fifty-eight, responded that he hadn’t given up any of his own responsibilities, adding pointedly, “I don’t feel very old, either.” Shortly afterward, Dimon and Bob Lipp were elected directors of Primerica, joining Sandy and Frank Zarb as “inside” directors.
By 1992 the turnaround of Primerica was well under way. In January the company reported record earnings for 1991 with the profit at Smith Barney tripling from the year earlier. The news propelled Primerica’s share price up more than $2 to $40.75. The stock’s surging price gave Sandy the valuable currency he needed to embark on a shopping spree. And it wasn’t long before a target came into view. General Electric had bought Kidder, Peabody in 1986 as part of GE’s growing financial-services empire. But over the years GE’s much-vaunted management had not done well running the brokerage company. Plagued by an insider-trading scandal, a market downturn, and sibling rivalry with GE’s powerful GE Capital unit, Kidder had become a drag on the parent company, and Jack Welch, GE’s chairman, wanted to sell it. Not surprisingly, Primerica was first in line for a look at Kidder’s books.
On the surface Kidder would be a very attractive addition to Primerica. Catering as it did to well-heeled individual investors, Kidder could give Smith Barney the critical mass it needed to become even more powerful and profitable among its Wall Street competitors. But even a cursory weekend examination of Kidder’s books and systems revealed a high “risk profile” and a lax system of controls, anathema to a risk-averse control freak like Sandy. Still, at the right price…The Primerica executives agreed to return to GE’s Rockefeller Center offices for three days of continued due diligence over the coming Memorial Day weekend. As the executives toiled away that long weekend, GE provided a continuous flow of food, starting with lox and bagels in the morning and ending each evening with a sumptuous buffet of Chinese food. By Memorial Day Sandy had concluded that he couldn’t pay more than the $400 million book value for Kidder. He knew that GE had about $1 billion invested in the brokerage firm, much of that incurred in an expensive recapitalization to keep Kidder on a sound financial footing during its worst days. Negotiations were bound to be tough.
The time for Sandy’s scheduled meeting with Welch that Monday afternoon came and went with no Welch. When Welch finally arrived at Rockefeller Center, the two strong-willed CEOs did not find much common ground. Sandy pushed hard to get a good deal. At the other extreme, Welch wanted a premium price for the ailing company. Neither was willing to budge. That evening Sandy summoned his weary executives to the GE boardroom. “Jack and I have agreed to disagree,” he told them. “We’re walking.”
Sandy’s decision to walk away from the high risk and high price of Kidder paid big dividends a year later when Kidder was rocked by a huge bond-trading scandal that ultimately led to the firm’s demise. Joseph Jett, the firm’s government-bond chief, allegedly generated $350 million in bogus profits over two years. In the immediate aftermath of the disclosures, Kidder’s chairman, Michael Carpenter, was forced out for failing to detect the fraud and for papering over its potential for damage when it was discovered. Wall Street was surprised when Sandy snapped up the ex–Kidder chairman, giving him a strategic planning post at Primerica. “I have a much better feeling about Mike than I did about Kidder,” Sandy told his colleagues.
The protracted weak economy of the early 1990s had taken a toll on other industries beyond the brokerage business. The insurance industry, which had invested heavily in real estate, was particularly hard hit by the collapse of the commercial real-estate market. Making matters worse, a price war in the commercial insurance markets ate deeply into profits. No insurance company seemed affected more by all the turmoil than Travelers Corp., based in Hartford, Connecticut.
Founded in 1864, Travelers was the result of a two-cent transaction. Hartford businessman James G. Batterson was organizing a company to introduce accident insurance to America when he ran into a local banker at the post office. “I’m on my way home for a luncheon,” the banker said. “How much would you charge to insure me against an accident from here to there?”
“Two cents,” Batterson promptly responded and took the banker’s two pennies. When the banker walked the four blocks home without mishap, Batterson saved the “two-cent premium” as a souvenir of founding The Travelers. Other early policyholders included renowned merchant John Wanamaker and General George A. Custer, who took out a life insurance contract before meeting his end at the hands of Sioux warriors on the banks of the Little Big Horn River. After originally writing policies for horse-and-buggy insurance, the company wrote the first automobile policy in 1897 to Gilbert Loomis, who insured a car he built himself. More recently, Travelers issued “space travel” accident insurance policies to cover American astronauts during Apollo and Skylab missions.
With such a rich heritage, Travelers was much beloved in its Connecticut Yankee hometown and had played a central role in Hartford’s economic and social development for generations. By 1992, however, the insurer was in dire straits, starved for capital. The 128-year-old company was reeling under the weight of more than $5 billion of problem mortgages in its portfolio. With its distressed balance sheet, Travelers was struggling to maintain its financial health ratings and assure worried policyholders.
Ed Budd, the insurance giant’s chairman, sought investors for a cash infusion but kept coming up empty-handed. Finally, he decided to call Sandy. The two had met in 1983 shortly after Sandy, then president of American Express, had taken over the ailing Fireman’s Fund. Sandy had invited Budd to spend the weekend in Boca Raton, Florida, to teach Sandy about the insurance business. Budd knew that Sandy analyzed issues and problems quickly and now, as the head of Primerica, he had lots of cash, too. Still, Budd didn’t forget Sandy’s reputation as a ruthless and voracious acquirer of distressed companies.
Sandy was delighted to talk to Budd about Travelers. The venerable insurance company hadn’t entered his mind as a way to expand Primerica, but now his curiosity was piqued. Here was a company that met his two prime criteria as a target: magnitude and misery. Travelers also had a powerful lure in its established ability to sell insurance to businesses, an approach very different from Primerica’s efforts to sell insurance directly to individuals. And despite its financial problems, Travelers’ corporate symbol—an open red umbrella—was one of the most recognizable icons in the financial-services industry.
From the outset Budd stressed that Travelers needed only an “investment,” not a buyout. Despite his propensity to take over companies, not invest in them, Sandy agreed to take a look. He gathered his key executives and headed for Hartford, where on a Saturday morning they were greeted by a stiff and formal cadre of Travelers executives all dressed in coats and ties. Inside the company’s headquarters, Travelers’ paternalistic nature was evident in signs on bulletin boards offering scores of free programs for better health, outside activities, transportation discounts—precisely the kind of costly perks Sandy abhorred. Bob Lipp and Jay Fishman came across one notice on a bulletin board for a seminar on “Managing Negativity.”
“We’ll teach them how to manage negativity,” Fishman offered. “We’ll just tell them their company can’t afford to offer this class.”
“Yeah, manage that,” Lipp quipped with a chuckle.
The New Yorkers’ arrival brought a dose of business reality to the insurance executives, who seemed to believe that Travelers’ great size and venerable history ensured its survival despite its current problems. Sandy’s team cut through the gloss in seconds, burrowing in with probing questions. When Dimon and Irwin Ettinger, Primerica’s tax and accounting manager, asked for details on financial statements, it quickly became apparent that the insurance executives didn’t understand their own books. “It’s like being on Mars,” Ettinger whispered to Dimon.
Travelers desperately needed cash, but its executives shared Budd’s wariness of Sandy Weill. They wanted to limit his investment to a small minority stake, even though the Primerica chief told them he could afford a sizable interest. Budd stood firm that the insurer would accept about $350 million for 15 percent of the company. That would be enough to bolster Travelers’ long-term financial health. In exchange, Primerica would be given two seats on Travelers’ board.
Sandy sought approval for the Travelers alliance from his own board. “You must be their last resort,” said former PepsiCo president Andrall Pearson, a longtime director. “If you think those old WASPy guys in Hartford are anxious to get in bed with a nice Jewish boy from Brooklyn, you’re crazy. They’re desperate.”
Before the deal could close, Sandy’s desire to take a bigger stake in Travelers got an unexpected boost from an ally named Andrew. On August 24, 1992, Hurricane Andrew slammed into the southeast coast of Florida with sustained winds of 140 miles per hour and eight-foot tidal surges. The storm devastated the Miami area, killing several people, leaving 50,000 homeless, uprooting huge oak trees, and smashing thousands of buildings. Travelers scrambled in the days following the disaster to determine the amount of property and casualty claims it would have to pay. The preliminary calculations were dire: Hurricane Andrew would wipe out nearly all of the cash infusion expected from Primerica.
Sandy calmly tracked the storm and its aftermath, and awaited Budd’s call. It came the Sunday night after the disaster. On the phone, Budd pleaded for more cash. Sandy was in a perfect negotiating posture: He had the cash, and he wanted more control. With his back against the wall, the Travelers chairman agreed to give Sandy 27 percent of the company and four board seats for $722 million, mostly cash. But Sandy wanted even more: For such a large stake in a struggling company, the Primerica CEO demanded a big say in the Hartford giant’s operations. Sandy would become the head of a new finance committee and cochairman with Budd of an operating committee. Sandy knew he couldn’t trust the inept Travelers management with his money, and he planned to take full advantage of Andrew’s ruinous visit to South Florida.
There was still more. Convinced by his visit to Hartford that Travelers was carrying too much deadweight, Sandy demanded that Budd agree to eliminate at least 10 percent of Travelers’ workforce. And if the little guys would be hurt, so would the big guys: Budd and other senior executives must surrender their golden parachutes. Still disgusted by his experience with Gerry Tsai’s ludicrously expensive golden parachute, Sandy wanted nothing to do with any more management payoffs. The Travelers parachutes would be triggered by Primerica’s 27 percent stake in the company. Budd alone would stand to collect $3 million. With few bargaining chips left, Budd reluctantly consented to Sandy’s tough terms. But, still fearful of Sandy’s acquisitiveness, he insisted that the agreement include a clause that forbade Primerica from increasing its stake in Travelers for five years without the consent of the board.
On September 20, 1992, Primerica announced it would invest $722 million in Travelers in return for the 27 percent stake and Sandy’s direct involvement in the insurer’s management. At the same time, Travelers announced it was eliminating 3,500 jobs. Analysts delving into the terms of the deal discovered—no surprise—that once again Sandy had driven a hard bargain. Primerica had paid less than half of Travelers’ stated book value for its stake in the insurer. And with Sandy now standing, if not behind the Travelers helm, at least beside it, investors had renewed faith in the company’s prospects. The insurance giant’s shares shot up 26 percent.
The reaction in Hartford, however, was less welcoming. Budd assured employees the transaction was a “simple investment.” One manager responded, “But Sandy Weill is one scary investor. His cutthroat reputation doesn’t mix with our value system here.” An editorial in the Hartford Courant said the deal “gives Hartford something to cheer about, but also something to mourn.” Besides the job losses, the newspaper criticized “the possible erosion of independence for an institution whose history is entwined with Hartford’s.” Finally, it admonished Sandy Weill that “companies are more than profits, shares, and stock prices.”
But to Sandy, that’s exactly what companies were. He drove managers in the name of profits, pushed daily for greater market share, and watched his company’s stock price as if it were his own heartbeat. His arrival in the sedate little city of Hartford was bound to create shock waves.
At the first management meeting to be “cochaired” by Sandy and Budd, there was no announcement at the beginning about who was in charge. But it quickly became evident. Sporting an umbrella pin on his lapel, Sandy announced that henceforth Travelers would focus on bringing “value to the shareholders.”
Listening to Sandy, Charles Clarke, who headed Travelers’ commercial business, thought to himself: Who are shareholders? The only time the word shareholder was ever used at Travelers was once a year when the annual report was mailed to them. Sandy Weill cares more about shareholders than he does about us, Clarke thought, fuming. Of course, he and hundreds of other Travelers employees would soon find that Sandy would care about them by turning them into shareholders.
The confident and brash Primerica leaders started coming to Hartford once a week. Sandy and Dimon relentlessly focused on the bottom line with a crispness and discipline never seen before at Travelers. After leaving one early meeting with the Primerica “investors,” Clarke ran into a couple of his subordinates.
“Does Sandy love insurance people?” a Travelers underwriter asked.
“He loves profitable people,” Clarke responded. “I don’t know if he loves insurance. I think he wants our name more than he wants insurance.”
“But does he love us?” an agent persisted.
“If we’re profitable, Sandy will love us,” Clarke said.
With three quarters of a billion dollars invested in Travelers, Sandy wanted to keep a very close eye on the company. He ordered Bob Lipp, who headed Commercial Credit, to take up residence at Travelers headquarters.
“Why’s this guy here?” employees asked one another when the tall, unassuming Lipp reported every day. Schemes were hatched to get Lipp out of the way. The company told Lipp that the only available office was in a nearby building that housed the “natural disaster division,” part of Travelers’ “weather department.”
Lipp was amazed—and disgusted—that Travelers was spending $3 million a year on a department that produced the same information that could be found on the Weather Channel. Then one day the Travelers’ well-paid meteorologists went on high alert, firing off predictions of severe windstorms. To what end? Lipp wondered. “We have the insurance in force already,” he said. “What are you supposed to do—go out on the beach and try to blow the wind back?”
Then at five o’clock sharp, the meteorologists left. The cleaning people were already moving into the office, pushing screeching vacuum cleaners around Lipp. Furious, he called the only executive still around, Chuck Clarke. “This isn’t a real business,” Lipp bristled over the phone. “The vacuum cleaning doesn’t disturb anyone, because no one’s here!”
“Quit making us feel like losers,” rebutted Clarke, who was fast tiring of the Primerica executives’ holier-than-thou attitude. “It ain’t fun being bought, unless you don’t think much of yourself. We may not be perfect, but we have a lot of pride in what we do well.”
Lipp, taken aback by Clarke’s response, nevertheless liked his backbone. “But look at all the gross inefficiencies, the sour investments—”
“That’s not who we are,” Clarke continued. “It’s not the essence of Travelers. We’ve been crippled by our investment strategy and a management that forgot it needed to make money. But those of us who are professionals are very good at how we write the insurance business and analyze those risks. Don’t disturb our insurance strategy; don’t tell us how to underwrite or process claims.”
When Lipp hung up, he made a mental note to tell Sandy that Chuck Clarke, who had joined Travelers in 1958 as his first job, would be a “keeper.” The insurance veteran understood what the Primerica team needed to change to restore Travelers to profitability, but he also knew what needed to be preserved: its insurance expertise and tradition. Clarke’s heartfelt advice would be Lipp’s focus as he represented Primerica’s minority interest for the next year.
Sandy reveled in the negotiations that gave Primerica a strong foothold in Travelers and the management challenges that followed. But never very far from his mind was Shearson. The former president of American Express watched—and waited—as the credit-card company continued to struggle with its brokerage subsidiary. American Express was a company carefully built on status and prestige, and Shearson was tarnishing its image. The brokerage unit had just reported a $116-million loss for 1992, while Sandy’s Smith Barney and other Wall Street firms logged record earnings amid a rebounding stock market. American Express’s stock had fallen to $20 a share from $40 a share under Robinson’s regime. An exasperated American Express board had named Harvey Golub, the former McKinsey consultant whom Sandy had recruited to American Express, president in 1991, while letting Robinson remain as chairman. The selection of Golub surprised many who had assumed the American Express board would never put a Jew in such a powerful position. But the financial-services industry was undergoing a seismic shift. Where once prestige and pedigree were the gold standards by which firms—and the executives who ran them—were judged, the forces of competition and the demands of investors were setting a new standard for management. Golub, quick-witted and decisive, had impressed the American Express board ever since his days as a consultant to American Express. As president, though, Golub chafed under Robinson’s conservative oversight. Finally, in February 1993, the board, led by former Mobil Corp. chairman Rawleigh Warner, gave Golub full authority to run the company, naming him chairman and demanding Robinson’s resignation. That was Sandy’s signal to move and to move fast.
The opening gambit was a simple offer to help ease some of American Express’s financial burden. Sandy called Golub to tell him that Primerica was looking for a new headquarters. “You have these two buildings with Shearson,” Sandy said. “If you want those buildings off your balance sheet, you better sign a deal with us now. Otherwise, I’m buying another building.” He suggested that he and Golub meet.
“We can’t risk meeting at a restaurant or office,” replied Golub, who had developed a friendship with Sandy since their years together at American Express. “A rumor about a deal would start, even if we’re just talking about golf.”
Both executives were fully aware that the buildings were just an excuse to get them together to discuss what was really on their minds. Sandy knew Golub desperately wanted to sell Shearson, and Golub knew Sandy just as desperately wanted to buy Shearson. Because of their solid friendship, started a decade earlier when Golub hitched a ride on Sandy’s American Express jet, the men didn’t have to perform the typical prenegotiation “dances.” Even more important, the Brooklyn-born, blunt-spoken executives trusted each other.
The fifty-three-year-old Golub invited Sandy to his American Express apartment, located near the Museum of Modern Art in midtown. The burly American Express chairman with thick glasses and a bristling moustache greeted Sandy and showed him into his study. Over coffee, the men initially chatted about their children. Sandy was godfather to Golub’s youngest son, who was now in grade school.
As Golub chain-smoked, Sandy revealed that he had recently given up his trademark stogies. Despite pleas from Joan, his children, and countless colleagues for years, it was his four-year-old grandson who finally succeeded in getting him to quit. In a deal with Jessica’s first son, Tommy, Sandy had agreed to give up smoking cigars.
“How did you stop cold turkey?” Golub questioned, as he continued smoking.
“Chain-sucking,” Sandy confided. “Lemon lollipops.”
On their second cup of coffee, the men reminisced about the days in the early 1980s when Golub was with McKinsey and Sandy was president of American Express. After hiring Golub to evaluate IDS Financial, Sandy had been impressed enough to tap him to run the Minneapolis-based financial-services provider. Under Golub, IDS became one of American Express’s best performing units, propelling him to top posts at the parent company after Sandy was gone.
With the coffeepot empty, the two got down to business. Sandy knew more about Shearson than just about anybody, having spent two decades rearranging and resuscitating the ailing brokerage houses that constituted the firm. “It’s not a happy environment over there—a parent company with a broker affiliate it doesn’t understand or want anymore,” Sandy told Golub. “We’ll love Shearson, and take its problems off your hands.” Sandy, always a retail broker at heart, really wanted his first child back. “I think we can do a deal in a week without any leaks,” Sandy added. He told Golub what he was willing to pay.
“The difference between bid and asked is close enough to justify spending more time together,” Golub responded. One-on-one negotiations began on the spot. They knew it was one of the rare cases in which both of them could come out winners. They settled on a straight asset sale of Shearson’s retail-brokerage business alone. American Express would keep the investment-banking firm Lehman Brothers, whose pedigreed and expensive bankers hadn’t worked well with Shearson’s brokers. American Express would eventually spin off Lehman in a public offering.
The negotiations were especially easy because Golub had no emotional attachment to Shearson, as had his predecessor Robinson. Sandy, on the other hand, cherished the idea of once again running the brokerage empire he had created. Moreover, the two companies were pursuing strategies that made the deal very attractive to both. Sandy was hell-bent on beefing up and expanding the financial-services supermarket that Robinson had failed to create with American Express. Golub, on the other hand, wanted to slim down and salvage the core of his company’s global credit-card franchise.
With the broad parameters of an agreement roughed out between the two of them, Sandy and Golub brought in a few other executives to work out the details in long sessions at Golub’s apartment. For several days, after a full day of work at Primerica, Jamie Dimon and Chuck Prince would walk over to the apartment to meet with their American Express counterparts. Working from 6:00 P.M. until 6:00 A.M. every night, they immersed themselves in what they called the “Dracula deal,” a transaction that was negotiated and drafted only at night.
On March 9, Primerica and American Express confirmed growing rumors that they were close to a deal on Shearson. Investors, convinced that Sandy could squeeze costs out of Shearson that American Express couldn’t, sent Primerica stock surging 12 percent to a record $44.75 a share on unusually heavy volume. Investors cheered Golub, too, for biting the bullet and refocusing American Express on what it did best. Shareholders couldn’t say enough good things about Sandy. “Investors are in love with him. There is nobody better at managing brokerage firms,” said Scott Offen, a money manager at Fidelity Investments and one of Primerica’s largest shareholders with 12.9 million shares. The March 10 Wall Street Journal said the union could be one of Sandy’s “best deals ever.”
By week’s end the boards of both companies had given their unanimous approval, and the final deal was announced. To anyone familiar with the history of Shearson, the bargain Primerica struck was breathtaking. Sandy had sold Shearson to American Express in 1981 for stock valued at $930 million. Then American Express more than doubled its brokerage force by purchasing Lehman Brothers and EF Hutton, and spent billions of dollars more on the unit. Shearson also had built two state-of-the-art office buildings in downtown Manhattan valued at more than $600 million. Now Sandy was set to buy this much larger company and its real estate, all for about a billion dollars. For his money Sandy got nearly 8,500 Shearson brokers, an asset-management company that invested $52 billion for clients, and an agreement by American Express to assume virtually all legal liability for past Shearson problems. Combined with Smith Barney, the new firm of Smith Barney Shearson would boast 11,400 brokers and nearly 500 branches. Sandy Weill, the man who had done as much as anyone to transform the retail brokerage industry, was set to change the Wall Street landscape again. The combined firm would instantly be a juggernaut, challenging Merrill Lynch as the nation’s biggest brokerage firm. Its negligible presence in investment banking gave it less clout on Wall Street, but, as Sandy pointed out, the new Smith Barney Shearson “has more money under management” than Merrill Lynch. Between them, the two mega-firms employed one of every four stockbrokers in America.
Sandy told reporters and analysts that the Shearson buy-back constituted a “quantum leap forward in achieving what would have required years to develop internally. It’s a pleasure for me to be reunited with so many old friends.” He named Zarb as the combined firm’s chairman and CEO, and Joseph Plumeri, the managing partner of Shearson and a former colleague, as the president.
The next day’s headline in The New York Times read BUILDING A WALL STREET EMPIRE, AGAIN. The article said: “They call it Primerica Inc., but Weill Enterprises would be more descriptive. With Wall Street’s other corporations now run by a bunch of anonymous suits…Sandy Weill’s portly profile has loomed up as the investment world’s most prominent empire builder.” The Wall Street Journal’s report elevated Sandy’s status as well—calling him a “Wall Street legend” and his firm “Wall Street’s New Goliath.”
An ecstatic Sandy beamed throughout the day. He talked up the deal with stock analysts that morning and went to lunch with Joan. That afternoon, he headed straight for Primerica’s trading room to chat with traders and watch Primerica’s stock. Then Sandy immediately left on his Gulfstream jet to tour several Shearson offices around the country. It was the homecoming he dreamed of. In Dallas, Atlanta, and other key cities, the stockbrokers gave him enthusiastic standing ovations. When Sandy wasn’t shedding tears in emotional reunions with old friends, he was giddy celebrating his victory. “It just doesn’t get better than this,” he said ebulliently.
Two days later, Sandy was feted at a lavish sixtieth birthday party at the Four Seasons. About 150 guests, including former president Gerald Ford, an honorary Primerica director, braved a record two feet of snow on this March Sunday to honor the man of the hour, “the comeback kid.”
Causing more of a sensation than even the surprise snowfall was the unexpected appearance of the recently ousted American Express chairman Jim Robinson with his wife, Linda. The Weills had invited them to the birthday party long before the Shearson deal had been inked, in an effort for the onetime rivals to put aside past differences. With the guest list filled with “friends of Sandy,” they all knew just how low Sandy had fallen when overpowered by Robinson in 1985 and how high he was on this night only forty-eight hours after winning back his original power base. Now Robinson was the one on the outside looking in. The dramatic change in circumstances between these two corporate titans wasn’t lost on the guests assembled that snowy evening, least of all either of them.
As the Shearson negotiations were nearing their climax, Wall Street was stunned when Morgan Stanley, the prestigious investment bank, unceremoniously dethroned Robert Greenhill as its president. Greenhill, one of Wall Street’s most prominent deal makers, was the victim of a palace coup engineered by Richard Fisher, the firm’s chairman, and John Mack, chief of its operating committee. While acknowledging Greenhill’s ability to bring deals to Morgan Stanley, both men had lost confidence in his administrative abilities. Mack would be the new president, and Greenhill would become a “senior advisor” to Morgan Stanley’s roster of blue-chip clients. Greenhill, skiing with clients in Colorado, was blindsided by the announcement and furious.
Here was yet another chance for Sandy to capitalize on a sudden turn of events. Amid all the accolades surrounding his Shearson triumph, Sandy was acutely aware that the huge firm’s biggest weakness was its lack of an effective investment-banking arm. With a vast stable of brokers eager to peddle high-quality investments, Sandy decided that if he could snag Greenhill, the craggy-faced merger meister could generate a huge flow of new deals for his brokers to sell. Moreover, raiding a merger specialist like Morgan Stanley of such a prominent player would generate instant respect in the clubby world of investment banking.
“Greenie” and Sandy had become close friends over the years, especially when the busy investment banker, during the 1980s merger mania, took time every month to visit Sandy in his Park Avenue office. There he would present ideas that might get the defrocked American Express president back in the mainstream of business. Joan Weill and Gayle Greenhill were fast friends as well. In a business filled with second and third marriages to young “trophy wives,” the two women had remained married to their driven and demanding husbands for more than thirty years. When Dimon expressed misgivings—he had heard the rumors about Greenhill’s lack of administrative ability—Sandy dismissed his concerns. “They’re just bad-mouthing him,” he said.
To Sandy’s astonishment, Greenhill was immediately receptive to jumping ship to Smith Barney Shearson. The avatar of the 1980s-style “merger banker” was eager to show the world that his old firm had made a terrible mistake, that he still had what it took to build a premier investment bank. With its newfound heft to challenge Merrill Lynch, Shearson could be a great platform from which to launch such an enterprise.
No one understood better than Sandy about the deep need to resurrect oneself after a downfall. Sandy believed in second chances. He knew all too well how powerful was the motivation to work harder so the second chance wasn’t squandered.
But before Greenhill would commit, he pressed the Primerica chairman for assurances. For one thing, he didn’t want to be just the head of investment banking at Smith Barney Shearson; he wanted to run the whole thing. Sandy was reluctant to unseat his old friend Frank Zarb, who had proven himself a talented executive. “We don’t need Frank,” Greenhill repeatedly told Sandy. Beyond that, he warned Sandy that getting into the investment-banking business would take Sandy and Primerica where they had never been before. “Sandy, if you take me on board, I’m going to build a world-class investment bank,” the star deal maker said. “But you’re going to have to go outside the U.S., and you’re going to have to risk capital.”
In the past Sandy would have laughed at such a preposterous notion. His entire career had been spent pursuing a more mundane retail strategy that avoided the stratospheric expenses associated with investment banking. The king of cost control, Sandy had assiduously avoided risking capital for thirty years.
But now he had stars in his eyes. This could be his big chance to show them all—the Morgan Stanleys, the J.P. Morgans, the entire snooty banking bunch—that he had arrived in their ranks. Greenhill would give him instant credibility. He made his decision: Shearson would plunge headfirst into the rarefied world of capital markets. “What blows my mind is that people thought we’d bought this big powerful retail thing and would do nothing anywhere else,” Sandy said.
To prove his point, Sandy got out Primerica’s checkbook. He agreed to an extravagant pay package for Greenhill: a $20-million signing bonus and 2 percent of all profits over $50 million for Smith Barney. And that would be just the start. Greenhill would recruit a team of investment bankers, but they would all come with huge price tags. It was completely out of character: Sandy Weill would be subsidizing an immense payroll for a division that would take months, at best, to start producing profits. Even more startling, he acceded to Greenhill’s demand for the top job at Smith Barney Shearson.
Sandy and Greenhill sealed their deal Sunday, June 20, 1993, at a dinner celebrating the birthdays of Joan and Greenhill. “There’s something special about Geminis born on June 20,” Sandy said, toasting his wife of thirty-eight years and his new business partner. “They’re real loyal.”
On Tuesday, Greenhill showed his loyalty to his soon-to-be firm by buying Primerica stock, a move Sandy typically demanded of his executives. What was unusual was the size of the investment. Greenhill paid $35 million in cash for 750,000 Primerica shares bought directly from the company. Already rich, Greenhill, who piloted his own plane, had $125 million of Morgan Stanley stock and had earned more than $6 million the previous year.
Before announcing Greenhill’s ascendancy, Sandy had to tell Zarb that he was being kicked upstairs. On Wednesday, Sandy asked Zarb to meet with him in the library. Sitting opposite Zarb on the red leather tufted sofas, Sandy told him, “Now that we’re putting together Shearson and Smith Barney, we need an enormous investment bank to generate the deals.”
Thoroughly familiar with Sandy’s strategy of growing through acquisition, Zarb asked, “Which firm do you want to buy?”
“Another way to build this thing is bringing in a world-class team,” Sandy replied, surprising Zarb, who knew that his boss didn’t like to pay high-priced stars.
“We’re going to bring in a new guy who’s world-class,” Sandy explained, adding that the new hire would assume the chairmanship of Smith Barney Shearson.
Zarb was floored. He told Sandy he was very unhappy to be replaced just as they were making strides.
“Everyone should be willing to change jobs or subordinate their jobs, if it makes sense from the company’s standpoint,” Sandy countered. “That’s for the good of the organization.” Zarb would become a “group chief executive” at the parent company. A crestfallen Zarb maintained his composure and left for home. His wife, Patricia, who had watched her husband dedicate himself to Sandy for years, was enraged.
Primerica called a press conference for Thursday, June 24, at the Drake Hotel, across the street from its corporate headquarters. Early that morning, Sandy phoned Lew Glucksman, who was Smith Barney’s second in command, to tell him about the imminent announcement of Greenhill, who would be bringing his own number two. Without being told he was being shoved aside, Glucksman knew he was out of a job. As Sandy obliviously chattered away about how “business would come in buckets” under Greenhill, Glucksman, deeply hurt that Sandy didn’t have the decency to give him more consideration, or at least more notice, began to clean out his desk.
Minutes later, an ebullient Sandy paraded Greenhill before the press as the new chairman and chief executive of Smith Barney Shearson. The ex–Morgan Stanley banker, a flashy dresser with a penchant for bold suspenders, called the opportunity “an exciting entrepreneurial challenge to build the firm of tomorrow.” An Ivy Leaguer with degrees from Yale and Harvard, Greenhill told the press he looked forward to the change in culture from button-down Morgan Stanley to brash Smith Barney, including its in-house “hoot-’n’-holler” telecommunications link to all the branches.
Preening before the assembled media, the wavy-haired Greenhill told the packed room that he’d just invested $35 million in Primerica. “This is an expression of my confidence,” he said. Sandy quickly added, “There are few people who will put their money where their mouth is. Bob Greenhill is one of those people.” (Neither revealed that Greenhill would recoup a substantial part of the purchase price with the $20-million signing bonus he would receive.)
Sandy, thrilled that he had bagged such a star, uncharacteristically let his new Smith Barney chairman steal the show. The merger ace proceeded to describe his lofty ambitions for the newly combined securities firm, despite his lack of experience in a brokerage firm that catered to individual investors. He said Sandy was completely behind him.
“He trusts me, and I trust him,” Greenhill blustered. “He’s basically turned it over to me.”
That triggered a series of meaningful glances among the Primerica executives gathered along the wall. “Is he talking about our Sandy, the one who micromanages every detail?” one whispered. As soon as the press conference ended, the executives were joking about Greenhill’s “Alexander Haig act,” an uncomplimentary reference to the former secretary of state’s declaration that “I’m in charge here” the day President Ronald Reagan was shot.
Primerica’s management team might have been skeptical, but investors certainly weren’t. Primerica’s stock rocketed up nearly 8 percent the day Greenhill was introduced as the new chairman of Smith Barney. Greenhill left messages of almost childish delight on Sandy’s answering machine, gloating that his mere arrival could increase Primerica’s market capitalization by nearly $1 billion. Part of that delight may also have been due to the fact that he had just made $3 million on his investment in Primerica stock.
That evening, Smith Barney held a cocktail party for Zarb. When Sandy tried to greet Zarb’s wife with a kiss, she turned her cheek away. Eventually Greenhill made his way to her side of the room.
“Frank did a wonderful job,” the new Smith Barney CEO told her. “I really hope I can do as well as your husband did.”
Patricia Zarb glared at Greenhill. “And if you don’t,” she snapped, “Sandy will have you out of here in a heartbeat.” Zarb himself didn’t linger at Primerica. He eventually accepted the post of president of Alexander & Alexander, an insurance broker.
Greenhill promptly hired twenty-one bankers away from Morgan Stanley, mostly junior managers who received big promotions and raises that nearly doubled their compensation. Robert Lessin also followed Greenhill, his mentor, to become vice chairman of investment banking. When the smug deputy showed up and ordered Glucksman’s assistant, Jennifer Bush, to move her boss out in three hours, she overheard him tell a colleague, “I’m not here for years. I’m here to make as much money as possible as quickly as possible.”
As summer settled over New York, Smith Barney Shearson was an amalgam of three distinct firms. Smith Barney brokers clung to their sedate, old-fashioned ways of doing business with a loyal clientele. They resented the more aggressive and obnoxious Shearson brokers. And the brokers from both firms were the subject of constant ridicule and disparagement from the swaggering Morgan Stanley bankers. Day in and day out, it was “At Morgan we did it like this,” or “You should see how it’s done at Morgan.” Greenhill even held secret morning meetings with his “team” before the usual eight o’clock firm meeting.
Yet Sandy seemed oblivious to the rocky relationships, at least in part because Greenhill got off to a quick start, bagging the role of advisor to Viacom Inc. in its megadeal to acquire Paramount Communications Inc. for $8.2 billion. With Greenhill flitting around the country to meet potential clients in their boardrooms, Primerica executives wondered aloud if Greenhill could be both a rainmaker and an effective administrator.
“Yes, he can,” replied Sandy, determined his new and expensive experiment would work, “if he has good partners.”
To ensure that Greenhill had the best possible partner, Sandy dispatched Jamie Dimon to become the de facto manager of Smith Barney Shearson. Although he had no official role, Dimon began spending up to 90 percent of his working hours at the securities firm. To get better control of management, he took an office next to Greenhill’s. Sandy believed that Dimon would easily compensate for Greenhill’s administrative shortcomings. Certainly the Shearson and Smith Barney brokers liked the idea that Dimon’s steady hand and sharp mind were guiding the business. They loved the outgoing and smart Primerica president, whose own father was a broker in their ranks. Even as they resented the newcomers, the brokers and traders knew if Dimon could hold his own with a tough SOB like Sandy Weill, he wouldn’t be railroaded by Greenhill and his cronies.
Dimon was appalled at what he found. Greenhill had gone overboard in hiring new bankers, and the ones he had hired were inexperienced. “You’re giving them jobs far beyond what they can do,” Dimon complained. Worse still, Greenhill was paying them small fortunes. A junior banker making $400,000 a year at Morgan Stanley jumped to Smith Barney Shearson for $800,000 plus a signing bonus equal to one year’s pay.
When the board’s compensation committee began to be deluged with contracts spelling out such fat salary guarantees, the directors got worried. This was so unlike Sandy, a zealot about modest salaries offset by huge grants of stock options. At a compensation committee meeting, director Andrall Pearson expressed his reservations about the flood of high-paid bankers. “I’ve been around a long time, pal,” he told Sandy. “When you start doing this, you get all kinds of jealousies. Besides, if these are people who will leave a place for more money, they’ll leave you, too.” Pearson became so concerned about the big signing bonuses Greenhill was promising that he asked for “evidence” of the previous salary before signing off on the disbursements.
Dimon and Greenhill, who had been friendly when Greenhill was at Morgan Stanley, soon found themselves clashing on nearly every point. “The rumors were right,” Dimon concluded. “He doesn’t have a clue about how to run a business.”
Greenhill was frequently out of the office, flying his Cessna Citation V around the country to meet potential clients and leaving Dimon struggling to maintain order and make decisions in a firm in which no one seemed to want to work together.
Greenhill’s business decisions—often made without any consultation with his colleagues at Smith Barney Shearson—revealed his lack of knowledge about how retail brokerage firms work. A month after taking over, Greenhill breezed into the offices to announce that he had committed Smith Barney Shearson to buy $500 million of junk bonds being offered by RJR Nabisco. Kohlberg Kravis Roberts & Co., who had been one of Greenhill’s clients when he was at Morgan Stanley, was handling the sale for RJR, and Greenhill said he had told Henry Kravis “we could sell it through our retail network.”
“Are you crazy?” asked a stunned Dimon. “You can’t commit like that. There are no terms? No pricing? What are you doing?” Dimon, on his feet and in Greenhill’s face, was shocked at Greenhill’s hubris and lack of understanding about the kind of firm he was heading. Smith Barney Shearson dealt with conservative individual investors who had little use for anything labeled “junk.” It would be impossible for the brokers to sell such a huge amount of junk bonds to their clients.
“You go back to RJR and say we can’t commit to that,” Dimon demanded. “You can’t put the firm at risk like that.”
Greenhill resisted; he didn’t want to go back on a deal with the powerful Henry Kravis.
“You can’t jam an offering like that down our retail guys,” Dimon said with exasperation. “They can’t sell junk bonds that easily.”
Dimon explained carefully that Smith Barney Shearson could commit to deals only in reasonable amounts and on terms consistent with the firm’s low tolerance for risk. Then the thirty-five-year-old executive, who had no official title at Smith Barney Shearson, forced the fifty-seven-year-old star banker to renege on his commitment to Kravis. Instead of $500 million, Smith Barney Shearson would take $150 million, Dimon said.
Not long after that argument, Greenhill informed Dimon that he had found someone he wanted to bring in to run the firm’s fixed-income group.
“Wait a minute,” Dimon sputtered. “What about Blackie and Boshart?” Dimon and others at Smith Barney Shearson considered Steve Black, the chief of capital markets, and his deputy, Jim Boshart, to be two of the smartest, most reliable executives in the firm. A new head of fixed income would report to them. “You can’t just throw someone new in and risk a clash without talking it over with them.”
“No, I’ve made a decision,” Greenhill said. “And he’s going to report to me.”
Dimon was outraged. When Black and Boshart got wind of the change, they threatened to quit. Dimon finally persuaded them to stay, assuring them that, despite his own title as president and CFO of Primerica, he would devote ample time and energy to making certain that Greenhill wasn’t allowed to run amok at Smith Barney Shearson.
Armed with such anecdotes, Dimon warned Sandy about Greenhill’s erratic behavior. “He’s destructive,” Dimon told his boss.
Sandy had been delighted that Greenhill had hit the ground running, bringing in deals like the Viacom-Paramount merger. But it wasn’t just Dimon grousing about Greenhill. Sandy might be willing to pay big bucks to get bankers like Greenhill, but he still wasn’t willing to put his firm at risk. And he was worried that key managers like Black and Boshart were talking about quitting. To determine how much of the turmoil was real and how much was just testosterone talking, he sought the perspective of a woman, Heidi Miller.
Dimon had hired Miller as his assistant in 1992, luring her away from a ten-year career at Chemical Bank. The intelligent young woman had quickly assumed more responsibilities, rising to become the chief risk officer at the securities firm. A Jewish girl from Queens, New York, Miller had no academic background in business. Admitted to Princeton the second year it accepted women, Miller got a history degree and then went on to earn a Ph.D. in Latin American history from Yale. She had backed into financial services work when looking for a job with companies that did business in Latin America.
Miller was on a Caribbean vacation with her husband and two young sons when the phone rang in her hotel room. It was Sandy’s secretary. “Sandy wants to have lunch with you.”
“Are you sure?” she asked, knowing that she had never had, and never expected to have, lunch with Sandy Weill. Miller had met Sandy when she accompanied Dimon to meetings, but the Primerica CEO was always oddly quiet around her.
The secretary assured her that Sandy was indeed inviting her to lunch and set the date for them to meet at the Four Seasons when she returned from vacation. Before she hung up, the secretary warned, “Don’t be nervous if people look at you strangely when you walk in.”
“Why?” Miller asked tentatively.
“Because he doesn’t have lunch with women.”
Nervous and excited, Miller showed up at the famed Four Seasons in her standard dark business suit, accented by a vibrant Hermès silk scarf. She was escorted to “Mr. Weill’s table,” the corner banquette along the wall of “power” tables.
With no niceties or preliminaries, Sandy got straight down to business. “What do you think about the new people? How is Steve Black handling the fixed-income people? What’s your thinking about risk control in the company? What about management of the trading floor?”
Miller took the barrage of questions in stride. As they ate, she answered quickly and succinctly, all the time thinking to herself, So much for a warm and fuzzy get-to-know-you conversation.
Besides a discussion of credit and risk issues, she confirmed that the atmosphere at Smith Barney Shearson was becoming poisonous. “It’s not a way to run a company,” she told her ultimate boss. “You almost need a facilitator between Jamie and Greenhill—it’s ugly. Jamie is getting angrier and angrier about having to carry the load.”
Sandy liked Miller’s clear thinking and her moxie. “You’re a player, aren’t you?” he said to her.
“Those are my observations,” she said matter-of-factly, though she was thrilled that he now considered her worthy of possible promotion among the coterie of powerful executives he commanded.
The lunch convinced Sandy that he really did have to worry about the “Greenhill effect” at Smith Barney Shearson. Both Greenhill and Dimon were claiming that they had Sandy’s blessing to pursue their very different visions of Smith Barney Shearson and, in a sense, they both did. Soon Sandy would have to decide: Would he wager the firm’s future on hot-headed, expensive, and aloof bankers who could potentially deliver great rewards? Or would he stick with his longtime, less glamorous formula for success—his belief in the retail customer?
But for the moment those burning questions would have to wait. Despite the near civil war raging in Smith Barney Shearson, Sandy’s attention was elsewhere—on a deal that could fulfill his deep desire to erase his one and only failure, American Express.