400: Sanford Weill – info

Sanford Weill strikes me as a pretty nice guy, and profiles of him emphasize his commitment to classical music. I have a feeling the amount of giving he has done to cultural institutions will be a rarity among members of the Forbes 400, and my letter to him will rely heavily on our shared appreciation for music. My approach to Weill will focus on the notion of patronage, and the importance of artists having support in advance to execute work, rather than hoping for success later in life. The following is my condensed edit of his Wikipedia entry, with tidbits from newspaper articles on him.

“He was born on March 16, 1933 and raised in Brooklyn, New York. He married his wife Joan shortly after graduating from Cornell University in 1955. Weill had joined Air Force ROTC while in college and planned to be a pilot, but cutbacks in defense spending canceled his military career, and he went to work as a $35-a-week runner for the New York stockbrokers Bear Stearns. He quickly moved to work in the office and became a broker himself.

In 1960, Weill and three partners started the small brokerage firm of Carter, Berlind, Potoma & Weill. Over the next 20 years, Weill led the brokerage through 15 acquisitions, building it into the financial powerhouse Shearson, the second largest company in the securities industry. He sold Shearson to American Express in 1981 for $930 million. Weill became President of American Express, whose directors specifically hoped he would be able to turn around their failing insurance operation, Fireman’s Fund. Although Weill succeeded in this goal, he became frustrated with the corporate culture at American Express and attempted unsuccessfully to buy Fireman’s for himself. In 1985, he resigned from American Express.

At age 53, Weill, although wealthy, was out of work and thwarted in his efforts to find a job. In 1986 he traveled to Minneapolis to persuade Control Data to spin off its subsidiary, Commercial Credit, in an IPO (initial public offering) worth $850 million. Control Data sold 82 percent of the company to the public, Weill took over as CEO, investing $7 million of his own money. Besides Commercial Credit’s lending operation, Weill had acquired its subsidiary, a property and casualty insurance company called Gulf Insurance.

By 1988, Weill and his team had turned Commercial Credit around and acquired Primerica Corp., for $1.5 billion, along with its holdings, the brokerage Smith Barney and the A.L. Williams insurance company, which Weill renamed Primerica Financial Services (PFS). The whole conglomerate of brokerage, commercial credit, and insurance operations would continue under the name Primerica Corp.

Over the next several years, Weill’s Primerica Corp. absorbed the consumer lending operations of Barclays American/Financial, acquired receivables and branches from Landmark Financial Services, 27 percent of Travelers Insurance, and regained control of Shearson, buying it from American Express for $1.2 billion. With Shearson under its belt, Weill’s Primerica purchased the remaining shares of Travelers with $4 billion in stock. Weill merged Shearson with Smith Barney. Travelers Group, as the resulting parent company was called, included brokerage, term insurance, consumer finance, property-casualty insurance, life insurance, money management, and investment banking operations. In 1996, Weill acquired the property and casualty operations of the insurance provider Aetna for $4 billion.

Throughout his career, Sanford Weill ran his businesses like an owner. He avoided consultants and got to know his company by getting to know people at all levels of the business. All of Travelers’ employees were encouraged to own stock in the company. Senior managers received up to 25 percent of their pay in stock, which they were not allowed to sell for two years.

In September 1997, Travelers paid $9.1 billion in stock to acquire Salomon, Inc., the parent company of the investment bank Salomon Brothers. Weill merged Salomon with Smith Barney to create the second largest securities firm in the world. In April 1998, Weill announced the biggest coup of all: Travelers Group would merge with Citicorp, the parent company of Citibank, to create Citigroup, Inc. At the time, Citicorp was the world’s largest supplier of credit cards, and Citibank was the second largest bank in the United States. On the morning the planned merger was announced, the value of the companies’ combined stock increased by $13 billion to $83.6 billion.

Weill had already overcome significant regulatory hurdles to merge his insurance businesses with investment banks and brokerages, but the merger of Travelers with Citibank faced a seemingly insurmountable legal obstacle: the 1933 Glass-Steagall Banking Act, which strictly separated investment banks and commercial banks. In the 1980s, banks and insurance companies had won limited regulatory waivers from the Glass-Steagall restrictions, and many in the financial services industry called for their complete repeal. Weill and Citicorp Chairman John S. Reed decided to force the issue. They went ahead with their plan and secured a waiver whereby the temporary merger of the companies would be permitted, pending congressional action.

In 1999, both houses of Congress passed the Gramm-Leach-Bliley Financial Services Modernization Act by overwhelming margins, and President Clinton signed the act into law. The measure won bipartisan support by reforming certain discriminatory banking practices, such as the “redlining” of low-income neighborhoods, while repealing the Glass-Steagall restrictions on the intermingling of commercial banks and investment banks, and of banks with insurance companies. Gramm-Leach-Bliley permitted the completion of the Citigroup merger, and set off a wave of similar combinations in the financial services industry. Some economists believe this deregulation contributed to the credit crisis that engulfed the world economy in 2007.

Few considered this possibility in 1999, as Citigroup became the largest financial services company in the world, with 100 million customers in 100 countries. Under Weill’s leadership, Citigroup achieved unprecedented growth, earning $13 billion in 2001. New subsidiaries were acquired or created all over the world, particularly in Asia and the newly liberated economies of Eastern Europe. Weill stepped aside as CEO in 2003 and retired from the Chairmanship in 2006.

Weill served as a Cornell University Trustee for many years, and in 1998 he endowed Cornell’s medical school, now known as the Weill Cornell Medical College. As chairman of the Board of Overseers of Weill Cornell Medical College and an emeritus member of the Board of Trustees of Cornell University, Weill orchestrated a $400 million donation to Cornell, of which he and his wife personally contributed $250 million. In June 2007, he endowed the Weill Institute for Cell and Molecular Biology at Cornell, housed in a new life science building named Weill Hall.

In May 2003, he received the Baruch Medal for Business and Civic Leadership, presented by Baruch College for his work in public education and his accomplishments in business. He is currently the chairman of the Board of Trustees of the National Academy Foundation, a non-profit he founded in 1982. NAF supports career-themed academies in the areas of finance, hospitality and tourism, information technology and engineering in over 500 high schools across the United States. He is also currently the Chairman of the Board of Carnegie Hall and is an avid champion of classical music in the United States.

In September 2006, Joan and Sanford Weill Hall was dedicated at the University of Michigan. The building is home to the Gerald R. Ford School of Public Policy. Weill donated $5 million towards the construction of the building and an additional $3 million to endow the position of the dean of the school.”