Then there was Marge Magner, head of the company’s consumer-banking unit, who along with Willumstad had built Citi’s consumer business into an $12 billion behemoth. In 2005, Magner had been hit by a taxi and was out of commission for three weeks. Prince chose this time to confront her over how her division should be organized, a showdown that ultimately led Magner to resign.
There’s a postscript: Both Willumstad and Magner landed in the embrace of Jamie Dimon, now head of rival JPMorgan Chase, who provided much of the funding for a private-equity firm that has since raided Citi for other talent. Firing people is one thing—driving them into the arms of your closest competitor is another.
One thing Prince has done right is assiduously court the three constituencies that matter most to his keeping the corner office: major shareholder Prince Alwaleed of Saudi Arabia; Bob Rubin, chairman of the company’s executive committee; and the rest of the company’s board.
Rubin is the X-factor in Chuck Prince’s world. One of the most respected people on Wall Street, the former co-chairman of Goldman Sachs and Treasury secretary under Bill Clinton has managed to get himself what one former executive calls “the best gig in town.” He’s paid $17 million a year with no operational responsibilities—tasked merely with playing a corporate and diplomatic glad-handing game of the highest order.
Prince needs Rubin’s support and, for the time being, seems to have it. But Rubin may not be around for long. If Hillary Clinton wins the Democratic nomination, Rubin could jump ship. Or he could merely retire. At 69, he could be forgiven for concluding that his time is better spent fly-fishing.
As for the board, well, it will support Prince, as they say, until it doesn’t. It’s a board, it should be noted, that gave Prince a 13 percent pay raise, to $26 million, in 2006, a year during which Citi’s profits fell 12 percent and the company lost market share on several fronts. Says one former executive, “A different board would have thrown Sandy out. So it’s kind of strange to expect it would do something with Chuck. And many of them have faced the same issues as Chuck. Dick Parsons [of Time Warner] had Carl Icahn. Alain Belda [of Alcoa] has been criticized. And everybody knows what Mike Armstrong did to AT&T. With the exception of George David [of United Technologies], who is a rock star, none of them have distinguished themselves of late. It’s hard to imagine this group will take any action.” Indeed, Parsons said of Prince recently, “Chuck is doing a good job, and I think he has been working in an extraordinarily complex situation through difficult markets. Now is not the time to be saying, ‘Do we change course or do we change captains?’ ”
In an effort to delay the inevitable, Prince has taken a measured approach to feeling out a new strategy for Citi, one that includes a focus on organic growth (except when it doesn’t), a shift to grow the company’s overseas revenues more quickly, and a renewed focus on ethics. In other words, multiyear changes that contain an implicit argument in favor of keeping him around. How can you fire a man in the first or second year of a five-year plan? Prince also has been restocking the executive ranks. In poaching new CFO Gary Crittenden from American Express, he doubled Crittenden’s salary from $5 million to $10 million. What better way to make a BFF? And just last week, Prince restructured top Citi management, dispatching a potential successor and promoting Pandit. This move elicited words of support from Rubin: “I think Chuck’s going to be here for a lot of years.”
For right now, nobody seems to be gunning for Prince’s job, which may be the main reason he’s safe. The most talented internal candidate, former CFO Todd Thomson, was thrown under the bus in January in a Machiavellian opera that included allegations of escorting CNBC’s Maria Bartiromo on the company jet. New York Stock Exchange CEO John Thain, often rumored to be a potential replacement, obviously doesn’t want the job, as he’s failed to take the opportunity in the two years Prince has been on the ropes.
After the disaster that was the last earnings report, Prince again made an imprudent prediction. Despite the $33.1 billion in lending commitments to leveraged-buyout deals that Citi has yet to get off its books—and which could result in yet another gargantuan hit to earnings—Prince declared that the bank’s earnings would be back on track by the end of the year. The bases are loaded again.