Tearing Down the Walls by Monica Langley

Author:Monica Langley
Language: eng
Format: epub
Publisher: Free Press
Published: 2003-10-06T04:00:00+00:00

11

The Red Umbrella

No question about it, the button-down executives at Travelers Corp. were terrified of Sandy Weill. They feared that this brash New Yorker would tear apart the conservative culture they had so carefully nurtured for decades. Never mind that the culture they were so eager to preserve had nearly destroyed the company.

And they were right. It didn’t take the feisty Primerica chief long to begin plying his management expertise throughout Travelers. As with any other ailing company that Sandy took over, the first priority was to get expenses under control. After slashing 3,300 jobs as a condition for Primerica’s $722-million investment, Sandy pushed to shed another 1,700 jobs in the coming year. Then he insisted that Travelers dump much of the depressed real estate it held in its investment portfolio. Better to get rid of a drag like that and invest in something that produces cash flow than to sit on the depressed property and await a rebound in property values that may be years away. He also ditched the executive dining room and one of Travelers’ two corporate jets (he had his own Gulfstream). He did, however, relent on Travelers’ helicopter. Sandy loved zooming from his home in Greenwich to Hartford in the plush Sikorsky aircraft, considered the sine qua non of corporate choppers.

Never content merely to cut costs, Sandy and Jamie Dimon went looking for increased profits, too, analyzing each of Travelers’ businesses line by line. Unlike Budd, who had seldom left his palatial executive suite to wander the halls, Sandy and Dimon wanted face-to-face meetings with unit managers, not only to get facts, but also to determine if a manager was a “keeper.” When Sandy reviewed the annuities division, which basically offered clients a product that combined an insurance policy with investments in mutual funds, he asked the administrator how much Travelers was being paid by the mutual fund companies whose products it sold.

“Um, um, um…I don’t remember,” the cringing manager replied. “Um, should we get paid something?”

“How can you ask me such a basic question about the business you’re supposed to run?” Sandy raged. Not a keeper.

Sandy also insisted that Travelers’ board receive monthly rather than quarterly financial reports. “I want a monthly scorecard to see how we’re doing,” he told his fellow board members. At board meetings Sandy was accompanied by his chosen directors—Dimon, Bob Lipp, and Frank Zarb. The smart and voluble foursome easily dominated the other twelve directors, led by Budd, who had started his career at Travelers in 1955 as an actuary. Sometimes Sandy forgot that he wasn’t really the chairman of Travelers. As the board prepared for a routine vote one day, he piped up and said, “All in favor, say ‘aye.’”

“That’s my line,” Budd remonstrated.

For all their fear and resentment, though, the Travelers executives weren’t so blind that they couldn’t see the results Sandy was getting. Increasingly he was setting policy at Travelers. And as he did, Travelers’ profits and its stock price increased. By August 1993, Travelers stock

Download

Copyright Disclaimer:
This site does not store any files on its server. We only index and link to content provided by other sites. Please contact the content providers to delete copyright contents if any and email us, we'll remove relevant links or contents immediately.