- The Washington Times - Wednesday, July 16, 2003

NEW YORK (AP) — Citigroup Chairman Sanford I. Weill said yesterday that he was giving up his job as chief executive of the nation’s largest bank and named longtime confidant Charles O. Prince as his successor.

The selection of Mr. Prince, a 53-year-old lawyer, ended months of speculation about who would replace Mr. Weill. The change is to occur by the end of the year.

Mr. Weill, 70, won’t quite be going into retirement. While relinquishing the CEO title, he will remain chairman of Citigroup’s board until the 2006 annual meeting.

Mr. Prince was tapped last September to take over Citigroup’s Global Corporate and Investment Bank after its Salomon Smith Barney unit was tarnished with accusations of biased stock research.

Citigroup also announced that Robert B. Willumstad, 57, the current president, will become chief operating officer by year’s end.

Both Mr. Prince and Mr. Willumstad were elected to Citigroup’s board of directors Tuesday, the New York-based bank said.

Mr. Weill has headed the company since 1998, when he merged his insurance company Travelers Group with Citicorp, as the bank then was known. Citigroup spun off Travelers Property Casualty Corp. last year.

Banking analysts said it is hard to predict whether the management changes will result in new directions for the bank because Mr. Prince is a relative unknown on Wall Street.

“He’s not well known on the Street,” said Brock C. Vandervliet, an analyst with Lehman Brothers. “But his reputation is very good — a straight shooter, a ‘what you see is what you get’ kind of guy.”

Michael L. Mayo of Prudential Securities, who rates Citigroup stock a hold, expressed concern that adding Mr. Prince and Mr. Willumstad to the Citigroup board increased the number of “insiders” to five out of 16, or “more than any other large bank.”

Mr. Mayo also said that while the announcement ended uncertainty over succession, “a degree of the Sandy Weill premium goes away.”

Citigroup shares fell $1.31, or nearly 3 percent, to close at $45.52 on the New York Stock Exchange.

The change in leadership comes at a challenging time for Citigroup and other major financial institutions. Citigroup has been defending itself against accusations of conflict of interest in investment banking, mishandling of initial stock offerings, and misleading the public in its dealings with Enron Corp. and WorldCom Inc.

In April, Citigroup paid the highest penalty of any Wall Street firm — $400 million — to settle charges that its Smith Barney unit issued fraudulent and misleading research. Regulators also fined its former star telecommunications analyst, Jack Grubman, and are investigating Mr. Grubman’s former boss.

Mr. Weill selected Mr. Prince to manage Citigroup’s corporate and investment-banking operations last fall in a move seen as trying to speed resolution of regulatory and legal probes.

The company has more than 200 million customers in more than 100 countries. It employs more than 260,000 people.

In a conference call with analysts, Mr. Prince acknowledged that taking over from Mr. Weill would be a challenge.

“It’s a very tough act to follow,” Mr. Prince said. “There’s never going to be another Sandy Weill.”

Asked if he would change the way Citigroup does things, Mr. Prince said: “I don’t think you should look for radical changes from the new management team.”

Mr. Weill emphasized that he would stay closely involved with the bank. Besides working with the board, he said he would call on government officials, work to expand the business overseas and do strategic planning.

There was no announcement about salaries or benefits to go with the new titles.

According to Citigroup’s year-end proxy statement, Mr. Weill was paid a salary of $1 million in 2002. Last year, he refused a cash bonus and stock awards because the bank’s shares had done poorly.

In 2001, he had received a $17 million bonus and shares valued at more than $8 million in addition to his salary.

Mr. Prince earned $500,000 in salary, a $2.3 million bonus and $3 million in stock last year; Mr. Willumstad received a salary of $512,500, a bonus of $4.5 million and $2.2 million in stock.

Mr. Prince was an attorney at U.S. Steel Corp. before joining the Commercial Credit Co., a predecessor of Citigroup, in 1979. Before taking over as chairman and CEO of Citigroup’s Global Corporate and Investment Bank, Mr. Prince was chief operating officer of Citigroup.

Mr. Weill was president of American Express before moving to Commercial Credit as its chairman in 1986. Commercial Credit acquired Primerica Corp. in 1988, taking its name.

Primerica then acquired Travelers in 1993, again changing names, and later absorbed the brokerage house Salomon Inc. Travelers and Citigroup merged in 1998.


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