Chuck Prince is running a $240 billion (market cap) global financial colossus, and he is treating his organization chart as if it's his own personal plaything. When I eyed tonight's Wall Street Journal story I was simply awe-struck:
The personnel moves were announced as part of a new corporate structure in which Citigroup will merge its investment-banking operations and its alternative-investments businesses. The combined unit will be run by Vikram Pandit, a former Morgan Stanley executive who joined Citigroup earlier this year when the bank bought his Old Lane hedge fund. Initially viewed as a potential successor to Mr. Prince, Mr. Pandit will now rise another step up Citigroup's hierarchy just months after joining the bank.
Vik to run both alternative investments and banking? How does that go together?
Meanwhile, Thomas Maheras, who has been co-head of investment banking with responsibility for capital markets and trading, is leaving the company. Mr. Maheras also had been considered a potential successor to Mr. Prince and is highly regarded with the ranks of the bank.
The well-regarded Tom Maheras and Randy Barker (mentioned later in the article) shunted to the side? It was not that long ago that Tom was the "golden boy" - how do you go from that to dog-crap in such a short span of time? This just isn't natural.
Under the new structure, Mr. Pandit is rising above veteran banker Michael Klein and James Forese, who will jointly run the investment-banking business, and John Havens, who will run the alternative-investments business.
And what about Michael Klein and Jim Forese? Are they just going to say "Hey, Vik, great to have you as my new boss!" This is Wall Street, Chuck. People have egos, believe it or not. These are top guys, real deal guys, and you've treated them like - well, if I'm them I'm not sticking around too long. Don't get me wrong - I'm not against bruising egos here and there for the greater good, but is this really the greater good? It seems as if maybe, must maybe, you are trying to accomplish a few things in one fell swoop:
- Scapegoat a few guys for having their privates in a vise due to aggressive P&L targets, taking on too much risk and losing some money when everybody on the Street did, guys who have been making the firm lots of money and building businesses for a long, long time;
- Assert your leadership via the old Al Haig routine - "I am in charge." Yeah, I know. So was the captain of the Titanic; and
- Set up Vik for the inevitable CEO succession which was telegraphed when you paid the largest executive search fee in history, around $800 million, to buy Old Lane essentially for Vik, John and an ok, mid-sized hedge fund.
This whole move makes me think of George Steinbrenner's recent ultimatum to Joe Torre delivered via the press: "(You're) the highest paid manager in the game; if (you) don't win this series then maybe (you) shouldn't be working here." Ugh. I understand that the other Prince (the Saudi Prince) was supportive of Chuck's move; maybe he is looking for something, anything, to propel Citi's share price higher. But as an outsider who used to be an insider, this does not look good.