Sandy Weill, pragmatic dreamer: Travelers Group CEO Sanford Weill talks about his approach to dealmaking, governance, and life in and out of the spotlight.

Travelers Group CEO Sanford Weill talks about his approach to dealmaking, governance, and life in and out of the spotlight.

At approximately 7 a.m. on April 6, 1998, Sanford I. Weill, chairman and CEO of Travelers Group Inc., and John S. Reed, chairman and CEO of Citicorp, stunned the world. They announced that their two companies, each separately a financial services behemoth, had agreed to merge. The two CEOs revealed at a press conference later that day that the deal - the largest proposed merger in history at roughly $70 billion - had been proposed by Weill to Reed on February 25. Amazingly, it took only six weeks for the companies to agree to terms.

Sandy Weill was interviewed by me on March 4 - literally one week after his momentous discussion with Reed. Thus, that interview placed DIRECTORS & BOARDS virtually "present at the creation."

Several twists flow from this chronological fortuity. Since Weill on March 4 knew of his proposal to Reed one week before but DIRECTORS & BOARDS did not, Weill's answers to my questions can be analyzed on several different levels.

An example: As presented at the end of the interview below, Weill and I discussed his experience at American Express in the 1980s, where he had not succeeded in creating a "financial supermarket." Weill noted that "what I had hoped to happen at American Express didn't happen at that particular location, but it didn't mean that my concept was wrong. It was just that the people together weren't able to make it happen. Here we go again, right?"

At the time, I took these comments to mean both that (a) given Travelers' late- 1997 acquisition of Salomon Brothers, Weill had already created, in significant part, what he had tried to do at American Express, and (b) notwithstanding the $9 billion Salomon acquisition, Weill intended to take further steps in the future to expand Travelers' reach globally. Thus, two levels of meaning. However, the fact that one week earlier Weill had commenced negotiating the Citicorp merger plainly infuses his "Here we go again" with a third tranche of significance.

Another example: During the interview, Weill predicted further consolidation within the financial services industry. He referred to banks, brokerages, and insurance. But his remarks are laden with ambiguity: Did he mean that he foresaw more banks consolidating with banks, brokerages with brokerages, and insurers with insurers? Did he mean a continuation of some of the bank/brokerage acquisitions we have seen in the past year or so (e.g., BankAmerica's acquisition of Robertson Stephens)? Or, was he instead thinking about his own gargantuan, ground-breaking deal with Citicorp?

These and other ambiguities are present throughout the interview. It provides a rare opportunity for DIRECTORS & BOARDS readers to gain insight into the personality and thinking of a CEO one week after the secret initiation of a deal that alters forever the financial services global landscape.

Sandy Weill started out in 1955 as a "runner" (i.e., a messenger) for Bear Stearns. In 1960, when in his late 20s, he borrowed heavily to start a brokerage firm with three friends. Throughout the 1970s, that firm - originally Carter, Berlind, Potoma & Weill but renamed CBWL to reflect the participation of Arthur Levitt, currently SEC Chairman - absorbed several substantially larger brokerages, including the well-known firms Shearson Hamill and Loeb Rhoades Hornblower. The resulting enterprise was sold to American Express in 1981 for almost $1 billion; Weill personally received about $30 million. In 1983, he became number-two man at American Express to CEO James Robinson III.

Things did not work out for Sandy Weill at American Express as well as they had in his earlier endeavors. After having unsuccessfully tried to convince American Express to sell him its Fireman's Fund subsidiary (which he had taken a principal role in turning around), he left. It was summer 1985. Weill was just 53. And he was unemployed. Come September, most of his friends would return, post-vacation, to jobs in large organizations where they held positions of power and influence. Weill would not. Indeed, when asked as late as spring 1986 by Carol Loomis of Fortune for an interview appointment, Weill replied: "Name your time. I'm free."

Weill's "wilderness" period post American Express involved working alone in a small office with young associate James Dimon, trying to do deals. But Weill was publicly rebuffed in early 1986 when he offered to recapitalize (and become the CEO of) BankAmerica. He seemed stalled. Yet his touch soon returned. He bought Commercial Credit (after it had been spun-off from Control Data), and he turned it around. Later, Primerica (including its Smith Barney brokerage subsidiary) was acquired - an action which, importantly, put Sandy Weill back in the brokerage business.

He subsequently acquired an interest in then-ailing insurer Travelers. In addition, Shearson was acquired from American Express (for Weill, of course, a reacquisition) and, in a $4 billion deal, bought Aetna's property and casualty business. Then, at the end of 1997, Weill closed Travelers' purchase of a major marquee name: Salomon Brothers, tarnished years earlier by a Treasury securities bid-rigging debacle, was purchased for $9 billion in Travelers common stock.

"You have to understand his psyche," said an unnamed Wall Streeter quoted in Business Week late last year. "The guy lives to do deals. That's what he does. It means no endgame." The copy for full-page Salomon Smith Barney ads appearing in March 1998 was consistent with that theme. Trumpeting the brokerage's already substantial market penetration, it concluded with the line"And we're just getting started." The anonymous Wall Streeter's assessment, and the copy for the Salomon Smith Barney print ads, could both be viewed as signposts towards the Travelers/Citicorp merger.

Sandy Weill and I met for an hour in his office on March 4. The conversation was tape-recorded. With the exception of two short followups asked and answered in writing, all Q&A in the interview was in real time. We talked about his approach to doing deals, his management style, his views on corporate governance, how he felt after leaving American Express and becoming "president of nothing" - and his dreams.

Doing Deals

Sandy, let's separate doing a deal from day-to-day Travelers' stuff. A deal has a life of its own.

That's right.

Everybody has highs and lows during the deal process, but do you feel you maybe have more than others?

I'm not a shrink. I think when you're doing a deal things do get pretty compressed. There are very few deals that move in a straight line from Point A to Point B. Lots of them have plenty of bumps along the way and I react to those bumps positively and negatively. And I would guess that my emotions do move more in both directions during the course of the deal. Whether it's more or less than somebody else, I don't know.

But, whatever it is, it hasn't hurt our ability to do deals. And God knows that in the last 28 years I've participated in a lot of them. And I would think that if you went and spoke to the people that we did our deals with, 99% of them, or maybe 100%, would think that they were treated very well, that it was fair, that we always kept our word, and they would do another deal with us. And I think that if you don't leave that kind of impression, the next deal is not going to be there.

Does it happen that you may waiver in the process of doing a deal and say, "Hey, look, I'm not going to do this. I'm going to blow this deal away"?

That's happened sometimes, where I'm pushed beyond where I think I should be pushed at a particular time. Sometimes I change my mind, regroup, and come back. Sometimes I don't.

Deals are dynamic things. The only thing I can tell you is, whatever I do do and whatever my emotions create, I hope they keep on doing the same kind of thing because so far it's worked.

A lot of it is instinct and feeling and looking people in the eye. And you can't do deals by figuring that this deal is going to work or not work by what the lawyers put on a piece of paper or [from] the due diligence process. A lot of it has to be the trust in what people are saying to each other.

Would you say that more than a few times you told the other side, "Look, you pushed me too far...I'm not doing the deal... That's it" but then went on to close those same deals?

I don't know that it's happened a lot, but it's happened sometimes. You always know the good test is when you get up the next morning, do you feel good....

That you blew it away?

That you blew it away. Or, are you very upset that you blew it away? You should always make sure when you're blowing it away the first time that you've left yourself a way back if that's not really where you wanted to end up.

In a New York Times article about the Solly deal, Jeffrey Lane [Travelers vice chairman and Weill's friend for many years] was quoted as saying about you: "When he gets close to a deal, he gets very, very nervous. His strength is his insecurity." How about that?

Again, I'm not a shrink....

These are your friends saying these things.

I would ask them. I don't want to relate to "insecure" as a strength or a weakness. I have no idea. It's absolutely true that when something looks like it can be a reality, I do get nervous because I say, yeah, this can really happen. When you have this kind of responsibility, I think that's not a bad thing to worry about before you sign your name at the bottom of the line.

You understand I'm quoting these things.

Oh I understand. I have a lot of friends that practice a lot of different things without their ever having gotten their degrees.

What does this all mean for the deal process? Is it so standard for you that you can adjust automatically for, say, getting cold feet before a closing?

I can't remember any deal of any size where I didn't get nervous before it happened. I was nervous before I got married. I was nervous before we had a baby. I was nervous when we were having grandchildren.

What is the nervousness? Suppose, in the Solly deal, it's the night before you signed the definitive merger agreement...

You start with basics: Are we doing the right thing? That's what gets me nervous. It's everything. It's a reality check. I think price is important, but more important than price is the strategic connection, the strategic fit, and the people. Is the chemistry going to work?

It's the same thing about a stock market trade - how a trader feels afterward about a trade he's done.

Except this is a trade forever.

I understand. You wake up in the morning and two hours later you're supposed to sign the merger agreement. Now, either you feel good or you feel bad about a deal that you've been working on for months. So, where would the nervousness come in?

I would get nervous the night before, not the morning. I know it's going to happen, and I'll twist and turn before I can get to sleep and figure out how am I going to feel when I get up in the morning?

Do you say to yourself, maybe I should walk away from this deal?

I think you think about that all the time. We don't do deals to do deals. We're doing deals to try to create something that will bring more value.

A Weill Mantra

In Travelers' 1994 annual report, you said that two key business principles of yours are 1) recurrent, predictable earnings and 2) cross-selling.

We're going to say that in our annual report this year, too.

I have no doubt. Now, in Travelers post the Solly deal, you closed down Solly's risk arbitrage operation [i.e., trading in takeover situations for the house account]. Is that right?

[We closed] equity risk arb in New York. We still do equity risk arb at Travelers and Solly does risk arb overseas. [But] you're taking that way out of context. It's not that important.

Correct it then.

I think what you're trying to say is that we moved away from recurrent, predictable earnings when we bought Salomon Brothers, and therefore we're trying to correct that by getting out of the risk arb business.

That seemed to be the view in the financial press, because the fluctuations in Salomon Brothers' proprietary trading were too great.

You're talking about 1994 and 1998. In 1994, our company's goal was to try and build one of the best financial service companies in America. We are going to do that by having recurring predictable earnings, which allows us to plan and to market products that are manufactured in one place and sell them in another.

At the end of 1997, we had built one of the finest financial services companies in America. So we had accomplished a lot of that objective. But we were looking at a global marketplace, and we didn't really have a position in that global marketplace. And therefore our reason for acquiring Salomon was to give us a jump start to do that, and that's what it's done.

We still think that, after the Salomon acquisition, more than 50% of our [1998] profitability will come from recurring predictable sources. And cross-selling will grow at a multiple of everything else we do.

But isn't it true that Solly's taking big positions with house money did not appeal to you and was, if anything, a negative to the Salomon acquisition, but that that negative was overwhelmed by other positive aspects of the deal? [Editor's note: The Wall Street Journal had run a September 1997 story indicating that, years earlier, Weill had viewed Salomon as little more than a risky investment fund and had vowed never to buy it.]

I'm going to try to answer it another way. I think that the fit of Salomon, as far as it related to the customer business, was terrific. Smith Barney had one of the best equity businesses in the United States, Salomon had one of the best fixed income businesses in the United States, and we both had fairly important investment banks but not really completely at scale. Salomon dealt with a lot of the bigger companies and Smith Barney dealt with the mid-range companies.

So the thing really fit together, and I think that, now starting our fourth month since the deal, we are really thrilled with how the businesses are coming together. We are willing to take risk where it is intelligent. We don't want to take risk where it doesn't make any sense. And one of the things that is happening in the growth of the financial business is that, in order to gain business, the financial companies are being asked to take more risk to win the mandates.

Like bridge financing and the like?

Yes.

That goes back to the '80s, when investment banking houses were buying the deals [i.e., were putting their own capital at risk in deals in order to win the associated investment banking business].

Right.

And some of those blew up.

Yes, plenty of them blew up. That's correct. Therefore, I think that it becomes even more important that a company have the appropriate kind of equity base so that when they do something and it does blow up, it's a pinprick rather than an explosion. And I think that you're going to see a continued trend toward consolidation and larger and larger companies in this business because of that factor.

Including brokerage?

In financial services - including brokerage, banks, insurance. Everything.

Corned Beef with Lettuce

If I recall, some people used to call CBWL "Corned Beef With Lox."

Lettuce. Corned Beef With Lettuce. You wouldn't really have corned beef with lox.

Of the four partners in CBWL, Arthur Carter now owns The New York Observer, Roger Berlind is a theatrical producer, and Arthur Levitt is Chairman of the SEC.

Frank Zarb is head of the NASD.

Right, he used to be the energy czar. I didn't know Zarb was with you at CBWL.

Oh sure. Zarb joined us in '69. And you had Duke Chapman, who ran the CBOE. He was the chairman of Shearson when we bought that in '74. So we had a lot of people who went out and became regulators or pseudo-regulators.

Of the four CBWL guys, you're the only one still in the brokerage business. Why do you think the other three have gone down different paths but you have stayed in financial services from the beginning?

I guess I'm not as diverse or interesting. They left at very different times. I think Arthur Carter left in 1967. Way, way back when we were in business seven years at that time. I think that Marshall Cogan left in 1973. Roger Berlind left in about '75 or '76, and Arthur Levitt stayed till '78 and left to go run the Amex.

I'll give you the [timing] of the big [acquisitions]. Hayden Stone was '70. H. Hentz was '73. Shearson Hamill was '74. Each one doubled the size of the firm. Hayden Stone was 30 times our size. Hentz doubled that. Shearson doubled the whole thing. Then in 1979 we bought Loeb Rhoades Hornblower, which doubled the whole shebang again.

In that same time period, there was also the dupont Glore Forgan-Walston deal. [Ross Perot took control of brokerage dupont Glore Forgan; later, he merged it with Walston & Co. to form the huge brokerage firm dupont Walston Inc. The combined entity failed not too long afterwards.]

That didn't work.

No. Terrible. When you started CBWL, did you have a vision of the possibility of building a huge financial empire, or was that not even in your dreams?

I think when we started the company in 1960, our dream was to be a merchant banker like Charlie Allen [of Allen & Company]. To do some business and do some deals, own parts of things, and see if we could be smart. That turned out to be very difficult. I think that my personal ambitions were always to set out goals and when I came near achieving them, to then keep on throwing the rope, and keep on throwing the rope. I'm still throwing the rope.

Samuel Johnson said that "The wish is everything; the fulfillment, nothing."

I agree with that sentiment. I don't view anything we have done, any acquisition, any achievement, as an end, only as a building block for the future. We always get to a point and throw the rope out a little further and then throw it out a little further again. You can't stop doing that. You can't stop looking ahead, thinking a little bit about doing something differently.

You've got to look at something as a building block for the future. Not the end in itself, but a way to create a new future.

Emotionality

In a Fortune article in May 1986 [about Weill's unsuccessful attempt to buy Fireman's Fund, his ensuing departure from American Express, and his unsuccessful BankAmerica foray], a friend of yours is quoted as saying, "His thinking system is unconstrained by convention." Some people might think that was pejorative. A lot of others would think it was complimentary.

I would take it as a compliment.

In what ways would you say your thinking about business is "unconstrained by convention"?

Well, my wife calls me a pragmatic dreamer. And I think that my thinking is based on 43 years of reading and studying and participating in the financial services business and understanding where it was, where it is, and enjoying the challenge of trying to figure out where it's going and how to position ourselves to be in the forefront of that.

But where does the unconventionality come in?

I guess maybe a lot of other people don't do it. [The statement] is not my quote, so you've got to ask the [speaker].

In a 1985 New York Times article about your then-recent departure from American Express, Peter Cohen [Weill's former protege in the brokerage business who remained at American Express after Weill left, and headed its Shearson Lehman subsidiary] was quoted as saying: "I never get as down as he does and I never get as high as he gets. His emotions drive him." Do you think that's an accurate portrayal?

It might have been Peter's impression. I would ask Peter in 1998: Would that quote still be as accurate? I have no idea.

I would say I certainly am an emotional human being. And I hope I always will be an emotional person. I equate emotions with feelings, and I think feelings are important. And people should know how you feel when they interact with you. Very few people do not know how I feel about things. I'm not a surprise. So it's easy to deal with.

No guess work.

What you see is what you get.

Corporate Charitable Giving

You have a substantial presence in charitable doings...

... Carnegie Hall. [In the early 1980s, Weill worked with Isaac Stern, James Wolfensohn, Rupert Murdoch, Ronald Perelman, Felix Rohatyn, and others to raise $60 million for its renovation. In 1987, Carnegie recital hall was renamed Weill Recital Hall.]

... Child care. [Weill is a member of a Presidential working group chaired by Treasury Secretary Robert Rubin.]

... The Academy of Finance. [In 1980, Weill's firm, then called Shearson Loeb Rhoades, along with the New York City Board of Education and the American Federation of Teachers, developed a program to prepare high school students for financial services careers. It involves integrating classroom instruction with workplace experience. About 70% of AOF participants are minority and 60% are women, with college scholarships funded through Academy business partners.]

That's a big thing of mine.

Do you still lecture there?

Well, I started it 18 years ago, and now it's in 200 schools in 31 states with about 16,000 students.

Where is the New York school located?

Right next to the American Stock Exchange. But they are in 10 other schools in Brooklyn and all the [New York City] boroughs.

What do you lecture on?

Just talk about careers, success, attitude.

So you have all these involvements.

You left out one. I'm also Chairman of Cornell Medical College. [Editor's note: On April 30, it was announced that Weill and his wife, Joan, have pledged $100 million to Cornell University's medical college; it is to be renamed the Joan and Sanford I. Weill Medical College and Graduate School of Medical Sciences of Cornell University. The request for the donation was made by Cornell's president and its medical school dean in a visit to the Weills on March 2, two days before this interview.]

Some people think charitable giving should be done individually and not through corporations. Others say, no, there are reasons corporations should do this directly.

I feel very good about companies being involved in charity. I think that it's important that we help create a better environment in the communities that we live [in]. I also think that it is very important to work with the people in our company and get them to be personally involved in doing things beyond just what they do in the office, to get involved in the institutions that are going to make our community or our country a better place. We as a company support a lot of those efforts with funding because they're showing that they're doing it themselves, with their own money and their own time. I think we will have far better employees when they're more well-rounded by participating in things [like this].

Requiring Directors to Own Stock

You have been a strong advocate of paying directors in stock.

Right.

Indeed, in 1996, according to The Wall Street Journal, your 17-man planning group - the internal guys - agreed not to sell their Travelers stock.

As well, the directors have agreed to that too.

Is that in writing or is it informal?

We transact hundreds of billions of dollars in business a day...

On the phone.

...on the phone. We don't need something to be in writing. [The Travelers board did, however, adopt a resolution on this point.]

I've written on this. [See "The Case for Cash for Directors," DIRECTORS & BOARDS, Winter 1996]. Basically, the counter to your view is that one cannot induce character or integrity with the form of compensation. It doesn't make sense. Let's take an example. You've got Ken Bialkin [a partner at Skadden Arps, a major figure in the legal community, and a significant figure in American Jewish organizations] on your board. I stipulate that he's a major player and a man of utmost character and integrity.

Okay.

Under your theory, Ken Bialkin is induced to be a better director, more attentive, thinking more about Travelers' problems, because he's paid $100,000 in stock. Under my theory, Ken Bialkin, man of great character and integrity, is doing the best he can for you right now, whether he's paid in cash, stock, or maybe nothing. How do you induce Ken Bialkin to be a man of greater character than he already is? I pause for your reply.

I will say that I think your question is pejorative.

Why?

I don't know what it means. But it sounds good. [Both laugh.] Let me answer it in a different way. We started paying our directors in stock right from the beginning. It could either be 100% in stock if they deferred it or we would give them a percentage of stock and whatever the federal tax rate was in cash so they could keep the stock. We started at $25,000, then we went to $50,000 a year. Then we went to $100,000. We pay no retirement benefits, no insurance, no special come-to-meetings [fees], no extra fee to be chairman of a committee. Everybody gets the same and everybody comes to the meetings.

Over the last decade, 1987 to 1997, our earnings grew 24% a year compounded and our share price grew 32% a year compounded. So whatever we did worked. How did yours do?

That's not the point. You could have paid your board in cash, and they could have gone out and bought Travelers stock had they chosen to do so.

Who knows what would have happened? I don't. We did it this way, and this is the result.

You're not responsive to my question.

For two years in a row we have been in the top performers of the top thousand companies in America [according to] The Wall Street Journal - for one, three, five and 10-year performance for our shareholders. So whatever we're doing, it works.

You said I was emotional.

I didn't say that.

Someone else did, right. If you do something that works, why change it?

Suppose you had a guy on your board who was a wonderful person. You had the highest regard for his business judgment and integrity. And he says, "You know, Sandy, I don't like this market. I'm an old guy. I lived through the Depression. This market doesn't smell right to me."

No problem.

This director says to you "I don't want to be forced, in effect, to buy Travelers stock. No reflection on you. I'm short the market." That's a reasonable point of view, isn't it?

No problem. That person is perfectly welcome to leave our board.

So you would give up his business expertise...

Absolutely.

...because he doesn't want to own Travelers stock?

Absolutely. I don't want to tell anybody how to live their life.

Another point: Skadden Arps handled the legal work on the Solly acquisition for you. But their fee is not contingent on how the acquisition works out or what Travelers' earnings are two years from now. They got a fee on an hourly basis plus, I assume, some qualitative aspect.

No.

This is how professionals work.

No.

Professionals don't work on contingency.

No. We pay them fees, we negotiate bills, and I'm not part of that.

My point is that most professionals don't work such that the amount they receive for their professional endeavors depends on a subsequent outcome totally extrinsic to them.

Some do, some don't. We work with a lot of different lawyers at that law firm and other law firms. But that has nothing to do with what we're talking about.

Yes, it does. I'm saying you're putting directors in a different category from the professionals you use and depend on and expect to perform without being tied into...

I think it's entirely different. The job of a director is to oversee the corporate governance, hire and fire the CEO, and help in creating a direction that will create shareholder value. And when the directors are in sync with the shareholders, it is much easier to do that. And ! think if you look at the shares owned by outside directors [set forth] in our new proxy, which will be out in about a month, you'll see that they own over $100 million worth of our stock. And believe me, they come to meetings. They're concerned. They're connected. It's fantastic.

Business Week, which I think is a very good publication, has two years in a row voted our board one of the top 25 boards in America. One of the reasons they cited the last time is they said that our independent directors owned something like $4 million worth of stock each, average. I think [now] the number is $6 or $8 million each, average. That's fantastic.

Business Week also said Disney is one of the worst boards in America, notwithstanding the great job Eisner has done there.

They did. But they didn't say that about us. So, have a different conversation with Eisner.

The Business Roundtable came out in September 1997 with a Statement on Corporate Governance. You were on the BRT subcommittee.

Don't [put] too much into that.

In my view, the BRT Statement says: get good quality directors of character, and that's all we need. Do you disagree with that?

Basically, I can tell you what we do ourselves. That is, I think we have people from diverse backgrounds, with an incredible amount of integrity, that work well together as a board and work on the committees. I think they've been very helpful to me over the last 11 years and to other people in our company, helping us think how we can manage it better and think better.

We do no rehearsals for board meetings. When somebody's talking about something, or strategy, or making a presentation on one of our companies or another, it has not been rehearsed in advance.

Unlike many other companies.

Unlike others that I've been at.

You bet. It's all orchestrated.

Our board knows the top 20 people in our company nearly as well as they know me, and gets to interact with them both in a social setting as well as a business setting. I like what we do. I like our directors. We have no protection to keep us in our job. We had a staggered board every three years. We did away with that on our own. Nobody told us to do it. We didn't have any person coming in with anything saying we should do it. But we did it. And we had to work hard to get a two-thirds majority to get it passed.

Age Limits for Directors

Is President Ford still on your board?

Yes. We do have a retirement age.

A mandatory directors' retirement age is a crock.

We didn't have one. We put one in, I guess, last year also for the first time. But we put it in at 75, which is above what most companies have - 70 or 72. But we made one exception - if you've been President of the United States.

I understand - a universal exception applying to all ex-Presidents who are balding, left-handed, and used to play football. Do you believe there is any direct relationship between a director's age and his ability to perform?

No.

Why did Travelers adopt an age limit for directors?

Well, we didn't have one for a long time. And I am not 100 percent convinced, as a personal matter, that it is necessary. But we try to keep up to date with good corporate governance practices and this is something that many people feel is very appropriate.

Let's talk a bit more about President Ford. Are you saying to me with a straight face - I'm going to use your own comments against you now...

Go ahead.

Suppose President Ford came to you and said, "You know, I'd like to have cash this year," or "I don't like the market," or "My wife doesn't like the market," or "I'm short the market"...

He wants to sell some of the stock.

..." I don't want to be long Travelers." And you would say to him: "Mr. President, we've had a long relationship. You've been very helpful on our board for many years. You're off."

I wouldn't say that. Let me tell you who would say that. And I know they would. Our nomination and compensation committee would say to President Ford that our agreement with each other is different from that, and if you want to do that, you should not stand for reelection. And I would support that 100 percent.

What if he says, "But I want to continue to contribute and give my judgment"?

"I'll call you up." And I guarantee you that would be the reaction.

Dr. Abraham Zaleznik, Matsushita Professor Emeritus at Harvard Business School, wrote a piece for DIRECTORS & BOARDS agreeing with me that "aligning" directors with shareholders through mandatory stock ownership is misguided.

I can't understand with your background how you could possibly have that view. You should really look at what happened in foreign countries. Look at Deutsche Bank. Look at these other companies in other countries where nobody owns the stock. [Look at] what's happened.

'Here We Go Again'

When you left American Express in 1985 you opened an office with Jamie Dimon. You had already made a major success in business. You had money in your wallet. You were an accomplished person by anyone's standard. Obviously not as accomplished as you are now. How did you feel at that time? Did you feel [down] that you didn't get to do the Fireman's Fund deal? Or did you feel, hey, I've done a lot already now, I would like to do some more and I have all sorts of other plans, but if they don't happen, that's okay too. I can still have sirloin for dinner. What was your state of mind?

The latter is true. I could have still had sirloin for dinner, and I could afford to pay for some of the perks that I had at American Express personally. I was in fine shape. I felt I was too young to quit. The interesting thing that happened to me in that period of being head of American Express is that I found out that people who were my friends while I was president of American Express, which was a very important place, still were my friends while I was president of nothing. People liked me for me.

That was one very important point. The second was as it related to my kids. They had this father that had this skyrocket career and it seemed like he's infallible. Now all of a sudden their father is vulnerable, and they can be helpful. That was also a terrific thing.

I guess what I was saying is that it wasn't a question of retiring. You were only in your fifties at that time. But did you feel that if you didn't do some major, major things but did some smaller deals, that would be okay...or, did you really want to do a BankAmerica-type deal or some other big deal like that?

That's an interesting statement. Just to be able to think that was pretty good. To just think something like that when you're down and you're no place. [But] people took me very seriously.

You weren't no place. That's my point.

Right, okay. I was just sitting in a little office with Jamie.

So what? The environment didn't matter. So what if your office was small? You had already created CBWL, built it through acquisitions, and then sold the whole thing to American Express. That's what I'm trying to get at.

To me, building something has always been far more important than counting money. I have always felt that if you do a good job, the money comes and you shouldn't shoot for the money. So I was much more interested in going in a direction where I could help create something. I felt that what I had hoped to happen at American Express didn't happen at that particular location, but it didn't mean that my concept was wrong. It was just that the people together weren't able to make it happen.

Here we go again, right?

The Travelers Group Inc. Board

C. Michael Armstrong, chairman and CEO of AT&T Corp. since 1997.

Judith Arron, executive director and artistic director of Carnegie Hall Corp.

Kenneth J. Bialkin, partner in the law firm of Skadden, Arps, Slate, Meagher & Flom LLP.

Joseph A. Califano Jr., chairman and president of the National Center on Addiction and Substance Abuse at Columbia University.

James Dimon, president and COO of Travelers Group, and co-chairman and co-CEO of Salomon Smith Barney Holdings Inc.

Leslie B. Disharoon, former chairman, president and CEO of Monumental Corp., an insurance holding company.

Gerald R. Ford, President of the United States from 1974-1977.

Thomas W. Jones, vice chairman of Travelers Group since 1997. Formerly held senior positions with TIAA-CREF.

Ann Dibble Jordan, consultant and corporate director. Held senior positions in the social services field in the 1970s and '80s.

Robert I. Lipp, vice chairman of Travelers Group and chairman and CEO of Travelers Insurance Group Inc.

Michael T. Masin, vice chairman and president-international of GTE Corp.

Deryck C. Maughan, vice chairman of Travelers Group. Chairman and CEO of Salomon Brothers until its merger with Travelers in 1997.

Dudley C. Mecum, managing director of Capricorn Holdings LLC, a firm specializing in leveraged acquisitions.

Andrall E. Pearson, chairman and CEO of Tricon Global Restaurants Inc. President of PepsiCo from 1970-1984.

Frank J. Tasco, retired chairman and CEO of Marsh & McLennan Cos. Inc. and Mid Ocean Ltd.

Linda J. Wachner, chairman and CEO of Warnaco Group Inc. and Authentic Fitness Corp.

Sanford I. Weill, chairman and CEO of Travelers Group and its predecessor company since 1986.

Joseph R. Wright Jr., chairman and CEO of AmTec Inc., a developer and financier of business projects in China.

Arthur Zankel, general partner of First Manhattan Co., an investment management firm.

Source: Company proxy, March 1998