Last Man Standing (19 page)

Weill wrote in
The Real Deal
that only at three o’clock that morning, when he was alone with Joan, did it finally dawn on him that Dimon must leave. But his retelling lacks credibility. Weill had played a Machiavellian game with Dimon for several years; the appointment of Maughan as co-CEO was merely the last in a series of moves that, if not explicitly designed to frustrate Dimon, had the effect of fraying their relationship. Weill simply refused to acknowledge how his own behavior had provoked Dimon.

The next morning, most Citigroup executives still did not know what had happened. When Charlie Scharf and his wife showed up in the lobby, happy and chipper, he couldn’t get a read on the mood. “It’s like a morgue in here,” he told his wife. Once the two were in a car on the way to the airport, he was told about the near-brawl.

• • •

Once he had decided on a course of action, Weill moved expeditiously. He called Reed, who was flabbergasted at hearing of Dimon’s behavior. The two men finally accepted what their tri-CEOs had been trying to tell them for months, that something had to give. On Monday, October
26, Weill and Reed asked Citigroup’s general counsel Chuck Prince to conduct an “investigation” into the incident and to report back by the end of the week. On Monday and Tuesday, Dimon remained in his downtown office at Salomon Smith Barney. He and Weill had a single, brief phone conversation, during which Weill determined that Dimon had no plans to apologize for his actions. But the point was academic. Prince, ever the yes-man, gave his new boss exactly what Weill had wanted, concluding that Dimon had been in the wrong.

Equally important, the spectacle of his executives fighting like schoolchildren was all a man like John Reed needed to entirely change his opinion of someone. Reed is a man for whom cordiality, no matter how phony, must be maintained at all costs. Any misgivings he had about the merger with Travelers were precisely about the possible coarsening of the Citicorp culture. The last thing he wanted to do was turn over the institution he had nurtured to a bunch of hooligans. “Jamie has become an impediment to making this merger work,” Weill said to Reed. “We’ve got to ask him to leave.” Reed, never known for his warmth, delivered a stone-cold response: “You’re absolutely right. Jamie’s got to go.” Weill had the backing he needed. (Lipp told Weill that he was acting rashly and that he should give the situation six more months. But Weill overruled him.) Weill later wrote that his relationship with Reed reached its zenith at this moment. Reed, after all, had given him the support he needed to make one of the biggest decisions of his life. A less charitable interpretation is that Weill, the master manipulator, had used Reed as a pawn in his endgame with Jamie Dimon. For all his intelligence and drive, Dimon was also predictable. Push the right button—such as giving him
yet another
co-this or co-that—and he would get angry. For Dimon, the co-CEO positions were an annoyance not just because he had to share power, but also because he believed them to be an inefficient way to manage. Push another button—like Weill’s asking his executives to name their successors—and you have a man ready to crack. And crack he did.

Remarkably, Dimon failed to see it coming. He did not grasp that his time at Citigroup was coming to a close. On Friday evening, October 30, he sat in his office with his assistant Theresa Sweeney and asked her
what changes she thought would come out of a management meeting in Armonk on Sunday. It was his belief that at the meeting the management structure would finally be adjusted to his advantage. Still, while a part of him assumed that things would work out as they always had, with Dimon getting his way and another incompetent partner removed from his orbit, another part of him was concerned. The previous week had been a conspicuously quiet one. Sweeney told him she hoped Weill would make him sole CEO of the corporate investment bank, so that he could get on with the work that needed to be done. Dimon seemed to hope the same. Unaware that his own ouster was in the works, Dimon invited 100 Salomon Smith Barney brokers to his Park Avenue apartment on Sunday for brunch on his expansive terrace. As the brokers trickled in, he sat around in a Smith Barney tracksuit. Then Weill called, asking him to come up to Armonk early. Dimon replied that because of the brunch, he couldn’t leave at the very moment, but that he would be there as soon as he could.

Dimon eventually drove up to Armonk and walked unwittingly into his own execution. Weill and Reed sat him down in a small conference room. “We’ve done a lot of thinking about the organization just as you want and John and I have decided to make the following changes,” said Weill. “Deryck is going to move to a strategy job, Victor will take the Global Bank, and Mike Carpenter will run Salomon Smith Barney.” That last one threw Dimon for a loop, as that was
his
job. But Weill wasn’t quite done. “And … we want you to resign.”

Dimon offered only a one-word reply: “OK.” Weill asked him if he wanted to know why. “Nope,” replied Dimon. “I’m sure you thought it through.” Reed was stunned. “Is that it?” he asked. “Well, yeah,” replied Dimon. “You’ve obviously decided.”

Despite his shock, Dimon agreed to stick around, and sat down in a larger conference room with Prince to finalize the press release announcing his departure. (Prince would also negotiate his severance agreement.) While they were waiting for the other executives to show up, Bob Lipp came into the room with tears in his eyes and gave Dimon a hug. Dimon also took a moment to call his wife. “Judy, I’m going to tell you something and please, please, don’t tell me I’m making a joke,”
he said. “They asked me to resign, and I resigned.” He then told her he’d be home as soon as he could. Leaving the conference room, according to
Tearing Down the Walls
, Dimon bumped into Maughan, who had just been told of his own fate. “Best of luck to you,” Dimon said. “And to you,” Maughan replied.

At about 2:00 that afternoon, Theresa Sweeney’s home telephone rang while she was mowing the lawn. Her husband told her that Judy Dimon was on the phone. When Sweeney said hello, Judy Dimon said gravely, “Theresa, they’ve gotten rid of him.” Sweeney’s response: “Well, Deryck Maughan really needed to go.” When Judy Dimon corrected Sweeney, her face went white, and her husband had just enough time to shove a chair beneath her to prevent her from falling to the floor.

Back in Armonk, once the entire executive team had gathered, Reed got to the point. “Jamie is resigning,” he said. Sandy Weill didn’t say a single word. (Dimon interpreted this as Weill’s attempt to have former Travelers executives think it was Reed’s decision and not his own. If so, it was not successful.)

Monica Langley writes that Dimon then addressed the assembled group. “Look, I’ve been with this company for fifteen years,” he said. “I put my heart and soul into it. I want to tell you it’s a fabulous place. Keep on making yourself proud.” No one knew what to say, and so no one said anything. “I am sorry it didn’t work out,” Dimon continued. “I know that I have some blame for it. If I can help anybody, that’s what I’m here to do. I still love this company. It has an incredibly fantastic future. You are all friends of mine, and I wish you the best.” He was given a standing ovation.

He then walked out of the room. Weill followed. “You’ve been very gracious and nice,” he said. “I still respect and love you.” To which Dimon replied, “Look, Sandy, I don’t know what to say.”

“I’m sorry it had to come to this,” Weill said, and moved to hug him.

“No hugs, please,” said Dimon, recoiling. He walked from the room and went home.

After pulling off one of the largest mergers in history with Weill, Dimon set a dubious record of his own. His was, quite possibly, the shortest tenure on record of a president at a Fortune 500 company. He’d
held the title for less than a month. He was only 42 years old. (In 2009, a questioner at a presentation to investors referred to Dimon’s having “been present at the gluing together of Citigroup.” His response: “I’m not sure that was glue. Maybe it was gum and paper clips. And I should remind you that I was fired 30 days after that deal was completed.”)

For the first time in his career, Dimon had lost a power struggle. In an article the previous year—“How Long Can These Two Tango?”—
Business Week
’s writers had said that in the event of conflict, “the betting is that Dimon will ultimately prevail.” This conclusion was based on his historical ability to remove those he felt were holding the company back—Zarb, Plumeri, Greenhill. But the journalists at
Business Week
, like almost everyone else at the time, had failed to understand the complexities of Dimon’s and Weill’s relationship. For all his deal-making prowess, Weill was a deeply insecure man who was not ready to share his moment at the top, not even with his most trusted soldier.

• • •

According to a later story in
Fortune
magazine, Dimon arrived home about 5:30
P.M
. Judy, in tears and in a state of shock, met him at the door. “What did you do that was so bad?” she asked.

The couple gathered the girls in the kitchen. “Girls, I resigned today,” Dimon told them. Then he corrected himself. “I was fired.”

Kara, then nine, the youngest, asked the first important question: “Will we have to move?”

“No,” her father said.

Laura, 11, the middle daughter, was next: “Will we be able to go to college?”

“Yes,” her father said.

Then Julia, 13, cut to brass tacks: “Can I have your cell phone?”

At 6:00
P.M
., Dimon participated with Weill and Reed in a conference call with the press. The three men explained that problems integrating the corporate businesses at Salomon Smith Barney and Citicorp had resulted in a need for a new management structure. It was one, however, that didn’t give Dimon the authority he desired, and so it was mutually agreed that he would leave the firm. Even in defeat, Dimon
loved the company he had helped build so much that he allowed its officers to lie about his reasons for leaving.

• • •

The stock market didn’t take the news well. Whether because of concern that the merger wasn’t going well or merely as an affirmation of Dimon’s value to the firm, the stock price fell 2 percent that day, even though the Dow Jones industrial average climbed 114 points. At $46.13, the stock now sat 36 percent below its summer peak of $72.63. (Shares of J.P. Morgan jumped 10 percent that Wednesday, owing to rumors that Dimon was about to join the company.) By December, the value of the combined Citigroup had fallen from $165 billion to $108 billion.

Equity analysts were shocked by Dimon’s ouster. Thomas Hanley of Warburg Dillon Read downgraded Citigroup’s shares to “hold” from “buy” because of “increased organizational risks.” Two other analysts also downgraded the stock, and still others voiced concern while maintaining their existing ratings.

The brokerage force at Salomon Smith Barney wasn’t happy about the outcome, either. Weill anticipated this, and had buttonholed Jay Mandelbaum the next morning and asked for his advice on how to break the news to the company’s brokers.

Weill was right to be concerned. After giving Dimon a standing ovation as he walked off the trading floor on November 2, brokers soon started leaving the firm in droves. In the immediate aftermath of the merger, there had been more departures on Citi’s side than on Travelers’ side, but after Dimon left, that switched. For all his brusqueness, Dimon engendered a fierce loyalty among those who worked for him. (Dimon’s father, curiously, stayed on at Citigroup for several more years. But he laughs at the idea that he continued reporting to Sandy Weill even after Weill had fired his son. Ted Dimon Sr. reported to no one.)

The most prominent departure following Dimon’s was that of Steve Black. In addition to being angry with Weill over the treatment of Dimon, Black was also steamed that he hadn’t been given Carpenter’s job. The very afternoon Dimon was fired, Carpenter informed Black that unless he got on board with the decision, he might as well start
packing his bags as well. But Weill had a much subtler message for the 25-year veteran. Unless Black was prepared to tell colleagues that he
agreed
with the decision, he was no longer a welcome member of the team. “I’m not going to be disruptive,” Black told Weill. “But if you’re telling me that in order to stay here, I have to stand up in front of a large group of people and lie, I’m not going to do it. So maybe it’s time for me to go as well.” Realizing that Black was serious, Carpenter backtracked and spent the next several days trying to convince Weill that even though he had the knife out, he didn’t have to get more blood on it. Maybe it was best to keep Black around. But Weill was adamant. A notorious worrier, he called Black late in the afternoon on Friday, November 6, clearly hoping to settle the matter so that it wouldn’t ruin the weekend. “Twenty-five years is a long time, but if you can’t get fully behind everything we’re doing I think its time for you to go,” he told Black.

Black replied that he thought Weill had fired Dimon for all the wrong reasons, and that he couldn’t possibly stand in front of his colleagues and condone the move. Weill didn’t budge. “Then it’s time for you to go.”

“Fine, I’m out. I’m done,” Black retorted. On November 10, he resigned. Once again, Chuck Prince oversaw the severance negotiations.

On Monday, November 2, nearly 100 Salomon Smith Barney employees had gathered in a Tribeca establishment known as “Ponte’s”—the Italian restaurant F. Illi Ponte, which called itself the “home of the angry lobster”—to bid Dimon adieu. The night of November 10, the same people reconvened for Black’s good-bye. When the owner of the restaurant asked Theresa Sweeney how things were going at Salomon Smith Barney, she replied, “If you see us here next Monday, it’s not going very well.” (Sweeney chose to leave the firm along with Dimon.)

Dimon felt horrible that Black was in some sense collateral damage of his own battle with Weill. “I respect Steve’s loyalty, but I told him to do what was right for himself,” he recalls. “I felt terrible for him. I didn’t want him to lose his job and career out of thinking he was protecting me, because there wasn’t anything I could do anymore.”