Last Man Standing (23 page)

Still, the board members had reservations. They were concerned about the effect of a hardened New Yorker on their proudly midwestern institution. And they certainly didn’t want to be a mere vehicle for Dimon’s larger ambitions, which would surely take him back to New York in due course. Dimon insisted that he was prepared to make a total commitment to the bank, but the board had heard that before. In the 1980s, First Chicago had hired Barry Sullivan as CEO, only to see him keep his residence in New York and commute to work. Midwesterners didn’t much care for that.

Meanwhile, Dimon had to deal with his own family. Asking three teenage daughters to move to Chicago was no small request. In this, he proved to be as shrewd a manager as he was in the office. As the parent of three children, Dimon had discovered that it was important to spend chunks of time alone with each one, in order to bond. And so, when his daughters started complaining that they didn’t want to move to Chicago, he proposed that the eldest of the three, Julia, then 15, accompany him on his next trip to see the board. They spent several days in Chicago; Julia even came to the Bank One office and attended the press conference announcing his hiring. Judy Dimon remembers a phone conversation in which Julia said, “Mom, we have two choices for school, but I think we should go to the Latin School of Chicago. I spent a day there, and I have the applications filled out for all three of us, but I need to fill in the ‘parents’ comments’ section. So … what do you want to say about us?’”

The board was split, with the 10 members who came from the First Chicago side supporting their own man, McCoy’s interim replacement, Verne Istock, who had been with the company since 1963. But they were at a mathematical disadvantage. Eleven members came from the Banc One side. The unemployed Dimon ultimately beat out four other outsider finalists, including Lewis Coleman, then chairman of Bank of America’s investment banking arm, as well as Marc Shapiro.

Dimon told the board he believed in “eating his own cooking” and rewarded their confidence in him by purchasing 2 million shares of stock at $28.37 a share, for some $57 million, the day before his appointment was announced. The move showed he was all-in and from that
day forward, nobody questioned his commitment to the job. On March 27, the press conference was held, and Bank One shares promptly rose 12.2 percent, giving Dimon a paper gain of $7.25 million. By the end of the week they were up 30 percent. In interviews with reporters, he joked about his departure from Citigroup, saying that he hoped it would be the last time in his career that he exited a job in such a way. But when asked how he’d fare without Weill by his side, he was curt. “I couldn’t care less,” he replied. “That’s not me. I want to be happy and do the best thing for my family.”

• • •

Jamie Dimon might have been unemployed for more than a year after leaving Citigroup, but he understood the value of his own talents. So he drove a tough bargain when negotiating, hiring the New York lawyer Joseph Bachelder to negotiate a generous pay package. They ultimately came to a five-year deal with the board that included a $1 million base salary and a bonus of $2.5 million in the first year and up to $4 million a year thereafter. Dimon received 35,242 shares of restricted stock, options on another 3.24 million shares, and a guarantee that he receive at least $7 million in annual stock grants. He won the right to cut the size of the board, as well as install himself as chairman, in addition to CEO. Dimon, at long last, was his own boss.

Three early moves showed a political astuteness for which he had not been known. First, he called John G. McCoy, who had run Banc One from 1958 to 1984 before handing over the reins to his son. “Your son has built a fabulous institution,” Dimon told him. “And I hope what I do makes you proud of me.” When asked who his model would be for turning around Bank One, he didn’t hesitate: “Sandy Weill.” He also went to meet Chicago’s mayor, Richard M. Daley, the day after his appointment, and said he planned to be a good citizen of Chicago.

Dimon decorated his office with a vintage 13-star U.S. flag, a four-star general’s helmet given to him by the former U.S. Army brigadier general Pete Dawkins, and a sign that said “No Whining.” He also put mounted magazine covers documenting his career on the walls, a self-aggrandizing custom he would give up later in his career.

For all its internal problems, Bank One remained a giant, the fourth-largest bank holding company in the country, with $36 billion in market value, $265 billion in assets, 1,800 retail branches, and 56 million credit card customers. Dimon flew to Columbus, Dallas, Detroit, Phoenix, and Wilmington in April to visit employees, and began restructuring the executive ranks. Several top managers departed, including the heads of corporate banking, middle market banking, and capital markets. Within a year, Dimon replaced all but one of the 13 executive committee members, with seven of the new hires coming from Citigroup, and followed through on his intention to reduce the board from 22 to 13.

The board had actually tried to make Dimon agree to keep Istock on as president indefinitely, but Dimon had balked, saying that the solution to infighting between the Banc One and First Chicago factions wasn’t to create two new competing factions atop the company. He also explained that if he was to be CEO, it would be he and not the board who would choose his executive team. It was hard for anyone to make the argument that Istock had done a bang-up job in the role anyway, he argued, considering the disarray at the bank. Dimon ultimately agreed to have Istock stay on for three to six months, with no one reporting to him, so that the two men might get to know each other. When that probation period was up, Istock left the company and its board, albeit with a healthy exit package. Dimon did not replace him.

Dimon refilled the board with his own allies, including Bob Lipp; Stephen Burke, the president of Comcast, who was a friend from Harvard Business School; and David Novak, Andrall Pearson’s successor as chairman and CEO of Yum! Brands. (Dimon was still a board member of Yum!)

Under the separation agreement he’d signed, Dimon was forbidden to solicit his former colleagues at Citigroup; but nothing prevented Bank One from hiring those who came to him. And come they did. In May, Mike Cavanagh, who had risen to be chief administrative officer and managing director of Salomon Smith Barney Europe, joined Bank One as senior vice president of strategy and planning, a new position. In June, Charlie Scharf, the CFO of Citigroup’s global corporate and investment bank, signed on to be CFO. In September, Jim Boshart came
on board as head of commercial banking; and Dimon named Heidi Miller, who had left Citigroup in February to become chief financial officer of the Internet travel outfit Priceline.com, to the Bank One board.

He also hired the Citigroup veteran William Campbell as a consultant, tasking the longtime branding expert with the question of what to do with Wilmington-based Wingspan.com, the company’s ailing Internet banking operation. (It had accounted for $150 million in losses in the previous year.) The unit was being formally offered for sale, but Dimon wasn’t convinced that there was any “there” there to sell. He also brought his pal from the Seagram Building, Peter Freund, on board for a time.

(Sandy Weill can—and should—be given credit for the 12-year vision that took a tiny company called Commercial Credit and somehow ended up swallowing Citicorp. Once his creation was complete, however, he managed to gut the top ranks of the company in a remarkably short time. By the end of 2005, a dozen crucial colleagues who’d helped him build the company had left—Jim Calvano, Mike Cavanagh, Jamie Dimon, Bob Lipp, Marge Magner, Jay Mandelbaum, Heidi Miller, Joe Plumeri, Charlie Scharf, Joe Wright, Bob Willumstad, and Frank Zarb. The only person of note left from the Baltimore days was Chuck Prince, who held on long enough to be made CEO. Had those other people remained with the company, it is unlikely that Prince would have even been a top-five candidate for the job.)

The arrival of the New Yorkers raised concerns in Chicago that Dimon was merely creating Citigroup West. There was also concern in New York. Weill called to complain about what he perceived as excessive poaching, but Dimon was unmoved, telling his former boss that every single person who had joined him in Chicago was coming to a much worse company for a much smaller job and a lot less money. Dimon guaranteed his hires just a one-year contract at two-thirds of their previous salary—much the same approach Weill had taken at Commercial Credit. How could top talent be attracted by that? For the potential of sharing in the upside.

“If I were you,” Dimon told Weill, “I’d be looking
inside
to see why your people are leaving.”

The number of defections did suggest discontent inside Citigroup. Weill’s allies had been quietly pleased when no one except Black had initially followed Dimon out the door. But now it looked as if that was only because they were waiting until Dimon was in a position to hire.

The media were split on Dimon. Some coverage seemed to reflect a Weillian point of view. The trade publication
US Banker
published an article titled “Is Anyone Monitoring Jamie Dimon?”
Business Week
was even more blunt in its April 18, 2000, issue, asking, “Jamie Dimon: The Wrong Man for the Bank One Job?” and including a vague, unattributed criticism—“A dealmaker is a different personality than a leader.”
CBS Marketwatch
posted a report about how Citigroup was on top of its game at the same time that Bank One was on the bottom.

Other coverage was more complimentary, sometimes embarrassingly so. In June,
Fortune
published an article titled “Dimon in the Rough: The Problem Solver.”
Bank Investment Consultant
headlined its story “Boy Wonder.”

What no one grasped at the time was one of several ironies that mark Dimon’s career. The union of First Chicago and Banc One was, at least in part, a response to the creation of Citigroup just two years before. In effect, Dimon and Weill had scared the midwestern banks into a merger that failed to cohere, giving Dimon an opportunity to parachute in and play the hero. The specter of Citigroup, in good ways and bad, was still hanging over him.

• • •

Dimon confided in his old friends that his time off from work had mellowed him—that he was going to do it differently this time around. He wanted to buy a boat, he said, and take them on cruises around Lake Michigan. Plus, they would all go on vacations in Greece together. But the new Jamie Dimon never quite took hold. Within weeks, he was back to working long hours. “I’m still waiting for that cruise,” Mike Cavanagh recently mused.

(When Cavanagh’s wife, Emily, visited Chicago to scope out the housing market, Dimon asked her to join him for dinner at The Four Seasons hotel. When she told him how much the Cavanaghs were planning
to spend on a house, he replied that her husband was lowballing her and that she should spend more.)

In late summer 2000, Judy and the kids made the move to Chicago. After taking care of school arrangements—the girls did end up at the Latin School of Chicago—Judy went into a funk for months. “I really missed close family and friends,” she recalls, “and wasn’t able to be immediately responsive to the open and welcoming ways of the Midwest.”

But she began to acclimate. In October, the Dimons paid $4.68 million for a mansion on Chicago’s “gold coast,” a 15,500-square-foot, 26-room pile with eight bedrooms, 11 baths, a game room, an exercise room, and a 900-square-foot roof terrace. The family had been living quite well for years, but this was something else—a trophy house that had been redesigned by the well-known Chicago architect Marvin Herman. One longtime colleague of Dimon’s described it as “like an embassy.” The Dimons had numerous parties at their home, including one on Halloween that was attended by several hundred people. True to his philosophy of no perquisites, Dimon neither asked for nor received assistance from Bank One in purchasing the residence.

(Although the entire family had moved back to New York by 2007, the Dimons still owned the house in Chicago in 2009. It was listed for sale for $10.5 million, a tough price for another young family to cough up during a recession. “We loved living there,” recalls Dimon. “But it’s just not going to sell and there’s nothing I can do about it.”)

Dimon achieved a personal milestone in Chicago. He bought his first new car. (The family’s Volvo wagon had been used.) But the financial wunderkind realized that he had a problem—he didn’t know how to play the car-buying game. He called Jim Boshart and asked Boshart to accompany him and show him how the negotiations were supposed to go. He ended up buying a Lexus.

Every Friday night, Dimon and Judy went to Mario’s Gold Coast Ristorante, a neighborhood favorite—and Sunday night was dinner with the family. When their daughter Julia introduced her parents to Luol Deng, a classmate from Duke who made the roster of basketball’s Chicago Bulls, they became fans of the team and attended a few games. Dimon even took up the guitar.

Dimon says he came to love Chicago and got involved in civic causes, joining the boards of the city’s Civic Committee, the Economic Club, and the University of Chicago, where his brother Peter had received a PhD in physics. After a lunch with one of his daughters at a South Side fire station, where they heard about the problem of finding victims in smoke-filled rooms, Dimon personally gave $1.2 million to the city’s fire department so that it could buy 120 thermal imaging cameras—one for every firehouse in the city. (Bank One also paid for 10 firemen to go to New York after 9/11 to help with the cleanup in lower Manhattan. Upon returning, one of the firemen presented Dimon with the boots he’d worn at Ground Zero. Dimon still keeps them in his office.)

For her part, Judy Dimon expanded on the work she’d been doing in education in New York City’s inner-city schools. She helped put together the Campaign to Expand Community Schools in Chicago, working alongside Arne Duncan, then deputy chief of staff to Paul Vallas, CEO of the Chicago public schools. (Duncan became Barack Obama’s secretary of education in 2009.) She also cochaired a $50 million fundraiser so that her daughters’ school could add facilities. “Serious arm bending,” is how she remembers the effort. “But a lot of fun.” The Dimons hosted about 15 different fund-raising cocktail parties at their house for various graduating classes of the school. She also cofounded another $50 million public-private partnership that transformed 150 of Chicago’s toughest public schools into community schools with extended operations, programs, and services.