Academy of Achievement Logo

Sanford Weill

Biography: Sanford Weill
Financier and Philanthropist

Sanford Weill Date of birth: March 16, 1933

Back to Sanford Weill Biography

Sanford Weill Biography Photo
Sanford Weill was born and raised in Brooklyn, New York. He married his wife Joan shortly after graduating from Cornell University in 1955. Weill had joined Air Force ROTC while in college and planned to be a pilot, but cutbacks in defense spending canceled his military career, and he went to work as a $35-a-week runner for the New York stockbrokers Bear Stearns. He quickly moved to work in the office and became a broker himself. He had found a career.

In 1960, while still in his twenties, Weill and three partners started a small brokerage: Carter, Berlind, Potoma & Weill. Over the next 20 years, Weill led the brokerage through 15 acquisitions, building it into the financial powerhouse Shearson, the second largest company in the securities industry. He sold Shearson to American Express in 1981 for $930 million. Weill became President of American Express, whose directors specifically hoped he would be able to turn around their failing insurance operation, Fireman's Fund. Although Weill succeeded in this goal, he became frustrated with the corporate culture at American Express and attempted unsuccessfully to buy Fireman's for himself. In 1985, he resigned from American Express.

At age 53, Weill, although wealthy, was out of work and thwarted in his efforts to find a job. In 1986 he traveled to Minneapolis to persuade Control Data to spin off its subsidiary, Commercial Credit, in an IPO (initial public offering) worth $850 million. Control Data sold 82 percent of the company to the public, Weill took over as CEO, investing $7 million of his own money. Besides Commercial Credit's lending operation, Weill had acquired its subsidiary, a property and casualty insurance company called Gulf Insurance.

Sanford Weill Biography Photo
By 1988, Weill and his team had turned Commercial Credit around and acquired Primerica Corp., for $1.5 billion, along with its holdings, the brokerage Smith Barney and the A.L. Williams insurance company, which Weill renamed Primerica Financial Services (PFS). The whole conglomerate of brokerage, commercial credit, and insurance operations would continue under the name Primerica Corp.

Over the next two years, Weill's Primerica Corp. absorbed the consumer lending operations of Barclays American/Financial, and acquired receivables and branches from Landmark Financial Services.

In 1992 alone, Primerica raised $625 million by selling non-strategic assets. Weill made a decisive move, buying 27 percent of Travelers Insurance for $722.5 million. Sanford Weill earned $67.6 million that year, most of it from stock options. He was the second highest-paid executive in America.

Sanford Weill Biography Photo
The following year, he succeeded in realizing a cherished dream. He regained control of Shearson, buying his old firm back from American Express for $1.2 billion. He acquired Shearson's 8400 brokers and state-of-the-art back office, while leaving behind Shearson's litigation liability. With Shearson under its belt, Weill's Primerica purchased the remaining shares of Travelers with $4 billion in stock. Weill merged Shearson with Smith Barney, retaining the formidable Shearson office facilities, and closing Smith Barney's. Travelers Group, as the resulting parent company was called, included brokerage, term insurance, consumer finance, property-casualty insurance, life insurance, money management and investment banking operations.

In 1996, Weill acquired the property and casualty operations of the insurance provider Aetna for $4 billion. The insurance companies were reorganized into separate life, term, and property-casualty operations. Smith Barney Shearson played a major role in financing the merger of Viacom Inc. with Paramount Communications. Travelers' 1996 profits made it number 32 of the Fortune 500 list of America's most successful companies. The original shares of Commercial Credit appreciated tenfold in the decade after Weill bought them.

Throughout his career, Sanford Weill ran his businesses like an owner. He avoided consultants and got to know his company by getting to know people at all levels of the business. All of Travelers' employees were encouraged to own stock in the company. Senior managers received up to 25 percent of their pay in stock, which they were not allowed to sell for two years.

In September 1997, Travelers paid $9.1 billion in stock to acquire Salomon, Inc., the parent company of the investment bank Salomon Brothers. Weill merged Salomon with Smith Barney to create the second largest securities firm in the world. In April 1998, Weill announced the biggest coup of all: Travelers Group would merge with Citicorp, the parent company of Citibank, to create Citigroup, Inc. At the time, Citicorp was the world's largest supplier of credit cards, and Citibank was the second largest bank in the United States. On the morning the planned merger was announced, the two companies were valued at about $70.6 billion. By the end of the day, the value of their combined stock had jumped to $83.6 billion.

Sanford Weill Biography Photo
Weill had already overcome significant regulatory hurdles to merge his insurance businesses with investment banks and brokerages, but the merger of Travelers with Citibank faced a seemingly insurmountable legal obstacle: the 1933 Glass-Steagall Banking Act, which strictly separated investment banks and commercial banks. In the 1980s, banks and insurance companies had won limited regulatory waivers from the Glass-Steagall restrictions, and many in the financial services industry called for their complete repeal. Weill and Citicorp Chairman John S. Reed decided to force the issue. They went ahead with their plan and secured a waiver whereby the temporary merger of the companies would be permitted, pending congressional action. Weill recruited former President Gerald Ford, a Republican, and former Treasury Secretary Robert Rubin, a Democrat, to serve on the board of the merged companies and assist them in making their case to Congress.

In 1999, both houses of Congress passed the Gramm-Leach-Bliley Financial Services Modernization Act by overwhelming margins, and President Clinton signed the act into law. The measure won bipartisan support by reforming certain discriminatory banking practices, such as the "redlining" of low-income neighborhoods, while repealing the Glass-Steagall restrictions on the intermingling of commercial banks and investment banks, and of banks with insurance companies. Gramm-Leach-Bliley permitted the completion of the Citigroup merger, and set off a wave of similar combinations in the financial services industry. Some economists believe this deregulation contributed to the credit crisis that engulfed the world economy less than a decade later.

Few considered this possibility in 1999, as Citigroup became the largest financial services company in the world, with 100 million customers in 100 countries. At first, Sanford Weill served as Co-Chairman and Co-CEO with John Reed, but in 2000 Weill became the sole Chairman and CEO of Citigroup. Under Weill's leadership, Citigroup achieved unprecedented growth, earning $13 billion in 2001. New subsidiaries were acquired or created all over the world, particularly in Asia and the newly liberated economies of Eastern Europe. Weill stepped aside as CEO in 2003 and retired from the Chairmanship in 2006.

Sanford Weill Biography Photo
Today, Sanford and Joan Weill make their home in Greenwich, Connecticut. Even before his retirement, Weill was an active philanthropist. As Chairman of Carnegie Hall in New York City, he raised $60 million for renovation of its facilities; one of the concert halls is named for him. In 1998, the year of the Citigroup merger, he endowed the medical school at his alma mater, Cornell. In 2006, the year of Sanford Weill's retirement, the Weills donated $8 million to the University of Michigan, to construct the hall that houses the Gerald R. Ford School of Public Policy and to endow the position of the school's dean. The following year, he endowed the Life Science Technology building at Cornell. While serving as Chairman of the Board of Overseers of Weill Cornell Medical College, he organized a $400 million capital campaign for Cornell; Sanford and Joan Weill personally contributed $250 million.

Sanford Weill Biography Photo
When the financial services industry descended into chaos in the last months of 2008, many observers cited the repeal of the Glass-Steagall restrictions as a principal cause of the industry's troubles. The resulting mergers had created giant firms that were seen as "too big to fail" without wrecking the financial system. In 2009, when the Treasury Department conducted stress tests of leading financial institutions, Citigroup was identified as the most overextended of all. As the federal government poured billions of dollars into rescuing Citigroup, Sanford Weill's contributions to philanthropy were weighed against the damage done to the world economy by the uncontrolled expansion of Citigroup and its competitors.





This page last revised on May 04, 2010 17:02 EST