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Chuck's purple reign
As Citibank's stock struggles, board members weigh in on CEO Prince's performance.
 NEW YORK (FORTUNE) - It seems almost unanimous -- among employees, former employees, investors, analysts -- Citigroup CEO Chuck Prince is still feeling his way. Since taking over from Sandy Weill two and half years ago, Prince has instituted needed reforms in response to the banking company's exposure to Enron, WorldCom and regulatory issues in Japan. But the pressure to perform for Wall Street -- and soon -- is almost palpable.
During his tenure, Prince has overseen a 40 percent hike in the dividend and in 2005 alone plowed almost $13 billion into share buybacks. Yet Citi's stock has languished, returning just 10.8 percent, including dividends, since Prince took the helm, vs. 34 percent for the S&P 500 and 33 percent for the S&P 500 financials. (This story is an excerpt from a story in the Mar. 6, 2006 Fortune, titled "The Unlikely Revolutionary." To read the entire article, click here.) When Citi (Research) announced its fourth-quarter earnings on Jan. 20, Wall Street was disappointed -- for the third consecutive quarter -- and the stock dropped almost 5 percent. Industry publication American Banker chided Prince and CFO Sallie Krawcheck for repeatedly blaming a "challenging" external environment during their quarterly conference call, counting up 11 uses of the word during the 80-minute presentation. Shareholders aren't calling for Prince's head. He is, after all, dealing with less than hospitable economic conditions, including a flattening yield curve and a shriveling mortgage market. Citi's board remains supportive: When Weill steps down as chairman this spring, Prince is the odds-on favorite to add that title. But there's no question that Wall Street is getting antsy. FORTUNE spoke with some of Citigroup's board members for their take on Prince's performance so far: Says Citi's biggest investor, Prince Alwaleed bin Talal bin Abdul Aziz al Saud: "It's all wonderful and lovely that Chuck Prince has cleaned up Citigroup. But we now need him to execute growth and boost the stock price. He should be out there selling the Citi story! If he's publicity-shy, then it's my job as a shareholder to have him change that habit." Robert Rubin, 67, the former Treasury Secretary and Wall Street luminary who is a Citigroup director and chairman of the executive committee, offers a gentle, if biting assessment: "He has the potential to be a great CEO." Rubin then goes on to talk about how he encouraged Prince to hire Lewis Kaden as chief administrative officer to add more depth to the Citi management team. Kaden, 63, is a lawyer from Davis Polk and a longtime consigliere to business titans. His office is on the other side of Prince's, giving the CEO another gray eminence near at hand. "It was a good plan to get Lew in," Rubin says. "It's working well." Board member Time Warner (Research) Chairman and CEO Richard Parsons, another Prince advisor, echoes this on-his-way-but-not-there-yet theme. "He probably didn't have enough line experience [when he became CEO]. He's turning out to be a better leader than we hoped. Still, you can't anticipate the experience of being CEO. "The most important thing for Chuck is to get his team functioning at the highest level. He needs to get them to be super-effective, and fast." Parsons compares Prince's CEO-dom to the rule of Augustus Caesar. "After Julius Caesar," Parsons notes, "he was the one who had to come in to put in the infrastructure so the place would be around for the next hundred years." _________________________ To read the entire article, click here.
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