NEW YORK, Sept 21 - The New York Stock Exchange reached far beyond Wall Street to announce on Sunday that former Citigroup Chairman John Reed will be interim successor to Dick Grasso as chairman and chief executive. Reed, who retired from the summit of high finance over three years ago, will return from an overseas vacation next week and, for only the second time in his career, enter the NYSE's landmark building in lower Manhattan.
Among his initial tasks will be calming the divisive turmoil at the exchange, and quickly understanding and reconciling the competing agendas of all its varied interests, including traders, investors and NYSE members, that make the 211-year-old exchange unique. "His breadth of experience is outstanding," said Henry Hu, securities law professor at the University of Texas. "He was with Citigroup for three decades, so he has been through a lot of financial and other crises. He is stress tested." The NYSE's embattled board on Sunday named Reed, the former chairman and co-chief executive at Citigroup Inc. , interim head of the exchange, following the resignation last week of Dick Grasso. Quickly naming an interim chairman and CEO was considered an important step in finding a permanent replacement for Grasso, who quit Wednesday amid a furor over his $140 million payout, as structural and governance issues remain for the NYSE.
Reed, 64, retired from Citigroup in April 2000 as co-chairman, after a power struggle left Sanford "Sandy" Weill and former U.S. Treasury Secretary Robert Rubin firmly in control of the company. "He has got the respect and the financial acumen, and he has been out of the picture long enough to not be swept up in the current controversy," said Charles Elson, director of the John L. Weinberg Center for Corporate Governance at the University of Delaware. At a press conference Sunday morning at the Big Board, Reed was introduced by BlackRock Inc. Chairman Laurence Fink, head of an internal executive search committee assembled only on Friday by the NYSE. "We are pleased and fortunate that John has accepted our offer to become the interim chairman and chief executive of the NYSE," Fink said.
"John Reed is an exceptionally good choice," said Jeffrey Sonnenfeld, associate dean at the Yale School of Management and founder of the Chief Executive Leadership Institute. "He is a brilliant visionary who revolutionized four or five pieces of the (banking) business, most notably the technology of the back room." As for Reed's Citigroup departure, he said the widely publicized power struggle makes him even better prepared to lead the NYSE. "He has dealt with adversity when he was outmaneuvered politically (at Citigroup). That has a humbling effect on a guy who never had a single bump in his career," Sonnenfeld said. "That was a learning experience for him, and it brought some self-reflection that makes him an even greater leader." Sonnenfeld told he had been advising some members of the NYSE board in the selection process, but would not identify those members.
REED - AN OUTSIDER
Reed's appointment came as a surprise because of his relative outsider status at the exchange. He had nevertheless spent his entire career at a major New York bank Reed said he had only been to the NYSE's downtown Manhattan headquarters once in his long career and had never met Grasso, although he anticipated speaking to him soon. Reed said he would be paid $1 for his new job. Reed was not present at the meeting, but in a conference call with members of the exchange, he said he would not be a permanent candidate for the position. He said he was calling from an island off France and would be at the NYSE in about a week. Reed will have his hands full in the new post.
"First, he has got to calm a very unsettled situation, and put the exchange on a course of rapid restructuring. And he has to move the governance review along very quickly," said Elson. "He has got to restore calm. It is a very unsettled and unstable situation -- not what you need in the world's largest financial market," Elson added. Since leaving Citigroup, Reed said he had been teaching at both Princeton University and the Sloan Business School at the Massachusetts Institute of Technology. Added Sonnenfeld, "He is charismatic, but not a back slapper, his relationships are very deep." Following Sunday's press conference, H. Carl McCall, lead director of the NYSE board, said that since Reed will not be in New York for a week, the board's report on its own governance to the Security and Exchange Commission will be pushed back from its original date of Oct. 2.
LONG BANKING CAREER
Prior to the merger of Citicorp and Travelers Group in 1998, Reed was chairman and CEO of Citicorp and Citibank from 1984 to 1998. He joined Citibank in 1965. "I have known John Reed for many years and am pleased that the New York Stock Exchange board has taken prompt action in reaching out to him." said Securities and Exchange Commission head William Donaldson in a statement. "I am gratified that he is willing to take on this critical post. He is independent, experienced, and has impeccable credentials, all of which will be crucial as he works with the NYSE board to insure the highest standards of governance." He holds degrees from Washington and Jefferson College and MIT. He said he will step down from the one board of directors of which he is currently a member -- food and tobacco company Altria Group Inc. He is Altria's lead director.//