Citigroup reported $18 billion in losses 2008, has fired some 60,000 employees in recent months, and is currently in the process of dismantling the financial services giant. Earlier this week, the bank announced plans to sell a majority stake in Smith Barney to Morgan Stanley. Today, it revealed plans to divide the bank into two pieces. One person on the sidelines watching his legacy unravel: Sandy Weill, Citigroup's former chairman and chief executive, who built Citi into a sprawling empire based on the belief that "financial supermarkets" represented the future of banking. Except Weill is not on the sidelines, exactly. As Citigroup has unraveled these past few months and hovered on the brink of collapse, Weill has been watching the carnage unfold from one of the most spectacular offices in New York. Offices that Citigroup continues to pay for.
Weill hasn't had much to say about the events of the past few months. Nor is he said to be in regular contact with Citi's current management team, led by Vikram Pandit and Sir Win Bischoff. He is, however, continuing to enjoy the sweet life thanks to his former employer.
Shortly before he stepped down as Citi's non-executive chairman in 2006, Weill entered into an 10-year employment agreement with Citigroup, a deal that provides him with a generous fee for any advisory work he does (up to 45 days a year), a full-time car and driver, and health and life insurance for him and his wife, Joan. The agreement also guaranteed Weill lifetime access to Citi's fleet of jets—for both personal and business travel—a perk he "unilaterally and voluntarily" agreed to "reduce" in 2007 after objections to the arrangement were raised. (He said he would give up flying on Citi's jets entirely by 2013, although given Citi is now shedding its fleet, the free trips may come to an end sooner than that.)
But there's one much more lavish perk he hasn't given up, which is costing Citigroup infinitely more money: his office. In 2006, Weill's personal investment firm, S.I. Weill, signed a deal to lease 10,000 square feet on the 46th floor of the General Motors building. (He's a floor below Carl Icahn and one floor up from Ted Forstmann.) Although terms of the lease weren't disclosed, based on the going rate at 767 Fifth at the time—$175 a square foot—the rent on his office alone could run as high as $1.75 million a year, which means Citi may end up spending close to $20 million keeping Weill in a wood-paneled, full-floor paradise for the course of the 10-year contract.*
What official purpose does the office serve? That's unclear given the distance between Weill and Citi's current leadership. It does, however, make quite an impression on visitors. According to one person who's been there, the "vast shrine to Sandy" is decorated with hundreds of photos of Weill with politicians and fellow business leaders. (Weill's own office in the northwest corner of the building features a prominent picture of his childhood home in Bensonhurst.)
Could he give up the office or any of his other perks in light of the current mess Citigroup is in? Probably. Will he? Probably not, especially since much of his fortune—estimated at $1.3 billion by Forbes in 2007—has likely evaporated as Citi's stock has plunged.
But at least he knows where the money to support his lavish existence is coming from. Although the entrance on the 46th floor says "S.I. Weill," if you call Sandy's office, his assistant answers the phone with a chirpy "Citigroup."
* Correction: We did the math wrong on the cost of the office space. Our apologies.