Sandra Navidi - SuperHubs - How the Financial Elite and Their Networks Rule our World

When Jamie Dimon’s 2014 Christmas card leaked, it caused a slew of negative media feedback. It pictured him and his family playing tennis inside their luxurious Fifth Avenue apartment. The shoot’s creative director likely found this presentation dynamic and original, but the nonchalant and somewhat nonsensical presentation of opulence coupled with furniture-unfriendly tennis was portrayed by the press as decadent and inappropriate.

Sometimes relatives launch themselves into the public spotlight, much to the chagrin of superhubs. After Bob Diamond, CEO of Barclays, was ousted over the Libor scandal and heavily criticized, Diamond’s feisty daughter showed her support by tweeting “George Osborne and Ed Miliband you can go ahead and #HMD,” an abbreviation that refers to a certain male body part.9 Actually, anything that the “Lucky Sperm Club”—a term coined by Warren Buffett—does seems to be of interest to the public. Popular media is always keen to report on the fabulous lives of Wall Street’s hottest offspring. Having a famous parent certainly has its perks, but it also means operating under a magnifying glass. When Jamie Dimon’s daughter, a journalist, devoted an article to the delicate topic of the lengths women take to hide “doing their business” at work, it made headlines.10

Super-Sick: Paying the Ultimate Price

The qualities that drive superhubs to the top—such as high motivation and resilience—can also be their downfall. Top executives are perfectionists who deem themselves irreplaceable and fear that showing vulnerability will be interpreted as weakness. In a competitive environment wrought with distrust and suspicion, they must keep up appearances. Hence, even during personal crises, they typically remain highly functional and hide their feelings of fear, anguish, and exhaustion. If enough stress builds up, it can morph into depression—or worse.

Especially during and in the aftermath of the financial crisis, many chief executives suffered from burnout, which in most cases was buried and treated with a regimen of prescription drugs, including antidepressants. The CEO of Lloyds, António Horta Osório, was the only high-profile case of a top executive admitting to exhaustion. After not even a year on the job, for which he received an annual compensation package of GBP 8.3 million and a sign-on bonus of shares worth GBP 4 million, he took immediate sick leave due to stress-related fatigue. Shortly before, Osório had mentioned during an interview that he had been working 24/7, and word on the street was that he had been struggling with the media scrutiny adding to the pressures. A couple of months later he returned to his job.

Many top financial professionals have been diagnosed with serious illnesses like cancer. Paul Calello, the CEO of Credit Suisse’s investment bank and a genuinely nice guy, was diagnosed with cancer in 2009 in the midst of the financial crisis. He was forty-eight years old, athletic, married, and a father of four. Calello went from executive suite to cancer ward, where he made friends who would be gone a couple of days later. It was brutal. He mentioned that he thought the stress of the financial crisis might have triggered the disease.

Top financiers tend to equate professional with personal failure, and in the most extreme cases, they see no other way out of the psychological quicksand than ending their lives. The number of suicides of top bankers in the aftermath of the financial crisis has been staggering. Statistically, a banker has a 39 percent higher likelihood of killing himself than the workforce as a whole.11

The suicide of Pierre Wauthier, CFO of Zürich Insurance Group became a media spectacle, because in his suicide note, he held Joe Ackermann—then chairman of Zürich insurance—directly and personally responsible. He accused Ackermann of putting him under extreme pressure with his tough management style. Ackermann categorically rejected those claims, but nevertheless resigned the next day. The unfortunate incident remained somewhat puzzling, as there had been no warning signs. An official investigation by an outside law firm cleared Ackermann, finding no indication that the finance chief was subjected to undue or inappropriate pressure.

Who knows how many swashbuckling and seemingly invincible top executives are secretly suffering in misery? Of course they could break free from their self-imposed incarceration at any time, but more often than not they are unable to escape from the prison of their personalities. Although they would likely have a wealth of opportunities upon leaving their posts, for many, the potential loss of status, recognition, and power is even more unbearable than the strains of the most arduous position. It’s a highly addictive status game, and CEOs in golden handcuffs are entirely consumed by their efforts to stay at the top.

Clash of the Titans: Close Combat and Coups d’État

CEOs need to be great judges of character to sort out trustworthy confidantes, because virtually everyone they deal with is self-interested. There are many examples of coups d’état at the highest levels of large financial institutions.

The CEO of Citigroup, Vikram Pandit, was so ruthlessly ousted in a boardroom coup that it shocked Wall Street and dominated the international headlines. It all had begun so promisingly. Pandit, who immigrated to the U.S. from India when he was in his teens, was unanimously considered a genius and innovative thinker. He was an introvert, cerebral and quiet, but when he did speak, it was usually profound. Although he impressed those he knew with his sharp intellect, in social situations he was awkward and uncomfortable. Many mistook his shyness for arrogance, and were intimidated by his killer smarts. Extremely risk-averse, he tended to carefully weigh all options before making any decisions.

Years earlier at Morgan Stanley, Pandit himself participated in a coup d’état when he—along with a group of senior executives—tried to overthrow CEO Philip Purcell. Purcell survived the power struggle, however, and Pandit was shown the door. Eventually, he joined other ex-Morgan Stanley executives and formed a hedge fund: Old Lane Partners. In their quest to raise assets, they knocked on Citigroup’s door, where Pandit had an entrée through former U.S. treasury secretary Robert Rubin, who was a great admirer of Pandit’s intellect. With then-CEO Chuck Prince’s approval, Citigroup invested $100 million into Pandit’s hedge fund. But Rubin had other designs for Pandit: He hoped to install him as Citi’s next CEO.

In 2007, Citi bought Old Lane Partners for $800 million in a transaction that was considered the biggest “sign-on bonus” in the history of Wall Street. Unfortunately, the fund faltered shortly thereafter and was wound down not even a year after Citigroup’s purchase. Then the subprime crisis erupted with a bang, and Chuck Prince had to resign amid billions in losses. Rubin lobbied for Pandit to become Prince’s successor and, despite initial board resistance, eventually prevailed. On the plus side of his track record at Citi, Pandit repaid $45 billion in bailout monies, rebuilt capital, wound down poorly performing departments, and recalibrated the company’s business lines. But he inherited a mess and had a hard time from the outset. Under his watch, the bank failed a stress test and had to take a $4.7 billion write-down on its Morgan Stanley Smith Barney stake; meanwhile, the government rejected his proposal to buy back shares and increase its dividend to shareholders.

When Citi humiliatingly lost out on the much-needed acquisition of deposit-rich Wachovia to Wells Fargo, the media attributed the failure to secure the deal to Pandit. Over time he had alienated many long-serving Citi executives; some loyalists were promoted, while other staff were pushed aside. Michael O’Neill, chairman of the board, who had previously vied for the CEO position himself and lost out to Pandit, raised concerns over Pandit’s reign with the rest of the board. One after another, they were receptive, until Pandit had no sympathizers left.