As Executive Pool Thins, Big Firms Scramble to Fill Top Jobs

Credit turmoil has claimed two scalps on Wall Street in a week -- and exposed the shortage of talent for the biggest jobs in finance, The Wall Street Journal reports.

 

Both Citigroup and Merrill Lynch saw troubled chief executives hastily depart as write-downs fueled by losses on mortgage-related securities spiraled near $10 billion. Citigroup named Robert Rubin chairman and Sir Win Bischoff interim CEO after Charles Prince resigned amid billions of dollars in losses on mortgage-related securities. The company is set to disclose that it will increase by as much as $8 billion the write-downs it has taken in recent weeks. Neither had a ready replacement, forcing them to get by with interim arrangements as the search for successors is conducted.

 

The dearth of CEO material owes much to the Wall Street culture in which executives are pushed to maximize profits and quickly get axed if they fail to deliver. That sullies the résumés of many would-be chiefs, the newspaper reports. What's more, most Wall Street firms are now global publicly held companies, not the private partnerships of yore, meaning a CEO must be skilled both in presenting the public face of a company and understanding the nitty-gritty of finance.

 

"It's a weird state of affairs that these phenomenal global companies can't self-reproduce executives," says Glenn Schorr, a financial services analyst at UBS AG. "It is a function of the culture and the leadership or lack of leadership" at each firm, he says.

 

Boards at Citigroup and Merrill are likely to look outside their firms for successors. The pool of candidates includes Robert Willumstad, the former chief operating officer of Citigroup and now nonexecutive chairman of American International Group Inc.; Laurence Fink, the CEO of BlackRock, an asset manager 49 perecent-owned by Merrill Lynch and NYSE Euronext CEO John Thain, who previously served as president of Goldman Sachs Group.

 

Fink has been approached by Merrill about becoming CEO there. The Merrill board is moving quickly, says a person familiar with the matter, and the leading choice appears to be Fink. He has run a highly successful fund-management company specializing in bonds, but doesn't have lengthy experience running a large banking or retail-brokerage operation, the heart of Merrill's business. One scenario is for Fink to become CEO and Gregory Fleming, Merrill's co-president, to become his No. 2.