All the pretty bubbles , tech, Wall Street, telecom , have burst. Now it’s time to see who in finance made money in miserable markets.

All the pretty bubbles , tech, Wall Street, telecom , have burst. Now it’s time to see who in finance made money in miserable markets.

By Jenny Anderson
August 2001
Institutional Investor Magazine

Irrational exuberance is never dead for long, but recently, it’s taking a backseat to old-fashioned management success-and-failure stories. A look at Institutional Investor’s 2001 survey of the paper wealth of top executives shows that well-positioned companies can do well in rotten market conditions, but even strong companies can,t resist the pressure for long.

Consider Merrill Lynch & Co. The bull may be its corporate logo, but the bear has had it pinned against the wall lately. Rocked by equity markets with new issuance that is down 38 percent, completed global M&A activity that has shrunk 63 percent and a retail base that is feeling mighty stock-shy, Merrill Lynch reported second-quarter earnings of 56 cents a share, compared with $1.01 for the same quarter a year earlier. Return on equity hit a sorry 10.1 percent , a far cry from the 18 to 20 percent that management had promised. Shareholders rushed for the door after an earnings warning, sending the stock tumbling 11 percent on one day in June. No surprise then that CEO David Komansky has shed 24.5 percent of his paper wealth, with his fortune in stock and options dropping to $332.2 million. E. Stanley O,Neal, Komansky’s recently elevated successor, didn,t do as badly: He is down 9.5 percent, to $72.3 million.

Then look at Alfred West Jr., chairman and CEO of SEI Investments Co. As the bull market raged, he reinvented SEI, transforming it from a pension consulting business into a diversified asset management and technology company. His strategy was deemed dangerous and unlikely to succeed. For the 12 months ended June 29, SEI’s stock rose 138.1 percent from the previous year, to $47.40, and West has joined the billionaires club with $1.2 billion in paper wealth , 146.2 percent more than last year. Not bad for an exceptionally bad year. And yet West is quick to point out that turbulent markets certainly tame even the rich ego: “You get a good thing going and you think, I,m a genius. Then the market falls apart, and you say, Wait a minute, it wasn,t all me. It keeps you from getting arrogant.”

From mid-1998 to mid-1999, when everything “e” turned to gold, the top seven gainers came from brokerage firms with strong online operations such as Ameritrade Holding Corp.'s then,chairman and co-CEO J. Joe Ricketts and E*Trade Group’s chairman and CEO Christos Cotsakos. The Old Economy wilted, with all ten of the top percentage losers working for old-fashioned firms (Conseco, Raymond James Financial, U.S. Bancorp). Last spring, when everything “e” turned to dross, the Old Economy was born again. Nine of the top percentage winners in 2000 came from that staid standby of the Old Economy , insurance companies.

No longer. This year the fortunes of executives from all types of financial services companies surged and suffered , with the e-finance kitties continuing to suffer the most. During the past 12 months, as the Standard & Poor’s 500 index shed 15 percent and the Nasdaq composite index collapsed 43 percent, those logging the greatest gains came from insurance companies, such as American International Group; value-oriented investors, like Berkshire Hathaway; and a few banks, including Fifth Third Bancorp. Where the losers come from: banks, insurance companies and money management firms as well. “Everybody’s had a rough time in some area of their business,” says Steven Hall, founding partner at executive compensation group Pearl Meyer & Partners. “The devastation hadn,t hit last year. This year will be much worse.”

Poor stock performance, of course, frequently means executive housecleaning , retirement or worse. That’s why almost a quarter of those on this year’s list are new to it.

Not everyone is wallowing in market misery. Value investors staged the comeback they promised during the raging bull market years. Berkshire Hathaway chairman and CEO Warren Buffett is a plumper Top Cat. He reversed much of his losses , $11.7 billion from mid-1998 to mid-2000 , with a 29 percent gain of $7.4 billion. Buffett’s shareholdings , he doesn,t believe in options , totaled $33.1 billion.

Mario Gabelli, chief executive of Gabelli Asset Management, also saw his fortunes fructify: His paper wealth rebounded 90 percent, from $2.5 million to $4.7 million. Ever the gracious winner, he notes that the world has just reverted to seeking normal risk-adjusted returns. “When we went public, no one cared about us because we were value investors and we were out of touch with the world,” says Gabelli. “Now we are getting back to figuring out what a business is worth and why I want to own it.”

Gabelli likes to compare the performance of his company with that of, a once-high-flying online financial news service founded by hedge fund manager James Cramer. Shares of peaked around $70, about the time Gabelli’s “out of touch” value shop hit bottom. In late June, as the markets continued to crater, Gabelli,s firm traded at $41.15, up 64.6 percent for the year, while’s shares hovered at about $1.50. “It’s the tale of two cities, Jim Cramer and Mario Gabelli. And the title is: ,The Turtle Wins Again,,” crows Gabelli.

Laurence Tisch and brother Preston also basked in value’s rebound. Laurence, co-chairman and co-CEO of Loews Corp., reascended to the billionaires club, his wealth climbing from $679 million in 2000 to $1.6 billion this year, while Preston, who shares the same titles, upped his $1 billion to $1.8 billion. The stock of the duo’s holding company , which includes property and casualty insurer CNA Financial Corp., tobacco, hotels, oil and watches , was up 114.8 percent from a year ago in late June. Their gain may be short-lived: In early August Loews reported a loss of $1.42 billion based on revenue shortfalls and a massive write-down in its insurance business , and its stock tumbled 20 percent. American International Group chief M.R. (Hank) Greenberg saw his $2.9 billion 2000 fortune rise 41.7 percent, to $4.1 billion, as he successfully snagged financial services company American General from the U.K.'s Prudential for $23 billion. “Greenberg’s a business genius, and the strategic direction he’s sent this company in has proven to be right over and over again,” says Morgan Stanley nonlife insurance analyst Alice Schroeder. “They are disciplined with costs, excellent managers of capital, and good markets don,t tempt him into just spending money.”

Outside the orbit of ecstatic value investors are a few managers who eked out exceptional performance in unexceptional markets. Take Fifth Third Bancorp’s chief executive George Schaeffer. As his rivals scooped up competitors in a hyperactive wave of bank mergers and acquisitions , many unsuccessful , Schaeffer helped to deliver 22 years of double-digit earnings growth with ferocious cost-cutting (he works at the same desk his two predecessors used back in the 1960s) and relentless attention to detail. Last year, while competitor First Union Corp. saw profits shrink, net income at Fifth Third increased 29 percent. Result: Schaeffer’s paper wealth skyrocketed 461.9 percent, to $677 million.

Another gainer: Bank One Corp. CEO James Dimon. The erstwhile protégé of Citigroup CEO Sanford Weill took the reins at Bank One in March 2000. Dimon has cleaned up the balance sheet, cutting costs to improve the bank’s efficiency ratio (expenses to revenues) from the high 60s down to 60 percent in the second quarter, according to Goldman, Sachs & Co. banking analyst Lori Applebaum. Over the past 12 months, the stock has risen 34.8 percent. Dimon, who traded a bonus for options, saw his wealth climb 138.1 percent, from $30.6 million at the end of June 2000 to $72.9 million this year. “He’s doing the right things,” says Applebaum. “But changing the culture to one focused on sales and expense efficiency takes time.”

Of course, with fundamentals like these firmly back in vogue, e-finance fortunes have turned to kitty litter. When Wit SoundView Corp. went public in June 1999, founder Andrew Klein and chairman Robert Lessin were each worth about $150 million. Today, down almost 95 percent, the sum of their fortunes tallies less than $17 million (they ranked fourth and fifth among top ten losers). E*Trade Group president and COO Jerry Gramaglia lost 90.9 percent of his paper wealth, bringing his total to $3.2 million. Joseph Moglia, the new CEO of Ameritrade, is listed with zero wealth this year because he has unexercisable options.

The bursting of the tech bubble , and the evaporation of billions of dollars of wealth , has e-financiers sounding very sober these days. Chris Larsen, chairman and CEO of E-Loan, the online lending and technology company whose stock soared to $63 at its peak and now trades at about $1.05, has watched 72.4 percent of his paper wealth walk away. “It kind of never seemed real at the time,” says Larsen of the $115 million he once had. “What feels good is if we can build a profitable company that helps consumers and can somehow change the banking industry. That’s different from saying, Hey, I took advantage of the bubble and got my money, and now I can get my jet.”

One exception to the e-financiers debacle: Douglas Lebda, founder and CEO of LendingTree. The company has not posted miraculous growth (or profitability), but Lebda increased his stake in the company when it completed a $45 million round of financing in March, and his paper wealth increased about 30 percent, to $8.4 million.

If Buffett and Gabelli reveled in cheap stocks and bargain markets, many investment bankers have wallowed in bear market misery, watching their massive fortunes fall to slightly less massive fortunes. Morgan Stanley chairman and CEO Philip Purcell lost more than most of his investment banking peers: 66.2 percent, bringing his wealth down to $215.2 million. John Mack, ex-president and COO, left Morgan Stanley in January after losing a power struggle with Purcell, with $369.8 million in his pockets, 51.0 percent less than last year (but still more than Purcell). Now the president and CEO of Credit Suisse First Boston, Mack will likely receive a posh compensation package from his new Swiss employer.

The richest banker, the ever-ambitious Citigroup CEO Sandy Weill, lost more than half a billion dollars , 31.4 percent of his fortune , but still has $1.2 billion on paper. Chairman of the executive committee Robert Rubin, on the other hand, enjoyed a 395.7 percent leap, to $6.5 million, in his paper wealth, on the strength of a wad of stock and options awarded for his first full year under Sandy,s red umbrella.

Let’s hope he stays dry under there.

Name, title, company

Total beneficial

ownership as of


($ thousands)

Total beneficial

ownership as of


($ thousands)



Warren Buffett, Chmn & CEO, Berkshire Hathaway




M.R. Greenberg, Chmn & CEO, American International Group




Charles Schwab, Fdr, Chmn & Co-CEO, Charles Schwab Corp.




Alfred Lerner, Chmn & CEO, MBNA Corp.




Charles Johnson, Pres. & CEO, Franklin Resources




Preston Tisch, Co-Chmn & Co-CEO, Loews Corp.




Rupert Johnson Jr., Vice Chmn & Member, Office of the Chmn, Franklin Resources




Eli Broad, Chmn (SunAmerica), American International Group




Laurence Tisch, Co-Chmn & Co-CEO, Loews Corp.




Sanford Weill, Chmn & CEO, Citigroup




Charles Munger, Vice Chmn, Berkshire Hathaway




Alfred West Jr., Chmn & CEO, SEI Investments Co.




Marion Sandler, Co-Chmn & Co-CEO, Golden West Financial Corp.




Patrick Ryan, Chmn & CEO, Aon Corp.




Peter Lewis, Chmn, Pres. & CEO, Progressive Corp.




Herbert Sandler, Co-Chmn & Co-CEO, Golden West Financial Corp.




George Schaeffer, Pres. & CEO, Fifth Third Bancorp




Richard Fairbank, Chmn & CEO, Capital One Financial Corp.




Daniel Amos, Chmn & CEO, Aflac




Richard Fuld Jr., Chmn & CEO, Lehman Brothers Holdings




J. Joe Ricketts, Chmn, Ameritrade Holding Corp.




Henry Paulson Jr., Chmn & CEO, Goldman Sachs Group




David Komansky, Chmn & CEO, Merrill Lynch & Co.




Nigel Morris, Pres. & COO, Capital One Financial Corp.




James Cayne, Chmn & CEO, Bear Stearns Cos.




John Thain, Pres. & Co-COO, Goldman Sachs Group




John Thornton, Pres. & Co-COO, Goldman Sachs Group




Thomas James, Chmn & CEO, Raymond James Financial




Philip Purcell, Chmn & CEO, Morgan Stanley




Christopher Donohue, Pres. & CEO, Federated Investors




William Aldinger, Chmn & CEO, Household International




Landon Rowland, Chmn, Pres. & CEO, Stilwell Financial




Jay Wintrob, Pres. & CEO (SunAmerica), American International Group




David Pottruck, Pres. & Co-CEO, Charles Schwab Corp.




John Donohue, Chmn, Federated Investors




Robert Devlin, Chmn, Pres. & CEO, American General Corp.




Richard Kovacevich, Pres. & CEO, Wells Fargo & Co.




Thomas Renyi, Chmn & CEO, Bank of New York Co.




Douglas Warner III, Chmn, J.P. Morgan Chase




Lawrence Zicklin, Chmn, Neuberger Berman




Michael LaBranche, Chmn, Pres. & CEO, LaBranche & Co.




Thomas Johnson, Chmn & CEO, GreenPoint Financial Corp.




George Roche, Chmn & Pres., T. Rowe Price Associates




Thomas Tizzio, Sr. Vice Chmn (General Ins.), American International Group




Keith Tucker, Chmn & CEO, Waddell & Reed Financial




Charles Cawley, Pres. & CEO (MBNA America Bank), MBNA Corp.




James Riepe, Vice Chmn, T. Rowe Price Associates




David Spina, Chmn & CEO, State Street Corp.




Walter Raquet, EVP, Knight Trading Group




Kenneth Pasternak, Chmn & CEO, Knight Trading Group




Raymond (Chip) Mason, Chmn, Pres. & CEO, Legg Mason




James Dimon, Chmn & CEO, Bank One Corp.




E. Stanley O,Neal, Pres. & COO, Merrill Lynch & Co.




Kriss Cloninger III, Pres. & CFO, Aflac




Eugene Miller, Chmn, Pres. & CEO, Comerica




James Gallagher, EVP, LaBranche & Co.




William Harrison Jr., Pres. & CEO, J.P. Morgan Chase




Kerry Killinger, Chmn, Pres. & CEO, Washington Mutual




Laurence Fink, Chmn & CEO, BlackRock




T.C. Frost, Sr. Chmn, Cullen/Frost Bankers




Kenneth Chenault, Chmn & CEO, American Express Corp.




Ramini Ayer, Chmn, Pres. & CEO, Hartford Financial Services Group




Lawrence Bangs, Vice Chmn, Household International




J.M. Isaacs, CEO (Europe & Asia), Lehman Brothers Holdings




Gary Wendt, Chmn & CEO, Conseco




James Stewart, EVP & CFO, Cigna Corp.




William Osborn, Chmn & CEO, Northern Trust Corp.




Gerald Hassell, Pres., Bank of New York Co.




Barry Hastings, Pres. & COO, Northern Trust Corp.




Jeremy Lent, Chmn & CEO, NextCard




D.W. Leatherdale, Chmn & CEO, St. Paul Cos.




Kenneth Lewis, Chmn, Pres. & CEO, Bank of America Corp.




Les Biller, Vice Chmn & COO, Wells Fargo & Co.




Terrence Murray, Chmn & CEO, FleetBoston Financial Corp.




Frank Baxter, Chmn, Jefferies Group




Jerry Grundhofer, Pres. & CEO, U.S. Bancorp




Henry Herrmann, Pres., CIO, Waddell & Reed Financial




Jeffrey Lane, Pres. & CEO, Neuberger Berman




William Nutt, Chmn & CEO, Affiliated Managers Group




Jeffrey Greenberg, Chmn and CEO, Marsh & McLennan Cos.




Martin McGuinn, Chmn & CEO, Mellon Financial Corp.




Christos Cotsakos, Chmn & CEO, E*Trade Group




Stephen Schrantz, EVP, Fifth Third Bancorp




Albert Lord, Vice Chmn & CEO, SLM Holding Corp.




Robert Kapito, Vice Chmn, BlackRock




L. Philip Humann, Chmn, Pres. & CEO, SunTrust Banks




James Brinkley, Sr. EVP, Legg Mason




Edward Liddy, Chmn, Pres. & CEO, Allstate Corp.




Lawrence Lasser, Pres. & CEO (Putnam Investments), Marsh & McLennan Cos.




Leland Brendsel, Chmn & CEO, Freddie Mac




Bharat Bhatt, Pres. & COO, GreenPoint Financial Corp.




Charles Koch, Chmn, Pres. & CEO, Charter One Financial Corp.




Lowndes Smith, Vice Chmn, Pres. & CEO (Hartford Life), Hartford Financial Services Group




Charles Gifford, Pres. & COO, FleetBoston Financial Corp.




Thomas O,Brien, Chmn, PNC Financial Services Group




Richard Lieb, EVP, SEI Investments Co.




Richard Handler, CEO, Jefferies Group




Harvey Medvin, EVP & CFO, Aon Corp.




Sean Healey, Pres & COO, Affiliated Managers Group




John Graf, Vice Chmn, American General Corp.




John Grundhofer, Chmn, U.S. Bancorp




Dean O,Hare, Chmn & CEO, Chubb Corp.




John Lewis, Vice Chmn (Inv. and Indiv. Banks), Comerica




Peter Hajas, Pres., Knight Trading Group




Brian Duperreault, Chmn & CEO, Ace




Franklin Raines, Chmn & CEO, Fannie Mae




H. Edward Hanway, Chmn & CEO, Cigna Corp.




Danny Carpenter, EVP, Stilwell Financial




John Koch, EVP, Charter One Financial Corp.




Thomas Fitzpatrick, Pres., SLM Holding Corp.




James Rohr, Pres. & CEO, PNC Financial Services Group




Richard Evans Jr., Chmn & CEO, Cullen/Frost Bankers




Jon Boscia, Chmn & CEO, Lincoln National Corp.




Donald Kramer, Vice Chmn, Ace




Richard Vaughn, EVP & CFO, Lincoln National Corp.




Leslie Baker Jr., Chmn, Pres. & CEO, Wachovia Corp.




Carl Jones Jr., Chmn, Pres. & CEO, Regions Financial Corp.




James Wells III, Vice Chmn, SunTrust Banks




Glenn Renwick, Pres. & CEO, Progressive Corp.




Tim Cottrell, COO, NextCard




Craig Tall, Pres. (Home Loans & Ins. Svcs Grp), Washington Mutual




Jamie Gorelick, Vice Chmn, Fannie Mae




Nicolas Lopardo, Vice Chmn, State Street Corp.




David Glenn, Vice Chmn & Pres., Freddie Mac




Edward Brown III, Pres. (Global Corp & Inv. Bkg.), Bank of America Corp.




James Boshart III, EVP, Bank One Corp.




Thomas Kilian, Pres. & COO, Conseco




G. Kennedy Thompson, Chmn, Pres. & CEO, First Union Corp.




Robert Lessin, Chmn, Wit SoundView Corp.




Richard Horsley, Vice Chmn & Exec. Fin. Ofcr, Regions Financial Corp.




Alan Greenberg, Chmn, Exec. Comm., Bear Stearns Cos.




Douglas Lebda, CEO, Fdr, LendingTree




John Degnan, Pres., Chubb Corp.




Andrew Klein, Fdr & Vice Chmn, Wit SoundView Corp.




David D,Alessandro, Chmn & CEO, John Hancock Financial Services




Robert Rubin, Member, Office of the Chmn, Citigroup




Thomas Franke, Pres. (Raymond James & Associates), Raymond James Financial




Richard Almeida, Chmn & CEO, Heller Financial




John Shaw Jr., Pres. & COO, Jefferies Group




Mario Gabelli, Chmn, CEO & CIO, Gabelli Asset Management




Ben Jenkins III, Vice Chmn, First Union Corp.




Michael Roth, Chmn & CEO, MONY Group




Richard Cohen, Pres. (Personal Property/Casualty), Allstate Corp.




Henry Meyer III, Chmn, Pres. & CEO, KeyCorp




Frederick Wolfert, Pres. & COO, Heller Financial




Chris Larsen, Chmn & CEO, E-Loan




Robert Bagby, Chmn & CEO, A.G. Edwards




Russell Crabs, Pres., Wit SoundView Corp.




Robert Bowers, CFO, Net.B@nk




T. Stephen Johnson, Chmn, Net.B@nk




Jerry Gramaglia, Pres. & COO, E*Trade Group




Ben Edwards IV, Vice Chmn & Pres., A.G. Edwards




John Hashman, Pres. & CFO, NextCard




Samuel Foti, Pres. & COO, MONY Group




Daniel Mudd, Vice Chmn & COO, Fannie Mae




D.R. Grimes, Vice Chmn, CEO, Net.B@nk




Thomas Bailey, Chmn & CEO (Janus), Stilwell Financial




Mark Loehr, CEO, Wit SoundView Corp.




Thomas Bradley, CFO, St. Paul Cos.




Stephen McDonald, CEO, TD Waterhouse Group




Frank Petrilli, Pres. & COO, TD Waterhouse Group




Keith Hall, SVP & CFO, LendingTree




Bruce Alpert, EVP & COO (Gabelli Funds), Gabelli Asset Management




A. Charles Baillie, Chmn, TD Waterhouse Group




John Rowe MD, Chmn, Pres. & CEO, Aetna




Joseph Kennedy, Pres. & COO, E-Loan




Stewart Nagler, Vice Chmn & CFO, Metropolitan Life Insurance Co.




Robert Benmosche, Chmn, Pres. & CEO, Metropolitan Life Insurance Co.




Joseph Moglia, CEO, Ameritrade Holding Corp.




Data for this ranking was compiled by Assistant Editor Laura Witkin.

To compile the data, Institutional Investor selected the largest publicly traded companies, ranked by market capitalization, among commercial banks, insurance companies, investment banks, brokerages, money managers and specialized financial firms that filed shareholder proxies for the 2000 fiscal year.

From those firms, we selected the top two executives by title (though in a few cases where titles seemed misleading, other executives were chosen). In the case of firms that recently merged or went public, additional executives from predecessor firms were selected if they appeared in the proxy. The main table presents data for 169 executives from 82 companies.

Total beneficial ownership of stock and options was determined by combining the value of direct stockownership and the value of unexercised options as of June 29, 2001, based on share and options holdings reported in the proxies, and compared with similar figures tabulated last year by Institutional Investor.

Direct ownership numbers were adjusted to exclude 60-day stock options as well as those shares to which the executives had disclaimed beneficial ownership (including shares owned by spouses and children, given to charitable organizations or held in trusts where the executive is not the primary beneficiary) or that were severely restricted. We did include shares in personal employee stockownership programs and personal 401(k)s.

To calculate the June 29 holdings, we recalculated the direct ownership and stock option values using the June 29 stock price, assuming the underlying amount of direct shareownership and the number of unexercised options remained unchanged from those reported for fiscal 2000, but adjusting for any subsequent stock splits.