One stark difference between great leaders and pathetic leaders is the acceptance of personal accountability. Some of it is cultural; for example while in Japan I learned how a simple apology and acceptance of responsibility can forgive even the most grievous corporate sin, conversely not apologizing can elevate the smallest infraction to a major fiasco. Leaders often apologize before even understanding where fault lies, as ultimately the actions, products, and performance of their organizations is still their responsibility.
It is not entirely cultural, however, and there are many examples of leaders in the western world that take full accountability and responsibility for their organizations. Unfortunately it appears Citigroup did not have such a group of leaders, and instead had the misfortune of having people like Robert Rubin steering the ship, who also happens to be part of the core economic team of the upcoming administration.
Under fire for his role in the near-collapse of Citigroup Inc., Robert Rubin said its problems were due to the buckling financial system, not is own mistakes, and that his role was peripheral to the bank’s main operations even though he was one of its highest-paid officials.
“Highly paid” is something of an understatement.
Its troubles have put the former Treasury secretary in the awkward position of having to justify $115 million in pay since 1999, excluding stock options, while explaining Citigroup’s $20 billion in losses over the past year and a government bailout of at least $45 billion. Mr. Rubin’s salary made him one of Wall Street’s highest-paid officials.
Hopefully at least the options are now worthless. Even with that comp package, he considers himself a bit altruistic.
Mr. Rubin said his pay was justified and that there were higher-paying opportunities available to him. “I bet there’s not a single year where I couldn’t have gone somewhere else and made more,” he said.
Good for him. I wonder if he would have exercised more real leadership if he had gone somewhere else. Or maybe those other companies are lucky he didn’t.
Mr. Rubin distances himself from Citi’s problems.
Mr. Rubin said it is a company’s risk management executives who are responsible for avoiding problems like the ones Citigroup faces. “The board can’t run the risk book of a company,” he said. “The board as a whole is not going to have a granular knowledge” of operations.
Perhaps, but the Citigroup fiasco wasn’t the result of decisions made by risk management executives.
Still, Mr. Rubin was deeply involved in a decision in late 2004 and early 2005 to take on more risk to boost flagging profit growth, according to people familiar with the discussions. They say he would comment that Citigroup’s competitors were taking more risks, leading to higher profits. Colleagues deferred to him, as the only board member with experience as a trader or risk manager. The decision has been blamed in part for Citigroup’s problems, including the growth of its collateralized debt obligation holdings, amid signs the mortgage market was unraveling.
The closest he comes to admitting even a modicum of responsibility is musing whether the entire board group could have done better.
He said the Citigroup board could bear some responsibility. “Maybe there are things, in the context of the facts we knew then, we should have done differently,” he said.
And almost bizarrely,
Asked about what he feels he’s accomplished, he responded: “It’s a funny way to think about it. I think I’ve been a very constructive part of the Citigroup environment. That has become particularly manifest since August ’07. I have been very involved.”
“Particularly funny” indeed. If that’s what you call being in a leadership role of a company with a stock down 86% after losing $20 billion and sucking up $45 billion of taxpayer money, while raking in $115 million in pay.
I’ll do it for you: I’m sorry for what you and your company did to Citigroup’s customers and shareholders. Unfortunately I don’t think my apology will suffice.