John Mack: How Mack got whacked
Last month, Euromoney reported on the challenges facing CSFB CEO John Mack in rebuilding the firm's global investment banking franchise after three years' cost-cutting and damage limitation. Other banks' earnings and share prices had powered ahead. Mack had unveiled plans to double profits in three years. He won't be around to see them through. Late last month he was pushed out. What happened?
JOHN MACK FORGOT one of the basic lessons of business: if you don't have a power base, a title means nothing. The former president of Morgan Stanley was brought in to run CSFB in July 2001 after Lukas Mühlemann, then Credit Suisse Group CEO, fired Allen Wheat just days after reassuring him that his job was safe. By the end of 2002 Mühlemann himself was out as well, and Mack joined Oswald Grübel as co-CEO of the group while retaining his title of CEO at CSFB.
The two worked well together to get the group back on an even keel after all the problems caused by the investment bank and the insurance businesses. But when it came down to what to do next, Mack pushed too hard and got knifed in the back.
At a group board meeting in New York on the morning of June 24, chairman Walter Kielholz told Mack that his contract, which was due to run out in mid-July, would not be renewed. Just the evening before, they had both been at a dinner for CSFB executives and the group board members.