10/06/97 DIMON AND MAUGHAN: HOW LONG CAN THESE TWO TANGO?

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DIMON AND MAUGHAN: HOW LONG CAN THESE TWO TANGO?
They insist that their joint-CEO setup will work. But the odds say otherwise
Co-chief executive officers for Salomon Smith Barney? Yeah, right. Who really believes that ultimate authority for running a newly created global financial behemoth with $11 billion in revenues, 34,000 employees, and nearly 500 offices around the globe can be permanently shared by two smart and savvy CEOs? ''It's an inherently unstable relationship,'' says Noel M. Tichy, a professor of organizational behavior at the University of Michigan Graduate School of Business. ''My guess is that this is a transition vehicle to get past the merger phase.''
In an interview with BUSINESS WEEK hours after their corporate marriage was announced, Smith Barney CEO James Dimon, 41, and Salomon Brothers CEO Deryck C. Maughan, 49, insist that their arrangement is meant to last. ''We want to operate as a team,'' says Maughan. ''The idea of partnership is not foreign to us.'' Adds Dimon: ''There's plenty of work for both of us to do here.''
Dimon says they're already working in tandem. By the time the Travelers-Salomon deal was announced on Sept. 24, he says, the two execs had already assembled a management committee with top people from both firms. ''That's something that usually doesn't happen until well into the first year. That's one of the hardest things about a merger--and it's already done.''
Both Dimon and Weill have been working with higher authorities for several years. Dimon grew up in Sanford I. Weill's growing empire, where Weill developed a strong cadre of executives who followed him from acquisition to acquisition. ''Jamie and I are partners,'' says Weill. ''Deryck is now a partner, too.'' For his part, Maughan has had to report to and work closely with Robert E. Denham, chairman of Salomon Inc. And superinvestor Warren E. Buffett, whose Berkshire Hathaway Inc. is Solly's largest investor, was never out of touch.
Weill, seated between Dimon and Maughan in the executive library of Travelers Group's headquarters, argues that co-chieftains can and do exist on Wall Street. Goldman, Sachs & Co. has had two pairs of co-CEOs. And, says Weill, Morgan Stanley, Dean Witter & Discover Co. is run jointly by CEO Philip J. Purcell and President John J. Mack, although Purcell outranks Mack.
What should help the Dimon-Maughan arrangement is that the two men have different expertise. Dimon's strength is in retail brokerage and operations in the U.S., and Maughan is far more experienced with global investment banking and trading. When he ran Salomon's Tokyo office in the late 1980s, it was one of the few Japanese outposts of U.S. firms to make money.
It also helps that Maughan is no stranger to Dimon--or to Weill. When Buffett brought Maughan to New York in 1991, Weill introduced him to movers and shakers. Maughan is on Carnegie Hall's board of trustees; Weill is chairman of that board.
Still, conflicts could arise between such strong personalities, and the betting is that Dimon will ultimately prevail. Even if he's co-equal with Maughan at Salomon Smith Barney, Dimon is No. 2 at parent Travelers Group--the presumptive heir apparent for the 64-year-old Weill's job.
By Jeffrey M. Laderman in New York

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