After three decades laboring in the frequently stodgy realm of banking, David Vitale stepped last March back into a world that more closely resembles the blue-collar environment in which he grew up.
As chief executive of the Chicago Board of Trade, he works with hundreds of traders who use their hands and wear out their voices to make money, frequently sweating and swearing like construction workers on a hot, hard day.
It’s a way of life Vitale knows intimately. Growing up in an Italian enclave near Boston, he followed his father and grandfathers into construction work, holding his own union card by the age of 19.
Moving dirt with backhoes helped put Vitale through Harvard University, which led to his career in banking.
More than 30 years later, the experience could provide Vitale with the managerial grit to guide the Board of Trade through a critical period of transition as it attempts to regain its status atop a fiercely competitive industry by creating successful new products and, more immediately, becoming a for-profit, shareholder-owned corporation pursuing the best interests of the exchange as a whole, rather than the self-interests of warring camps.
Vitale was hired on the heels of a tumultuous span that saw two previous CEOs–Thomas Donovan and Dennis Dutterer–leave within eight months of each other amid political infighting and the aftermath of a hotly contested election for a new chairman.
Besides his tenure in banking, Vitale also brought experience from his tenure on the board of the Chicago Board Options Exchange.
That experience probably cushioned Vitale’s transition from banking to the exchange industry, said CBOE Chairman and Chief Executive William Brodsky. Vitale joined that board after stepping down as vice chairman of Bank One Corp. in 1999 amid substantial executive turmoil.
“People get brought in from the non-exchange world and think they’re running a normal business corporation. They suffer some pretty big culture shock,” Brodsky said.
Newcomers quickly learn that members often cannot agree on whether to trade in the pits or electronically, which products to market, and how to price various contracts.
But the deliberative, intellectual Vitale has been cool amid the chaos of an exchange known historically for politics and rancor–and more recently for its falling seat prices and loss in stature among derivatives exchanges worldwide.
Under Vitale and CBOT Chairman Nickolas Neubauer, who was elected in December 2000, the atmosphere has begun to change.
“They have managed to put together a peaceful period on a political level at the Board of Trade,” said Les Rosenthal, a former exchange chairman.
But that’s not to say Vitale is laid back. Beneath his usually calm exterior simmers a tenacious passion to do what he thinks is right for the business.
“David and I had horrific fights,” said Chicago Stock Exchange Chairman A.D. Frazier, who worked with Vitale at First Chicago Corp.–now Bank One–in the 1980s.
“But nobody got terminally angry about it. It was always about an issue . . . and he was frequently right, which meant I was frequently wrong,” said Frazier, who describes Vitale as “painfully bright.”
Vitale’s detractors put it differently.
“He was very much a total control freak,” said one former Bank One executive, who spoke only on condition he not be named.
Vitale also has been blamed for current problems in the bank’s large corporate business, which he oversaw until 1999. Current Bank One CEO Jamie Dimon has said that area is the bank’s weakest, but Vitale defends his record, saying much could have changed during the two years he has been gone.
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Intense worker
Even Vitale’s critics acknowledge that he works smart and intensely.
He arrives at the Board of Trade at 7 a.m. and leaves for his Hyde Park home around 6 p.m., except on nights when he volunteers for programs at the University of Chicago, or has duties for the boards of numerous civic groups, including the Art Institute of Chicago and the YMCA of Metropolitan Chicago.
In his first year on the job, Vitale already has achieved a string of substantial accomplishments at the Board of Trade, including improving its financial position and presiding over a substantial increase in seat prices, a measure of the exchange’s market standing.
In addition, Vitale and Neubauer settled a bitter, long-running dispute with the CBOE over trading rights, helping to clear the way for becoming a shareholder-owned corporation. That move is expected to make the CBOT more competitive than it has been as a mutually owned, member-run organization.
A member vote on the restructuring is expected early this year.
Some members are so impressed with the exchange’s rapid improvement under Vitale that they now wonder why the ownership structure needs to be changed.
“They knew things had to be different, and now things are different, so they ask why we need to take the next step,” Vitale said.
He tells them: “You let us do these things because we were in extremis. This will keep us from taking a step back.”
In addition, shares bring liquidity for owners and give the exchange flexibility for, say, partnering with other firms or raising capital.
Although he has adapted well to life at the exchange, Vitale says there are major differences from his days near the helm of First Chicago and Bank One.
For one thing, exchange members have more intimate knowledge and interest in the day-to-day decisions at the firm than do shareholders of major corporations.
“The people who own the place work here, and they’re a lot more sensitive to things that may change the environment,” Vitale said.
They are not shy with their opinions, either, which can be helpful–and time-consuming.
“Let’s just say the members are generous in imparting their knowledge,” Vitale said.
The problem is that, historically, many members are concerned with self-interest, and not necessarily the needs of the exchange as a whole.
Managing that is part of Vitale’s challenge.
The Board of Trade needs more products and better technology to stay afloat, experts say, whether its open-outcry pits and its traditional products survive or not.
Difficult challenge
Some of the issues–the technology, deregulation for certain products and meeting customers’ changing needs–are familiar to Vitale from his days in banking, but the challenge of creating exchange products is newer to him, and more difficult, he said.
Fortunately, switching gears and learning new tricks comes naturally to Vitale.
A history major at Harvard, he was headed for Turkey to teach English and coach basketball for the Peace Corps when a recruiter for First Chicago snagged him.
The bank offered him a chance to earn his MBA from the University of Chicago through its First Scholars Program.
Vitale made the switch “not knowing what I was getting into,” and the decision stuck–for 31 years at the same bank.
Before First Chicago merged with NBD Bancorp Inc., and then with Bank One, Vitale and Leo Mullin–now head of Delta Air Lines Inc.–were considered potential heirs to Chief Executive Richard Thomas.
That possibility crumbled with the mergers, when new executives climbed aboard with their own agendas and their own potential heirs. Many former First Chicago executives, including Vitale, departed.