Thursday, March 15, 2012

Parsons: On to the Next Phase

What's next for Parsons?
After an illustrious business career that spanned decades, Richard Parsons is calling it quits this month. 

He announced he wouldn't pursue re-election as chairman of the board at Citi. (Citi, as many know, has been an important, decades-long supporter of the Consortium and a host at Orientation Programs and Consortium events in New York.)

Has an era ended?  Parsons has been a pioneer in many ways, and he wraps up a career filled with quite a few "African-American" firsts."  He was CEO in the 1980s at Dime Savings Bank, at that time a well-known New York regional bank. He later became CEO at AOL Time Warner in the 2000s, landing right in the middle of turmoil from the cantankerous combination of AOL and Time Warner.   

Few African-American lead or have led major financial institutions, so Parsons' exit from the Wall Street scene is noteworthy.  In 2012, Kenneth Chennaultcontinues to preside over American Express. Stanley O’Neal rose to the top at Merrill, scratching and grinding from investment banker to CFO to CEO, but departed suddenly after an avalanche of mortgage-related losses during the financial crisis.

Was Parsons pushed out at Citi? Was this a behind-the-scenes ploy by current CEO Vikram Pandit to seize more control at Citi after a relatively calm and successful 2011? Did Pandit plot to assert himself now that re-engineering, reorganizing and downsizing at Citi are well under way. Not really.

Years ago, Citi adopted a governance strategy long accepted at European institutions--separating the roles of board chairman and the CEO. In the U.S., the CEO is often the board chairman.  Elsewhere, it's likely the CEO answers to a board chairman who is not involved in daily operations. The board chairman watches over the CEO's shoulders. 

So as Parsons exits, Pandit won't rise to the position of chairman; Michael O'Neill will succeed Parsons. The timing might be optimal.  Citi is restructured, performance has improved, odd businesses have been sold, and now it can gear up for the impact of tough Dodd-Frank legislation. 

For his part, Parsons, 63,  is likely contemplating a life with other activities and projects (his interests in the community and in jazz).  As Citi chairman since 2009, he was in a position that sometimes seems ceremonial. Yet with Citi, like most financial institutions since 2008, under the gun, scrapping desperately to survive the crisis and undergoing soul-searching reviews of its strategy, Parsons' role was likely anything but ceremonial.

In the end, he's had a sparkling, assorted career. He started out long ago as an aide for New York Governor Nelson Rockefeller, rode those coat-tails for a long time, and took advantage of contacts to propel himself up the corporate ladder. He eventually transitioned into corporate life and became Dime Savings' head until it was later sold. Years afterward, he found himself at the top of AOL Time Warner after what was an awkward, questionable merger of AOL and Time Warner. 

Business observers have been neutral about his overall performance throughout his career (measured by gross profits, profitability or percentage increases in share prices). Yet whether at Dime, Time Warner or Citi, he always found himself in fire-fighting roles, where he had to lead companies out of corporate turmoil or shepherd them through complex restructurings. 

Some say he had the knack for being in the right place at the right time. That knack started with his ties to Rockefeller, who got to know him after law school, liked him and tapped him to be an assistant. That relationship jump-started his career.

Being lucky helped, but rising to the occasion helped.  And he demonstrated he could manage a variety of ugly corporate situations in different industries, solve board-level problems, negotiate effectively and bring together groups with different agenda. He was often praised as being conciliatory, comfortable to work with, smooth, and one who understood tough, grinding business issues. 

A classic case of someone who didn't ruffle feathers, who was generally well liked, and was fortunate to have started his career with the best of contacts. One who should be remembered, too, for those pioneering roles. 

Tracy Williams

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