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Board games

13 June 2012 By Jeffrey Goldfarb

Lazard’s newest director implies a serious dearth of choice. The investment bank just put Richard Parsons on its board. Six years ago, it railed against his leadership of Time Warner as part of a campaign led by activist investor Carl Icahn. Lazard may have just been talking its client’s book at the time. But finding unimpeachable directors must be proving quite tough.

Parsons comes with a résumé that would make any headhunter swoon. In addition to once running the world’s biggest media company, he served on Citigroup’s board for 16 years and was its chairman for three of them. He worked in the White House, ran a savings bank and is a New York grandee who sits on the boards of several big arts institutions.

But he didn’t exactly cover himself in glory in his biggest roles. Parsons was part of the boards that pushed through two disastrous mergers: Citi with Travelers, and Time Warner with AOL. Citi also required two government bailouts during his tenure. That led to a rebuke by shareholders, 30 percent of whom voted against re-electing him in 2008. Instead of getting the boot, however, he was made chairman. And that role just ended with Parsons presiding over a rejection by shareholders of Chief Executive Vikram Pandit’s pay package.

Lazard developed its own strong view about Parsons back in 2006 under then, now late, CEO Bruce Wasserstein. For an advisory firm, it took an unusually public position against a corporate chieftain. Wasserstein stood side by side with Icahn to release the 343-page “Lazard Report” supporting a breakup of Time Warner and criticizing Parsons’ stewardship as CEO. “If Dick Parsons indeed has the secret super spicy sauce to drive and deliver greater value, we all say, ’Hallellujah and God bless,”’ Wasserstein said.

Ken Jacobs now runs Lazard. It’s also common to let bygones be bygones when it comes to wars of corporate words. And even in its 2006 critique, Lazard called Parsons “an affable, well-liked executive and consummate politician.” Still, the firm’s new-found approval of Parsons hints at how hard it is for banks to find directors whose qualifications look right both on paper and in practice. Many U.S. bank boards haven’t changed much since the crisis began. JPMorgan’s is one that has grown noticeably stale. Lazard may have just shown one reason why.


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