Some executives enjoy challenges. Richard Parsons, however, seems addicted to them. Barely a month after stepping down as chairman of Time Warner, the once bankruptcy-bound media giant, Parsons agreed this week to become chairman of Citigroup Inc., which is nearing a financial meltdown. Why would Parsons, 60, give up retirement to manage yet another corporate crisis? As a long time member of the Citi board, he's intimately acquainted with the mess, and already was playing an unsung role behind the scenes. Now he's front and center. "Dick very much likes to be at the intersection of government and companies," declared Edward Adler, Time Warner's top communications exec. "He likes to be in that game."
Parsons will get plenty of playing time. As part of the $345 billion Troubled Asset Relief Program, Citi is receiving a $20 billion bailout. And with so much taxpayer money at stake, Washington's scrutiny of Citi during Parsons tenure is destined to intensify exponentially.
But can he really turn Citi around? The mealymouthed answer: only time will tell. But if you let his track record speak for itself, the answer is a resounding yes. Fortunately for Citi, Parsons spent much of his early career bridging the gap between Corporate America and the government. As a young lawyer in the 70s, Parsons was a protégé of and then consigliere to Nelson Rockefeller the late New York governor, vice president and scion of the storied billionaire family. "Having worked with Dick for a lot of years, he's always best when there's been a moment of crisis," says Adler.
Parsons knows something about crises. Beleaguered after approving the media company's disastrous combination with AOL, Time Warner's directors appointed Parsons—the company's No. 2 and a fellow board member—CEO in December 2001. The post had been vacant after it was essentially abdicated by Gerald Levin, co-architect of history's worst transaction. Steve Case, the other architect and chairman of the combined company, had too little credibility to even be considered for the job. As a director and as Levin's chief lieutenant, Parsons didn't escape blame either, having voted for and helped complete Levin's and Case's deal. His fellow directors tapped him anyway: they had seen his coolness under fire in the corporate cauldron that had always been the dysfunctional Time Warner, an amalgam of clashing egos and corporate cultures.
The company Parsons took over was a mess. The shares had crashed, shareholders were suing and federal regulators and the Justice Department were breathing down the executives' necks, investigating possible securities laws violations and other merger-related skullduggery. Parsons moved quickly to rebuild the top management, appointing his eventual successor, Jeff Bewkes, as a top lieutenant. He sold off chunks of the sprawling empire for funds to pay down massive debt and to help underwrite multibillion-dollar settlements of the various lawsuits and investigations. He pulled the company back from the brink.
But after the crisis, Parsons seemed bored with the day-to-day routine of running the business, and relied heavily on Bewkes and other colleagues. Shareholders and Wall Street criticized him for lacking vision. His response was that vision had gotten Time Warner into a historic mess. The new approach would be to under-promise and over-deliver.
Then came another crisis: Carl Icahn, the storied shareholder activist, who purchased tons of the depressed Time Warner shares and began a fierce campaign to force the company to dismember itself and sell off the parts. Parsons was back in his element. He schmoozed Icahn into submission, ultimately winning the praise of the crafty investor, who abandoned his breakup plan and later sold his stake, having extracted only minor concessions.
Parsons has spent his entire career being groomed for the hot seat at Time Warner—and now Citi. His most useful talent is diplomacy. At Rockefeller's knee in the early 70s, he began to hone an innate flair for the art of getting along and negotiating conflict at the top. Rockefeller, then governor of New York, had snatched up Parsons and made him a counselor after learning that the young man had nailed what was then the highest score ever on the New York bar exam. Rockefeller quickly found Parsons indispensable. When Gerald Ford tapped Rockefeller as his veep, Parsons was one of the few aides whom the patriarch of the powerful billionaire family asked to come along to Washington. There, he caught the eye of the president, who tapped Parsons to help run the White House domestic council. In that role, he largely drafted the rules that implement Title IX, which outlaws sex discrimination in education. It was Parsons who was handed the difficult brief of handling the Boston school-busing crisis for the White House.
With the Ford administration nearing an end, Rockefeller dispatched Parsons back to New York. In 1977, the former governor and vice president called on Parsons to help settle a family feud over leadership, finances and ideology. At first, many in the family suspiciously viewed Parsons as Nelson's flunky. But Parsons plunged into this pile of rich egos, and, through quiet, persistent coaxing, he finally prevailed, pressing the family to form a corporation to handle their affairs and put an end to the intergenerational tensions.
He next spent several years at a Rockefeller-connected law firm, but then abruptly changed course, accepting the CEO post at troubled Dime Savings Bank in New York in 1988, even though he had no banking experience. Parsons managed to stave off regulators, raising $300 million in new capital and ultimately merging Dime with another thrift in 1994. The following year, Levin stunned the media world by tapping him to be president of Time Warner.
Almost everything on Gerald Levin's corporate agenda at the time—from acquisitions, to the unburdening of the balance sheet, to pressing regulatory issues—was a project that could benefit from Parsons's skills. Parsons kept squabbling executives from each other's throats, helped negotiate the purchase of Ted Turner's company and settled nasty disputes between Levin and other moguls.
Citi presents its own unique set of challenges. But if Parsons can apply the negotiation skills he learned alongside Rockefeller, the touch he used to heal Time Warner and the savvy he gained while previously dealing with government regulators, then he might just be the right man for the job. And lest we overlook it, as an economic policy advisor to President Obama, he has the ear of the biggest ear in Washington.