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Dick Parsons to Step Down, 2nd Black CEO to Resign in a Week!
By Yoji Cole
November 06, 2007
How would things be different if more women and people of color headed up Fortune 500 companies? Click here to tell us what you think or read what DiversityInc readers are saying.
Time Warner's CEO Richard (Dick)
Parsons, whose contract was set to expire in five months, will step down in
January, the company announced Monday.
Parsons is the second high-profile
black CEO to resign in the last seven days, although he is not being ushered to
the exit as was E. Stanley O'Neal, former CEO of Merrill Lynch. O'Neal resigned
Oct. 30, effective immediately amid the investment bank's announcement that it
had lost $2.2 billion because of investing in the risky subprime-mortgage
industry.
Parsons, whose calm and thoughtful
management style was welcomed when he took over at Time Warner, is still
thought of in high regard at the media conglomerate. He will retain his
seat as chairman of Time Warner's corporate board. Time Warner Chief Operating
Officer Jeff Bewkes is set to succeed Parsons.
Parsons' exit, however, further
shrinks the pool of high-profile CEOs of color. In 1995, not one Fortune 500 CEO
was a person of color. Today, 14 Fortune 500 companies are run by people of
color. After Parsons resigns there will be only four black CEOs of Fortune 500
companies: Aylwin Lewis, Sears Holdings; Kenneth Chenault, American Express;
Ronald Williams, Aetna; and Clarence Otis, Darden
Restaurants.
American Express and
Darden Restaurants are Nos. 23 and 45, respectively, in The 2007 DiversityInc Top 50
Companies for Diversity®. Merrill Lynch is one of
DiversityInc's 25 Noteworthy Companies
in 2007.
To date, four Fortune
500 CEOs are Latino; five are Asian, including two women of color; and 13 are
women. Click here to find out who they are.
"Dick Parsons has done an
outstanding job during his tenure as chief executive officer," said Robert C.
Clark, chairman of the Nominating and Governance Committee. "The Board is
grateful for Dick's exceptional leadership in turning this company around and
putting it on a solid foundation for the future."
Parsons took the helm of Time Warner
in 2002 and spent much of his time repairing the damage from its ill-fated
$106-billion merger with America Online in 2000. The deal promised synergies
that never happened and forced Parsons to deal with shareholder lawsuits and
federal investigations upon the revelation of AOL's shoddy accounting practices.
Parsons led Time Warner's turnaround
internally in part by publicly endorsing diversity-management practices and
putting them to work behind the scenes. Externally, Parsons shed Time Warner's
excess and set the company on a path toward sustainable growth.
"He was a very visible leader of
course and talked openly about the importance [of diversity] from a business
perspective, the importance of understanding different markets and our ability
to produce, market and distribute to that diverse audience base," said Kiko
Washington, senior vice president, worldwide human resources for Warner Bros. (a
division of Time Warner).
Parsons demonstrated his commitment
to diversity management in February 2003 when he ordered CEOs from Time Warner's
business units to sit at a table across from high-level customers who bluntly
told them which Time Warner divisions employed people who understood diverse
consumer markets and which did not.
"We were trying to figure out a way
for the business case to come alive for people," Patricia Fili-Krushel,
executive vice president of administration, told
DiversityInc in the Jan./Feb. 2005 cover story, Dick
Parsons: The Calm That Hit the Time Warner
Storm ."
Of Time Warner's seven business
units, Turner Broadcasting System is currently No. 21 on the DiversityInc Top 50
list and came in at No. 7 in 2006 and No. 2 in 2005. HBO also made the list,
ranking No. 5 in 2006.
"If you look at Time Warner, whether
it's HBO or Warner Bros., while one could argue there's always room for
improvement of inclusive strategies, we are a heck of a lot more diverse now
than prior to Dick becoming CEO," says Washington.
Parsons' critics complained that he
should have further divested Time Warner's business units. In 2006, he
successfully defended a challenge from investor Carl Icahn, who wanted to break
up Time Warner. The company's stock price has remained around the same level for
the past five years, which has negatively impacted Parsons' reputation.
After Time Warner released news of Parsons' resignation Deutsche Bank
reiterated a buy rating on Time Warner shares reasoning that Bewkes taking
over as CEO on Jan. 1, "could lead to a strategic realignment of assets,"
reported CNN Money.
While Bewkes may sell some Time
Warner companies, it is expected that he will continue the strong focus on
diversity management. Perhaps most telling is his seven-year stint as HBO's CEO.
Under Bewkes, HBO became the world's most profitable TV network and a critics'
darling for its original programming and documentaries, many of which featured
people from underrepresented groups.
"Jeff is going to pick up exactly
[where Dick leaves off]," says Washington, who worked with Bewkes at HBO. "He's
already communicated our need to focus on diverse markets. You look at HBO and
its success with diverse audiences and that happened under Jeff's leadership. He
sees the business opportunity."
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