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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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