Warning: getimagesize(): Filename cannot be empty in /home/blackenterprise/public_html/wp-content/themes/blackenterprise/single-standard.php on line 35
In one week the number of black CEOs of the nation’s top publicly-traded companies fell by two. Merill Lynch CEO Stanley O’Neal was ousted for making a bad bet on mortgage-backed securities. In an unrelated act, Richard Parsons announced he was retiring as CEO of Time Warner after putting in place an orderly succession plan.
Often CEOs keep their jobs only as long as their strengths match current corporate needs. “The business strategy challenges that Time Warner faces now are very different from what it faced when Dick Parsons became CEO. That is why he will be stepping down,” says Bernard E. Anderson, a member of the be Board of Economists. In 2001, Time Warner’s difficult merger with AOL made Parsons, the company’s co-COO at the time, the man of the hour. “His contacts, and background as a lawyer and businessman was a combination thought helpful in successfully negotiating the integration of AOL and Time Warner. He did that, but was unable to increase the share price. That’s the next challenge.”
In 2002, Merrill Lynch wanted to increase profits, and Stanley O’Neal was a superstar for thinking of new ways of expanding the business services of the financial services company. Merrill Lynch elevated O’Neal, and he used the company’s strong capital base to make it the No. 1 provider of collateralized debt obligation instruments. In seven years, Merrill captured 5% to 45% of the structured investment vehicle (SIV) market share, which includes CDOs. Merrill Lynch’s profits and share price shot up dramatically. But when the 2007 subprime mortgage meltdown cut demand for SIVs, those products’ earnings shrank, and Merrill Lynch had to write down those assets’ values. This resulted in a staggering $8.4 billion write-off for the financial services giant. “It matters not what color you are. When you preside over that kind of asset devaluation you’re going to lose your job. “There was no way under those circumstances that Stan O’Neal could have survived,” Anderson says. O’Neal’s ouster from Merrill Lynch was coupled with an alleged secret meeting with Wachovia to discuss a possible merger that board members were never told about.
Because only eight African Americans were at the helm of the top 1,000 publicly traded companies in 2007, “any reduction of rank will be viewed as a watershed event,” says Carl Brooks, president and CEO of the Alexandria, Virginia-based Executive Leadership Council. The current black CEO rosters include Kenneth Chenault of American Express, Ronald Williams of Aetna, Clarence Otis of Darden Restaurants, Aylwin B. Lewis of Sears, John Thompson of Symantec, and Rodney O’Neal of Delphi Systems.
The rise of black executives has not been reversed, says Thomas Boston, Ph.D., an economics professor at the Georgia Institute of Technology and a member of the be Board of Economists. “I don’t think it’s a setback,” he says. “The corporate CEO position is becoming more of a merry-go-round for everyone, black or white, because of the tough, competitive environment they must negotiate. One bad strategic move can have enormous adverse consequences on