May 02, 2014
Directorships, 2008 – 2012: 5
Total director compensation, 2008 – 2012: $3,572,317
Average annual director compensation, 2008 – 2012: $714,463
Average compensation per full year of service as director: $229,655
Richard D. Parsons has enjoyed a long career at the intersections of business and politics. As a young man he became close with former New York Governor Nelson Rockefeller, on whose gubernatorial staff he worked. When Rockefeller became vice president, Parsons went to work for him in Washington and has served every Republican administration since. He later joined the law firm Patterson, Belknap, Webb & Tyler, where he worked with Rudolph Giuliani, whose mayoral campaigns Parsons would later support.
After working as an executive of Dime Bank for three years, Parsons’ mentor’s brother, Laurance Rockefeller, recommended to Time Warner CEO Steven Ross that Parsons join the company’s board. Parsons was president of Time Warner when the company sold itself to AOL for $165 billion in AOL stock. This deal took place at the peak of the Internet bubble with AOL being one of the most over-valued companies in the country.
When the bubble burst two months later the value of the AOL side of the deal plummeted. Essentially one of the largest media companies had sold itself for almost nothing. When the merged company span off its AOL division in 2009 it had a market value of just $2.5 billion. Parsons later commented: “fundamentally I thought it [the merger] was a good idea.” He served as Chairman and CEO of the conglomerate from 2002 to 2008.
In 2001 Parsons served as a co-chair of President Bush’s Social Security commission. The commission recommended partially privatizing Social Security. As a result of the plunge in the stock market in 2001 this idea looked much less attractive at the end of the year than the beginning. As a result the commission issued its report on the Friday afternoon just before Christmas.
In 2008, Mr. Parsons served as a member of president-elect Barack Obama’s Economic Transition Team and is a member of the President’s Council on Jobs and Competitiveness. He is Chairman Emeritus of the Partnership for New York City, which another Rockefeller, David, the former head of Chase Manhattan Bank, founded in 1979 to represent the city’s biggest business interests. He was also a founding co-chair of former New York City mayor Michael Bloomberg’s Commission for Economic Opportunity (CEO), of which fellow Director of the Day Judith Rodin was also a member.
Parsons became a director of Citigroup in 1996 and served as the board’s Chairman from 2009 through 2012. He therefore oversaw the bank while it issued a huge volume of mortgage-backed securities, many of them filled with subprime loans, which were at the center of the housing, the collapse of which caused the Great Recession.
Citigroup would have gone bankrupt were it not for support from the federal government. In fact, Citigroup was in such bad financial condition that the Treasury agreed to guarantee the value of $306 billion in questionable assets at the peak of the crisis in the fall of 2008.
At the 2012 annual meeting, Parsons’ last as Chairman, shareholders voted by a margin of 55-45 percent to reject the board of directors’ CEO pay package. Less than 3.0 percent of CEO pay packages received a no vote from shareholders that year. Since the end of the recession, Citigroup’s stock has performed much worse than the market average.
Shortly after losing the say-on-pay vote, New York Governor Andrew Cuomo picked Parsons to chair of the New NY Education Reform Commission. In the announcement of the panel’s creation, Parsons proclaimed, “New York’s students will not be able to compete in the global economy unless we dramatically reform our schools.” Just weeks after being rebuffed for not aligning executive pay with performance at Citigroup, Parsons said the new commission would help build a system that “holds schools accountable for the results they achieve and the dollars they spend.”
Parsons has also been a director of Estée Lauder Companies since 1999, Madison Square Garden Company since February 2010, and Lazard Ltd. since June 2012. He retired from the Time Warner board in May 2009. Since 2009, he has been a senior advisor at the private equity firm Providence Equity Partners.
Notes:
MSG tax abatements:
The company has not paid taxes on its centerpiece namesake arena in prime midtown Manhattan real estate since 1982. The company saved over $16 million in 2012 due to the abatement.
State Pols Square Off Over Madison Square Garden’s Property Tax Exemption (DNAinfo New York)
New Boss for a Media Giant Is an Old Hand at New York (New York Times)
How the AOL-Time Warner Merger Went So Wrong (New York Times)
Bush’s Commission on Social Security May Propose Caps (New York Times)
President’s Council on Jobs and Competitiveness (Whitehouse.gov)
CEO History (NYC Center for Economic Opportunity)
Governor Cuomo Establishes New NY Education Reform Commission (Governor.ny.gov)
