The GC as Chairman: Lawyer as Lightning Rod
April 22, 2008 | Filed Under GC as CEO Springboard, Governance
As Ed Thornton notes in Legal Week, the appointment of UBS GC Peter Kurer as chairman has again stirred the debate as to whether this is a trend, or a good idea.
Given the small sample size represented by these appointments, those who point to the experience of Charles Prince at Citigroup aren’t gaining much by the comparison. Interestingly, these same commentators often fail to note the legal background of Goldman Sachs CEO Lloyd Blankfein, who seems to be doing quite well, thank you.
The amount of criticism has forced Mr. Kurer to respond (as reported in the Times Online) even framing some shareholder attacks as “discriminatory” against lawyers:
“People should judge me on actions and not concepts,” he said, denying that his lack of management experience was an impediment to running an organisation of 85,000 people.
Certain London law firm lawyers have also rallied to Mr. Kurer’s defense.
Many companies that turn to a CEO or chairman with a legal background may be highly regulated (Duke Power) depend upon IP and also regulated (Pfizer), or are in some kind of market challenge/turnaround situation (Home Depot/UBS). Some may be successful, some not so much.
Just as a legal background surely isn’t a guarantee of a CEO or board chair slot, it shouldn’t be a road block, either.
Consider also that rarely was the predecessor CEO/chairman in these situations a lawyer. But for some reason perpetuating non-lawyer leadership as a status quo is considered prudent.
Lawyers of the corporate world unite!
An Honorable Lawyer-CEO?
November 8, 2007 | Filed Under GC as CEO Springboard, In the News
Much was made of the rise of lawyers as CEOs when Pfizer and Home Depot joined Citigroup (and others) in naming former GCs as CEO.
Now the other shoe drops; when you’ve arrived your departure clock starts ticking.
Last Sunday Citigroup CEO Charles Prince resigned. Large financial services companies do nothing small. When they make money, they make it by the truckload. And when they lose it, stand back, call the Fed, and get ready for numbers starting with a “B.”
What caught my eye, however, was Mr. Prince’s memo to staff (as reprinted by the New York Times). Particularly this paragraph:
I am responsible for the conduct of our businesses. It is my judgment that the size of these charges makes stepping down the only honorable course for me to take as Chief Executive Officer. This is what I advised the Board.
It is rare for a CEO, particularly one who is stepping down, to (a) state the obvious, (b) take responsibility, and (c) do so in three short sentences.
Must be that legal writing training.
Here’s hoping that other GCs have the opportunity to be CEO. The marketers, financial types and engineers have been running up losses for years.
The GC: Going Up? (or Down!)
October 4, 2007 | Filed Under GC Liability, GC as CEO Springboard
It’s like living in an elevator.
Two recent articles in the ALM universe show the highs and lows of the GC life.
The first discusses whether the GC position could be a road to the top. Writer Katheryn Hayes Tucker quotes former executive recruiter Frederick W. Wackerle, who is not sold on the idea yet, but sees a glimmer of logic:
To be sure, Wackerle considers a law degree to be valuable, particularly when combined with an MBA. But he advises not spending a long time in a law firm or an in-house job on the way to the top. “Reporting to the CEO as general counsel for 20 years, it’s very unlikely that they would be a candidate for CEO succession,” he said, “unless they’re involved in working with strategy.”
This is the same attitude that the Wall Street Journal adopted earlier this year.
But just as the GC community starts to see more options for upward mobility, reality intrudes and reminds of the very serious nature of the position. The second article in question lists the GCs charged with civil or criminal wrongdoing. To be fair, the problems at nearly all these companies extended way beyond the GC.
Given the challenging matters dealt with by today’s GC, they get much more contact with CEOs, boards, and the investor community. Maybe that’s why boards are increasingly open to consider a lawyer for CEO.
Just as long as they pick carefully.
Another GC Becomes CEO
February 27, 2007 | Filed Under GC as CEO Springboard, In the News
And this time it’s not a Jeff or a Frank: it’s an Angela!
Health insurer Wellpoint announced the appointment of general counsel Angela Braly as CEO. Ms. Braly then becomes the highest-ranking of the 10 female CEOs on the Fortune 500, according to USA Today.
It’s about time that a woman joins the fraternity of such ex-GC CEOs as Pfizer’s Kindler and Home Depot’s Blake. To say nothing of lawyer-CEOs at the helm of Goldman Sachs, Time Warner, Citigroup, Marsh, and Waste Mangement, to name more than a few.
Ms. Braly was an architect of WellPoint’s recent acquisition strategies and also was responsible for public affairs. Given the substantial regulatory and policy challenges faced by health insurers, a legal background here is a natural, and has some strong parallels to the appointment of Mr. Kindler at Pfizer.
I fully expect some press reports to comment on Ms. Braly’s experience in a somewhat negative way (such as this from the Chicago Tribune; it fails to note that she was previously CEO of a subsidiary). Perhaps down the road the appointment of a GC as CEO won’t be news on this fact alone, and a legal background will be seen as an asset.
The Lawyer as CEO is News?
January 10, 2007 | Filed Under GC as CEO Springboard, Governance
The Wall Street Journal focused on this again today with an article entitled “When Firms Turn to Lawyers.” (temp link here).
The tone at the top of the article is apparent when writer Alan Murray starts by noting that the boards of Pfizer and Home Depot turned to lawyers to “clean up the mess” left by the prior CEO:
The folks at Pfizer insist Jeffrey Kindler’s law degree (Harvard, ‘80) had little to do with his selection as the company’s new CEO. At Home Depot, where the top job went to Frank Blake (Columbia, ‘76) — a friend and former General Electric colleague of Mr. Kindler — a spokesman says there’s a difference “between having a law degree and being a lawyer. Basically, since 1998, Frank’s been out of the lawyer mode.”
Mr. Murray also examines the challenges faced by Citigroup CEO Charles Prince.
I addressed this before in response to an earlier article also written by Mr. Murray; here’s the salient part:
But most lawyers (and any GC) has to love the characterization of Mr. Kindler’s prior Pfizer job history as having “functioned only as general counsel.”
Somehow when US CEOs for decades came from finance or marketing or engineering, those disciplines were seen as good seasoning.
Two of the major crash-and-burn business stories of the last decade involved a Harvard-McKinsey chap and a bad dancer who also was an accountant.
So can MBAs and CPAs be good CEOs?
I think we are entering a phase in business when boards are looking closely at skill sets as well as experience when choosing a CEO. Some executives-with-law-degrees have superior skill sets, and two of them are undoubtedly Messrs. Kindler and Blake. Few such executives have the requisite experience outside the legal discipline. But these two did. And I’d venture a guess that more will be ready for board consideration in the coming years.
Can lawyers make good CEOs? Sure, just give qualified ones a shot and hold them accountable for results.
At the end of the day, it’s sort of like asking whether economists can make good journalists. I’d say definitely yes.
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