Bear Stearns CEO James Cayne has become yet another textbook example of why executives at the top of their game should never regard journalists as their friends. Just 18 months ago, The Wall Street Journal characterized Mr. Cayne as being “renowned at Bear for his hands-on approach.” Bear’s fortunes have changed since then, and so has the Journal’s reporting of Mr. Cayne’s leadership.
It turns out Mr. Cayne might not have been quite as “hands-on” as the Journal’s readers were initially led to believe. The paper reported last week that Mr. Cayne was hitting the links or playing bridge during much of the summer while two of the firm’s hedge funds were badly imploding. Regardless, Bear president Alan Schwartz insists that Mr. Cayne remains fully engaged.
There are some top business strategists who would argue that good leadership is all about delegating authority, even at times of crisis. Indeed, one of the savviest PR executives I know once chose to remain on vacation when his company became embroiled in a crisis. When I later asked him why he didn’t feel compelled to return to the office, he matter-of-factly replied, “I surround myself with good people and I knew they could handle it.”
For me, the Journal’s most startling disclosure in that story about Jimmy Cayne was not that he is a master at delegating or that he allegedly likes to smoke a little marijuana from time to time. Rather, it’s that talk-show host Maury Povich is one of Mr. Cayne’s golf partners. For those who are not particularly familiar with the underbelly of American culture, Mr. Povich is host of the daytime chat show called “Maury.” The show isn’t quite as exploitive as “The Jerry Springer Show,” but it’s pretty close. One of their favorite shticks is to have women drag current or former husbands, boyfriends, and one-night-stands on to the show to take paternity tests. In manners as dignified and sympathetic as the show itself, more than a few guys have pranced around the stage to hear Mr. Povich deliver his signature lines: “The results of the paternity test are in. With 99.7% accuracy, you are …NOT the father!”
That said, Mr. Cayne could teach Mr. Povich a thing or two about exploiting – err, I mean leveraging – a situation. According to “King of the Club“, a book by Charlie Gasparino about former NYSE head Dick Grasso, Mr. Cayne spotted an opportunity in the immediate aftermath of 9/11 that would be to his company’s competitive advantage and took it. Mr. Gasparino reports that when the operations of the NYSE and several brokerage firms were impaired after the collapse of the Twin Towers, Mr. Grasso wanted to hold a meeting of Wall Street’s top executives at the Exchange. Mr. Cayne, however, convinced Mr. Grasso to hold the meeting at Bear’s midtown headquarters.
As reported on page 157 of Mr. Gasparino’s book:
“It wasn’t long before it became clear why Cayne was being so accommodating. Bear Stearns’s competitors, all representatives of the top securities firms, began filing into the large conference room, many with stern looks on their faces as they realized they would have to hold a meeting not on neutral ground at the NYSE but on Cayne’s turf. They knew that Bear would get publicity as being one of the few Wall Street firms open for business following the attacks.”
Mr. Gasparino said that Mr. Cayne wanted to hold a follow-up meeting at Bear’s headquarters, but then SEC chairman Harvey Pitt nixed the idea.
“The official reason given for the change in venue was a series of bomb scares near Bear’s offices. But the real reason was much different. Pitt was blown away by all the Bear Stearns signs that appeared in the media room where the press conference was televised.”
They say things happen in threes. With two prominent Wall Street CEOs already shown the door in recent days, I can’t help but wonder if Bear’s board is pondering a similar fate for Mr. Cayne. If that turns out to be the case, maybe they should do it live on “Maury.” I can hear it now… “Mr. Cayne, the results of the Board are in. With 100% accuracy, you are … NOT the CEO!”
In the interest of full disclosure: S&A represented Mr. Grasso and I’m mentioned in the body of Mr. Gasparino’s book and in his acknowledgments.