AOL Time Warner Inc said its board elected Chief Executive Officer Richard Parsons to succeed Stephen Case as chairman on May 16 when he steps down from the job at the world's largest media company.
The decision of AOL Time Warner's board, which met Thursday in New York, was unanimous, Vice Chairman Ted Turner told reporters.
Parsons's appointment consolidates the power of executives from Time Warner Inc over former America Online Inc officials who advocated the Internet company's 2001 purchase of the media and entertainment company founded in the 1920s.
Parsons won the chairman-CEO job a week after an expert panel recommended that companies separate the posts to curb executive power. Any sacrifice of board independence in this case is outweighed by the benefits of centralized direction as the company tries to turn around its online unit and contends with two US accounting investigations, an investor said.
The 54-year-old Parsons "is the best choice overall because it maintains continuity and avoids introducing a potential area of management conflict," said Richard Barnett, a Los Angeles-based money manager at Northern Trust Corp, which owned 15.4 million AOL Time Warner shares in September.
As long as AOL Time Warner sets up a formal structure for outside directors to evaluate the CEO's performance, there shouldn't be a problem with Parsons holding both the chief executive and chairman posts, said John Coffee, a law professor at Columbia University.
Parsons's combined chairman-CEO job places him among the most powerful media moguls in the world, including Walt Disney Co's Michael Eisner, Viacom Inc's Sumner Redstone and News Corp's Rupert Murdoch.
Investors may want AOL Time Warner to name a "presiding" director, said Patrick McGurn of Institutional Shareholder Services, which advises shareholders on proxy and corporate governance issues. A presiding director is independent of management and has control over board agendas and proposals.
A panel last week made up of government officials and executives said US companies should name a presiding director to protect shareholders' interests if the chairman has ties to management.
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