Going Quietly

Peterson gives up his top spot

Wall Street brokers and financiers have long been accustomed to power struggles in the executive suite. But they have seldom seen the head of a major firm voluntarily and abruptly surrender his top spot because an ambitious colleague wanted it. That was precisely what Peter Peterson, chairman of Lehman Bros. Kuhn Loeb, did last week.

Peterson, 57, Secretary of Commerce under President Nixon, stunned Wall Street by announcing that he will leave Lehman Bros, next January in order to turn over full control to Lewis Glucksman, 57, who became co-chief executive only two months ago. Said Peterson: "Lew told me that after considerable thought, he had concluded that this arrangement fell short of permitting him the fulfillment of his larger goals and of realizing the full potential of his capabilities. He told me that he felt he could achieve that fulfillment only by assuming the sole direction of the firm."

Peterson's remarks set off rumors, and firm denials, that he had been elbowed aside. But one close associate called the statement typical of Peterson, and attributed it to the temperament he had inherited from his Greek immigrant parents, whose surname was originally Petropoulos. Said the friend: "Everything Peterson said came from the heart. The key to the man is his Greek origin. No Anglo-Saxon could ever have made such an emotional and candid statement."

According to Peterson, Glucksman told him about three weeks ago that he was unhappy with his role as co-boss. Peterson had named him to that unusual position two months earlier. "He spoke very movingly of how much his life was wrapped up in this firm," the chairman recalled. The two men worked out an arrangement under which Glucksman will become sole chief executive of the 133-year-old firm in October and assume the additional title of chairman when Peterson leaves in January.

Glucksman, a burly stock-and-bond trader, joined Lehman Bros, in 1963. He is known around Wall Street as a workaholic who often arrives at his desk before 6 in the morning and rarely leaves before 6:30 at night. "We all knew that his entire life was dedicated to one day running the firm," recalls a former colleague. Glucksman said last week that he was "grateful beyond words" to Peterson for "the wisdom and understanding he has consistently displayed during the years of our close cooperation." He added, "We've been good friends, and we will always be good friends. In fact, I do not have many friends besides Peter."

Lehman Bros, had lost $18 million and was near bankruptcy when Peterson joined it as vice chairman in 1973. He quickly moved up to chairman and embarked on cost cutting and rapid expansion. In 1977 the company merged with Kuhn, Loeb & Co., a 1,200-employee investment-banking house with $12 million in capital. Lehman Bros, now ranks as Wall Street's sixth largest firm and has more than 3,000 employees. The company earned about $140 million before taxes in fiscal 1982, and has already topped that this year.

Under Peterson, Lehman Bros, has become a major financial adviser to corporations involved in mergers and acquisitions. It helped to arrange 77 consolidations last year, more than any other Wall Street firm. Among the deals it has worked on were Allied Corp.'s $2.3 billion takeover of Bendix, and Occidental Petroleum's acquisition of Cities Service for about $4 billion.

After leaving Lehman Bros., Peterson will join Eli Jacobs, 45, a Los Angeles-based financier, to form a firm that will invest in new businesses. Jacobs is founder and chairman of Bio-Response, a producer of antibodies used in diagnosing blood samples, and has investments in fields ranging from energy exploration to retailing. Says he of Peterson: "We talked about doing this for a number of years. When Pete decided to leave Lehman he called me, and the negotiations took about 30 seconds."

Peterson will bring an ample endowment to the venture with Jacobs. His share of Lehman Bros, profits over the past ten years is estimated at $10 million, and he could transfer some or all of it to the new company. Lehman Bros, has also agreed to put up $5 million for the venture. Such contributions should ensure a flying start for the fledgling concern. This file is automatically generated by a robot program, so viewer discretion is required.