America Online Inc. chief executive Steve Case is going to unusual lengths to secure his boardroom power base in the AOL-Time Warner merger, naming four executives and close associates who will answer directly to him rather than the new company's CEO, Time Warner Inc. chief Gerald Levin.
The merger agreement the two companies filed yesterday with the Securities and Exchange Commission also spelled out specific areas of authority that will be reserved for Case as AOL Time Warner's chairman--duties that go beyond the traditional ceremonial role of a chairman of the board.
Case will maintain "supervisory responsibility" over a broad but amorphous sweep of operations: global public policy, technology policy, venture-type investments, philanthropy and "future innovation," according to the filing.
Case's inner circle will include AOL Vice Chairman Kenneth J. Novack; public relations consultant Kenneth Lerer; Senior Vice President George Vradenburg III, the company's public policy coordinator; and chief technology officer William Raduchel. Though the agreement did not say what titles they will hold in the combined company, Levin will not have the power to fire them.
"Normally the key person to whom everyone reports directly or indirectly is the chief executive officer," said Columbia University law professor John C. Coffee Jr., an authority on corporate governance. "You've got a small little enclave here that is carved out of the general managerial and executive authority of the chief executive officer."
The arrangement, which Coffee called "very rare," gives the members of that enclave a safety net amid the jockeying for power and winnowing of jobs that often accompany the melding of two corporate hierarchies.
Levin is an experienced master of the power game, having risen from the merger of Time Inc. and Warner Communications to dominate the media conglomerate.
Though the merger agreement ensures that Case will do more than preside over board meetings while Levin runs the company, it gives Case a much smaller sphere of authority than he occupies as AOL's undisputed leader.
The four executives who will report directly to Case are part of a group known at AOL as "Steve's senior staff." The group meets every Monday over lunch to discuss the company's most pressing issues and is the core team that orchestrated the merger.
AOL spokesman Jim Whitney said, "These are key people in the company who report to [Case] today." Officials declined further comment on the arrangement.
Novack, 58, a lawyer based in Boston who has largely remained out of the spotlight, is known at AOL as Case's most trusted adviser and has been working with him for more than a decade. Novack has been the lead negotiator on a number of AOL's biggest deals, including the current megamerger.
Lerer, 47, was brought in as a consultant to the company by AOL President Robert Pittman on the same day he joined the company in 1997, eclipsing Case's longtime PR firm, Fleishman Hillard. Lerer, of Manhattan public relations powerhouse Robinson Lerer & Montgomery, three months ago took on a senior vice president title without portfolio at AOL.
Vradenburg, 56, has spearheaded AOL's fight to open cable lines to competition between Internet service providers and has been instrumental in formulating the company's global strategy and negotiating with foreign governments to further the company's international expansion.
Raduchel, 53, who was named to the CTO job in September, has been positioned as critical to AOL's efforts to shake its image as a technology backwater.