The last tycoons: the secret history of Lazard Frères & Co

by William D. Cohan

  After Gerowin had been at Lazard for a few years, the firm decided to hire a second woman banker, Linda Pohs. Pohs had been working at First Boston. There was a partners' meeting where the subject of hiring her came up. Jim Glanville spoke up at the meeting. "Why are we firing Mina?" he said. "She's getting the hang of it. The work seems okay. I don't understand why you're firing her for some unknown." Another partner corrected Glanville's misimpression of what was going on. "So someone finally said, 'We're not firing Mina,'" Gerowin recalled being told after the meeting. "This would be a second woman. And Glanville's answer was, 'I thought the EEO meant we only had to have one.' This should set the tone for you."

  In August 1985, Gerowin's brother was killed in an airplane crash. Naturally, this caused her to rethink her goals and how she wanted to spend her life. She had given her all to the firm for the previous five years and received little but grief in return. "It was so brutal," she said. "I mean, my brother's death made me realize, you know what? I need a life. I'd given these guys a life." The tipping point came a couple months later when Bill Loomis asked her to lunch. "You're not being very productive lately," he told her. "I say, 'My brother died two months ago. We're still trying to find the airplane and lift it.' This was off of Block Island, and this guy looks at me and says, 'That was two months ago.' And it was like a snap awakening." She left Lazard soon thereafter to head up the restructuring advisory effort at Dean Witter, the brokerage firm that would later merge with Morgan Stanley. One longtime partner recalled that Gerowin did have a difficult time at the firm, partially for reasons unique to her and partially for reasons related to the slow changing attitudes toward women on Wall Street. "From the beginning, she had an unhappy experience," he said. "She didn't get along with partners. Frankly, I think it was very difficult then to be a woman. But I actually don't think it was about her being a woman; it was more just her working relationships and the work. At the time, though, the firm was extremely chauvinistic, as was Wall Street."

  Gerowin may have paved the way for other women bankers at Lazard, but their task was no less imposing. Linda Pohs left the firm before the decade was out and soon thereafter married David Supino. Michael Carmody--a woman--joined Lazard after Pohs but left before her, supposedly a victim of unkept promises and harassment from the likes of Jim Glanville, Luis Rinaldini, and Felix. When she was pregnant, a Lazard partner said to her: "Why don't you just go home and do what you do best and have your baby?" After she was fired by the firm and threatened to sue, Wachtell, Lipton was brought in. She was said to have received a $1 million settlement from the firm and has moved to South Africa.

  Sandy Lamb came from Mutual of New York. Christina Mohr came from Lehman Brothers. Kathy Kelly came from First Boston and Rothschild. Jenny Sullivan, Mary Conwell, and Susan McArthur all joined. These women were part of the general hiring wave on Wall Street in the 1980s that even Lazard could not avoid, per Loomis's recommendations. "And while we were one of a group of people, they built that firm on our backs," Kathy Kelly said. "And it would have been nice to have shared in the rewards. And I don't believe that by and large we did." The business was rapidly changing from being one where white men met and solved the social issues of mergers to one where white men met to solve the financial and social issues. The new crop of hires was proficient in the use of the computer programs that did the analytical work of relative valuation and dilution. These analyses became a new and integral part of the deal business. "And it was the beginning of seven of the most wonderful years of my life," Kelly said. "I have even tears welling in my eyes. Absolute, sheer unadulterated hell. But waking up every day was a pleasure because every day was an intellectual dialectic. Every day was a challenge. And you were working with people who weren't just smart. You could feel the tangible difference between yourself and their IQ. I mean, it was phenomenal." The new hires--men and women--were simply "utils," as one of them explained, "cogs in the machine." The problem for Lazard became what to do with the "utils" as they progressed and showed genuine promise as bankers. "Obviously that's where it becomes an issue," explained one of the women professionals at that time. "Because at the point at which you're no longer a util, there's a question of whether you become additive or a threat. Or just expense. You know what I mean? So it was a bit of a struggle without a lot of thought process around what you did with people in that gap between the time they were utils and the time they became gray-haired themselves. Let's just say there was a pretty long gap where you had to kind of fend for yourself."

  To succeed at Lazard, the women bankers, even more so than the men, had to figure out a way to bring in business, the coin of the realm. Whereas some of the male bankers were paid well and were promoted for working on Felix's deals and "carrying his bags"--a role that had its own costs--and others seemed to get the deals that came in over the transom, neither of these more traditional avenues to success seemed to be available to the few women bankers at Lazard. Felix never chose one of the women as his understudy, although many of them said he was pleased to flirt with them and to work with them occasionally. Most of the women at Lazard could not figure out how to play this game or lost interest in trying. "It's a white man's world," one of them said. Kathy Kelly, for one, eschewed her social life for some seven years in favor of her Lazard career, and then on the day she thought she would finally be promoted to partner, she was fired.

  "I believe that Bill Loomis, acting in my best interest, was absolutely right in letting me go," she said. "However, I don't believe if I had been one of the guys that I would have been let go." Christina Mohr gave it her all. She transformed herself into a tough, no-nonsense street fighter who refused to kowtow to the men at Lazard. She fit the stereotypical profile of the successful tough-as-nails female Wall Street banker. She occasionally smoked cigars. Within two days of giving birth to her children, she was back at the office. Nobody, at any level, worked harder than she did. She was not much fun to work for. She carved out for herself a niche of the clients that nobody else at Lazard wanted--in retail and in consumer products, ironically the traditional route of the outsiders and the immigrants. She started bringing in clients and winning business. She also sought to mentor the few younger women at the firm and act as a role model for them. She became the first female M&A partner at Lazard, in 1990. "I remember Michel saying to me at one point, you'll become a partner the year after it is evident to everyone that you are one," Mohr recalled. Added Loomis: "I think that Christina Mohr is a classic example. To be successful at Lazard as a woman partner, you had to be better than your peers."

  Then there was the unique case of Marilyn LaMarche, who worked for many years in the backwater that was Lazard's equity syndication department. She was a bit of an anomaly, though. There was a time--almost laughable now--in the late 1970s and early 1980s when Lazard was considered a bulge-bracket equity underwriter. Lazard rarely led a deal (even though it was the lead underwriter for the IPO of the Henley Group in 1986, one of the largest IPOs of all time), but the firm would be included in almost every equity underwriting syndicate because that's the way it was done at the time--when client relationships and capital were less important than the fact there was this set group of firms that did equity underwriting. LaMarche had Lazard's relationships with the institutional investors that bought the equity, and the firm made a fair amount of money as a result. Finally, in 1987, she was named a partner at age fifty-two. One of her partners explained why, in his opinion, LaMarche received this special treatment. "Basically she came back to her desk one day," he said, "and I understand there was a turd in a Baggie in her desk."

  Another woman, Sandy Lamb, worked with David Supino on restructuring deals, and she became the second female Lazard partner in banking in 1992, when Supino's restructuring group was having a big financial impact on the firm in the wake of the slowdown in the traditional M&A business. The firm seemed to be slowly making some progress by the early 1990s with regard to its treatment of women. Lazard hired a woman named Nancy Cooper to
create and run some sort of HR department, the firm's first such effort (and a miserable failure). Cooper was even a partner for a short time.

  But that progress quickly came to a complete halt in the aftermath of the hiring of a beautiful young woman, an undergraduate at the highly regarded Wharton School at the University of Pennsylvania. Her name was Kate Bohner. She was athletic, tall, and striking, with long blond hair and long, muscular legs. When Bohner was in her junior year at Penn, she happened to be at a dinner party in New York on Valentine's Day 1987. She was seated next to Kim Taipale, an up-and-coming vice president at Lazard living in the East Village. They got to talking, and Taipale asked Bohner what she was thinking about doing for the summer between her junior and her senior years. Bohner said something about working at Goldman Sachs, and Taipale urged her to come to Lazard instead. Michel had just decided to shake things up at Lazard Brothers by installing a team of Lazard New York bankers there with the hope of having some of the American M&A techniques rub off on the British (who, of course, were disdainful of the whole exercise). Michel had asked Robert Agostinelli, Steve Langman, and Taipale to move to London to set up the Lazard Freres outpost inside Lazard Brothers. "Michel sent us over there to wind them up," one of them said. Taipale said the group needed a summer analyst. Would Bohner be interested in the job?

  Bohner spent the summer in London working with the three New Yorkers, in a bull-pen-like setting, at Lazard Brothers. Their desks were catty-corner to one another. Bohner, then barely twenty, had a front-row seat on the deal business, Robert Agostinelli-style. "And there were no walls, so I could hear them negotiating, and I learned so much through osmosis," she said. This was a wonderful experience for Bohner. She had never before been exposed to international finance. She grew up in Wilmington, Delaware. Her father was chairman of the English department at the University of Delaware, and her mother was a poetry professor in the same department. When Bohner was a high school freshman in Wilmington, she was on the varsity lacrosse team. When she was fifteen, her mother left her father for her lacrosse coach. The coach happened to be a woman. "Remarkably, it wasn't as jarring as people assume," Bohner later wrote. "The experience taught me about a new type of permissive pluralism that I had not encountered before."

  What she may not have fully realized, though, was the effect she had on men. After graduating from Wharton in 1988, she joined Lazard full-time, in August, in New York, as part of the two-year analyst-training program. But the uncontrolled, unhealthy Darwinian Lazard environment may have been a seriously wrong choice for her. She was like catnip. "I was very naive," she explained. "I was very young, extraordinarily naive. I had no idea what I was getting into. I mean, remember I didn't grow up in New York and both my parents were professors." She said that various partners--Agostinelli and Loomis, among them--tried to "protect" her from the lecherous behavior. They "still wouldn't have been able to protect me, because you can't," she said. "There wasn't a culture there, in terms of the abuse, to prevent the abuse. And the obvious sort of sexual harassment."

  Shortly before Thanksgiving 1988, she received a call from her former London colleagues telling her to be on a plane to London that night to work on a deal with Agostinelli, Langman, and Taipale. What was supposed to be a few days turned into a six-month assignment, living in a swank London hotel, ordering room service and expensive champagne--and charging it all to the client. "Back then, if I was a client and I had seen the amount of expenses that we had, I would've been, like, horrified, totally," she said. Her roommates in New York would bring her clothes to Lazard at Rockefeller Center, and her secretary would FedEx them over to London. "I lived at Claridge's for six months," she said. "And my bill was like PS87,000. They said I'd be home for Thanksgiving. I didn't get home for Christmas or Easter. So I just lived in a hotel and I worked from, like, eight in the morning until ten at night because room service closed at ten-thirty at Claridge's. I just did that every day." There is an old saw on Wall Street told to young new recruits: "You won't know your children. But you'll get to know your grandchildren really well." Bohner was quickly discovering the meaning of that remark. Her professional and social life revolved around her colleagues in the London office. Before long, she started dating Steve Langman, then a vice president and later a partner. Langman was married. They dated for the balance of Bohner's time at Lazard. Langman decided to leave his wife, even though she was around eight months pregnant. Bohner was also said to have dated the flamboyant Agostinelli, who had taken to having a gourmet chef prepare his meals for his overseas first-class flights and having Frette sheets FedExed to his hotel rooms in advance of his arrival.

  When she returned to New York, she was put in the oil and gas group, working with the senior partners Jim Glanville and Ward Woods. This proved to be quite treacherous for her. She started working on the IPO of Sterling Chemicals, a private company based in Houston owned by the iconoclastic investor Gordon Cain. One late afternoon, she and Glanville were in Glanville's car on the way to the airport to catch the last plane to Houston to work on the offering. By this time, Glanville was well into his sixties, overweight, and craggy. According to Bohner, he had his driver purposely get lost in Queens, and then, when it was obvious that the last flight to Houston had been missed, he suggested that they take the first flight out in the morning. "I didn't understand that he was hitting on me," she said. "I was that naive. I was that weird.... And then he sent me flowers the next day, and the flowers, I didn't have a doorman, so the flowers came to the office, and I opened up the card [when she got back from Houston] and I was like, 'Oh my God!' So I just ripped up the card and threw it out and said they were from my brother."

  J. Virgil Waggoner, the CEO of Sterling Chemicals, also gave Bohner an earful when she showed up for the meeting in Houston. He said to her: "I don't understand why a girl like you is doing this. You're a beautiful girl. Why don't you just get married?" Bohner described sitting at the conference room table with Waggoner--known to all as "Virge"--after he finished making his comments. "I took it seriously, 'Oh, I actually really enjoy my work,' like I actually answered the question. I mean, can you imagine?" Later, when she was at the printer putting together the prospectus for the Sterling IPO, the CFO of Sterling saw her and asked her to get him a cup of coffee, with cream and sugar. The man later apologized for thinking she was a secretary and not part of the deal team. "It was sort of just like constant," she said. The oil and gas group was clearly the wrong place for Bohner, and Ward Woods, of all people, recognized that fact. Woods recommended to Loomis that Bohner be transferred to another group. "She's getting killed," he told Loomis.

  But the shenanigans did not stop. Michael Price, then a young Lazard partner, got a firm reprimand from Bill Loomis for joking with Jamie Kempner about whether or not he had had sex with Bohner yet. Bohner was working with Kempner on the Sterling IPO, and he was her mentor. Price's comment was inappropriate and outrageous--as Kempner was, and is, happily married--and Loomis let Price have it in the form of a warning that such behavior would not be tolerated. Christina Mohr introduced Bohner to a young banker from Salomon Brothers who was working with Mohr on a deal. The idea was that Bohner should meet some people her own age. They dated a few times and, the rumor goes, had sex in the small library at Lazard. Then there were the unfounded rumors going around the office that she had sex with the bisexual fellow in charge of the night word-processing department. And with Mark Pincus, a fellow analyst. And Luis Rinaldini. And there was the rumor that she had oral sex with Felix, also in the library. Felix used to stop by Bohner's office regularly to chat with her when her office was, briefly, on the thirty-second floor of One Rock. The rank and file couldn't help but chuckle at the fact that Felix barely knew the names of people who had been there for years but made a point of spending time with Kate, a twenty-two-year-old financial analyst. But these rumors persisted, even though some clearly were not true.

  Kate recalled, "When somebody confronted me with the rumor about her and Felix, I said
, 'You can't get fired for that. You can only get promoted for it.' So that's why it circled the firm, because I was just so pissed at this point. I was so tired of all the chitchat I couldn't take it anymore." Rumors about Bohner and all sorts of Lazard bankers had become a staple around the firm. "The tally of people Kate slept with around the firm got up to around fifteen," one former partner said.

  Many of the stories about Felix pursuing the younger women at the firm were more rumor and innuendo than anything else. "I think that it is a remarkable sense of delusion for someone such as myself or perhaps even Linda [Pohs] or Michael [Carmody] to think that they were going to compete with Shirley MacLaine or Barbara Walters for Felix," Kathy Kelly said. "Did Felix ever put his hand on your shoulder and come close to you? Yes, that's Felix's way. He's a warm guy. But that's not sexual harassment. He's a flirt. And that's part of the goddamn job. And you know why it was part of the goddamn job? Because that's exactly what you do with your clients. You flirt." For his part, Felix claimed to be "blissfully unaware" of all the sexually aggressive behavior that had been so much a part of Lazard over the years and said he could no longer even recall names such as Gerowin, Pohs, Carmody, Kelly, Mohr, McArthur, and Bohner. "Without going into personalities," one woman banker explained, "I think that was the time at which there were some dark forces around Lazard. And I do think that there was at least one individual who was not fair. And who did not treat me well. And since at Lazard you were kind of waiting to turn fifty-five, I kind of looked at how old I was, looked at when I would turn fifty-five, and looked at these people and said, 'Maybe there's a better place for me to wait out the next ten years than getting picked on by these characters.'"

  But there was more. A senior vice president of Lazard, well on his way to making partner, was a regular visitor to Bohner's office after she moved down to the thirtieth floor. The senior vice president would come by and chat, no doubt as he had seen Felix do with Bohner any number of times. Loomis became a little concerned by his increasingly random visits to see Bohner. Loomis's office was right next to Bohner's, part of the plan to try to protect Kate by letting people know that Loomis would be watching. After all, the senior vice president was married with children. And Loomis was becoming all too aware of the effect Bohner was having on the Lazard men.