James S. Tisch
1953–

Chief executive officer and co-president, Loews Corporation

Nationality: American.

Born: January 2, 1953, in Atlantic City, New Jersey.

Education: Cornell University, BA, 1975; Wharton School of the University of Pennsylvania, MBA, 1976.

Family: Son of Laurence A. Tisch (a co-chairman of Loews Corporation) and Wilma Stein (a trustee of Skidmore College); married Merryl Hiat (a professional volunteer and civic leader); children: three.

Career: Loews Corporation, 1977–1982, various positions; 1982–1994, vice president; 1986–, chairman and CEO of Diamond Offshore Drilling; 1994–1998, president and COO; 1999–, CEO and president.

Address: Loews Corporation, 667 Madison Avenue, New York, New York 10021; http://www.loews.com.

■ James Tisch, a shrewd investor, inherited from his father and uncle and commanded one of the largest family businesses in corporate America. With 2002 sales of $19.4 billion Loews was a diversified holding company with a primary interest in the insurance business of the publicly traded subsidiary CNA Financial. Receiving more attention—primarily negative—was the Loews subsidiary Lorillard Tobacco, which marketed the Kent, Newport, and True U.S. cigarette brands. Professionally, James Tisch defended his company against a slew of lawsuits; personally he was obligated to contend with detractors who viewed his family's philanthropy as a calculated strategy to cover up their affiliation with tobacco.

A FAMILY EMPIRE IS FORMED

In 1947 James Tisch's father, Laurence, and his uncle, Preston, entered the lodging industry with the purchase of a winter resort that was popular in the New York metropolitan area. The two brothers bought the Laurel-in-the-Pines vacation spot in Lakewood, New Jersey, for $375,000 with help

from their parents. From that modest family business the Tisch brothers eventually built Loews Corporation. From 1995 to 2002 the two Tisch brothers appeared on the Forbes 400 list of the most affluent Americans with estimated net worths of $1–2.2 billion.

As a child in Scarsdale, New York, James found summer employment in two of the family businesses: at age 10 he lugged suitcases for bellhops at the Americana Hotel in Miami Beach, which later became the Sheraton Bal Harbour; as a student at Cornell University he was a route salesman for Loril-lard tobacco. Tisch was quoted in the New York Times as remarking, "It was never said that I was to work at Loews, but I always assumed it was something I would do. It was instinc tive" (May 30, 1999).

LEARNING TO SIT ON HIS INVESTMENTS

Tisch majored in economics at Cornell University and graduated as a member of Phi Beta Kappa. He earned an MBA with distinction from the Wharton Graduate School of the University of Pennsylvania. After his time at Wharton he completed a stint in the Loews training program; his father then brought him to work in the investment department. As Tisch told it, his father neglected to inform Joseph Rosenberg, the longtime head of the department, about the new trainee until the day before he arrived. The elder Tisch's simple instructions to the department head were, "Do me a favor. Take an hour and teach him the business" (May 30, 1999).

James Tisch was said to have inherited his father's talent for investing in out-of-favor businesses; his office nickname quickly became "Little Larry." In 1982, when he was vice president at Loews, he initiated the new venture Majestic Shipping through the purchase of about half a dozen supertankers for the scrap-value price of $42 million. He waited until 1986—when shipping rates improved—to unload them: in 1990 Loews sold a 51 percent interest in the tanker operation for about $150 million. By 2004 the company's 49 percent stake was worth around $85 million, and James Tisch envisioned a profitable future for the business.

TWO EMPIRE BUILDING BROTHERS CREATE A TENABLE FAMILY STRUCTURE

Preston and Laurence Tisch carefully groomed the next generation of their family to lead Loews. James, his brother Andrew, and their cousin Jonathan all started working at Loews while in their 20s. Loews's enormous structure allowed all three men plenty of room to find something they could control—and to stay out of one another's way. James would manage the company's investments; bottom-fishing was a prevalent and successful business strategy in the 1980s and 1990s, and Tisch quickly mastered it. In 1989 he led the acquisition of what became Diamond Offshore Drilling; by the early 2000s the company was one of the world's largest offshore drilling companies and the deal remained Tisch's crowning investment.

A CHOSEN SON TAKES OVER

In November 1998 Laurence and Preston Tisch relinquished the helm of the diversified holding company that they had begun half a century before, handing the reins over to the next generation. They each retained the title of co-chairman and established the office of the president for their sons to comanage. On January 1, 1999, James Tisch assumed the leadership role, becoming chief executive. Tisch denied that there was ever any resentment on the part of his brother or his cousin: "While I may be CEO, Jonathan, Andrew, and I operate collegially in any or all decisions that are made. This works because there's a bond that's been built up not over the short term or even over a career, but over entire lives" (May 30, 1999).

One of Tisch's first projects as CEO was the restructuring of CNA, the insurer that contributed roughly a third of Loews's 1998 net income. CNA's acquisition of Continental Insurance in 1995 had hampered its balance sheet and a reorganization was in order. Tisch ordered up a turnaround that included plans to jettison unprofitable business lines, consolidate operations, and cut 2,400 employees from the payroll. As a result CNA expected savings of more than $300 million a year starting in 2000.

A SAGGING STOCK SIGNALS FORMIDABLE CHALLENGES

The portfolio of businesses and investments that made up Loews, one of the market's most celebrated long-term bets, floundered at the turn of the century, crippled by its out-of-favor tobacco, insurance, and oil industry holdings and a bearish investment stance. Analysts criticized the Tisches for exacerbating the company's poor performance by placing risky bets. Said Tisch of the company's bets against the market, "We shouldn't have done it. Our entire short enterprise has been an example of poor investing" (May 30, 1999).

Furthermore, the tobacco affiliate Lorillard suffered from an image problem. Following the settlement between tobacco companies and 46 states Lorillard dealt with a new litigation onslaught. In one year alone the business was a defendant in 520 suits. Yet Tisch had no plans to spin or sell off the business. Cigarettes may have contributed to millions of deaths each year, but they were a lucrative business. In 1998 tobacco pumped $352 million into Loews's net income.

CIVIC CONTROVERSY

Much of the Tisches' tobacco money found its way into charities. Laurence Tisch gave the New York University Medical Center $30 million, and a $7.5 million gift led to the creation of NYU's Tisch School of the Arts. Still, other prominent philanthropists took issue with what they perceived to be "dirty money." James Tisch was elected president of the UJAFederation of New York, a Jewish social services organization; in 1998 Edith and Henry Everett had battled Tisch's election on the grounds that any executive who profited from the sale of cigarettes was unfit to promote the values of Jewish life. As cited in the New York Times, in a letter opposing Tisch's nomination Henry Everett wrote, "Morality, ethics, Jewish law against self-destruction, and common sense mandate that it would be repugnant for a tobacco executive to be cast as the president and role model for any Jewish federation" (May 20, 1997).

In a surprising coda to the feud, the Everetts later withdrew a $3 million gift to the Children's Zoo in New York's Central Park that was then replaced by a $4.5 million gift from Laurence Tisch. The zoo was named the Tisch Children's Zoo, rather than the Everett Children's Zoo. The elder Tisch said that he made his gift without knowing the identity of the original donor, but his contention didn't quell criticism. Said Mrs. Everett, "It is deeply distressing that any venue that is dedicated to children should be supported by people who work in an industry that tries to induce children to smoke" (May 20, 1997).

MORAL AMBIGUITIES DON'T STOP BIG BUSINESS

While some may have been troubled by the source of that wealth that went into the Tisches' charitable contributions, the enormity of the historical impact the Tisch family made upon New York City remained unquestioned. Perhaps the more relevant question facing James Tisch was whether or not the business engine that drove those profits was running out of gas. In 2003 Loews was forced to take reserves at its CNA insurance business and was deeply invested in the increasingly troubled cigarette industry. That year, while the Standard & Poor's 500 index was up 14.8 percent, Loews's stock was down 3.37 percent.

Analysts such as Richard Pzena of Pzena Investment Management said that in general James Tisch made intelligent decisions in addressing the company's problems. In 2002 he named a new chief executive at CNA, Stephen Lilienthal. He spun off 20 percent of the cigarette unit Lorillard in a tracking stock called the Carolina Group. While shares of the Carolina Group did not do particularly well after they were issued in early 2002, they at least helped Loews determine the public value of the cigarette business—which would be crucial if Loews decided to sell its tobacco operations at a time when the cigarette business was out of favor and its value to Loews had been difficult to quantify.

See also entry on Loews Corporation in International Directory of Company Histories.