A Big Donation for Gay Rights Puts Executive in the Spotlight
By DAVID BANK
Staff Reporter of THE WALL STREET JOURNAL
Kathy Levinson, president and chief operating officer of E*Trade Group Inc., knew she was entering a public-relations minefield when she and her partner, Jennifer Levinson, made a large donation to fight a proposed ban on same-sex marriages in California.
But the 45-year-old mother of two says she decided the fallout would be minor compared with what could possibly happen to her family if she didn't try to help defeat Proposition 22, which appears on the state's ballot on Tuesday.
As it turned out, the donation sparked a public-relations crisis at the online brokerage. In the wake of news accounts of the $300,000 pledge in August, E*Trade received a flood of e-mail messages and phone calls. The company's chat rooms buzzed with overwhelmingly negative sentiments. Dozens of customers threatened to cancel accounts; some called for Ms. Levinson to resign.
Today, with the brouhaha six months behind it, E*Trade calls the controversy just another chapter in its quirky history, eager to take credit for its open-mindedness. Incoming e-mail is running about 80% in favor of the action, the Menlo Park, Calif., company says, and many investors are opening accounts or buying E-Trade stock precisely because of Ms. Levinson's visible support for equal rights for gays and lesbians.
Ms. Levinson is a tough operations whiz who rose to senior vice president at Charles Schwab & Co. before joining E*Trade in 1996. She agreed to talk publicly about the donation and the ensuing corporate uproar, she says, to help other executives trying to balance corporate responsibilities and personal commitments. The pledge "was a risk, but it was calculated," she says. "E*Trade is a brand that stands for people taking control of their lives and being able to make informed decisions. This is about individual empowerment."
Kathy and Jennifer Levinson have been together for nearly 19 years, have legally shared the same last name for 10 (Jennifer took Kathy's name), and held a commitment ceremony seven years ago. After enlisting a friend as a sperm donor, Kathy gave birth to the couple's two children.
Crayon artwork and family photographs cover Kathy's office walls. "We look like your neighbors and have a pretty boring life," she says. But as with other families formed by same-sex unions, the Levinsons' legal status is precarious. Jennifer, 41, had to go to court to formally adopt her two children -- an expensive and cumbersome process that, until recently, involved automatic rejection by the state's Department of Social Services because the parents aren't married. The couple doesn't have a joint checking account because of tax laws limiting tax-free gifts to nonspouses. Once, Kathy went to the hospital and forgot the paperwork authorizing Jennifer to make critical health-care decisions, leaving Kathy vulnerable had she become incapacitated. A legal spouse automatically has such authority.
"After our long struggle to create our family, we weren't going to have some law passed that would take away everything we've done to create a safe space around our family," Kathy Levinson says.
The donation has turned E*Trade into a lightning rod for criticism from Proposition 22's supporters. They say the measure isn't intended to undercut current legal protections for gays and lesbians. "We believe gays and lesbians have the right to live the lifestyle of their choice, but that doesn't give them the right to redefine the institution of marriage," says Robert Glazier, spokesman for the "Yes on 22" campaign.
But because the donation was in the form of shares of E*Trade, some investors who support Proposition 22 view the pledge as a link between E*Trade and the "No on 22" campaign. The way they see it, customers and investors helped make Ms. Levinson's shares valuable. "We've had conservatives in favor of traditional marriage disappointed to see that their money is going to oppose marriage," Mr. Glazier says. "I haven't heard of any one [of them] who has an E*Trade account who says they would keep it after hearing of her opposition to traditional marriage."
Ms. Levinson says she fully supports traditional marriage but opposes Proposition 22, which states that "only marriage between a man and a woman is valid or recognized in California." A 1977 state law already bans same-sex marriages in California. The Proposition 22 clause is needed, supporters say, to close a loophole that would require California to recognize same-sex unions if they ever are approved in other states. No state currently recognizes same-sex marriages, but Vermont's state legislature is considering doing so.
A barrage of television ads both pro and con hasn't done much to change voters' minds on Proposition 22, pollsters say. A majority of voters support the measure, according to a Field Poll released earlier this week: 53% of 1,048 likely California voters said they would vote "yes" on the initiative, 40% said they would vote "no," and 7% were undecided (with a margin of error of plus or minus three percentage points). That proportion has hardly changed in polls since fall.
Public-relations advisors often counsel executives to avoid controversy. But given the tight labor market, one corporate-image expert said E*Trade has played its cards just right.
The controversy "gives them an opportunity to attract and retain talented people by saying they support the rights of all employees to participate in their causes," says Holland Carney, executive vice president of Alexander Ogilvy Public Relations, San Francisco, whose clients include Merrill Lynch & Co., an E*Trade competitor. "It lets them say, 'We're a supportive place to work.' "
When four leaders of the "No on 22" campaign had lunch with Kathy and Jennifer Levinson in E*Trade's cafeteria last summer, they had raised only $223,000 -- barely a quarter of what their opponents raised. Even prominent gays and lesbians were hesitant to commit to large donations. Although many have since come forward and dozens of executives recently signed a newspaper ad opposing the measure, Mike Marshall, manager of the "No on 22" campaign, says, "Corporate California has been pretty chicken on this issue."
Mr. Marshall and the others appealed to the Levinsons to match the largest donation given to the other side -- $300,000. Ms. Levinson could certainly afford it: Her stake in E*Trade is worth more than $40 million, based on Securities and Exchange Commission filings that show she held more than 1.75 million shares in E*Trade as of Sept. 30, 1999.
The contribution would instantly make Ms. Levinson, who had considered herself a "quiet activist," one of the biggest and best-known donors to gay and lesbian causes. Even at E*Trade, Ms. Levinson is a behind-the-scenes player, keeping the trains running while the media spotlight shines on the company's outspoken chief executive, Christos Cotsakos.
"She didn't bat an eye," remembers Kate Kendell, executive director of the National Center for Lesbian Rights and a board member of the "No on 22" campaign.
Ms. Levinson says her blank stare was misinterpreted. "I thought if I fainted on the spot it wouldn't be good for company morale," she says.
Before making the donation, Ms. Levinson consulted with Mr. Cotsakos, polled the board of directors and developed a strategy for handling the fallout. She told the "No on 22" people that she didn't want to become a spokeswoman for the campaign and would decline interview requests. She assured colleagues she wouldn't discuss the measure in business settings. And E*Trade would take pains to make clear Ms. Levinson's actions were private, not corporate.
Mr. Cotsakos gave Ms. Levinson his full backing. "We certainly respected Kathy's rights to provide her personal support for this issue, just as we would for any of our associates," he says.
After managing other PR crises, including last year's service outages that temporarily blocked customers from accessing their portfolios, Ms. Levinson knew the drill. Statements were drafted. Security beefed up. Scripts were prepared for customer-service representatives, stressing, "This was a private and personal donation by Kathy and her family."
As it happened, the announcement was anything but scripted. In mid-August, after the Levinsons hosted a private fund-raising brunch at their home, one excited guest leaked news of their pledge to the San Francisco Examiner, which ran a front-page story headlined, "E*Trade Chief Boosts Gay Fight."
"I was caught flat-footed," Ms. Levinson says. "We had a plan, but we were a week or 10 days from having it ready to roll."
Ms. Levinson was out of town when the news broke. Security was her immediate concern: Only a few days earlier, gunmen had opened fire at a Jewish community center in Los Angeles and at day-trading offices in Atlanta.
She hired a security guard. Her family stopped answering the phone. Still, when she returned, she received several unpleasant e-mail and voice-mail messages.
The messages confirmed her desire to avoid a public role in the campaign. Still, officials say her private fund-raising efforts have brought in an additional $1.5 million.
Ms. Levinson helped solicit six-figure contributions from prominent gay donors such as Tim Gill, founder of Quark Inc., and David Bohnett, founder of GeoCities, now a unit of Yahoo Inc., and also from married heterosexual Republicans, such as heiress Susan Packard Orr and entrepreneur Ronald Burkle.
"If people like me who are successful are not willing to take a stand, how can I expect anybody else to do it?" Ms. Levinson says.
Write to David Bank at david.bank@wsj.com |
