““CEOs go to their vacation homes just after companies report favorable news, and CEOs return to headquarters right before subsequent news is released. More good news is released when CEOs are back at work, and CEOs appear not to leave headquarters at all if a firm has adverse news to disclose. When CEOs are away from the office, stock prices behave quietly with sharply lower volatility. Volatility increases immediately when CEOs return to work.” —David Yermack, a New York University finance professor, whose recently released study shows a correlation between when CEOs take their private jets on vacation and movements in their companies’ stock price ”
Carpenter & Co.'s Richard Friedman
Real estate developer Richard Friedman has been winning plaudits for his unusual latest project: the transformation of the historic Charles Street Jail in Boston's Beacon Hill district into the luxurious, award-winning Liberty Hotel.
Built in 1851, the jail housed the alleged Boston Strangler, a mayor of Boston and the controversial anarchists Sacco and Vanzetti. It was closed by federal order after prisoners rioted in 1973. Friedman's company spent $150 million to acquire and renovate it, adding a bar in the former "drunk tank" and a restaurant named Clink, while preserving the 90-foot atrium where prisoners exercised, as well as iron bars on windows and some cellblocks.
The Liberty caps more than 30 years in real estate for Friedman, who also developed the St. Regis hotel in San Francisco, the Charles Hotel in Cambridge, Mass., and three Hyatt Regency hotels in Texas and Cambridge, as well as shopping centers from Connecticut to suburban Chicago.
Friedman is also involved in politics. Appointed by President Clinton as chairman of the National Capital Planning Commission in 2000, Friedman said he resisted efforts after 9/11 to turn the capital into an "armed camp." He founded the Interagency Task Force, which works with the U.S. Secret Service and U.S. Department of Homeland Security to improve security in Washington, and was finance co-chairman of Senator Chris Dodd's presidential campaign in 2007.
How would you describe your management style?
I'm a pain in the neck. I try to find out what's wrong. I have an overly relentless drive for perfection. It's like the joke about the waiter at a Jewish resort in the Catskills who comes to a table to ask, "Is anything OK?"
What's your business philosophy?
You have to look long term, you can't look at quarterly results.
What are your best and worst traits?
I'm a good guy and extremely loyal. I have people who have worked for me 10, 20, 30 years. I don't give up, and I love the expression, "the harder you work, the luckier you get." But I can't tell the distinction between work and play, and I'm impatient and rough.
What attracted you to the hotel business?
Hotels are part real estate, part theater, part promotion. I like the vitality and sensuality of a hotel-designing it and merchandising it brings together a lot of skills and things that interest me.
Why build a hotel in a former jail in Brookline, Mass.?
It's the most fabulous building in a fantastic location in Boston on the Charles River. It was a magnificent opportunity to restore a federal, state and city landmark, and I was crazy enough to take it on. I don't know what they were thinking in 1851 to build it as a jail.
Was converting a jail and thrice-landmarked building daunting?
In hindsight, it should have daunted me a lot more than it did. I'm very tenacious and love to be creative, but it was very hard to finance and get people to believe in it.
How were you able to get financing for a hotel two months after 9/11?
We try to do everything conservatively, and have a track record of paying people back. That relationship is very personal, and people who loan us money I consider friends.
What do you notice most as a hotel guest?
I love the expression, "God is in the details." I like every light switch to be on a dimmer, incredibly great A/C, great bedding, a big showerhead, soft towels, and I can't stand a bedside with no outlet to plug in a computer. It's not the size of the room, but the amazing quality of the details.
How did you get involved in private aviation?
I bought a Beechcraft Baron with partners 20 years ago to go to Martha's Vineyard, then bought them out. I now own a Learjet 35A for long-haul business trips and flights to Aspen, where I have a vacation home-chartering it when we're not using it-and I own a piece of a [Socata] TBM  turboprop.
Why did you choose those models?
We chose the TBM 700 because it's fast for a turboprop, only marginally slower than many jets; inexpensive to operate for very short hauls up to 400 miles, like Martha's Vineyard; and has some short-field advantages getting us into airports that aren't right for the Learjet. The Lear is as fast as anything out there except a Citation X-we can fly as high as 43,000 feet and as far as 2,100 miles. It's not the biggest cabin in the sky and doesn't have the most baggage capacity, but the trade-offs of relatively low cost and high speed are worth it. We bought it from a major Wall Street firm that kept it in pristine condition.
How does private aviation help you in business?
Some of our trips would be impossible without private aircraft. The other day, we flew for meetings from the Boston area to Raleigh/Durham, N.C., then to Charleston, S.C., Philadelphia and back to Boston in a single day. That would be impossible commercially, and since we had five people, it was extremely efficient time- and cost-wise. We look at development projects all over the country to meet with lenders and prospective partners, and need to go fast and hassle-free.
Who flies on your aircraft?
We use the plane mostly for Carpenter executives and occasionally for our consultants, like architects and contractors.
Do you have a pilot's license?
I used to be a private pilot but I was not very good at it and decided several decades ago I didn't want to kill myself, or worse, somebody else. Sometimes I sit in the right seat of the TBM, but it wouldn't be a pretty sight if
I had to take over.
How do you think commercial first-class compares with private jets?
Recently, I've been going back and forth to Dubai on Emirates first class. It's a fantastic experience with a flat bed. I think mile for mile, the great long-haul first-class airlines are reasonably priced compared with the cost of a private jet on flights of more than 5,000 miles. I'm quite cost-conscious in using private aircraft and careful about selecting it versus commercial flights. Someday, the U.S. carriers will put in good, comfortable coast-to-coast flights, but as of yet they're way behind, very uncomfortable and very unpleasant.
Any aircraft you plan to move up to next?
I really don't have my eye on anything better than the Lear, but if I moved up, it would probably be to a Hawker 800.
How did you meet President Clinton?
When he was governor and came to the Charles Hotel. I had a note put under his door, and we had a drink in the bar. After he became president, the Clintons were staying that summer in Defense Secretary McNamara's house across the pond from me in Martha's Vineyard. We saw them on the beach, and I let Chelsea and Hillary ride my horses. I invited the Clintons to stay at my house the next summer, and they spent many summers there.
What do you do for fun?
I'm 67 with a nine-year-old son who keeps me active. On Tortola [in the Virgin Islands], I love to fish, snorkel and walk in the rainforest. Years ago with my older son, I spotted the wonderful hilltop location there where my vacation home, Frenchman's Lookout, is located. Later, I bought it from the Dungeons and Dragons video game entrepreneur. On Martha's Vineyard I do shark fishing for makos and blues, 30 miles south-one of the best places in the world for it. It's hours of boredom followed by minutes of terror. In Aspen, I fly fish on the Frying Pan River. I also love skiing in Aspen, Jackson Hole, Mammoth Mountain [Calif.] and Madonna di Campiglio [Italy].
What do you worry about?
Our country and its competitiveness. I think we're at a very perilous stage. I worry that fear is overcoming us and our constitutional values.
CEO Files Résumé: Richard Friedman
POSITION: Chairman and CEO, Carpenter & Co., Cambridge, Mass. Also, founder, Interagency Security Task Force, Washington, D.C.; and a director of Gatehouse Media and Steppingstone Foundation.
PREVIOUS POSITIONS: Chairman, National Capital Planning Commission,
2000-04. National Finance Co-chairman, 2007 presidential campaign of Senator Christopher Dodd. Guest lecturer, MIT's Center for Real Estate, Harvard Business School, Harvard Graduate School of Design and Boston Architectural Center. Harvard ski coach, 1965-71.
EDUCATION: B.A., philosophy, Dartmouth College, Hanover, N.H., 1963.
PERSONAL: Age 67. Lives with wife Nancy and two children. Homes in Cambridge, Mass.; Tortola, British Virgin Islands; Aspen, Colo.; Martha's Vineyard, Mass.