Barbarians at the Gate

by Bryan Burrough

  Unlike his father, who hadn’t completed high school, Ross Johnson wanted to be a college man, and he took the crosstown bus each day to Winnipeg’s University of Manitoba. He was average inside the classroom but excellent out of it: president of his fraternity, varsity basketball, and honors as outstanding cadet in the Canadian version of ROTC. (This despite a propensity for pranks: One night Johnson and some chums ambushed a superior officer, whom they considered a superior jerk, tied him to a diving board, and left him to contemplate his sins as the sun rose.) If there was anything that marked the playful young Ross Johnson, it was an ability to hold sway over his fellow students, even those who were far older. His college class was largely made up of returning World War II veterans, but it was Johnson, a teenager, who did the organizing and leading.

  Upon graduation, Johnson plunged into the middle levels of a string of Canadian companies, where he would muddle along for nearly twenty years with little distinction. His first job, as an accountant at Canadian General Electric in Montreal, lasted six years. Bored, he moved to the marketing side in Toronto to try his hand as a salesman. “It’s where the good parties are,” Johnson explained to friends. There, as a low-level manager given the pedestrian task of marketing light bulbs, Johnson first displayed a zest for salesmanship. He dreamed up an idea for a premium-priced bulb, painted on the inside, and researched a name: Shadow Ban. The product did well. Johnson also did wonders for the division’s Christmas-tree bulb sales.

  As good as he was with light bulbs, it was in his expense accounts that Johnson’s real creativity shone. He cut back the expense budgets of his salesmen, marshaling much of the money for himself. He used the additional funds to entertain customers royally, taking particular delight in plotting and executing what he called “the hundred-dollar golf game,” which involved a day on one of the city’s finer courses, followed by drinks and dinner at one of the city’s finer restaurants. It took a prodigious effort to drop $100 in the early 1960s, but Johnson was up to it. By combining his flair for spending with his gift for flattering older men, Johnson moved steadily up the corporate ladder. “Spending money was always a joyful, joyous thing to Ross,” recalled William Blundell, a Canadian friend. “He was convinced that all of the decisions got made by the senior people in the accounts. He thought he could leverage that money pretty well.”

  From the start Johnson was a party animal. He loved nothing better than sipping Scotch and schmoozing into the wee hours. The next morning he could walk into work without missing a beat. At GE he perfected a flip, wisecracking approach to business. If there was a choice between saying something straightforwardly and saying it humorously, Johnson always chose the latter. If it was self-deprecating, so much the better. “An accountant,” Johnson would say during his bookkeeping days, “is a man who puts his head in the past and backs his ass into the future.” He attracted a group of young protégés who felt the same. Johnson held sway over them with an hypnotic, singsong voice, both deep and nasal, and he alternately spoke sotto voce and fortissimo. “Come along with me,” his manner and mien beckoned young acolytes. “We’re going to have fun.” When he got married, his groomsmen capped an all-night bash by going water-skiing in their tuxedos.

  Yet after thirteen years, at age thirty-two Ross Johnson was still a nobody. He was making only $14,000 a year, teaching nights at the University of Toronto to augment his income. His first child was on the way. Except for a patina of charisma, he was like a thousand other bright young men in Toronto, struggling to get ahead. He was impatient. When his bid to be transferred to GE’s U.S. operations—the big time—was turned down, he jumped ship.

  Landing as a midlevel bureaucrat at T. Eaton, the big Canadian department-store chain, Johnson found a mentor, a man named Tony Peskett. Eaton was fat, sleepy, and slow, but Peskett, as head of personnel, was committed to bringing the company into the twentieth century. Johnson had come from the gray flannel of General Electric in the 1950s. Now, as a member of a guerrilla band of managers known as the “Pesketteers,” he entered the 1960s. Peskett encouraged him to indulge his natural proclivity for thumbing his nose at authority. The Pesketteers believed in change for change’s sake, and set out reshaping their dowdy old employer. They believed in constantly shaking things up, monitoring and reacting to the competition down the street at Sears Canada. The Pesketteers subscribed to a Bob Dylan line of the time: “He who’s not busy being born is busy dying.” Tony Peskett, who imbued Johnson with a lifelong belief in the creative uses of chaos, put it another way: “The minute you establish an organization, it starts to decay.” Johnson, who carried that idea to every business he ever ran, boiled it down into a personal philosophy called “shit stirring”: a love for constant restructuring and reorganizing.

  When Peskett fell out of favor, Johnson once more jumped ship, this time landing at a Toronto company named General Steel Works, Ltd. GSW, as it was called, offered the prospect of authority (Johnson would be the number-two executive), money (a $50,000 salary), and social contacts galore. Through the company’s rich owner, Johnson joined Toronto’s upscale Lambton Country Club and came to know many of the city’s elite, men such as hockey great Bobby Orr and Alan Eagleson, a lawyer who headed the National Hockey League players’ union. Johnson loved rubbing elbows with them and found he was good at it.

  Despite his social ascension, Johnson started off miserably at GSW, a tiny maker of appliances, garbage cans, and manure spreaders. When an economic downturn slowed its appliance business, Johnson’s impulse was to throw money at the problem, and he fell back on the expensive marketing schemes he’d developed at Eaton and GE. His new boss, a tightfisted hard case named Ralph Barford, rejected each one in turn. “Ralph’s philosophy was buy low, sell high, and argue over the bills,” recalled Jim Westcott, a Johnson friend who would frequently commiserate with him over lunch. “Boy, did Ralph rip the skin off my back today,” Johnson would moan.

  Johnson chafed at life in a smaller company. GSW was operating on the edge, with lots of debt, and Johnson suffered through weekly grillings by its bankers. “It was a shock,” he recalled. “You learned that the guy who writes the ads for the bank isn’t the guy who loans the money. They break your balls.” It was Johnson’s introduction to the harsh realities of corporate debt, for which he developed a lifelong aversion.

  Eventually, Johnson and his boss reached an accommodation of sorts and worked together for another five years. Johnson came to appreciate Barford’s ability to change directions at a minute’s notice. “If you could convince him you were right, he’d do a one hundred and eighty degree turn,” Johnson would recall. “It was just that getting him to do that could take a panzer division.” Johnson became an accomplished quick-change artist himself, an attribute that would bewilder subordinates for the next twenty years.

  By the early 1970s Ross Johnson was forty years old and still hadn’t run his own show. When a headhunter offered him that chance, he leapt at it, jumping this time to become president of the Montreal-based Canadian arm of an American food company, Standard Brands. Standard Brands had been created in 1928 by the House of Morgan, which had merged Fleischmann Distilling & Yeast Company, Royal Baking Powder, and Chase & Sanborn Company into one entity. That alone told Johnson something about the company’s problems. Chase & Sanborn coffee was a tired old brand, and yeast and baking powder seemed like pioneer-era remnants. A ponderous, second-tier organization, Standard Brands over the years had evolved into an employer of quiet tinkerers, who came up with a sugar substitute called high-fructose syrup and developed Fleischmann’s Margarine, a low-cholesterol spread. Year in, year out, the company’s timeworn credo fronted its annual report, affirming Standard Brands’s “commitment to use the fruits of the earth to provide a good quality of life for those we serve.”

  Johnson found Standard Brands hopelessly outdated. This was the age of marketing, of movement, and these people were trafficking in fats and oils. The Canadian subsidiary was a mess. Johnson, the ex-Pesketteer, hi
t Standard Brands Canada like a hurricane. In his first year, he bounced twenty-one of the top twenty-three executives, and to replace them he looked for the kind of free-spirited young men he had attracted throughout his career. Peter Rogers, an Englishman working for a Canadian candy company, had a reputation as a brilliant, profane loose cannon. “No fucking way,” Rogers said when first approached by Johnson. “Your company treats people terribly, and it’s messed up every acquisition it’s ever made.” But Rogers came; he would stay with Johnson for fifteen years. Johnson also snagged Martin Emmett, an aristocratic South African, who canceled a transfer to Australia to join Johnson’s growing band of Merry Men. In later years the two became so close they were dubbed “Martini and Rossi.”

  The pair became the core of Johnson’s rogue managers, dedicated to shaking up Standard Brands Canada by day and draining bottles of spirits by night. Johnson assigned them nicknames: Rogers was “The Rook,” for Canadian Olympic Drinking Team rookie; Emmett was “The Big E,” for his lanky frame. Jim Westcott, a personnel consultant, was “Buddha,” for his girth and wisdom. Johnson himself was “The Pope.”

  As in Toronto, Johnson proved himself adept at working his way into Montreal society. Paul Desmarais, the influential chairman of a big manufacturer, Power Corporation, sponsored Johnson’s membership in the exclusive Mount Royal Club and introduced him to the tight-knit Montreal business community. Among Johnson’s new friends was a young lawyer named Brian Mulroney, who would go on to become Canada’s prime minister. His confidence building, Johnson settled into a routine that would endure for fifteen years—staying up until all hours with his pals, talking business, sipping Scotch, and smoking cigars. Unorthodox, yes, but his guerrilla band produced results, and it got Johnson noticed. In 1973, he was promoted to head Standard Brands’s international operations.

  He moved to New York. Cocksure, buoyant, bubbly, Johnson was utterly unintimidated by the city. He felt he had been born to the moment. To his peers at Standard Brands’s headquarters, Johnson was a brash upstart, an overnight success. They knew nothing of the hardscrabble childhood in the provinces, the twenty-one years of anonymity. In fact, Johnson was the consummate late bloomer, a man who at age forty-two was only now starting to find his stride in life.

  He bought a house in the tony Connecticut suburb of New Canaan, and secured a sought-after seat on the New Canaan Club Car, a hangout for executives that was attached to the end of the 7:30 New Haven Railroad run. There, amid comforts not available to the average commuter, Johnson was introduced to a high-powered group, men such as Rawleigh Warner, the chairman of Mobil Oil. Every morning they played bridge, read the morning newspapers, talked business. Johnson’s long brown hair, wide ties, and pigskin coats stood out, and the other executives—every hair in place, every other suit pin-striped—rode him unmercifully. The mod young Canadian would jovially give it right back. “You old stiffs, you old farts,” he would say, “The world has gone right by you.”

  Johnson’s new boss, Henry Weigl, though, was no joking matter. Weigl was a tyrant who ran a tight, spartan company. His proudest accomplishment was a twenty-year string of annual profit increases since becoming president in the 1950s. He did it in part by making certain results went up each year just so much and no more. That way the company wouldn’t be hard-pressed to top its performance the following year. It also helped that Weigl could pinch a penny until it screamed.

  Unlike the posh corporate headquarters that dotted midtown Manhattan, Standard Brands’s offices were stark: linoleum floors and steel desks. Only the highest echelon qualified for carpeting and wooden desks. The rotary phone dials were locked at five each afternoon to prevent after-hours personal calls. When Standard Brands managers traveled, they were required not only to fly coach, but also to take the cheapest form of transit to the airport—a bus. On the road they stayed at Howard Johnson motels, because that chain’s restaurants were major customers for Chase & Sanborn. Weigl’s tightfistedness extended to big-ticket items as well. When a Standard Brands director and investment banker named Andrew G. C. Sage II put together an acquisition for the company, he was stunned to receive a letter from Weigl saying, in essence, “Thank you for the donation of your time.” Sage tore up the bill he had been preparing.

  Unlike the garrulous Johnson, Weigl spent so much time holed up in his office he was known as “Henry the Hermit.” Subordinates lived in fear of being summoned inside. Johnson once sat in on the tongue-lashing of a junior executive. The victim was excused, and Johnson remained to talk with Weigl for a moment. When he came out, the poor fellow was lying spent in the hall, hyperventilating. Weigl once thought he saw the head of the tax department sneaking out of work early. He told an aide to investigate and fire the man. The aide came back to him and said he must be mistaken; the man had been working late. “Look,” Weigl snapped, “you can either fire him or fire yourself.” (No one was ultimately fired, but people on Weigl’s floor began tiptoeing downstairs to catch the elevator at the next floor at day’s end.) At a Christmas party, Weigl observed an executive who he thought rather too jolly. He ordered Johnson to fire him—before Christmas. Johnson did the deed but softened the blow by giving the executive and his family a vacation trip to Canada. “Fogged it,” as he described the tactic.

  Soon Johnson was getting pretty good at fogging it. When senior vice president Lester Applegate was forced out by Weigl, Johnson hid him on the Canadian payroll. At first Johnson managed to avoid Weigl’s wrath. He delivered results and was out of the country half the time visiting the company’s far-flung international operations. But Johnson’s flamboyant style guaranteed an eventual collision with his indomitable boss.

  As phone locks clicked on, ending each Standard Brands day, Johnson’s second shift was just beginning. Always drawn to celebrities, he soon befriended the former football star Frank Gifford, then announcing “Monday Night Football” and pitching ads for Standard Brands’s Dry Sack sherry. The two men took to hanging out at Manuche’s, the successor to Toots Shor’s as the prime watering hole for New York’s sporting elite. Johnson was a hopeless sports nut, and through Gifford he met an array of big names: football commissioner Pete Rozelle; race-car mogul Roger Penske; broadcast buddy Don Meredith; Roone Arledge, who headed ABC Sports; Don Ohlmeyer, his crack producer; and a young man Arledge and Ohlmeyer shared as protégé, John Martin. Johnson and Gifford grew so close they began working together on an annual charity banquet called Dinner of Champions, where people paid a lot of money to mingle with Gifford’s starry friends. The Giffer, the glitz, the contacts: Johnson thrived.

  Beaten-down Standard Brands executives rallied around this buoyant newcomer. Senior managers had to endure an all-day meeting with Weigl once a month. Johnson repaired their spirits afterward by leading all-night drinking sessions he called “The Monday Evening Wrecking Club.”

  So, too, did he become a favorite of the Standard Brands board. In contrast to the prickly Weigl, Johnson talked with board members casually and comfortably. They rewarded him by naming him a director in 1974 and promoting him to president a year later. Weigl, sniffing a challenge to his power, did a slow burn. He forbade contacts between directors and executives outside his presence. When one of the directors, a New York lawyer named Watt Dunnington, gave a cocktail party and invited Johnson and the company’s general counsel, Weigl was furious at all of them.

  Johnson thought Weigl was looking for ways to trip him up. He was given a Mission Impossible: sell the company’s hapless chemicals division. Miraculously, he drew an offer of $23 million. Stubbornly, Weigl wouldn’t sell it for less than $24 million. Deftly, Johnson struck a side deal. The buyer would pay $24 million, but get $1 million of it right back under the table from a Standard Brands subsidiary. Weigl, not knowing about part two of the deal, approved it. “My greatest sale,” Johnson would recall.

  In January 1976, the board named Johnson chief operating officer, making him Weigl’s heir apparent. Many employees cheered the coming emancipation—but
not all. Weigl received two anonymous letters from Canadian staffers complaining of lavish spending—Martin Emmett’s three company cars and chauffeur, say—and expense-account abuses. Weigl, who had torpedoed successors before, jumped on it. He dispatched a team of auditors to Canada. The going was slow. But eventually Weigl learned of Johnson’s huge New York limo tab, which the company was picking up. He began gathering information on Johnson’s extramarital affairs—fertile territory, with Johnson’s first marriage on the rocks.

  Johnson, meanwhile, prepared for war. A headhunter who gathered employee intelligence for Weigl became a double agent, also reporting to Johnson. A gathering of conspirators descended upon Johnson’s New Canaan home over several weekends: Peter Rogers from Chicago, where he now ran the Planters Nut and Curtiss Candy businesses; Martin Emmett from Toronto, where he headed Standard Brands Canada; and Ruben Gutoff, a senior vice president, from New York. Together they assembled a report that would show how Weigl’s tightfisted ways were slowly strangling Standard Brands. As for the tail on Johnson, two could play that game. Soon, Weigl was pretty sure he was being followed.

  Then, a spark. Johnson had allowed an executive fired by Weigl to exercise his stock options after leaving the company. When Weigl found out, he was furious. He hadn’t fired the man to see him profit on stock options. He called up Johnson, who was out of town, and gave him ten kinds of hell. Johnson should have canceled those options, Weigl stormed…and stormed…and stormed. Exercising those options had been totally legitimate, Johnson protested, and blocking it would have been against the law. “We’ll write our own law,” Weigl declared.