Barbarians at the Gate

by Bryan Burrough

  From his new office above The Galleria, Johnson played the role of master puppeteer, keeping the company and its officers in a constant state of reorganization. Some of the changes seemed like sheer mischief. Johnson would order that two business units change buildings, knowing that one would wind up bursting at the seams, while the other would be rattling around looking for ways to grow. The joke at Nabisco offices in New Jersey was that Johnson owned a piece of a company called Quirk Moving Systems, which did all the moving. In the blink of an eye he would order reporting relationships inverted, with the subordinate becoming the boss. “If my boss calls,” the joke went, “ask him for his name and number.”

  While Johnson chuckled at the helm, his whipsawed junior executives found the constant shuffling no joking matter. A case in point was the July transfer of a Nabisco unit, Planters/Life Savers, to Winston-Salem, where it reported to Horrigan. The official reason for the move was that the distribution system of nuts and candies coincided with that of cigarettes; they were all so-called front-of-the-store items, sold in racks near cash registers. The real reason seemed to have more to do with padding Horrigan’s empire, soothing Winston-Salem’s pain, and providing new jobs for out-of-work Reynolds employees. Planters’s president, Martin Orlowsky, protested the move so vehemently that he was replaced by a Horrigan favorite. Scores of other Planters executives left rather than move to Winston-Salem and work with the Reynolds Death Merchants.

  John Greeniaus, Nabisco’s up-and-coming forty-two-year-old president, also fought the move bitterly until Johnson cut him off. “Hey Johnny,” he said, “stop taking things so seriously. Maybe it’s right; maybe it’s wrong. So what? We’ll find out.” The exchange captured both the slapdash spirit of the day and Johnson’s continued ignorance of the pain his whims were inflicting. But the Planters move also demonstrated the hazards of Johnson’s impetuous nature. Having donated the Glass Menagerie to Wake Forest, there was no office space in Winston-Salem in which to put the incoming workers. RJR Nabisco was forced to lease the building back from the college.

  For his part, Johnson stayed clear of Winston-Salem as much as possible. He remained a marked man in North Carolina. That summer Reynolds announced an early retirement program in an effort to trim 2,800 more people from the payroll. As always, Johnson got the blame. A story, widely believed, made the rounds in Winston-Salem that Johnson had gotten into a fistfight with Jerry Long, the domestic tobacco chief. Long had been defending the interests of Reynolds workers, the story went, and had given Johnson a fat lip. Both men denied it, explaining that the rumor began on a day Johnson cut himself shaving and Long arrived for work in a cast following minor surgery. But it was a tough story to kill, because everyone in Winston-Salem wanted so badly to believe it. Later, after Long was purged from Reynolds, he ran for the county commission. When he was elected, some political observers gave credit to the lingering story of the Johnson fistfight.

  When Johnson returned to play in a Reynolds-sponsored golf tournament, the Vantage Pro-Am, he took hell from the gallery. He invited some of the abuse, arriving at the course in a helicopter and tooling around in a golf cart with his name on it. “Go back to Atlanta, you bucolic bastard,” someone shouted. Even Johnson’s playing partner, Arnold Palmer, couldn’t escape the invective. “Nice drive, Arnie,” someone yelled. “Too bad you have to play with that son of a bitch.” The pièce de résistance, though, came as Johnson was carefully lining up a putt. Suddenly a voice bellowed from the gallery: “It breaks south, you bastard, toward Atlanta.”

  His estrangement from Winston-Salem may have contributed to Johnson’s continued pampering of Horrigan. Having buried their old enmities, the two were actually growing close, as were their wives: Betty Horrigan was Canadian, and she could keep up with Laurie Johnson on the fairways. Johnson continued to give Horrigan everything he wanted and some things he didn’t ask for, including exclusive use of a lavish new home the company had bought at the Loxahatchee Country Club outside Palm Beach.

  He even indulged Horrigan’s fetish for limousines. And not just any limo. When traveling, Horrigan insisted on a white stretch. He grew apoplectic if it was anything else, or if a chauffeur wasn’t on hand at all times. Horrigan even insisted one be on hand to drive the few hundred yards between the Atlanta headquarters and the Waverly Hotel. The 1980s had introduced limos to Winston-Salem, and, with Johnson’s approval, Horrigan switched the Reynolds fleet from black Lincoln Town Cars to maroon Cadillacs, with matching uniforms for the drivers. Maroon was Horrigan’s favorite color.

  Johnson would roar with laughter at Horrigan’s peccadilloes and his craving for perks, but he granted every one. “I didn’t care about the $50,000 for a chauffeur,” Johnson said years later. “I cared about the $1.2 billion [tobacco cash flow].” As Johnson was distracted by other matters, he came to depend more and more on Horrigan to run tobacco, still the largest source of RJR Nabisco’s profits. “The only question is,” Johnson would say, “is the screwing I’m getting worth the screwing I’m getting?”

  One evening the Horrigans had the Johnsons over for dinner. Talk turned to the burgeoning LBO phenomenon. “Oh hell, we’ll never do a buyout,” Johnson said. “Just think of all the people that would be affected; we can’t do that. Do we want to have to fire thousands of people? Can we live with that?” Besides, he added, “We have the best jobs in America.”

  It was no lie. RJR executives lived like kings. The top thirty-one executives were paid a total of $14.2 million, or an average of $458,000. Some of them became legends at the Waverly for dispensing $100 tips to the shoeshine girl. Johnson’s two maids were on the company payroll, and Johnson’s lieutenants single-handedly perked up the upper end of Atlanta’s housing market.

  No expense was spared in decorating the new headquarters, highlighted by the top-floor digs of the top executives. The reception area’s backdrop was an eighteenth-century $100,000 lacquered Chinese screen, complemented by a $16,000 pair of powder blue Chinese vases from a slightly later dynasty. Visitors could settle into a set of French Empire mahogany chairs ($30,000) and ogle the two matching bibliothèque cabinets ($30,000) from the same period. In each was an English porcelain dessert service in a tobacco-leaf pattern ($20,000). The visitor might be ushered in to see Bob Carbonell and pad across his camel-colored $50,000 Persian rug. Or, if the visitor was lucky enough to see Ross Johnson, they could jointly admire the $30,000 worth of blue-and-white eighteenth-century porcelain china scattered throughout his office.

  If the visitor was really lucky, he was an antique dealer in town to take more orders. RJR was the toast of dealers in London, Paris, and New York. Laurie Johnson personally supervised many purchases on European jaunts with her decorator. Despite the $50 million cost of moving the headquarters, multimillion-dollar decorating projects were also underway at the old tobacco headquarters and the new Washington office. “It was the only company I ever worked for without a budget,” gasped one grateful vendor.

  It was, literally, the sweet life. A candy cart came around twice a day, dropping off bowls of bonbons at each floor’s reception areas. Not Baby Ruths but fine French confections. The minimum perks for even lowly middle managers was one club membership and one company car, worth up to $28,000. (For serious luxury cars, executives had to kick in some of their own money.) The maximum, as nearly as anyone could tell, was Johnson’s two-dozen club memberships and John Martin’s $75,000 Mercedes.

  Sweet as the surroundings were, the new headquarters developed a clear caste system. About a third of the 400 people working there had moved from New Jersey. Many were Standard Brands veterans. Another third were Reynolds people from Winston-Salem. The remaining third, mostly secretaries and support staff, were new hires from Atlanta. The Reynolds veterans felt they shouldered much of the menial work. Some began calling themselves “the mushroom farmers” because they worked in the dark and just kept shoveling manure.

  An inescapable air of the transitory pervaded the new headquarters. Instead of th
e grand old tobacco building in Winston-Salem, or even the Glass Menagerie across the street from a cigarette factory, Johnson had moved RJR Nabisco into a spec office building in a mall-hotel-office park complex that overlooked a highway cloverleaf. Some of Johnson’s lieutenants—Ed Robinson and Andy Hines, the controller—hadn’t even bothered to sell their houses up north. Ward Miller, the corporate secretary, hadn’t even moved to Atlanta. Everything about RJR Nabisco said, “We’re just passing through.”

  But it was at nearby Charlie Brown Airport, where corporate Atlanta housed its jets, that the air of new money and restlessness found its ultimate expression. There Johnson ordered a new hangar built to house RJR Nabisco’s growing fleet of corporate aircraft. Reynolds had a half-dozen jets, and Nabisco a couple of Falcon 50s and a Lear, tiny planes an executive like Johnson wouldn’t be caught dead in. After the arrival of two new Gulfstreams, Johnson ordered a pair of top-of-the-line G4s, at a cool $21 million apiece. For the hangar, Johnson gave aviation head Linda Galvin an unlimited budget and implicit instructions to exceed it.

  When it was finished, RJR Nabisco had the Taj Mahal of corporate hangars, dwarfing that of Coca-Cola’s next door. The cost hadn’t gone into the hangar itself, but into an adjacent three-story building of tinted glass, surrounded by $250,000 in landscaping, complete with a Japanese garden. Inside a visitor walked into a stunning three-story atrium. The floors were Italian marble, the walls and doors lined in inlaid mahogany. More than $600,000 in new furniture was spread throughout, topped off by $100,000 in objets d’art, including an antique Chinese ceremonial robe spread in a glass case and a magnificent Chinese platter and urn. In one corner of the ornate bathroom stood a stuffed chair, as if one might grow fatigued walking from one end to the other. Among the building’s other features: a walk-in wine cooler; a “visiting pilots’ room,” with television and stereo; and a “flight-planning room,” packed with state-of-the-art computers to track executives’ whereabouts and their future transportation wishes. All this was necessary to keep track of RJR Nabisco’s thirty-six corporate pilots and ten planes, widely known as the RJR Air Force.

  The aviation staff presented the plans for all this to Johnson with some trepidation. He had said state-of-the-art, but this cost $12 million. He had wanted everything a corporate-jet hangar could possibly have, but this came out to 20,000 square feet. Johnson looked over the drawings, heard out the architects, and made his recommendation: add another 7,000 square feet.

  The RJR Air Force was a defining symbol for Johnson. It was all about restlessness and restiveness. It was also about dispensing favors. Frank Gifford got rides home from “Monday Night Football” games. Gifford and his talk-show host bride, Kathie Lee, were whisked away to their honeymoon on an RJR Nabisco jet. (Johnson was best man at the wedding.) When Roone Arledge needed a lift from Los Angeles to San Francisco, an RJR jet was dispatched from Atlanta. Johnson’s old buddy Martin Emmett, long gone from the company, racked up more miles on Johnson’s jets one year than nearly anyone still employed.

  The jets were also a symbol of the increasingly fuzzy line between what constituted proper use of a corporate asset and what constituted abuse. Some thought the case of Johnson’s German shepherd, Rocco, fell in the latter category. At the Dinah Shore that year, Rocco bit a security guard, setting off a flurry of concern in the Johnson household.

  Would he be seized by the authorities and quarantined, or worse? Rocco, it was decided, had to go on the lam. He was smuggled onto a corporate jet and secretly flown out of Palm Springs to Winston-Salem, one jump ahead of the law. Escorted by a senior vice president named Dennis Durden, Rocco was listed on the passenger manifold as “G. Shepherd.” It wasn’t the only Rocco adventure: The company would later pay an insurance claim for a bite inflicted on the Johnsons’ gardener.*

  The RJR Air Force was Johnson’s ticket to the high life. Each weekend the planes disgorged Don Meredith from Santa Fe, or Bobby Orr from Boston, or the Mulroneys from Canada. The jocks of Team Nabisco were frequent flyers on Air Johnson. The Pope took excellent care of them, paying more for occasional public appearances than for an average senior vice president: Meredith got $500,000 a year, Gifford $413,000 (plus a New York office and apartment), golfer Ben Crenshaw $400,000, and golfer Fuzzy Zoeller $300,000. The king was Jack Nicklaus, who commanded a $1 million a year.

  Johnson claimed his jocks yielded big benefits in wooing supermarket people, but the line between corporate and personal services was a blurry one at RJR Nabisco. LPGA pro Judy Dickenson gave Laurie Johnson golf lessons. Gifford emceed benefits for Johnson’s favorite charities like the New York Boys Club. A pair of retired New York Giant fullbacks, Alex Webster and Tucker Frederickson, maintained offices at the Team Nabisco office in Jupiter, Florida; Frederickson ran an investment counseling business from his.

  For all the money Johnson doled out for Team Nabisco, some of the athletes weren’t easily managed. Nicklaus was notoriously difficult. For one thing, he didn’t like playing golf with Johnson’s best customers, which was his highest and best use. And he considered himself above the task of working the room solo at some Nabisco function. Although he was making more money than anyone at RJR Nabisco except Johnson and Horrigan, the “Golden Bear” growled at doing more than a half-dozen appearances a year. After several run-ins with subordinates, an arrangement was struck where only Johnson and Horrigan could personally tap Nicklaus’s services.

  Then there was the O. J. Simpson problem. Simpson, the football star and sometime sports announcer, was being paid $250,000 a year, but was a perennial no-show at Team Nabisco events. So was Don Mattingly of the New York Yankees, who also pulled down a quarter million. Johnson didn’t care. Subordinates took care of those and most other problems. He was having a grand time. “A few million dollars,” he always said, “are lost in the sands of time.”

  As RJR Nabisco’s titular chairman, Paul Sticht was appalled by Johnson’s free-spending ways. A lover of the finer things himself, even Sticht now thought things had gone too far. To him, RJR Nabisco in its shiny Atlanta headquarters fairly screamed of opulence, waste, and nouveau-riche excess. Johnson was so busy flitting around between golf tournaments and trips to Manhattan that Sticht, his own chairman, couldn’t get in to see him.

  At his annual Bohemian Grove outing in August 1987, Sticht was openly critical of Johnson with every corporate titan there who would listen. “Hipshooter” was the word he kept using. He also groused to fellow directors and Grove denizens John Macomber and Vernon Jordan. Maybe it was time for another change of command, he suggested. Macomber was all ears. He had just sold Celanese to the German company Hoechst and had time on his hands. He would always deny it when asked, but he seemed forever intrigued with the idea of running RJR.

  Johnson moved swiftly to quash the possibility of a coup. On August 31, he met with Sticht. “Look, Paul, you’re turning seventy in October; this isn’t working out,” he said. “I’m going to make a change.” Always alert to shifting political winds, Johnson sensed that Sticht’s power was finally waning. Just as he had earlier wooed him, Johnson now cut Sticht off at the knees. After he was removed as chairman, the aviation department was told that if Sticht asked for a jet, it would have to be personally authorized by Johnson. When Sticht found out, he stopped asking.

  True to Johnson’s instincts, there was no ground swell of protest from Sticht’s board allies. In contrast to their treatment under Wilson, the directors found that all their needs were now attended to in detail. Bill Anderson of NCR slid into Sticht’s chairmanship of the International Advisory Board and was slipped an $80,000 contract for his services. Johnson disbanded RJR Nabisco’s shareholder services department and contracted its work out to John Medlin’s Wachovia Bank. Juanita Kreps was given $2 million to endow two chairs at Duke, one of them named after herself. For another $2 million, Duke’s business school named a wing of a new building “Horrigan Hall.” (Johnson was named a Duke trustee.) Ron Grierson was also being fussed over lovingly; o
n his visits to Atlanta, Grierson spent so much time on the phone Johnson took an alcove and marked it “Ronnie Grierson’s office.”

  Holdovers from Johnson’s Nabisco board did especially well. Bob Schaeberle was given a six-year, $180,000-a-year consulting contract for ill-defined duties. Andy Sage received $250,000 a year for his efforts with financial R&D. In an unusual move, Charlie Hugel took Sticht’s post as the ceremonial “nonexecutive” chairman of RJR Nabisco, for which he received a $150,000 contract. By naming him chairman, Johnson hoped Hugel would cement his increasingly close ties with the board.

  At the same time, the number of board meetings was slashed, and directors’ fees were boosted to $50,000. Wilson had allowed board members to use company jets only for official business. Johnson encouraged them to use the RJR Air Force anytime, anywhere, at no charge. “I sometimes feel like the director of transportation,” he once sighed after arranging yet another director’s flight. “But I know if I’m there for them they’ll be there for me.”

  At one point, Johnson badly wanted to sell Heublein, mostly because a British conglomerate, Grand Metropolitan PLC, had offered $1.2 billion for it. The problem was Stuart Watson. The retired Heublein chairman, still on RJR Nabisco’s board, had balked at selling Kentucky Fried Chicken and would no doubt raise a ruckus at the idea of selling his old company to the Brits. Heublein’s chief executive, Jack Powers, was in Winston-Salem for meetings one week, and Johnson took him out for dinner at the Old Town Club.

  “Jack,” he asked, “what does Stuart Watson want more than anything in the world?”

  Powers thought a moment. Watson was retiring from the board in several months and would hate to give up the trappings of corporate power. “More than anything?” Powers asked. “An office and a secretary.”