by Coll, Steve;
Such was the spirit of Getty familial relations. It was a family in which every issue was a potential lawsuit, in which the threatening language of lawyers substituted for the patter of brothers. There was no other way to treat Ronald, of course; he had many times before demonstrated a willingness, even an eagerness, to take the family’s problems to court. Besides, Ronald’s challenge to Gordon’s sole trusteeship had implications beyond relations between the two of them. Gordon believed that control of the Sarah Getty Trust should lead to control of Getty Oil Company, even though the trust did not own a full majority of the company’s shares. He had seen Lansing Hays exercise such control through the force of his personality. Though he lacked Lansing’s bombast, Gordon was determined that May to imitate the lawyer’s example and assume control of Getty Oil—not of its day-to-day operations, which even Gordon conceded he was not qualified to supervise, but of its policies and strategies. It seemed logical, he said later, that a trust controlling 40 percent of a company’s stock, even a company as large and complex as Getty Oil, should control policy. And Gordon did not want Ronald or anyone else to thwart his ambitions. Already the Lasky firm was researching the legal aspects of Gordon’s rights as sole trustee, preparing to fend off any challengers. Frustrated by Gordon’s unresponsiveness to his request, Ronald might well sue to gain a cotrusteeship, but Lasky believed such a suit had no basis in the trust document itself and could be beaten back. A more difficult issue was how Getty Oil itself would respond to Gordon’s ascent to power and his aim—which he kept largely to himself—to control the company’s destiny. For the last six years, Getty Oil’s executives had endured Lansing Hays’ tyrannical reign. They might not easily accept a new bid for control from Gordon.
Moses Lasky understood this problem well enough. On and off, he had served as a trial lawyer for Getty Oil for more than ten years. He had developed friendships with several of Getty Oil’s key executives, including Sid Petersen, the chief executive officer, and Dave Copley, the general counsel, who Lasky regarded as an uncle might a nephew. Moses Lasky knew Gordon, too. At the trial against him, he had emphasized Gordon’s perceived immaturity and erratic habits. And though he said that Gordon had matured considerably in the years since then, his client was still the same man, the same whimsical “Gordo,” as his father had sometimes called him—a dreamer who had spent much of his life in the shadows of tougher, more practical men. There had been his father, then Lansing, and now, perhaps, Moses Lasky. If anyone could pave the way for Gordon at Getty Oil, it would be Lasky. Certainly, most everyone believed, Gordon could not take control of Getty Oil on his own. He needed a proxy, someone to fight and argue and negotiate as Lansing had done.
And that was why, that May, Moses Lasky called Sid Petersen and arranged to have dinner with the Getty Oil chairman in Los Angeles. He wanted to talk, he said, about Gordon’s new role at the company.
3
Company Man
It was with feelings of both apprehension and relief that Sidney R. Petersen made a dinner reservation at the Los Angeles Club for the evening of Tuesday, May 18, 1982.
When Lasky had called the chairman’s office to say that his firm was now representing Gordon Getty and the Sarah Getty Trust and to suggest that perhaps they should meet to discuss these new circumstances, Petersen had thought to himself that this was a positive development indeed, perhaps the first good news since the death of Lansing Hays a week before. Petersen had first met Lasky back in the early 1970s when Petersen was a rising young executive in Getty Oil’s financial and corporate planning departments and Lasky was litigating on Getty Oil’s behalf a long, complex antitrust suit that had been filed against the company. Petersen had worked with Lasky then, and he had come to regard the trial lawyer as a friend. They did not spend much time together socially; there was a twenty-year difference between them, and Lasky lived in San Francisco while Petersen was in Los Angeles. But Petersen had spent time socially with Lasky’s younger partner, Tim Cohler. In 1979, Petersen, Getty Oil general counsel Dave Copley, Cohler, and their wives had gone on a vacation cruise together in Greece. They had all stayed in touch since then, exchanging Christmas cards and other pleasantries and occasionally working together on Getty Oil business. Now that Lasky was representing Gordon, his firm could no longer work for the company; it would be a conflict of interest. But that did not really bother Petersen. As he awaited their dinner meeting, Petersen regarded Lasky’s new association with Gordon as a potential breakthrough. They both knew Gordon. In the past, they both had endured his petulance and his lack of business sophistication. Petersen had been George Getty’s executive assistant during the time when Gordon had tried his hand at the family business, and he knew all the stories about Gordon’s feuds with his half-brother, his erratic habits, and absent-mindedness.
More recently, Petersen had witnessed Gordon’s behavior in the Getty Oil boardroom, where the Getty scion seemed to him completely out of sync with the other directors, unable to articulate even the basic issues faced by the company. One incident that stuck in Petersen’s mind was the directors’ vote on the acquisition of the ERC Corporation, an insurance company Getty Oil bought during the late 1970s in an effort to diversify from the oil business. It was an important deal—the price tag was more than $500 million—and Petersen had invested a great deal of time and effort negotiating the purchase and explaining it to the directors. Gordon had never once voiced an objection to the deal. But when it came time to approve it, Gordon cast the only negative vote. His dissent was not much of a problem because all of the other directors were strongly in favor of the deal, but the vote so surprised and annoyed Petersen that he had turned to Gordon across the table and asked him why he voted against the proposal.
“Well, everybody else voted yes, and I thought someone should vote against it,” Gordon had answered.
The arbitrariness, the silliness of that answer had stayed with Petersen. He regarded Gordon as a man simultaneously indecisive and stubborn. He was encouraged by Lasky’s engagement now because Lasky, too, knew this story about his client, and no doubt knew other stories as well. Petersen hoped that Lasky would understand the dilemma he faced as the chairman of a Fortune 100 company with tens of thousands of public stockholders who were now potentially at the mercy of the whims and idiosyncracies of a man such as Gordon Getty. It was important that Gordon and the company find a way to work together now that Gordon was in control of 40 percent of Getty Oil’s stock. Perhaps Lasky could bridge the gulf between Petersen and Gordon.
It was a gulf rooted in time, culture, and social standing. In demeanor, background, and experience, Sidney Petersen had little in common with Gordon Getty. He had grown up in Oakland and San Leandro, across the bay from the glamorous San Francisco society in which Gordon and his wife moved so easily. His father was a small businessman who owned a speedometer repair shop where Sid worked during the summers. The company had been started in the midst of the Depression, and the vast majority of its business came from used-car lots that wanted the speedometers on their cars turned back. Petersen was the youngest child, and the only son, in a stable, stoical Danish family that emphasized hard work and showed little emotion. Sid was the first in his family to finish college, and for all the success he achieved in school and later in corporate life, his parents never expressed much surprise or pleasure over his accomplishments.
Petersen worked hard despite his parents’ outward indifference. He attended the University of California at Berkeley, and after graduation served in the army for twenty-one months. At the time of his release, he was married and the father of a young child, so he returned to the Bay Area to search for a job. It was the 1950s, an era of prosperity and corporate conformity in America, and Petersen chose a secure career with the giant Tidewater Oil Company, then just newly under the control of J. Paul Getty after a decades-long takeover campaign. Petersen was placed in an administrative training program and landed in the transportation department. When Tidewater’s headquarters were
moved to Los Angeles as part of a consolidation with Getty Oil, Petersen went with the company reluctantly after his search for a new job in San Francisco yielded no offer more promising than the job he already had. In time, he came to enjoy Los Angeles, at least partly because he began to succeed professionally.
Tidewater had been notorious for its penny-pinching corporate policies, and the company had hired only a handful of young executives in the twenty years since the Depression. The result was that Petersen moved rapidly through the corporation’s ranks because there were few contemporaries around to block his ascent. By the 1960s, because of the twenty-year informal hiring freeze, when an executive retired at age sixty-five, there was no one fifty-five years old working in a job one notch below, waiting to replace the retiree. Someone such as Petersen—young, smart, and aggressive—could move quickly into the vacuum. Moreover, when Tidewater’s name was changed to Getty Oil, its culture was altered, too. The company began to expand aggressively, making up for the time lost by the old Tidewater management’s frugal caution. New service stations were erected across the country, a fleet of tankers was built, and a plethora of new oil wells were sunk in Texas, Oklahoma, California, and elsewhere. In this atmosphere of growth, it was Petersen’s facility with numbers and his talent for budgets and planning, not his knowledge of the oil patch, that led to his rise. The planners were ascendant in the new Getty Oil; in a company experiencing such rapid change and expansion, they had to be, J. Paul Getty believed. By the mid-1970s, Petersen was positioned for Getty Oil’s chairmanship, and in 1979, three years after the old man’s death, he was voted to the post by the company’s board of directors.
There were those in and around Getty Oil company who thought that Sid Petersen had changed for the worse when he became chairman. Before, they said, he had been a quiet, nervous, almost shy man, whose solid professionalism distinguished him from the coarser, less articulate executives who surrounded him. The board had chosen Petersen because since George Getty’s death in 1973 the company had been led by executives “with mud still on their boots,” as the saying at the company went, men from the oil patch who, while knowledgeable about bits and drills and wells and pipelines, lacked the sophistication necessary to lead Getty Oil into the modern corporate era. Or so the board believed. Certainly, the company was no longer the Getty family’s private empire—it was a visible, publicly owned, sprawling and complex enterprise. The company could benefit from a higher profile on Wall Street, in the Los Angeles community, and in the corporate oil fraternity.
Sid Petersen, the board felt, was the man who could lead the way. He had never gotten mud on his boots; so far as anyone knew, he didn’t even have boots. In more than twenty years with the company, he had worked outside of corporate headquarters for only nine months. Sid Petersen was a numbers man, a spokesman, the sort of CEO who might just as easily lead a food company or a diversified conglomerate. And yet, some of Getty Oil’s executives thought, he had taken his new, public role too seriously since becoming chairman. It was little things that annoyed them, trappings of power and ambition absent in his precedessors. For years, Getty Oil’s top executives had driven company Cadillacs to and from the office, but that wasn’t good enough for Petersen, they said—he had to have a Jaguar for himself. Some increasingly perceived his shyness as arrogance. Socially, he became openly ambitious, joining the Los Angeles Philharmonic board and hosting dinner parties for Los Angeles’ artistic cognoscenti. In this realm, the contrast between Petersen and his immediate predecessor, Harold Berg, a large, burly man who had spent nearly all of his life in the Texas oil fields, was especially vivid. There was a story about how after his retirement Berg had joined Petersen at a glittering fund-raising party for the Philharmonic. While Petersen mixed comfortably with the symphony’s directors and musicians, Berg stood off by himself. Finally, a woman who worked with the symphony approached him and, expecting to initiate a discussion about Mozart or Handel or Chopin, asked him, “Mr. Berg, what kind of music do you enjoy?”
“Well,” Berg drawled, “I’m kind of partial to barbershop quartets.”
It seemed to some that after Petersen became chairman, he snubbed his old friends. He was a handsome man, square-jawed, with graying temples and thin, fashionable silver glasses. With his $460,000 chairman’s salary, not including bonuses and benefits, now in hand, he seemed increasingly to pay close attention to his clothes and personal appearance. Petersen’s wife, Nancy, irritated a few company executives and their wives with previously suppressed pretensions—she used the company limousine to take herself on shopping sprees, for example, and stopped talking to wives who felt they had helped “cultivate” Nancy socially while her husband climbed the Getty Oil ladder.
The grievances against the Petersens were on their face petty, but they reflected a deeper cultural and social divisiveness in corporate headquarters. For years, Getty Oil’s managers and executives had shared the same life-style. They had been a kind of family. They lived in the less glamorous sections of Los Angeles County—sleepy, suburban Glendale, mainly—and they played golf together at the Wilshire Country Club a few miles from downtown. They were part of the old Los Angeles business establishment, which included the downtown banks and the oil companies and a handful of other industrial concerns. Petersen, in perhaps subtle ways, was seen to be leaving that orbit and moving into the glitzy, more socially self-conscious ranks of new Los Angeles: Hollywood. His house in Studio City, a large corner Tudor in a plush neighborhood, had once been occupied by Bing Crosby and was right next to Bob Hope’s block-long estate. The most talked-about symbol of Petersen’s ambitions, though, was the new office building he had announced soon after becoming chairman. It would be a large, elaborate building across the Hollywood Hills from downtown and near Universal City. Sharing the building with Getty Oil, Petersen hoped, would be a large movie company. Nancy was helping with the interior design decisions, or so it was rumored among company managers. Some of the executives at Getty Oil felt that what Petersen was really doing in Universal City was building a monument to himself and to the new Getty Oil he was fashioning in his own image.
Gordon Getty, whose world was far removed from the gossip and intrigue at Getty Oil’s headquarters, did not feel that the new office building represented a physical incarnation of Sid Petersen’s ego, nor was he uncomfortable with the chairman’s visible social aspirations. After all, Gordon Getty was well accustomed to the prerogatives and perquisites of wealth and power. What bothered Gordon about Sid Petersen was that he seemed to think he could push the Getty scion around. Whether Sid’s attitude was a by-product of the personal power he now felt as chairman of a huge Los Angeles oil company hardly mattered to Gordon. What mattered was that Gordon did not like the way he was being treated.
The friction between them had arisen quickly after Lansing’s death. Hays had died only a few days before Getty Oil’s annual shareholders meeting in 1982, where stockholders gathered to hear about the company’s performance and future plans, and to ratify proposals submitted by the management. That year’s meeting was being held at the Beverly Hills Hotel, a sprawling pink-stucco compound at the center of monied Hollywood society. In order for the annual meeting to take place, a quorum had to be established—a certain percentage of company shares had to vote “present.”
With Lansing suddenly gone, there was a question about how the Sarah Getty Trust’s large block of stock would be handled. If Gordon was now sole trustee, then he would have to submit his proxy to establish the quorum. In the past, when Lansing and Gordon together controlled the trust, there had been times when Gordon refused to sign the quorum proxy until the very last minute before the annual meeting began. Such occurrences had been extremely aggravating to Petersen because it would be a huge personal embarrassment if an annual meeting had to be canceled for lack of a quorum. Petersen and other Getty Oil executives had regarded Gordon’s past refusals to sign the proxy as a kind of adolescent rebellion by Gordon against Lansing. By postponing h
is signature, Gordon was reminding Lansing that, for all his bluster and authority, the lawyer could do nothing if Gordon did not go along. Lansing handled the rebellion in his usual manner: he confronted Gordon, loudly berated him for his imbecility, and obtained his signature. After Lansing’s death, Gordon againt postponed signing the proxy until the last minute—he stayed in his room at the Beverly Hills Hotel, Petersen said later, until thirty seconds before the meeting’s commencement. Petersen interpreted the postponement as a personal message to him from Gordon, a reminder that if he chose to, Gordon alone could grind even the most routine Getty Oil shareholders meeting to a halt. Gordon finally signed the proxy, but he did not apologize for his delay.
Petersen’s fears had been compounded by a private meeting he had with Gordon the day before the annual shareholders gathering convened. Gordon had flown down from San Francisco and had come to the chairman’s office on the eighteenth floor of the Getty Oil headquarters building near downtown Los Angeles. Petersen felt that he should talk briefly with Gordon before the annual meeting began.
“Those of us in management, and more particularly the other directors of the company, will be looking to you for some signal or indication about what you feel your role will be at Getty Oil,” Petersen said.
“I’m not going to make any changes in management—yet,” Gordon answered. “And the present slate of directors is okay for now.”
Gordon did not elaborate. Petersen was chilled by the response. He was unaware that Lansing had talked with Gordon about a change in management before the lawyer’s death. For his part, Gordon believed that he was simply communicating to Petersen the decision he had arrived at in recent days, that as a 40 percent stockholder in Getty Oil he intended now to control the company’s policies. Ever since he had come on the board of directors in 1976, after his father’s death, Gordon had regarded Getty Oil’s management with some suspicion. He sensed their hostility toward him, and he resented the manner in which they addressed him. As the most prominent surviving son of J. Paul Getty, and as cotrustee of so much of the company’s stock, he felt in those years that he deserved far more deference and respect than he received. Gordon felt that Sid Petersen, particularly, had been rude to him over the years. So he was not bothered by the thought that his new power as sole trustee made the Getty Oil chairman uneasy.
