The Ego Makers

by Donald Everett Axinn

  I first met Jack Phelan at a major fund-raising affair held in Central Park by the Nature Conservancy for the “Last Great Places.” I liked him immediately, respected his self-assurance and style, as well as his political savvy. I made it my practice to attend other benefits where I would see him occasionally, as well as at the Marco Polo Club, a private dining facility in the Waldorf Hotel, and also downtown at the Players Club. I became a friend of his, and he introduced me to other executives whose names I carefully wrote down as soon as I could. I followed his company closely and decided it might be in the market for office space in the Midtown area, where we were then contemplating 355 Park.

  Phelan had his own style of managing, which was unconventional in many respects. But he did get results. I asked him about it one day at the Lotos Club, where I was also a member. I had invited him to lunch to begin to negotiate the 355 transaction.

  The Lotos was on Sixty-sixth Street off Fifth Avenue. Its membership included businessmen and women, retirees, and old money. It had been a private mansion years earlier, and its ambiance was elegant. The spiral staircase off the subtle but tasteful entrance was venerable and dignified. It led up to a large, high-ceilinged sitting room, across from the formal dining room, where some read newspapers or engaged in small talk. One flight down from the first floor was a grill room, which was less formal, but the food was superb. This dining facility was warm and charming, with round oak tables, checkered tablecloths, stained-glass windows lighted nicely from behind, and a tile floor.

  “You see, Henry, all those CEOs and would-be top executives, those men,” Phelan pontificated, stopping to nibble his appetizer of smoked salmon, “think that intimidation is the best way to get results. But what they re really doing is exercising power. They love power, worship it, would trade their wives and girlfriends for it. Power gives them their opportunity to rewrite the rules.” He raised his glass of white wine to his lips and tasted it. “This is quite good. What is it?”

  “A Meursault, 82.1 thought you’d like it.” I smiled. The waiter, a man I had tipped well over the years, hovered nearby and appeared as if magically to refill Phelan’s glass. I wanted Jack Phelan to remember this lunch. I was practicing what was needed to gain full acceptance by the right people.

  “But they’re mistaken about how they use power,” Phelan went on. He scrutinized my face, saw that I was concentrating on what he was saying. Of course, I had the good sense to make the food secondary to the conversation — or in this case, the instruction.

  “You’d think that people in top business positions would feel secure,” Phelan went on, “but I assure you many do not. They issue orders and mandate change to validate their authority and lessen their insecurity. Wield power indiscriminately… and often stupidly. They’ve got it all wrong,’ he said. “You don’t alienate your competitors on your way up. If they receive the top job and not you, they'll be after your scalp. And you don’t know that you wouldn’t be content being numéro dos” He smiled.

  Phelan had a wonderful way of exposing an essential truths making clear something that was often obscure.

  The waiter cleared the remnants of our appetizers, and deftly replaced them with our main course: sautéed blue-clawed crabs for Phelan; calf s liver for me.

  “I’ve learned from many different men, Henry. Disraeli, Charlemagne, Caesar — or in our era—John D. Rockefeller, Church ill, Truman, Mellon, Ford, both Roosevelts. Even the not-so-greats, men like Hoover, Estes Kefauver, even Nixon. I’ve studied the philosophers, social scientists, great writers. Machiavelli, Tolstoy, Nietzsche. A brilliant Englishman, Christopher Caudwell.” I was having trouble figuring out how all those people related to his musings on power.

  “I'll tell you something else,” he said between bites. “I had a commander on my aircraft carrier, during those pretty awesome days in the Korean War. I was a junior air intelligence officer. This Annapolis man, a full commander, a big redheaded Irishman named James Duffy, took a shine to me. He would take me aside when he could and carefully explain his plans. Bright fellow. Now heads one of my divisions.

  “When you show your men you respect them,’ Duffy used to say, ‘they always bust their butts for you. Everyone has to function as part of a team. Get them to want to kill themselves for you. Never forget to make them feel they’ve contributed to the creation of the plan. You rarely issue orders, even though you have the power.’

  “We were so damn proud of what we accomplished,” Phelan said, “determining what were the most significant air strikes. We lost men and planes because we had to send them not only long distances but then to face flak and enemy fighters. Terrible days and nights. But wonderful, too. We stank for days, had just enough time to eat and an hour of sleep here and there.

  “Duffy taught me a lot about power,” Phelan continued. “I served under some I wouldn’t give you two cents for. Idiots. Power crazy.”

  Phelan was enjoying his monologue, which could have been overbearing but somehow was not. I listened attentively, not wanting to interrupt his flow.

  “It’s truly impressive how your particular management style has taken Standard General far beyond what Wall Street projected for volume and profits this year,’ I said. It probably sounded obsequious, but I meant it.

  “The last three years,’ he corrected. “You, Henry. A real leader in the real estate investment field. All those buildings,’

  “I had a CO in the Marines like your Commander Duffy. Got one now, my helicopter pilot, Craig Sampson. He keeps me on the straight and level.”

  “What about your brother? Isn’t he your partner?”

  I shrugged, surprised he had asked about Steve. “I suppose I was always the one who led. What I mean is, Steve’s comfortable executing. He’s better at that. We own equally, the way Dad wanted it. I’m satisfied, and I believe Steve is, too.”

  That didn’t seem to convince Phelan. “Are you sure?” He didn’t wait for my reply. “Didn’t he end up marrying the woman you were with for some years?” He watched my face carefully.

  How the hell did he know that? Oh, right, a former intelligence officer. “Yes,” I said slowly, “but I can assure you it’s never been a problem for any of us.”

  He sipped his steaming coffee “Being a dedicated realist is essential for top leaders,” Phelan said at the door as he was about to climb into his limousine. “I’m sure you’re right,” he said. “About your brother. Otherwise, you could wind up with big trouble.”

  He eyed me as if looking for a reaction. I made sure there was none.’

  5

  PHELAN had been expecting me. When I entered his inner suite, he peered at me fixedly, then motioned for us to move into the private sitting area adjacent to his office. The room was tastefully English: two tan, smooth-leather couches faced each other, separated by a mottled brown granite coffee table. A round conference table was set to one side, surrounded by wonderfully ornate chairs, the bottoms of the two front legs carved onto eagles’ talons over round balls. They stood on a handsome thick Persian rug, which was laid over an equally thick beige carpeting. The feeling it gave was of elegance as well as careful organization. The only things that seemed inconsistent were the paintings on two of the walls. Then I remembered Phelan told me he had a son who painted.

  “Nice to see you, Henry,” Phelan said, extending his hand. But instead of inviting me to sit down, he turned and walked over to the window that spanned the full length of his sitting area, and stood there, his back to me. I joined him and looked at the toy panorama below. Office buildings towered like children’s blocks; miniature streets were clogged with tiny buses and cars. Pedestrians appeared like ants, slow-moving, programmed by some ageless instinct. Central Park spread its green rectangle to the north, the East River visible to the right through gaps between the buildings. Queens ran farther to the east, distinctly flatter. Several airliners played follow-the-leader as they made their approaches to LaGuardia. They turned into long base legs and then on final to the ru
nway.

  As often as I had looked out onto scenes like this one, I remained impressed. I didn’t have much time to muse about my life in general, but in the seconds before he began to talk I remembered feeling I was at the top of everything, exactly where I had always wanted to be.

  “So, what can I do for you, Henry?” His tone was tight and remote, I thought. Bad sign. I hoped I was wrong.

  I cleared my throat. “Jack, I can’t understand what’s holding up the final execution of the new lease. Everyone’s in full agreement on all the open items. The attorneys can quickly settle any remaining differences in language. I’m sure you know I made an even further concession in the rent.”

  He turned to me and put his hand on my shoulder. “Let’s sit down, my boy,’ he urged. “Something I want to share with you. But I must have your word you’ll not discuss it with anyone. Including your brother.” I nodded.

  Phelan rang for Tina Schräger, who came in with a tray of both regular and decaf coffee, and hot water with choices for teas. English biscuits and scones were carefully assembled in circles on a brightly colored Spode plate. “What may I serve you, gentlemen?” she asked pleasantly. She continued to smile as she poured whatever it was we had requested. I didn’t give a damn what I was drinking.

  “Henry, I’m afraid your lease has been caught in a struggle, one over which I do not have my usual control.” What the hell did that mean? “As you know,” he continued, “I’ve announced I was planning to retire, but I’ve become uncomfortable with that decision because the board would in all probability appoint Jordan to succeed me. I misjudged that man. He turned out to be a lousy manager, and an even worse president. He’d make a disastrous CEO. The only way I can prevent that — and remember I own a significant amount of both common and preferred stock — is to stay on. Even though Jordan has some backing, the majority of the board votes are, without question, mine. Before I’m through, hell be out of here.”

  “I understand, Jack, but what does that have to do with my lease?”

  “Robert Ellington Prince — you know who he is — sits on our board and quite a few others. He’s all right except when he gets priggish, after he’s been with his Princeton or his Harvard Business School pals.”

  He took a sip of coffee, then went on. “Jordan has been buttering him up. So he decides — Parker, that is — that he’s an expert real estate negotiator, a maven, and spouts off about a 200,000 square-foot lease he’s just concluded for his own company. Supposedly the rent ended up fifteen to twenty percent lower, plus additional tenant work, and — get this — the deal included a twenty percent piece of the equity! So Jordan, out to make himself a hero, goes to Yedid, our present landlord, sits his people down, and tells them that if they drop the rent significantly, we might reconsider staying in their building.” Phelan glanced at me, waiting for a reaction. I decided to remain silent, because I knew there was more.

  “It’s a package, I suppose. Jordan saves us lots of dollars and makes a big impression on the board; and Parker gets his ego boosted.” He hesitated. “Jordan would remind me of Machiavelli except he’s a rank amateur. His mistake was he didn’t figure on me staying on.”

  “Don’t you have the power to finalize the lease with me?” I knew the answer, but I wanted him to spell it out.

  “Your lease can’t be my main priority right now.” Phelan stood and faced the window. “I have to let Jordan win that one. We’re into a power struggle. I’m playing more than one card. It’s most unfortunate, Henry, it really is. And I’m sorry, but that’s the way it is. We’re extending our present lease.” Phelan turned to look at me. “At the next board meeting — I will have it all worked out in advance — there’! be no surprises, except for Mr. Jordan. At one time this Irish lad from the Bronx was a pretty good gutter fighter.

  “The board will urge me to sign a new three-year contract, maybe five years, with an option to terminate after three. When and if I do exercise the option, I will be provided with a rather large golden parachute. I’ve already discussed my idea with a few key board members. They’re sure Parker and his faction will go along. Frankly, no matter what Jordan would like to believe, Parker could care less about him.”

  “I never could connect with Jordan,” I said. “He always makes me feel he has more than one agenda. The one we might be talking about and the other he keeps to himself,’

  “Mr. Martin,’ Phelan said with a bit of his old Irish accent and with a broad smile, “don’t we all?” He sat down next to me and patted my knee paternally. “Do you really believe that even in the most intimate of conversations, the various parties let on how they actually feel?”

  Screw the lesson. My deal was in a flat spin, an inevitable crash, a foregone conclusion. Jesus Christ. No tenant. The bank will pounce on me like an angry lioness. I had to do something. This was my last chance.

  “Jack, you have an incredible way of cutting to the absolute essence. IVe got something to tell you. It’s private.” I took a deep breath. “My companies — well, you know how bad real estate has become. Too much space available. Rents dropping. Tenants demanding more expensive improvements, and so forth. What’s exacerbating the situation more this time than during the last recession is the intransigence of the banks. Both the commercial and long-term lenders.”

  “I’m fully aware of it,” he responded. “I sit on the board of First Trust. We’re very concerned about outstanding loans. The situation with Donald Trump has everyone’s attention. He seems to have gotten himself heavily overcommitted. But he’s very clever, and has an incredibly strong self-image. The examiners, state and federal, are all over us demanding that we increase reserves for bad debts. And threaten foreclosures if developers don’t reduce or pay off their loans.”

  He glanced at his watch and walked over to an intercom. “Tina, tell Steve Aptheker to start the meeting. Ill be another ten minutes. Oh, and remind him that all division heads must present their quarterly reports by, ah, the eighth. I will not tolerate slippage.”

  “Yes, sir,” she responded. “And please don’t forget there are some important calls before your luncheon. Senator Flowers called. His AA sent a fax. The senator would like to talk to you about your suggestions regarding his amendment before he leaves Washington. Oh,” she added, “your trip to Denver?”

  “Yes, thanks. I’ll use the Gulfstream out of Teterboro. Bob Osinski reported that the Citation’s down for some work.”

  He turned to me. ‘We’re going to spend the weekend with my daughter Jamie in Aspen. I bought a place so we could all use it. My two granddaughters are exactly the right age. Wonderful kids!” His tone changed: “Henry, this situation should not be too great a surprise to you. Developers are a greedy bunch. Each one has an ego bigger than the next. When times are good, they jump in with too many projects. As though they can’t help themselves. There’s an old Irish expression, You can’t put your rear end into more than one wedding.’ Actually, I think it’s Jewish.”

  I stood up and shook my head. I had positioned us so well. Projections, careful planning. Now all those downside risks were crashing in all at once. I looked at a portion of Central Park, which suddenly seemed shaped like an albatross.

  Then I remembered something I had learned a long time ago about selling: a smart salesman has a better chance of landing an order if he acts as if he doesn’t need it. “I’ve been through recessions before,” I said. “Despite all the problems, we’re stronger now than we’ve ever been — experience, depth, credit, staying power.”

  “You said you had something to confide, but you sound like everything is dandy,” Phelan said. He offered more coffee, but I declined.

  “The impact of losing this lease could be serious,” I said. “There are other prospects out there, but it could take months to close another deal….” I was asking him to help me, but I didn’t want to appear as if I were desperate.

  “I’d like to help you, but your lease is dead for the reasons I’ve just outlined. Look,” he
went on, “another company, one I’ve been trying to acquire, may need space. But we won’t know that until after the acquisition. I’ve mandated tight space projections throughout the divisions. No exceptions.”

  He walked me to the door, his hand on my shoulder. “The top man always has to set the example, Henry. You know that. I promise to keep these eyes open. Let you know if any of my friends are in the market.” He extended his hand. “Call me next week and tell me how you’re doing. I’ve always liked and admired you. Learn from others. In this case excesses, like Trump’s. You’re a bit arrogant, but a real driver.” He looked at me squarely. “Unlike most men, you and I are unwilling to be deterred from our goals. No matter what the obstacles. Others drop out on their climbs up their Matterhorns. Not us. In the genes, Henry. Plus environment and training.” “I’m sure you’re right,’ I said.

  “But, my young friend, be obstinate and you become an ostrich. Get your tail bitten off. At times you will be the only one who believes you'll make it. I know, Henry, I've been there.”

  As I walked down the long hall toward the bank of elevators, it occurred to me that Jack Phelan had ended with a warning couched in a compliment. But what he hadn’t given me was what I needed most: the lease with Standard General.

  I passed the executive stairway and reached the end of the hall before I realized I had completely passed the bank of elevators. It surprised me I had been so absent-minded. It annoyed me. I was supposed to take problems in stride, not be completely fazed by them. I retraced my steps and took an elevator down to the first floor.