Barbarians at the Gate (16 page)

Johnson yawned. In an executive suite noted for “ideas of the week,” Benevento’s scribblings were yesterday’s news by the time they crossed his desk. Johnson himself had a new plan. It involved constructing a “third leg” for RJR Nabisco in the media business, a fascination that dated back to his friendship with Gifford. The immediate object of his attention was ESPN, the all-sports cable-television network of which RJR Nabisco already owned 20 percent; Johnson had become intrigued with the idea of buying the 80 percent of ESPN owned by Capital Cities/ABC. Don Ohlmeyer was brought in to evaluate the company, and Johnson for once
followed through, offering to buy out Cap Cities for $720 million. He was turned down flat.

Benevento was also left flat. He had hoped Johnson would broach their LBO idea at a board meeting in Palm Springs in late March. But as Benevento sat by idle, Johnson focused instead on ESPN, never mentioning any of financial R&D’s schemes. Later Johnson told Benevento to forget about LBOs for now. For all his free-spending ways, the fact was Johnson remained a prude about corporate debt, the core of any LBO. He remembered the backbreaking trips to GSW’s bankers twenty years before and cringed. Banks didn’t understand the need for golf tournaments and corporate jets. They cramped his style. No, he told Benevento, he’d take a pass on an LBO.

Jeff Beck proved tenacious. He knew what made Johnson tick; at Drexel, one of Johnson’s nicknames was “Starfucker.” Hearing RJR Nabisco might be interested in media properties, Beck arranged a dinner at a posh New York restaurant, La Côte Basque, for Johnson to meet the actor Michael Douglas, a friend of Beck’s who was looking to start his own production company. Nothing came of it, although Johnson had a marvelous time, as always.

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 the 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.