T. BOONE PICKENS GETS THE BOOT AT MESA BUSINESS PEOPLE WHO CHANGED THE WORLD
(FORTUNE Magazine) – The news that T. Boone Pickens will soon be leaving Mesa--the oil and gas company he founded some 40 years ago and launching pad for the hostile takeover attempts that made him famous--surely ranks as one of the great anticlimaxes in business history. Just ten years ago Pickens was far and away the most hated man in corporate America, the prototype of that new species of businessman: the fearsome, swashbuckling "corporate raider" (a phrase he's always loathed). Back then he commanded headlines, not just on the business page but on the front page, as he railed about CEOs who cared more about their perks than about their shareholders, and made runs at companies--such as Gulf Oil and Phillips Petroleum--that had always viewed themselves as invulnerable to the like of him. He was the first raider to get Michael Milken's backing, the first to make the cover of Fortune magazine, the first to write a best-selling autobiography. And he was the first to get shut down by the Delaware courts, which ruled, in 1985, that a company (in this case Unocal) could treat a raider differently from other shareholders.
The Delaware courts' blow for the status quo, though later overruled by the Securities and Exchange Commission, marked the beginning of the end for the raiders, and it's not much of an exaggeration to say that it was the beginning of the end for Boone. The subsequent decade has not been kind to him. He tried some years back to bully his way onto the board of a Japanese auto-parts company but failed. Once revered in his hometown of Amarillo, Texas, he got embroiled in some nasty political disputes and became merely controversial. (He moved to Dallas in 1989.) The press, which had once lionized him, started roughing him up.
And then there was his beloved Mesa, which Boone had built into the largest independent natural gas producer in the country but which, by the early 1990s, was drowning in more than $1 billion in debt that he had run up making overly generous payments to shareholders. It was the debt that finished him off. Boone had bet--it was the worst bet of his life--that the price of natural gas would go up and bail him out. Instead, Mesa itself became the target of a parricidal raiding party organized by his onetime protege, David Batchelder. When the Texas financier Richard Rainwater agreed several months ago to pump cash into Mesa in return for preferred stock, he became, in effect, Boone's white knight--to use another phrase that has fallen out of currency. According to news accounts, it was the white knight who performed the coup de grace and told the 68-year-old Pickens that he had to go. The Wall Street Journal put the story in the B section, on the "Who's News" page.
But the end of Boone's reign at Mesa--and perhaps the end of his career--ought not go completely unremarked. Yes, there is irony in his denouement; as others have pointed out, he did indeed reap what he had sown. But it's a cheap irony, and it obscures the more interesting and important thing about his career: More than any other raider--more even than Milken, the raiders' enabler--Boone changed the world.
He did, you know. I remember hanging out with Boone circa 1982, before the takeover movement had gained force, listening to him talk over dinner about how stockholders were the real owners of companies, and how the primary job of an executive was to make money for them, and how wrong it was that so few CEOs owned stock in their own companies. Those were startling ideas for their time--revolutionary, even. I had never heard anyone utter such thoughts before. Neither had most of America's corporate executives, who scoffed, especially when the ideas became part of Boone's rationale for his high-profile takeover attempts. Looking back, it's clear that they scoffed because they felt threatened. Boone's other rationale for his takeover attempts, of course, was that they made good business sense. He was always vaguely startled, and even a little hurt, when a takeover battle turned personal.
So here we are now, halfway through a different decade, and what do we see? We see, for one thing, Boone's once revolutionary ideas so completely taken for granted that they have become linchpins of the economy. Is there anybody anymore (except maybe in the labor movement) who doesn't accept the supremacy of the shareholder? Is there any CEO who doesn't understand that his primary job is to create wealth for his shareholders--and that to fail in that task will likely mean the loss of his own job?
And as for takeovers themselves, you may have noticed that even though the raiders have largely disappeared, takeovers have not. If anything, there are more now than there were during Boone's heyday. The only difference now is that the big boys--the very ones who used to hurl venom at Boone--are the ones driving the takeover business. And they're not at all sheepish about "going hostile" if it is in their interest to do so. What everyone understands now is what Boone always understood: It's not personal. It's just business.
So as he fades into the Texas sunset, let's take a moment to give T. Boone Pickens his due. Thanks to him, corporate life, especially at the top, is radically different: filled with both pressures and rewards that didn't used to exist. Like it or not--like him or not--the business landscape that exists today is one that he had no small role in painting.