As an executive, Mr. Johnson was known for attacking bureaucracy and clearing out poorly performing executives, but those who made the cut were well-paid. Johnson announced the company would shift its headquarters to Atlanta after years in Winston-Salem, N. Colleagues were impressed by his quick thinking.
His roots were modest. An only child, he was born Dec. His parents were Irish immigrants. His mother worked as a bookkeeper, and his father was a sales manager. The younger Mr. He held finance and marketing jobs at Canadian General Electric and then became vice president for merchandising at T. Eaton Co. His next stop was GSW Inc. In , Mr. Johnson joined the Canadian unit of Standard Brands Inc. He rose to CEO of the parent company in Eager for more scale, he initiated a merger with another big food company, Nabisco Inc.
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Measure content performance. Develop and improve products. List of Partners vendors. Of the many worries facing shareholders, damage from incompetent or irresponsible management is a big one. CEO s can hurt a company in various ways, including by steering it the wrong way, diversifying too much or too little, or expanding at the wrong times. Occasionally, the damage is much more intentional and wanton.
In this article, we'll look back at a prime example of corporate kleptocracy—the case of RJR Nabisco. In the s, tobacco giant R. Reynolds was despairing about its future as a one-product company.
Cigarettes were known to be carcinogenic, and litigation was getting costly. CEO J. Tylee Wilson was searching for another business to merge with; ideally, a company to offer an upside to counteract the company's expected declines. The best candidate, according to Wall Street advisors, was Nabisco Brands. Nabisco Brands was already a merged company created in by joining food companies Standard Brands and Nabisco.
Ross Johnson, had managed to stay on through the merger and wrest control of the new entity. Johnson had established a clear M. His first moves after getting a charge at Standard Brands and later Nabisco Brands was to ingratiate himself with the board of directors , increase management's compensation and then pile on the perks.
The same thing happened with Nabisco Brands, with Johnson seizing the reins within three years of the merger. In the spring of , Wilson and Johnson met to discuss a friendly merger in which Wilson would become chair of the new company. Johnson disliked his proffered job of vice chair and asked for the post of president and chief operating officer , as well.
Wilson countered by suggesting Johnson could have the top post when Wilson retired two years later. In the end, Wilson was more desperate for the deal than Johnson. Wilson had to pay a high premium for Nabisco, and Johnson pushed through demands for various perks and the two posts in a sweetheart deal that saw R.
It was a record setting-merger for non-oil companies. The price of the merger was increased when the ubiquitous Ivan Boesky bought Nabisco stock prior to the merger, signaling the takeover to the market and making a tidy sum in the process—it was one of the trades that fueled the investigation into his seeming prescience and resulted in his conviction for insider trading. Wilson was very cost-conscious; Johnson spent freely.
While Wilson wondered what to do with his brash, spendthrift partner, Johnson got close to the board of directors and managed to open a rift between them and Wilson.
It took him less than a year to wrest the top post from Wilson. The salaries and perks of the management quickly grew to outsized proportions.
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