I used to tell people that I was in the room when the 1980s — the bull-market-greed-is-good ‘80s — began. It was June 1982, and the room was a luxe Waldorf Towers suite leased by Lazard Freres. An investment banker at the firm had loaned the suite to a Texas oilman named T. Boone Pickens Jr., the founder and chief executive of Mesa Petroleum, based in Amarillo.
Boone, who had a big reputation in Texas, and virtually no reputation outside it, was making an audacious play: He was trying to take over Cities Service, a company 10 times Mesa’s size. And I was sitting right next to him, watching him try.
I had just turned 30, a new staff writer at Texas Monthly. Boone was 54. Profiling him was my first assignment, even though I knew nothing about business. Then again, he didn’t know much about hostile takeovers. One thing I understand now is that he and his team — which included a very young Hamilton James, who went on to become a senior executive at the Blackstone Group — were improvising, every step of the way.
Of course, back then you could count on one hand the people who knew how to do a hostile takeover. It was all new — and corporate America wasn’t happy about it. Men like Boone weren’t called “shareholder activists;” they were called “corporate raiders” or “greenmailers.” There were investment banks (Goldman Sachs was one, as I recall) that refused to advise anyone attempting a hostile takeover. Chief executives wouldn’t dream of trying to buy a company that didn’t want to be bought — if for no other reason than it was impolite. The price of the stock was low on their list of priorities.
What I wind up reflecting on now, as I think about Boone, who died Wednesday at the age of 91, is the role he played in the revolution that has taken place in the way companies think and operate. Michael Jensen, a finance professor at the University of Rochester, is usually given credit for laying the foundation for the modern emphasis on shareholder value. But few people in the executive suites or on Wall Street knew who Jensen was.
They knew who Boone was, though. He — and Carl Icahn, and a small handful of others — loudly proclaimed that everything they were doing was in the interest of shareholders. It was the rationale for their raids. Boone used to lecture me back then: Joe, he’d say, CEOs don’t own the company. The shareholders do. People used to ask me whether this was just something he said to justify his takeover plays. No, I would reply, he really means it.
Boone made five hostile takeovers in the 1980s. He didn’t land any of his targets, but he did become a public figure. When he went after Gulf Oil in 1984, he received the first-ever “highly confident” letter from Michael Milken (meaning that Milken would be able to raise enough in junk bonds to pay for the deal). That same deal also got him on the cover of Time magazine, with an illustration showing him playing high stakes poker. Thus did he help usher in another facet of modern business: the risk-taking, swashbuckling, larger-than-life businessman. It’s not too much to say that Elon Musk is an heir.
For the next 20 years — and I can also see this more clearly than I could at the time — Boone struggled. He started a shareholder rights organization, but it didn’t go anywhere. He had a tight-knit group of young whipper-snappers who had worked on his deals, but one by one, they left. He got into petty feuds with various people in Amarillo, including the editor of the newspaper. At one point, he had the idea of selling rights to the water under his ranch to Dallas or San Antonio. He was damned if he was going to sell it to Amarillo.
By the mid-1990s, he was in the middle of a horrific divorce and suffering from depression. Mesa had been borrowing money to pay to shareholders — he wanted to show that he put his money where his mouth was — but the company was going broke. Richard Rainwater and his wife, Darla Moore, made a deal to restructure the company. They did, and then — much to Boone’s surprise — they tossed him out.
What followed was what I think of as the most astonishing part of his career. In 1997, Boone set up shop in Dallas and started an energy hedge fund. He raised $27 million from friends in Texas, and put in another $10 million of his own money. By the end of 1999, the fund had dwindled to $4.4 million.
And then? Then, the price of natural gas started to go up, and the value of Boone’s fund soared. It helped immensely that he finally put his divorce behind him, and that he got on antidepressants for a short time. In the office he was sharp again, something he hadn’t been in years. He was also, for the first time in his life, a billionaire.
As for me, that story I wrote about him in 1982 changed my life. I became enthralled with business, and it became my beat. When Boone got a big contract to write his autobiography in 1986, he hired me to be his ghostwriter. But I had too much ego to be a good ghost, and he had too much ego to let me write his book. He fired me halfway through the project, and I sued him for the money I felt I was owed. Although we quickly settled, we were estranged for the next decade.
One day I got a note from him, about a story I had written for Fortune magazine. He thanked me for something I had written about shareholders. I took it to mean that he wanted to reconnect, so I went to visit him. He told me about his depression, and his divorce, and the therapy he was in with his grown children, with whom he had never had an easy relationship. “Joe,” I remember him saying, “never say no to therapy.”
From then on, we were friends. There were things he did that bothered me immensely, especially funding the Swift Boat attacks on John Kerry during the 2004 presidential election. But there were also things he did late in his life that I really admire. His effort to move the country as much as possible away from coal and oil, and towards natural gas, is high on that list. His critics used to complain that he was talking his own book, but so what? He believed in natural gas with all his heart.
I went to visit him in Dallas in November 2016, by which time he was 88. He sat in his conference room having his daily meeting with his aides and traders while they analyzed the latest energy trends. Why was Exxon Mobil Corp’s stock rising? Were rising gasoline prices affecting motorists? What were the Saudis going to do? Boone wore hearing aids and sometimes had to lean in to understand what was being said, but he was still very much the decision-maker. “Boone,” said one of his guys, “has balls like nobody I’ve ever known.”
A month later, Boone had the first in a series of strokes. He was soon using a walker, and struggling with his speech.
The last time I saw him was a year ago, at his ranch. It was difficult to watch him; in addition to his physical problems, you could see that he had things he wanted to say but just couldn’t get the words out.
One afternoon, Boone had someone drive him around the part of the property that had wells — yes, Boone drilled for oil and gas on his ranch — and that seemed to perk him up. He employed a full-time geologist, and after we’d visited a few wells, we went into a big room where one wall was papered over with an enormous map of the ranch’s geological formations. The geologist started to explain a few things, but Boone interrupted her. For about 10 minutes, he talked without trouble. For me, it was a nice moment.
When I first met Boone in 1982, he quickly sized me up as “an East Coast liberal.”
“You probably don’t know many conservatives,” he said (correctly). “I’m going to show you that a conservative can be a good guy.”
And he did, too. Rest in peace, Boone.