Dethroning the King (38 page)

Those four or five “outside” directors held the keys to Anheuser's future. Only one man, though, made a habit of seizing control of the boardroom and steamrolling the debate, and that was August III, the group's consummate insider. He encouraged other board members to speak their minds, and at points would call on people he felt were too quiet. The ability he had to cajole them into adopting his point of view was both awe-inspiring and, to those who had differing views, maddening.

“No one overtly ever wanted to take The Third on,” said one Anheuser insider. “This guy was so used to everybody in and around St. Louis, and certainly at Anheuser-Busch, just genuflecting to him. His whole life had been everybody kowtowing to him. The fact that his nickname was The Chief—he wouldn't even know how to deal with somebody unless they bent to his will. God knows what he thought of anyone who didn't.”

The Third's small ownership in Anheuser-Busch hardly seemed to matter. The imposing force of his personality was enough to overpower anyone else in the room. “This was a family-controlled corporation where they only had 4 percent of the stock,” said one company advisor. “I mean, the force of personality to let that happen ...”

Goldman Sachs's Tim Ingrassia had never met The Third before the first board meeting he attended. It was clear as the former chief jumped down from his helicopter and stalked into the boardroom, even before he spoke, that he possessed a strange kind of magnetism. “Watch this guy work the room,” Ingrassia said, leaning over toward Peter Gross as they waited for the meeting to start.

August III sat down and began canvassing the group, looking from one person to the next. He'd catch someone's eye and then—there it was—he'd wink or nod in his or her direction. And damned if that person didn't immediately sit up straighter or adjust his tie. The Third, whether consciously or not, was quietly establishing himself and asserting his superiority.

As Gross and Ingrassia watched the scene unfold, The Third turned unexpectedly toward Ingrassia and gave him a little wink as well. Ingrassia sat up in his chair and puffed out his chest before he could catch himself.

“You're doing it!” an incredulous Gross hissed at his colleague.

The Third knew how to work a room, but he seemed to feel it was more effective to lobby people individually if he was looking for a certain result. There weren't many places to hide in the airplane hangar, but he was skillful nonetheless at pulling people into the coffee room or hallway for furtive pow-wows. One advisor compared him to Lyndon Johnson during Johnson's days as a highly effective Senate Majority Leader in the 1950s, when he was photographed several times giving other senators the “Johnson Treatment”—leaning so aggressively into them while making a point that they nearly toppled backward.

“That, right there, captures the man,” the advisor said. “He spoke very rarely in open forums, but would talk to them in the bathroom, in the copy room, holding small conferences at the end of hallways. This whole thing played out in the airport hangar over a course of weeks. It was not happening out in front.” The Third was a behind-the-scenes coalition builder, and his preferred style of negotiation was one that sapped power away from others. When bilateral deals are cut one-on-one, no one else knows the context of the talks or the nature of the result. The Third seemed to understand the value of leaving other people guessing as he strategized and polled for votes.

“He's a consensus builder, but he does it behind the scenes,” the advisor said. “A lot of what he did took place behind the scenes. I don't think he left a lot to chance, let's put it that way. I don't think he would walk into a room without knowing what people thought beforehand.”

The Third has often been described as a “charismatic” figure, but begrudgingly. “The Third is the most impressive person on the board,” said one person close to the company. “He was hugely charismatic, intelligent, powerful. Whether his powers were being used for good or evil, as some might say, he was impressive as an individual. He had his hands around everything. You knew he was working everyone.”

Others argue that his success had less to do with charisma and more to do with sheer intimidation. “When The Third was challenged, he wouldn't even look at you,” one advisor said. “This guy was a classic schoolyard bully. If he could intimidate you, he would intimidate you, and he would bust the crap out of you. If you kind of pushed back against the guy, he would pretend he didn't hear it and wouldn't take you on. He literally didn't want to deal with somebody unless he could intimidate them. And I was just so disappointed that that's who the great August Busch III was.”

“The Third was, for such a long period of time, the head of that company, and he really ran that company with a fairly iron fist. The board was essentially people he knew well,” this person continued. “Those were really long and strong relationships. So when he came into the room, he cast a pretty big shadow. I didn't really find him to be charismatic or to be very candid. I found him at times to be much more rigid and agenda-oriented than others, and at times I regretted that because it was not the most helpful dynamic. He was so unbelievably opinionated about any issue that came up.”

The board's independent directors made some efforts to distance their decision making from The Third's influence during the InBev takeover battle, to varying degrees of success. “It was clear that while he had a lot of background and knowledge that was important—and we didn't want to lose that—he wasn't controlling it,” said Jim Forese. And with a few notable exceptions, The Third tempered himself during the actual board meetings. He had an unnerving habit of passing notes to the corporate planning and finance people who usually sat behind him along the wall.

One Anheuser advisor was less distracted by the note-passing than by The Third's “transparent” agenda. “The thing that was distracting was that he had a very, very strong point of view and was trying to kind of push it on the board, and had a very strong view also on what he thought of his management team.”

“The Third would basically try and bully whoever was presenting at the time into conceding whatever point he wanted them to make.”

He was never seen lobbying for support from one particular board member, however: his own son. The two rarely seemed to communicate at all. On the day InBev made its bid, The Third filled a reporter in on the secret to how he was able to operate as an Anheuser director once his son became CEO.

“[Our w]orking relationship boils down to communication,” he said. “It's all in being open, and talking to the board and to the CEO who, in this particular case, happens to be my son. But hell, he was in there for twenty-something years before he came up with that job. So he's seen all the deals and done all the jobs, so it's not very hard to communicate.”

Others beg to differ. “They didn't communicate much, except if you call communicating on a daily basis getting your ass chewed,” said one strategy committee member.

“One thing I will never forget,” said a company advisor, “is that I was sitting in a board meeting . . . right behind The Fourth and The Third, and looking at one head of really dark hair, one head of kind of grey hair, them both wearing their cowboy boots. And just thinking ‘My goodness, it's a shame they're not closer friends.'”

The contrast between the two men in the boardroom could hardly have been more pronounced. They could barely even make eye contact, and August IV had a way of looking as though he was asking his dad for permission to speak. They didn't break into battles in public—the friction between them was always subtle and indirect. When The Third ducked into the airplane hangar's tiny bathroom at one point, not knowing his son was already in there, it made for a suspenseful few moments for everyone who was standing outside imagining the forced confrontation.

“I never saw The Third and The Fourth say a word to each other, which I thought was remarkable,” said one person who worked to defend the company. “The Fourth really had nothing to say. He rarely said anything.”

“Just watching him in the board meetings—the discomfort was palpable. I felt for the guy. He was cordial and amiable, probably a guy you would enjoy spending time with. It was almost one of those Greek tragedies. He was put on a throne that maybe he never wanted to be on and didn't feel comfortable sitting on, surrounded by people who had different agendas. There were a lot of sharp knives all around him.”

For a few rough months in particular, the person who brandished the sharpest blade against The Fourth was his own father. When August IV started as CEO, the two had pledged to the board that they would make their relationship work. They had a monumental falling-out, however, in April of 2007, right after the first annual shareholders ' meeting of The Fourth's tenure, and it isn't clear their relationship ever fully recovered.

August IV was scheduled to make his first major briefing to investors at the meeting, which was held at Sea World in Orlando, Florida. As he prepped in the days leading up to his big moment, The Fourth showed his father a deck of slides that were meant to accompany his presentation. The Third gave his stamp of approval. When The Fourth briefed the crowd the next morning on the company's performance, though, he left several of the slides out.

August III went absolutely ballistic. He felt he had been tricked by his own son, and was concerned Anheuser's shareholders had been, too. Some of those slides had contained information investors should have seen, The Third angrily contended, and he didn't want to be accused of concealing it.

The Fourth claimed that his presentation had simply been too long. He and his staff had made a few changes the night before to pare things back, and it wouldn't have made sense to call his dad and wake him up just to say he had eliminated some slides from the deck. The Fourth had no obligation to show his dad the changes. August III was just a regular board member—he wasn't even chairman of the company any longer—and there was no need for the board to sign off on August IV's slides. These were the types of things The Third believed fell within his domain, however, both as the company's former CEO and as its current chief's dad.

“Whenever you have a former chairman or CEO who remains on the board, there is a bit of tension there,” said General Shelton. “It just happens in this case that it's a father and his son.”

Rather than hashing the matter out with his son in private, The Third made his rage so clear to Anheuser's board that various members of the group ended up trying to referee the argument. It didn't work, and the problem compounded upon itself as The Third grew even more irritated by a range of other successive issues that involved The Fourth. The tension grew so thick that several directors were forced to sit down with both of them to warn them to keep their eye on the ball—the company—and make sure that their disagreements didn't affect its performance.

“We did some things to try to make it work,” said Sandy Warner, one of the board members who attempted to mediate between father and son. “We could have done a better job.”

“We got August III to agree to leave the building, to take his office and move it somewhere else,” Warner said. “We got Pat Stokes to do the same thing. Those are little things. It was hard. But you know, we'd have worked through that, too. That wasn't at the root of this.”

“When the split occurred between The Third and The Fourth, I think the board was disappointed and didn't know exactly how to deal with it, other than the fact that The Fourth was the CEO and we had to support The Fourth,” said Ambassador Jones. “But I think that was a big disappointment to the board members who respected August III and had high hopes for August IV.”