We’re moving on, moving up, together We’re the family and the heart of MK.
Six and a half years later, that family feeling has long since disappeared. By the time Morrison Knudsen’s board forced Agee out last Friday, Boise was ready for a change. It wasn’t just MK’s red ink and Agee’s highhanded management style that had the town up in arms; it was the couple’s very character. They were, concluded The Idaho Statesman, “too lavish for Boise.”
Agee, 57, is hardly new to celebrity. A local boy whose smarts propelled him from Boise junior College to the Harvard Business School, Agee became finance chief of Boise Cascade at 31–and won notoriety when the papermaker reported huge losses after his departure. He moved to Bendix, the auto-parts and avionics company, climbing to the top in 1977. Three years later the married CEO’s relationship with Mary Cunningham, a young vice president whose career he promoted, made headlines. While denying romantic links with Cunningham, Agee mounted a raid on Martin Marietta Corp. The aerospace giant bit back, forcing Bendix into the arms of Allied Corp. Rich but unemployed, the Agees wed and retired to Cape Cod, Mass.
Morrison Knudsen’s board turned to Agee in desperation. Best known for building the Hoover Dam 60 years ago, the company was in a free fall by the mid-’80s. After a conciliatory start, Agee began slashing his way through the executive ranks, replacing construction veterans with young business-school grads. His tactics rankled laid-back Boise, and pressure on executives to support Mary’s charity added to the resentment. “There was a sense of ‘Us against the world’,” says Carolyn Terteling, a city council member. Shunned by the local elite, many of whom had company ties, the Agees abandoned Boise for Once Upon a Time, their estate in Pebble Beach, Calif. Morrison Knudsen’s board decreed that Agee could run the company long distance, forcing executives to fly out from Boise to meet with the boss. The company even chipped in $28,000 to cover the Agees’ moving costs.
Had the company prospered, that might not have mattered. But Agee’s touch was anything but magic. He astutely foresaw a rail revival, but a plan to build a high-speed line from Houston to Dallas was a costly flop. Agee was so eager for Morrison Knudsen to become the top supplier of rail equipment that it promised cars and engines it couldn’t deliver, leading to big penalties. In the costliest fiasco of all, it sold off part of its rail subsidiary last spring at a disastrously low price. “You don’t take a company public for less than it’s already valued at,” snaps one analyst. Big shareholders stampeded for the exits. They should have started sooner: an investor who’d ponied up $43,500 for 1,000 shares of stock on the day of Bill Agee’s ascension would have a stake worth only $25,430 today.
Why was Agee’s ouster so long in coming? Six class-action suits asking just that question are pending in Boise. The answer may come too late to save jobs in Idaho. The buzz on Wall Street is that Morrison Knudsen is likely to be dismembered.
