updated 01/31/1983 AT 01:00 AM EST
•originally published 01/31/1983 AT 01:00 AM EST
He'd better hope so, since the sharks along Wall Street are poised to take blood samples from his well-tailored self. After all, between June 1981 and June 1982, the try-harder car rental company went from an operating profit of $38.3 million to a loss of $35.2 million—a bad-news swing of $73.5 million. Hertz, hated Hertz, made $38.4 million during the same period, compared to $35.8 million for the preceding 12 months. Mahoney blames the economy, softness in the air travel industry, high new car prices—the predictable litany—but then his eyes go cold: "I know none of these things, nor all of them, can explain $73 million." No wonder rumors persist that (a) Avis is for sale and (b) Mahoney plans to buy up the stock and take it private. He emphatically denies both.
Still, heads have rolled at Avis, though Mahoney points out that the company has had only three presidents in the last five years, while Hertz has had five. Now No. 2 is going all out to shine itself up in word and deed. "I decided while we were taking our bath, we might as well fix things up," says Mahoney. "There is nothing wrong with the basic business." It is that ready-to-change spirit that prompts Congressman Jack Kemp, a Mahoney friend, to say, "I like his willingness to move out front, to wildcat, to take a risk."
Since last year, no one has been more out-front than Mahoney. Like Chrysler's Lee lacocca and Eastern Airlines' Frank Borman before him, he turned to television to chat up his ailing company. Says Mahoney, who has budgeted $17 million to promote Avis from June 1982 to June 1983, "When you're in turbulent waters, I think the captain should be on the bridge." Smoother sailing may be at hand. Latest market-share figures support the claim of David McCall of McCaffrey & McCall, the New York advertising agency that represents Avis: "Hertz is down and Avis is up." Some cynics on Madison Avenue contend that McCall hustled the Avis account by promising to put Mahoney in prime time. Nonsense, says McCall, Mahoney just happened to be the best salesman Avis could have.
Though the business community is by no means totally impressed, Philip E. Beekman, president of Seagram's, praises Mahoney's work as "sincere." Yet even Beekman admits that when Mahoney asked him how he liked the early commercials, which began airing last May, he responded, "I'm one of the few guys who will tell you the truth, and I think you're too stiff." Mahoney was. Too stiff. Too many hands. He swallowed funny. Too superheated. Says McCall, "He's getting better, and so are we. David more relaxed is plenty hot enough."
Still, Mahoney, 59, who expects to hear a lot of yesses and attaboys, seems also to attract a lot of slings and arrows. One reason is that he's too good-looking, what with that Irish ruggedness, that Irish charm and, says Beekman, "that Irish blarney." Unlike most of us, David doesn't rumple. Plus, he's too rich. As chairman of Norton Simon, Inc., the parent company for eight operating companies including Avis, Hunt-Wesson, Halston and Max Factor, he is one of the nation's highest-paid executives, with a salary of $637,917, an annual bonus of $250,000, plus more than $700,000 in deferred payments and close to $1 million in Norton Simon stock options. "Rich?" says Mahoney. "I never thought of myself as rich. But I know I'm wealthy. Rich was pejorative to me growing up. Yeah, wealthy. That sounds better." The tangible evidence of his prosperity includes a home on 20 Long Island acres overlooking the Atlantic (replacing another house that was swept out to sea in a hurricane in 1960) and another place in Jamaica, in addition to his airy Manhattan apartment.
In Mahoney's case, money hasn't meant isolation or withdrawal from civic activity. He serves as a director of two companies and is involved with educational, philanthropic and health-and civil rights-related organizations. He realizes that some businessmen aren't known for their altruism and acknowledges that they are often a self-centered group. Speaking recently at the Fletcher School of Law and Diplomacy at Tufts University in Massachusetts, he told students a sardonic story: The good news was that a bus carrying 47 businessmen had plunged off a mountain highway and everyone was killed; the bad news was there were three empty seats. Close to President Nixon, Mahoney once hoped in vain to be Secretary of State, but instead was named chairman of the American Revolution Bicentennial Commission. These days he insists that Norton Simon use 1 percent of its payroll to provide full-time jobs for unemployed young people. Explains Mahoney, "There are those who say 10.8 percent unemployment is not so bad. That's true, if you're not one of the 10.8 percent."
Mahoney's concern for the public well-being has by no means made him a monk. He eats regularly at Manhattan's pricey Le Cirque, he drinks (nothing hard) at "21," and many of his friends are celebs. Bill Safire, the former Nixon speech writer who is now a New York Times columnist, says, "He's the best friend a man can have. He's built to take pressure." And Vernon Jordan, former head of the National Urban League, says that when he was shot in Fort Wayne, Ind. in May 1980, Mahoney was one of the first people to fly to his bedside. Later, when Jordan was hospitalized for 84 days at New York Hospital, he estimates Mahoney visited him at least 60 times. "He's a dear and caring and proven friend," says Jordan, now practicing law in Washington, D.C.
Mahoney's second wife, Hildegarde Merrill (his first, the late Barbara Ann Moore, died in 1975), is a former beauty queen—a Miss Rheingold. Says David of his spouse, "She's a good dame, she wears well, and she hangs in there." Mahoney has two children, David, 22, a drug counselor in New Jersey, and Barbara, 20, a junior at Skid-more. Hillie herself has two grown children from her first marriage, which ended in divorce.
Mahoney's only significant wart may be his Mercedes; it is, after all, five years old. But his ascension, despite some critical carping to the contrary, is more than a mere triumph of style. For during the 13 years he has been the boss at Norton Simon, the conglomerate's revenues have risen from $898,278,000 to almost $3 billion.
Still, Mahoney laments, "I don't have as much fun as I thought I was going to at this stage." That's mainly because Norton Simon hasn't been making Wall Street turn handstands. Merrill Lynch doesn't even have an analyst keeping track of Norton Simon. One analyst who does follow the company says, "It's gone sideways for five years. The record is just atrocious." Norton Simon's continuing operating profits plummeted 33 percent in fiscal 1982, from $99 million to $66 million. Avis led the stripping of the corporate gears. A lesser problem is Max Factor, purchased in 1973 in a $463 million stock exchange deal, an acquisition that "should have been looked at a little more carefully," concedes Mahoney. Though its cosmetics are top sellers in Japan, the sagging Japanese economy has been smearing the bottom line. And Norton Simon's distilled spirits division, Somerset Importers, Ltd., which markets Johnnie Walker Black and Red Labels, has been bucking a steady decline in Scotch drinking in the U.S.
Whatever the reasons for the company's ills, they could never be traced to Mahoney's reluctance to remove personnel. "The most exciting thing about Norton Simon," says an analyst, "is the turnover in the executive suite." Indeed, since 1969 the corporation has had a turnover of 77 officers, including company presidents. Of those who departed, 19 were fired and 54 others quit. Some years ago, when Mahoney took over as president of Canada Dry, once a Norton Simon company, four vice-presidents were promptly dismissed. "People can be frightened of me," he says, "if they lack their own security. But I don't fire people. I hire somebody, and they fire people. Two-thirds of the people who got fired I never met. We all get paid to produce. Let's never forget that." In 1980 FORTUNE named Mahoney one of corporate America's 10 toughest bosses. Phil Beekman agrees. "It takes a tough guy to stand up to him," he says. "To work for David, you've got to really want to."
Mahoney comes by his own toughness naturally. One of two children, he was born in the Bronx, where the goal was survival. His father ran a construction crane when he could find work; his mother was a telephone operator for 22 years for New York Bell, a company of which David is now a director. "We would sit around the kitchen," he recalls, "and there would be no hope." An outstanding athlete at Cathedral High School, he won a scholarship to the University of Pennsylvania, and started for the basketball team as a sophomore before reporting for World War II duty in the Pacific in 1942.
In 1946, when he returned home, he couldn't find work. But since he was made of solid brass, he approached Ruthrauff & Ryan, a New York advertising agency, with an idea for a beer company promotion. He couldn't sell it, but was hired for $25 a week to work in the mail room. At the same time, he commuted nights from New York to Philadelphia to attend Penn's prestigious Wharton School. His commuter ticket was $58 a month, a huge chunk of his take-home pay from the mail room. Observes Bill Satire, "He knows how to invest in himself."
Within two years Mahoney was a vice-president of Ruthrauff & Ryan; then in 1951 he opened his own agency. Five years after that he became president of the Good Humor ice-cream company. "When it was 103°, we were marketing geniuses," he recalls wryly. "When it was 55, our plans weren't so good." Mahoney joined Colgate-Palmolive in 1961 as executive vice-president, became president of Canada Dry in 1966, and was instrumental in the formation of Norton Simon, Inc. in 1968, when he was named president. There was a brief power struggle before Mahoney emerged as chief executive officer in 1969 and chairman in 1970. Norton Simon himself, now retired in California, says he searched for seven years to find his replacement before settling on Mahoney. To this day, Simon says, he has no regrets. "David is very, very hep," he says. "He makes mistakes, but he doesn't try to hide them. He's a great business talent, and a great human talent."
Like football coaches who all want to be known as both offensive and defensive wizards, Mahoney wants to be both a financial and a marketing whiz. But there are those on Wall Street and in the business world who think marketing is his real—and maybe only—forte. There are even some who believe that what he is best at marketing is David Mahoney. But that's too catty. As chairman, he—like wife Hillie—has demonstrated a real talent for hanging in there. Mahoney isn't holding the company together with mirrors, nor have its successes been achieved largely in spite of him. Mahoney's main contributions have involved restructuring the huge conglomerate, presiding over its impressive growth, and diversifying it. Plus, David says softly, "When I fail, I bleed. I hurt."
What he bleeds for and cares most about these days is getting Avis rolling again. He knows that distinguishing his company from Hertz is a problem second to none, since the service offered is nearly identical. Still, he sees no reason why Avis can't double its revenues within a few years. To this end, Mahoney is willing to strive like the infantry lieutenant he was in the war, leading his troops anywhere, no matter how withering the fire. Others may think his TV commercials are ego trips; Mahoney thinks they're part of his job. "I'm trying to sell something honest enthusiastically," he says. "That's all. I'm paid handsomely to do my best every day, and that's what I'm doing."
Nobody understands better than Mahoney the immensity of the task of running a $3 billion company with 30,000 employees in more than 150 countries. Returning from Boston recently aboard Norton Simon's private jet (commanded by LBJ's former Air Force One pilot, Capt. Allen Wet-more), Mahoney stared out the window and mused, "I don't think you run a company. I think you influence it—maybe. It doesn't drive me crazy. But sometimes I get confused. Maybe you need enough defeats in life to keep your balance. Sometimes you win by losing. And remember, cathedrals aren't built by cynics." Mahoney is no cynic. Rather, he is good-looking, rich, famous, capable and successful. Damn him.