Chapter 2

Shareholders: Ownership

A scene in Barbarians at the Gate frames the problem of accountability of corporate management to investors. Then-RJR Nabisco CEO Ross Johnson, who somewhat impetuously initiated the leveraged buyout of his company, met with bidders Henry Kravis and George Roberts of Kohlberg, Kravis, Roberts, & Co. to discuss what the company would be like if it went private. There was a brief discussion of the business before Johnson's central question came up. “Now, Henry, if you guys get this, you're not going to get into [deleted] stuff about planes and golf courses are you?” Johnson's perquisites included corporate jets, having two domestic staff at his home on the company payroll, and membership fees at 24 country clubs.