An elderly Pinnacle West stockholder poked Keith Turley gingerly in the back. At this very moment, Turley was standing nervously at a urinal in a men's room on the main floor of the Hyatt Regency hotel.
"Hi there, Mr. Turley. How are you doing?" Turley, former chairman and chief executive of Pinnacle West Capital Corporation, turned and grinned. He was wearing a dark suit and a white shirt with a conservative tie. He was also quite busy performing a crucial bodily function.
"Couldn't be better," Turley said. "Couldn't be better." It was the typically ebullient but programmed response of the corporate executive.
Go through life with a knowing smile no matter what is said to you. Smile and your opponent thinks you still have your act together.
At the moment, Turley was relieving himself before entering what was to become the maelstrom of the most tumultuous shareholders meeting in Arizona history.
Perhaps Turley misunderstood. Maybe he perceived an aura of friendship rather than hostility in the crowded men's room.
Whatever, he maintained a practiced smile on his face while zipping up his fly. He brushed cautiously through the crowd and made for the sink to wash his hands.
The elderly shareholder shook his head as Turley moved away. It was clear that Turley, one of the state's richest men, was oblivious to the point being made.
"Things sure could be a lot better for the rest of us," he said, shaking his head. "Thanks to you, you son of a bitch, they're certainly not." Turley, unlike the other 1,200 stockholders of Pinnacle West who showed up for the meeting, is a man who actually has much to smile about. Turley's $2 million retirement home overlooking the Paradise Valley Country Club golf course is virtually complete. There are only minor touches remaining for the billiard room, the art gallery and the library of the 7,300-square-foot edifice constructed on a full-acre hillside lot.
Turley is clearly a success, financially. It is only those he was paid so handsomely to lead who are in disastrous shape.
Turley will live out his life as an aging rajah. Many of the shareholders have been reduced to abject poverty by Turley's actions. His life represents the perfect example of corporate greed in action. The company fails. The stockholders are crushed. But the head of the company lives forever after in luxury.
Keith Turley is quite a piece of work.
He joined Arizona Public Service Company as a writer for its house organ. After forty years, Turley departed APS with a handsome pension. During his peak earning years, Turley made $701,500 annually, a figure that was $200,000 a year more than any salary paid by any other investor-owned utility in the country. I went to the shareholders meeting last week expecting to see a pivotal moment in Phoenix history play itself out. I underestimated its potential for drama.
An overwhelming majority of the stockholders present wanted to accept the offer of PacifiCorp of Portland, Oregon, to buy APS.
Each time the issue of a sale was raised it was met with cheers and applause. It was a stunning defiance of and revolt from Pinnacle West's board of directors.
At one telling point, virtually every one of the more than one thousand shareholders in the room rose to vote approval for such a sale.
It turned out to be a public humiliation for both Keith Turley and his pal Karl Eller, the recently resigned chairman of the board of Circle K Corporation.
Eller, another member of the Pinnacle West board, also was on hand.
He and Turley have taken parallel hard-charging paths.
Turley took APS to the brink of bankruptcy. Eller actually took Circle K over the edge. Dick Snell, the new president of APS, who would chair this meeting, has had an equally dismal record as chairman of Ramada, Inc. Not long ago, I came across an Arizona Republic newspaper clipping from 1977.
It told of a new group called Arizona Tomorrow which had been founded by six leading members of the business community. The group was dedicated to making a great financial future for the state.
Turley and Eller were two of the founders. The others were Gary Driggs, then-president of Western Savings; Richard K. Mallery of Snell and Wilmer; Dino DeConcini, then-chief executive assistant to Governor Raul Castro; and Gilbert F. Bradley, then-head of Valley National Bank.
In a way, this Pinnacle West shareholders meeting would do much to explain how the greed of all these six men--as well as Charlie Keating--has dragged the entire state down into a disastrous real estate depression.
Dick Snell MDRV??appeared to be exceedingly nervous as he called the shareholders meeting to order at 10:04 a.m. The huge ballroom was packed. Those unable to find seats were lined against the rear wall. It was clearly a hostile audience.
Perhaps Turley and Eller understood the torrid reception that was awaiting them once the crowd of shareholders got warmed up. They did not sit directly behind Snell on the platform. Instead, Turley and Eller and the rest of the directors sat in the first row underneath the platform. This spot rendered them invisible to most of the crowd.
Snell stepped to the microphone wearing the flushed, slightly paranoid expression of a man about to face a firing squad.
He explained early on that although he had been a member of the board, he was against the changes made by Turley that brought the shareholders to ruination.
One of the first shareholders to speak made it plain what he thought of Snell.
"We don't believe you," he shouted. "You have no credibility with us."
This was greeted with thunderous applause.
"You say you opposed the plan to buy Merabank, but you went along," stockholder Peter Ranke said. "We don't want this good old boy club. We want someone with the integrity to say `no'." There was more applause.
Snell didn't answer. His face flushed a deep red. He took a sip of water.
"What about these golden parachutes that these people like Turley are walking away with?" asked another man.
"We must get someone to run this company who understands who they're working for," said another. "I demand that you either fire these people or ask them to resign right now.
"This is ridiculous. You still have the same directors. You still have the same problems. Fire them."
The big crowd erupted with more spontaneous applause.
Snell said there was no need for him to defend his board members because their credentials "spoke for themselves." Another critic quickly replied:
"You say their credentials speak for themselves," Richard Baron said. "I say their record speaks for itself. We need new management." "How can you stand up there after you failed so miserably at Ramada?" the man shouted into a microphone set up in the middle aisle.
"As far as I'm concerned, you're a goddamn liar."
Then he added:
"Is this company going to survive or not?
Snell then made his single effective rhetorical move of the day.
"Pay close attention to this answer," he said.
He then added:
"This company will survive." Some journalists have cited this as an example of Snell's adroit handling of the meeting.
I saw nothing that appeared either adroit or marginally clever about Snell. He comes across as merely another of those dimwits who attained wealth because his father had been a wealthy lawyer before him.
If Snell had the wit to answer the critics in kind, he might have gained some respect. To me, he seemed almost brain-dead at times. And when it was over, he conveniently ducked out a rear door of the room to avoid possible further confrontation.
For two hours and more, Snell's chief defensive tactic consisted of avoiding questions by sipping from a water glass and grinning idiotically when directly insulted.
Eller sat in the front row with his eyes closed through the meeting. As a young man, his nickname was "Smiles" because of his generally affable demeanor. There were no smiles from Eller on this day.
For Eller, this was the public reaction to his greedy business tactics that has been coming for a long time.
It seemed that every shareholder in the room realized that it was Eller who had urged Turley to buy Merabank. They knew other things about Eller, too. They knew, for example, that Eller had drawn more than $100,000 a year as a director of both APS and Pinnacle West. In addition, his ability to get a $650,000 mortgage loan from Merabank at a mere 6 percent was also common knowledge.
The incestuous nature of the Phoenix 40 had finally struck home to everyone.
Gene Rice, the head of Merabank, was also the head of the Phoenix 40.
And now the new head of the Phoenix 40, John Norton, has been elected as a new member of the Pinnacle West board. It happened on this very day. So the perfidious circle continues.
The men at the vital center, like Turley, Eller, and Rice, finally leave the stage. But they do so with broad grins and with their pockets bulging.
Eller grew up in Tucson, where he played high school football on the same team with Frank Borman, the astronaut. That team won 33 high school games in a row and Eller went on to play for the University of Arizona.
He was always a workaholic and hard charger. He went to work as a salesman for a sign company. Within a few years, he was able to buy the company and change its name to Eller Outdoor Advertising.
Eller became involved with Gannett publishing. One night, while a guest in his boss's house, he called his wife to tell her he was going to run the company before his career was over.
His Gannett company boss was listening in on the other end of the line. Eller's fast rise was short-circuited. But Eller has never allowed himself to be embarrassed by failures. Overreaching has been his style.
They have named a business school for him down at the University of Arizona. It is only a matter of time, one assumes, before Turley receives a similar honor.
Eller was part of the group that nearly brought the National Football League to Phoenix on several occasions. He was also involved in starting up the Phoenix Suns. It was Eller, in fact, who hired Jerry Colangelo.
And it was Eller and Turley who finally succeeded in bringing the football Cardinals here from St. Louis.
In the process, they assured Cards owner Bill Bidwill that the sky was the limit as far as ticket prices were concerned. Bidwill took them at their word. He promptly installed the highest ticket prices in all professional sport.
And Turley and Eller celebrated by leasing three skyboxes at Sun Devil Stadium for ten years at a cost of $1.6 million. The cost, of course, was to be borne by the stockholders of Pinnacle West.
It is as though Eller and Turley were joined at the hip. They can be seen together often. In addition, the two sit together in the front row of every Suns home game. They are, in fact, a part of the new ownership of that club.
To understand the anger of the shareholders you must realize that these are people who bought stocks in a company they felt would never take unnecessary risks.
They bought their stocks so they would have an assured income for their retirement. Now that's all gone. There will be no dividends for at least four years and probably more.
Some are hopping mad. Others are financially broken. They have only one thing in common. They all feel betrayed by Turley and Eller.
Turley and Eller led them into purchasing Merabank for $421 million and signing an agreement with the government to keep the savings and loan "well." This decision later cost the APS ratepayers a disastrous $450,000 in additional money.
The shareholders also know how much money Turley is making, even in retirement.
The meeting reached its fever pitch with several shareholders demanding that Turley and Eller be forced to stand up and face them.
At first Snell tried to ignore the summons. But it crescendoed. Then, one by one, the members of the board of directors were asked to stand and turn around to face the audience.
Both Turley and Eller waved sheepishly to the crowd, which jeered the two in return. In another time, Turley and Eller would have been tossed on tumbrels and led to the guillotine.
But we are living in the post-Reagan era. The only punishment these days for a Keith Turley is to go off into retirement with a golden parachute and live in a 7,300-square-foot mansion overlooking a golf course.
Reporters surrounded Eller at the close of the meeting.
"Will you resign from the board of directors?" they asked.
Eller smiled.
"Why should I resign?" he asked. "I've got a lot of money in this company." Turley's life represents the perfect example of corporate greed in action.
Snell stepped to the microphone wearing the flushed, slightly paranoid expression of a man about to face a firing squad.
In another time, Turley and Eller would have been tossed on tumbrels and led to the guillotine.
V.I.PIA ONCE HOLLYWOOD'S BIGGEST JOKE,... v5-30-90
