Musings From Martinez
On being a serial board member: “I have been on 12 public company boards and chairman and lead director in half of them. People say it's “a check and chair.' But the thing about board work is it gives you perspective on different problems and situations. I find it intellectually stimulating. I subscribe to the theory that every company is in trouble and some of them know it and are doing something about it. Others don't know it and should be doing something about it. There is always room for change and improvement and that is the role of the board.”
On his mentors: “Arnold Aronson was a fabulous teacher. He conveyed the urgency that is needed in this business. That it's reinvented every single day. That you need to pay attention to the smallest details to drive the business every single day. That it's about identifying your competition, their strengths and weaknesses and going after them. David Thomas at Exxon instilled in me a tremendous sense of curiosity about anything and everything. Go down a path, explore it, use analytics to understand, use data to understand, but be curious.”
On breaking a commitment to be ceo of Bergner’s when Sears jumped in with the merchandising group job:
“That was a very hard one. I hadn't signed anything. I wasn't legally bound but there was a moral issue there. Bergner's was bankrupt. They had scheduled a hearing in front of a judge in Milwaukee to approve my contract in a week or two and Sears came along. It was too big to ignore. I remember calling Bertrand Maus, who was the leader of the family that owned and controlled Bergner's. He called back from a pay phone at the airport in Boston. Poor guy. I had to tell him I wasn't coming. He sued me and Sears. Sears indemnified me and it was settled out of court. It was very unpleasant. He never wanted to talk to me again.” Months later, they ran into each other at a conference. “He couldn't have been more gracious. He kind of shook his head and said, ‘ Yeah that was an unpleasant moment. It happens.'”
On his worst career moment, when Sears illegally hounded customers for unpaid bills despite their filing bankruptcy and extinguishing debts.
“We were under criminal investigation by the Department of Justice. That was terrible because it was a real breach of trust with our customers. We were the ‘satisfaction guaranteed' people. You could always count on Sears to do the right thing. But we were not doing the right thing. We were doing something illegal. We were mailing bills to people who didn't owe money. That is mail fraud...The worst moment was sitting in Boston with the U.S. Attorney for that district and his deputy, four or five FBI guys and me and my attorney arguing why we should not be indicted or convicted on these charges because of the collateral damage. I felt like I was fighting for the company's life. They didn't say much. Their silence was intimidating. The defense was, ‘we made a mistake and the minute it was brought to my attention and the board's we took immediate action to halt the practice.' We offered to repay any consumer we had taken money from improperly, with interest. We were going to make amends. We argued the criminal action was an unnecessary punishment because it would affect the lives of people who worked for the company who had no connection whatsoever to this problem. We paid $550 million in fines, penalties and reimbursements to people. Twenty years ago that was a lot of money. We had been on a roll as a company, but this really knocked us side-wise. It took a couple of years to get back on track.”
On Martha Stewart, after her indictment for securities fraud and obstruction of justice, and getting stripped of her ceo and chairman roles at Martha Stewart Living Omnimedia: “I was lead director. She took it very personally. The company was hers. She was no longer a controlling shareholder, but it was her name and her brand. It was another founder situation where her DNA was all over the company, as it should have been and needed to be. It was very difficult for her. As a board we said, ‘ This is a personal matter for you. Not a company matter.' We walled off what goes on in the company from however she wanted to handle her personal problem. We couldn't have the company caught up in it. I don't think her legal trouble had any impact on the maturity of the concepts she was expressing through her media properties. It's that same story. You get the idea, launch it, grow it. It moves into maturity then it moves into decline, and she would probably argue [against] all this very provocatively, but the consumer moved on.”
“It's a people-intensive business. I relish that, the dayto-day intimate contact with interesting sometimes challenging but also fascinating people. There's also the short cycle nature of the business. You know very quickly whether you are right or wrong. The feedback loop is very short. I remember that in the oil business, decisions were made and they didn't know if they were right or wrong for seven or eight years.” — DAVID MOIN