Mail & Guardian reporter
Tony O’Reilly spends as he earns – liberally. When the estate of Jacqueline Kennedy Onassis came under the hammer at Sotheby’s two years ago, O’Reilly paid $2,6- million for a 40-carat diamond engagement ring given to the former first lady by Aristotle Onassis.
The former Ireland rugby star-turned-ketchup king was last year nominated to the Forbes billionaires’ club, albeit with only $1,2- billion, in comparison to Bill Gates’s $36- billion.
He counts President Nelson Mandela and celebrity Paul Newman among his personal friends, and the parties at his castle in Ireland are legendary, as is his capacity for alcohol and his free-spending lifestyle.
But it hasn’t all been plain sailing. In September last year, Business Week, the influential financial weekly, accused him of less-than-transparent corporate governance. Big shareholders, it was said, were not happy with his close ties to Heinz’s board of directors. He has since resigned as head of the food giant, after 18 years, although he will stay on as chair for another three years.
When he first took over, Heinz was underperforming and Wall Street was only too pleased to give him a chance. During his reign, the shares gave investors a whopping 22% annual return and the market capitalisation soared to about $19-billion currently, against $908-million in 1979.
By 1986 his honeymoon with investors was souring. While workers were being laid off, O’Reilly was still enjoying massive increases. Forbes magazine commented: “Tony O’Reilly’s ego and paycheck [sic] are bigger than his accomplishments.”
In a survey of 800 chief executives during five years, the magazine put O’Reilly’s earnings at $119-million – vastly outstripping the average of $6,9-million. The company was quick to defend his record, pointing to the company’s performance in the 1980s, when it had indeed beaten the competition.
Since then, however, earnings have steadily declined and Wall Street rewarded the news of his succession in December by pushing the shares to a 52-week high. Together with the massive restructuring announced last April, investors regard the new incumbent, William Johnson, as good for the group.
When asked about his successor, O’Reilly is quoted as saying: “When you hear what we’re going to do with this company over the next three to five years, you could say, ‘Well, one thing they bloody well need there is a lot of energy. And he’s got it.'”
The plan, called Project Millennia, involves substantial job cuts and the sale of less- profitable offshoots. The company will refocus its business on the fast-growing developing markets, aiming for 10 to 12% earnings growth a year against an average 1% industry-wide.
But with Heinz taking up less of his time, we can expect some big moves in the media business. Independent Newspaper Holdings, with print media interests in Britain, Ireland, South Africa, New Zealand and Australia, as well as radio and pay TV in Australia and Ireland, notched up a 50% increase in interim profits for 1997, with “a worthwhile improvement over 1996” expected for the full year. The South African arm raised pre-tax profits by 19% to R62-million.
At the same time, the group is feeling the pressure from the government, which is becoming increasingly vocal about foreign ownership and white media interests. O’Reilly will need all those friends in high places.