Listen: Pillsbury apologists mad about takeover

MPR’s Dan Olson interviews former Pillsbury employees, who express their criticism of company during the Grand Met takeover.


1989 MNSPJ Page One Award, third place in Excellence in Journalism - Radio Spot News category


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DAN OLSON: Jack Morris is a sailing fanatic. Just back from 10 days in the Caribbean, his unseasonable tan was gathered by spending part of his severance package from Pillsbury. Morris was vice president for investor relations.

He was an employee who companies tell their stockholders that they can call to get answers. But Morris said as the takeover unfolded, investors holding smaller blocks of stocks were given the back of the hand by Pillsbury.

JACK MORRIS: By giving them, in a sense, the back of the hand when it came to any communication, we were engaged in a process which ensured financial rewards only to the ARBs, to the investment bankers, to the lawyers, and indeed, to those in senior management and those a step or two below who got decent severance packages.

DAN OLSON: Jack Morris says he's an advocate of the view that companies should give all investors timely and accurate information. The Pillsbury takeover, Morris says, caused top management to circle the wagons and hold meetings where even some top company officers were excluded. And it prompted management to hire a small army of outsiders for advice.

Morris said the outsiders were investment bankers, communications consultants, and lawyers. The level of management paranoia and outsider meddling soon became apparent to Morris after he gave an empty response to a newspaper reporter. He and other Pillsbury staff were under tight orders to not speak to the press, a command that was obviously being violated by the paid outsiders, Morris said.

JACK MORRIS: I am quoted in the Saint Paul Press, and later, in the New York Times as saying, quote, "It ain't over til it's over," end quote. At that point, one of our lawyers from Skadden Arps in New York calls and wakes me over the coals. I am told that he will personally see me in jail if I speak again.

His comment, we're not going to let this company go down the tubes because some stupid IR hack doesn't know when to keep his mouth shut.

DAN OLSON: Yolanda Scharton says the cost to Pillsbury of hiring the outside subadvisors to fight the takeover attempt by Grand Met was $80 million. Scharton was Pillsbury's director of investor relations. She insists that neither she nor Maurice are bitter former employees giving vent to their version of events.

Scharton said that among the things Pillsbury did right was to publish accurate company financial information in the annual reports. The irony is not lost on Scharton that Grand Met, no doubt, was assisted in its takeover strategy by Pillsbury's reports. The reports were a strong dose of reality in contrast to the repeated assurances from management that all would be OK.

The company's lies eventually demoralized the worker, Scharton said, and she said employees were especially angered when a product symbol of some pride, the Doughboy figure, was made over into a slimmed down Doughboy with boxing gloves. It was a small matter to outsiders, but Scharton said it illustrated management's ignorance of employee sensibilities.

SPEAKER 1: I would hope that it's not a common trait, but I fear that it is, that companies is a we and they phenomenon, and yet in every annual report, they'll say, our people are our most important asset. Well, I don't think they believe that, or they don't know what they're saying.

And if they did believe it, then they would treat their people differently and bring them in. I mean, there was an incredible opportunity to get the support of the employees, especially given the fact that they had $5 million shares, and one of the restructuring plans was to use that 5 million shares as a refinancing mechanism. And that just flew out the door.

DAN OLSON: Yolanda Scharton, and before her, Jack Morris, two former Pillsbury employees who were in charge of investor relations before the Grand Met takeover. They gave their comments to an audience at a meeting of the National Investor Relations Institute in Minneapolis. I'm Dan Olson.


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