When We Were Kings
Once upon a time, their ranch was the grandest, not only in texas but also in the world, captained by visionaries and bound by blood. Those days are over.
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But with the older members of the family retiring and dying, who would guide the company into the next century? In the late eighties a momentous family vote was taken to look for chief executives and board members outside the family, specialists in “value-added processing” and “least-cost production” and “vertical integration.” If Captain King would have been surprised to learn that Richard Sugden was his largest stockholder, imagine what he might have said upon hearing that the new chairman of the board of directors was a man named Abraham Zaleznik, a psychoanalyst and professor emeritus at Harvard Business School who could barely stay on a horse but who was a nationally renowned corporate consultant. (One of his papers in the journal Psychiatry is titled, “The Case for Not Interpreting Unconscious Mental Life in Consulting to Organizations.”) The first outside chief executive and president of the King Ranch was Darwin E. Smith, the head of Kimberly-Clark, the Dallas tissue paper and baby-products corporation.
Under Smith and his successor, Roger Jarvis, a respected oil executive, the King Ranch added a citrus grove and a sod farm in Florida (both were supervised by Tio), an alfalfa hay farm in Arizona, and a cluster of offshore oil and gas wells in the Gulf of Mexico. According to company insiders, the King Ranch’s revenues started rising, jumping from around $100 million in the late eighties to $148 million in 1993 and $183 million in 1994. Although the 50,000 tourists to the King Ranch visitors center were still inundated with exhibits on the ranch’s great cattle history, the truth was that the cattle division had long ago become one of the smaller profit centers at King Ranch, Inc. In a year with sufficient rainfall, the cattle division added from $1 million to $3 million to the company’s annual pre-tax profits. The company made about $3 million annually in pre-tax profits leasing 500,000 acres of the home ranches for hunting. The cotton and milo farms, which had been expanded to 60,000 acres, brought in at least half a million dollars more than the cattle. And the King Ranch’s oil company, King Ranch Energy, was accumulating a healthy $12 million annually. But what really made money for the company was its Florida sod farm, which in a good year brought in a whopping $16 million. One insider remarked that the patron saint of King Ranch was no longer the Santa Gertrudis or the Santa Cruz, but Saint Augustine.
Because some of the more inßuential family members believed that the King Ranch could use even better leadership, Smith and then Jarvis resigned under pressure, Smith after one year and Jarvis after five. A family committee was formed to hire the best chief executive in the country, someone who knew the intricacies of a commodities-oriented business like King Ranch, Inc. In 1995 the committee found Jack Hunt, the head of the publicly held Tejon Ranch Company in California, a 270,000-acre operation that involved commercial real estate, farming, recreation, mineral extraction, and ranching (14,000 head of cattle). Hunt had spent some of his youth in Texas and had worked as an executive for a large family-owned ranching company in the Panhandle. But what impressed many family members was that he had also been trained at Harvard Business School, focusing on agribusiness. It seemed he was more inßuenced by modern-day business investors and tycoons than he was by cattlemen or oilmen. In a magazine interview, he once said the executives he would most like to have at a fantasy dinner were famed investor Warren E. Buffett, Ted Turner, and Robert Shapiro of Monsanto.
Hunt told me that when he arrived at the King Ranch offices in Houston, “I did what any executive would do, which was to find out what was generating good returns and what was generating poor returns.” And one of the first areas he looked at was the ranch’s beef business. “At all ranches, the beef prices keep going down, and the costs of producing the beef keep going up, which means we have to think and act in a more efficient way.”
Employees at the ranch headquarters sensed almost immediately that there was going to be a personality clash between the buttoned-down Hunt and the cigar-wielding Tio. Hunt wasn’t a backslapper, and he didn’t feel the need to get to know everyone at the ranch by name. Rumors about him ßew. Some cowboys said he didn’t have a firm handshake and he didn’t look a person in the eye. One employee openly worried about major job cutbacks after allegedly overhearing Hunt say he had learned to run the ranching division at Tejon with just a couple of cowboys and some dogs. There was one story going around that Hunt was so determined to make changes that he had ßown in a chef from California to teach the longtime cooks at the Big House a different way of cutting beef.
In person the 53-year-old Hunt is a pleasant if reserved man, with a soft face and blue eyes. Helen Groves, who was on the search committee, describes him as “very un-pushy and respectful.” But he is tenacious when it comes to evaluating the nuts and bolts of a business. Tio was startled, for instance, when Hunt asked him for the odometer readings of the cowboys’ pickups to see if they were driving too much. When Hunt suggested that the ranch didn’t need to buy trucks with air conditioning or power locks on the doors, Tio bristled, telling him, “These trucks are the cowboys’ offices!” According to one source at the ranch, after Hunt asked Tio why there wasn’t a higher percentage of weaned cattle on the ranch, an exasperated Tio went to his cattle managers and told them that Hunt just didn’t understand South Texas. He later explained to me, “Jack doesn’t realize that you aren’t going to get higher weaning percentages in this kind of environment where the moisture is low, unless you spend so much money on extra feed that you stop making a profit.”
The previous two chief executives had, for the most part, left Tio alone. It was good politics to avoid butting heads with the last Kleberg on the ranch. Besides, Tio was willing to take on any responsibility for the company. He not only supervised the entire agricultural side of the business but also watched over the King Ranch—owned hardware store and the King Ranch Saddle Shop in Kingsville when no one else could do it.
But Hunt did not hesitate to challenge Tio’s judgment. Perhaps what made Tio angriest was Hunt’s questioning the capability of some of Tio’s ranch managers. Tio had trained many of these men; they had been part of his team for more than twenty years. A few had turned into superstars in the business, regularly profiled in such magazines as The Cattleman. Yet, according to Tio, Hunt told him that at an industry meeting he had heard that the King Ranch’s manager in charge of breeding sales, Scott Wright, was not well respected by other cattlemen. Tio snapped, “Just who the hell is spreading nasty shit about Scott? Tell me right now, Jack. Who the hell thinks Scott’s not doing a good job?” Around the ranch, Wright was almost as beloved as Tio. He gave personal loans to the Kineños, took their kids to the doctor, and worked every day of the week. A few weeks later, Wright died suddenly of a heart attack. Tio told me that he was so distraught at the hospital that he picked up the phone, called Hunt in Houston, and shouted, “Jack, Scott Wright’s dead, and I hope you’re happy.” Then he slammed down the phone.
Hunt diplomatically told me that he had no confrontations with Tio. He specifically denied that Tio called him after Scott Wright’s death. “Tio and I worked well together,” he said. “I have a very high regard for him. We had different ideas on certain aspects of the cattle operation, but he adopted some of my ideas and I agreed with some of his.”
In reality, the two men were on a collision course. When Hunt told his board of directors at a meeting in Houston that he wanted to pay a consulting firm $500,000 to do a study assessing the King Ranch’s environmental problems, Tio glared at him and exclaimed that such a huge sum didn’t need to be spent. Tio said he knew the ranch from top to bottom, and he could show anyone the places where there might be problems, such as a garbage dump or an underground storage tank. There was a long, embarrassed silence around the table. The next day, Hunt ßew to Kingsville on the company’s jet and demanded to know why Tio had confronted him in such a manner in front of the board.
Around the ranch, Tio did not hide his opinion that Hunt was not leading the company. “He just wasn’t the kind of leader you would want to follow into battle,” Tio says now. “He never presented any vision of what he wanted King Ranch to become. He never once said to me, ‘Tio, this is where I want to go with the cattle and farming operations.’ All he had to do was tell me what he wanted, and I’d do it. But he kept me and the ranch managers in the dark like a bunch of mushrooms. He didn’t even once ask me to drive him around the ranch just to see what was here.”
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