L.S. had built a successful business, and he figured that if one line of business was good, more were better. In the 1970s, as the Arab oil embargo forced many of his gas station dealers to close, L.S. began to rent out jet skis, party furniture, heavy equipment and even videocassette movies. He also wanted to expand the number of company-owned dealers.
This proved to be a disastrous move. Within a decade, the business was in trouble: new ventures hadn't panned out, and competitors like Ryder had sprung up to cut into profits. In 1986, L.S. started doling out shares of stock to his children — keeping just 2 percent for himself. He saw it as a way to keep the business in the family, but it turned out to be a decision he would regret.
L.S. would later recall a friend's prophetic words, "Your problem from now on will be the management of greed."
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| Joe Schoen |
Joe, who didn't like the way the business was going, obtained backing from the majority of his siblings and staged a boardroom coup. He replaced L.S. as chairman, and the father was forced to retire in an agreement that left Sam, one of his few remaining supporters within the family, as president.
Joe wasted no time in cutting costs, firing thousands of employees, and then spending $1.2 billion to modernize the company's aging fleet of vehicles. He also stopped paying his father's $400,000 per year retirement pension, "unless he could prove he was mentally ill, in which case he might still qualify for disability income," according to the Los Angeles Times. This drove L.S. into bankruptcy; L.S. sued, but lost.
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