Advertising

Monday, June 12, 1995 - Page updated at 12:00 AM

E-mail article     Print

Reversal Of Fortune -- It Took Two Agees To Tangle With Events Leading Up To Mk's Near Destruction

Idaho Statesman

IN 1993, BILL AGEE pocketed $1.7 million in salary and bonus as chief executive of Morrison Knudsen Corp., making him the top-paid executive among major public companies in the Northwest. Now, Agee is out of a job and the Boise construction company is teetering on the edge of bankruptcy. Controversy continues to swirl in Boise and the corporate world about Agee's stewardship and the role of his wife, Mary Cunningham Agee. -----------------------------------

Carolyn Hjort dialed the numbers slowly that warm spring day in 1990, anxious about the conversation she was about to have with her brother. Their 79-year-old mother lay near death at St. Luke's Regional Medical Center in Boise, and Hjort had to break the news.

Her brother's response was swift.

He dispatched a doctor to assess the situation, passing on the message that he wanted to be called only when she was dead. One month after she died June 8, he legally changed his name to William Joseph Agee, dropping his middle name - his mother's maiden name of McReynolds - in favor of the one he received when he was baptized into the Roman Catholic Church.

The process of wiping away virtually all evidence of his former life was now complete.

"It's heartbreaking," Agee's other sister, Jackie Agee, said recently.

Amid the aftershocks of Morrison Knudsen Corp.'s near destruction, stunned employees and stockholders have asked again and again, how did this happen? An important part of the answer lies in the personalities of Agee and his wife, Mary Elizabeth Cunningham Agee. In scores of interviews across the nation, the couple - rather than Bill Agee alone - emerge as key players in one of the most talked-about financial debacles in recent history.

To be sure, Bill was the man in charge, legally responsible for piloting the company over six years.

But in significant ways - both personal and professional - his wife has been involved from the start, contrary to the company's denials. Her ability to influence her notoriously headstrong husband has fascinated observers as far back as 1979, with talk of their involvement in an infamous office-romance-turned-soap-opera at the Bendix Corp. Since then, they've devoted their lives to each other, sometimes at the expense of all other responsibilities.

Despite her deep Catholic faith, Mary divorced her first husband, then married Bill. In turn, he left his wife of nearly 23 years, then shunned his three children, sisters and parents.

He adopted Mary's religion and they joined an exclusive Catholic organization, the Order of Malta. Then, under Mary's direction and with his blessing, the company's charitable foundation funneled thousands of dollars to the order's favored charities and to others associated with the church. Meanwhile, MK's board swelled with prominent Catholic businessmen who seemed unable to police Bill's work.

As the business spiraled into a financial black hole, he drew multimillion-dollar paychecks, put personal bodyguards on MK's payroll, and ferried his family around the world in the company jet. When employees appeared disloyal, they were fired or their telephones were tapped.

Driven from Boise by angry workers and neighbors, the couple retreated to a seaside estate in Pebble Beach, Calif., where Agee ran the company by fax and telephone. Faced with the most damning accusations of his career, Bill issued just one statement - a passionate defense of his wife. Both Bill and Mary declined to be interviewed for this story.

The couple, once crowned the most glamorous and visible team in corporate America, had become one of its most vilified.

This is how it happened.

FROM THE BEGINNING

William McReynolds Agee was born Jan. 5, 1938, in Idaho's capital city.

Bill would be the second of three children. Carolyn was two years older; Jackie came 12 years later. Their father, Harold Jessie Agee, was a man of many careers and experiences - manufacturing executive, dairy farmer, state legislator, son of a Baptist minister.

The Agees lived in Boise until 1953, when Harold and his wife Suzanne moved the family to a dairy farm near Meridian.

Bill excelled at basketball and most everything else he took on.

He entered Meridian High School as a sophomore and quickly established himself as a smart guy with strong leadership qualities, getting elected class president that first year and again as a senior.

By his senior year, Bill was named one of the two most studious members of his class. Around this time, Bill began dating Diane Rae Weaver, who attended Boise High School.

They graduated from high school in 1956, and continued dating after Bill enrolled at Stanford University. But within a year, the otherwise academically stellar young man came back to Boise and enrolled in what was then Boise Junior College.

On Sept. 7, 1957, Bill and Diane were married at First Presbyterian Church in Boise and they honeymooned in San Francisco.

Meanwhile, in 1951, a girl was born to a well-to-do, Irish Catholic construction company executive and his wife in Falmouth, Maine. They named her Mary Elizabeth Cunningham.

Mary's childhood, and her description of her father as a heavy drinker, provide many of the clues to the puzzle that comprises her relationship with Bill.

In an oft-repeated tale, she recalls the day her mother spirited away Mary, two brothers and a sister from their father. At 5 years old, Mary believed the split was all her fault.

"I vowed from that day on that I would be good," she wrote, "so good that it would make up for this terrible thing I'd done."

Mary's mother had never warmed to the Casco Bay cocktail-party circuit favored by her husband, whose prosperity had nudged the family into the upper echelons of Falmouth society. When his drinking became too much, she moved with her four young children to Hanover, N.H., where a Catholic priest who was a cousin, the Rev. William Nolan, offered a safe haven.

Father Bill, as they called him, would become perhaps the single most important influence in Mary's life, instilling in her and her siblings an unshakable sense of virtue and Catholic faith.

Studious, hard-working, and eager to please others, Mary excelled in high school, participating in softball, gymnastics and chorus, and joining the more brainy clubs: French, Latin, science and world affairs.

She graduated in 1969, spent a year at Newton College of the Sacred Heart in Massachusetts, and then enrolled at Wellesley College. She graduated magna cum laude in 1973 with a Phi Beta Kappa key and a bachelor's degree in logic and philosophy.

It was during a college mixer in her senior year that she met the man who would become her first husband, Howard "Bo" Gray Jr., an African American and American Express executive.

Years later, after they had ended their six-year marriage, Mary would say it sprang from her youthful idealism.

"He's a most remarkable human being," she told Parade magazine in a 1982 cover story. "But he's experienced tremendous pain, some of the pains society inflicts on an individual whose skin doesn't happen to be the dominant color. And those pains can manifest themselves in married life."

What Mary hadn't anticipated, of course, was the spring of 1979, and a fateful meeting in New York City.

She wore a conservative suit, silk blouse and sensible flats for that first meeting with Bendix Corp. chief Bill Agee in a 32nd-floor suite at the Waldorf Astoria..

They shook hands as Bill offered her the job that would catapult her to fame.

"As if on cue," she wrote later, "a woman emerged from the next room. She wore a red dress, high heels and lots of jewelry. In contrast, I felt like a hick from New Hampshire in my boxy black suit and low-heeled shoes."

It was Bill's wife, Diane.

CIRCUITOUS TURNS

The road to the Agee-Cunningham meeting had circuitous turns. After three years as chief financial officer at Boise Cascade, Bill left in 1972 - just ahead of the news the company had lost a staggering $170 million.

But he emerged untarnished. A Wall Street wunderkind, he boosted Bendix's stock price with canny investing, and was winning converts to his idea Bendix could break from its mature industry by going high-tech through selective acquisitions. Mary would become an integral part of that strategy.

Mary earned an MBA in 1979 from Harvard. She had 32 job offers. But she accepted Bill's offer of $20,000 a year less so she could work with a well-regarded CEO.

Two views of Cunningham from her 15 months at Bendix:

Hers: an attractive assistant whose brilliant planning threatened older, male colleagues, leading to a sexist smear campaign that ousted her.

Critics: bright and cunning, used smart public relations to hype mediocre business accomplishments.

This is certain: She walked into Bill's life at a fortuitous moment. President Reagan's new, pro-business administration was in office. In vogue were power suits, power lunches and power couples - husband-and-wife teams such as Donald and Ivana Trump, Robert and Georgette Mosbacher.

Into this mix easily slipped Bill - lean, tan, handsome behind aviator frames - and his attractive blond assistant with the piercing blue eyes. Bendix gossip quickly told of a sexual liaison that led to Mary's rapid ascent to chief of strategic planning at age 29. At a meeting of Bendix workers, Bill denied the rumors - igniting front-page stories.

But the publicity led the Bendix board to oust Mary in October 1980.

Bill, 42, was earning about $825,000 a year.

In January 1981, Mary won a divorce. Five months later, the Agees divorced. Diane, living in Seattle, declined to be interviewed.

In spring 1981, Bill began taking Catholic instruction, and was baptized in July. After receiving annulments, Bill and Mary wed June 5, 1982.

The divorces and their marriage left bitterness in their wake. Bill has no contact with his ex-wife and three grown children.

In the fall of 1986, Bill's father, Harold, dying of cancer, tried to mend fences. But the Agees, millionaires several times over, tried to meddle in his estate planning - and two weeks before Harold died he wrote Bill out of his will. Bill's mother ended all contact, saying she didn't want to see Bill if it meant seeing Mary. She died in June 1990. Bill did not attend her funeral.

Less than eight months after their marriage, Bill's career at Bendix ended from his disastrous attempt to lead a hostile takeover of Martin Marietta. Hundreds lost their jobs. He briefly was president of Allied Corp. but was dismissed in February 1983 - with a golden parachute worth $9 million.

The Agees retreated to Cape Cod. Later, they bought an estate in Pebble Beach, Calif. They have two children, Mary Alana, 10, and William Jr., 8.

AT MORRISON KNUDSEN

When Bill returned to Idaho to become chairman and CEO of Morrison Knudsen Corp., he shattered everyone's notion of an MK chief, engendering hard feelings that would make rallying the troops a permanent obstacle for Bill.

He was a finance guy, a quick-tempered deal-maker more comfortable in shiny shoes and bright argyle sweaters than the boots and hard hats familiar to many MK managers. Mary was 37, sharp, well-educated and aggressive.

They led the high life, cruising in a $100,000 Mercedes, employing a retinue of bodyguards at company expense, spending thousands of MK dollars on gifts, and treating the corporate jet like a personal taxi.

Detractors never bought the story that they did not have an affair at Bendix before their divorces. And Mary's trashing of Bill's family and ex-wife in her best-selling memoirs made it even more difficult for Boiseans to accept them.

Though the company denied she played a business role, Mary was a frequent presence at MK's boys-only headquarters. Named by her husband to run MK's charitable foundation in 1991, Mary stationed herself next to Bill's executive suite.

That Mary would immerse herself in MK's business affairs shouldn't have surprised anyone. She'd made no bones about the fact that she was involved in Bendix business after she and Bill married.

But more than a year ago, after failing to crack Boise society and rising criticism of the way Mary spent MK money - corporate mailings featuring color photos of the Agee children, for example - the Agees departed Boise for Pebble Beach, Calif. Agee sent MK jets to shuttle officers to meetings at his home and managed to keep his absence hidden from a number of corporate directors.

The day of financial reckoning was ever near. MK had not increased its operating profit any two consecutive years during Agee's leadership. In some years, more profit was booked from investments than from MK's core business. The day Agee took office, the company's share price was $21.75. When he was ousted, it was at $12.50 and has since sunk to about $6..

The tip-off to the climax may have come last November, when former baseball commissioner Peter Ueberroth, an Agee pal, resigned from MK's board without comment.

In February, the once-proud builder of the Hoover Dam announced it would post record losses for the year and eliminate its dividend. Agee, 57, resigned in disgrace.

Morrison Knudsen is waiting for results from its Pittsburgh subsidiary, MK Rail Corp., to calculate the extent of its 1994 losses.

The company still has not released an annual proxy statement to shareholders, in which Agee's 1994 compensation will be stated. The terms of his resignation have not been disclosed, but his final paycheck is estimated to range from $1.5 million to about $2.5 million over two years.

Copyright (c) 1995 Seattle Times Company, All Rights Reserved.

advertising


Get home delivery today!

Advertising