Gordon Getty’s Gamble : On the Verge of Open Warfare, Gordon Getty, the Getty Museum and Getty Oil Management Sign a Standstill Agreement Promising No Further Hostilities for 18 Months. The Truce Doesn’t Last.
In May, 1982, Gordon P. Getty, a San Francisco opera enthusiast and composer, came to power as sole trustee of his family’s multibillion-dollar fortune in Getty Oil stock. Over the next nine months, Getty embarked on what one company lawyer described as an “odyssey of discovery” at Getty Oil, a journey that brought him into conflict with the company’s chairman, Sidney Petersen. By the summer of 1983, their disputes had pushed Getty Oil precariously close to a takeover.
THE ENTIRE MOOD OF Gordon Getty’s dealings with Sid Petersen began to shift in July, 1983. Until then, there had been an air of sibling squabbling about the Getty scion’s ascent to power at the company and within his family. After all, though it was publicly owned and one of the largest corporations in the country, Getty Oil was still in many ways a family business. By virtue of their long association with the late J. Paul Getty, Petersen and other top executives considered themselves part of the Getty family. Concerned about the future of the company and his career, Sid Petersen had for more than a year hoped--perhaps irrationally, given the deep divisions between himself and Gordon Getty--that the company’s destiny could be decided without involving outsiders.
By July, that appeared to be impossible. Gordon Getty continued to ponder a takeover that would involve an alliance between his family trust, which owned 40% of Getty Oil, and an outside corporate raider--or perhaps the Getty Museum, run by Harold Williams, which owned 12% of the company’s stock. Petersen, too, had begun to look outside the company’s Los Angeles headquarters for help. The previous spring, he had persuaded attorney Seth Hufstedler to manage a family lawsuit challenging Gordon Getty’s right to control the Getty fortune. Also that spring, at Gordon Getty’s insistence, Getty Oil had retained the Wall Street investment banking firm of Goldman, Sachs & Co. to conduct a comprehensive study of the company’s plans and policies. Goldman was to make recommendations about how Getty Oil might raise its stock price, thus enriching--and, Petersen hoped, placating--Getty. Goldman’s findings were to be presented at Getty Oil’s July 8 quarterly board meeting.
As they filed into the board room on the 18th floor of Getty Oil headquarters that Friday morning, the directors were confronted by indelible images from the company’s long history. On the walls were pictures of the Gettys who had served on the board over the years: George Getty I, J. Paul, George Getty II and finally, the only survivor among them, Gordon Getty. The windowless room was dominated by a long, winged conference table, which was surrounded by deep, studded leather chairs. At the center of the table, where its parallel wings converged, was a seat sometimes called the cockpit, where Sid Petersen presided. This morning, Petersen knew, he would have to pilot his board as never before.
Petersen intended to lay out a version of the past year’s events to his directors now, but he had to be careful. Gordon Getty was present, and Petersen did not want to provoke him. Impartially and somewhat superficially, Petersen described to the board the background of the Goldman, Sachs studies. This was the first time many of the directors had heard of Goldman’s retention. Petersen explained that the studies were Getty’s idea, hatched in the aftermath of an angry meeting at the Bonaventure Hotel, and that he, Petersen, had agreed to retain Goldman because “having Gordon undertake the study independently from the company and its management might well be disruptive.”
This was a polite way of saying that if Getty went running about Wall Street on his own, asking investment bankers to make studies of Getty Oil’s future, the company would be taken over faster than you could say T. Boone Pickens.
Then Petersen mentioned the price tag--the studies had cost more than $1 million.
Two executives from Goldman, Sachs were invited into the board room. They explained that Goldman had examined Getty Oil from every angle. A wide range of alternatives had been considered: restructuring the company, spinning off portions of its oil reserves to shareholders, dissolving the corporation into limited partnerships, and so on. But in the end, the investment bankers said, one idea made the most sense: Getty Oil should repurchase some of its shares from the public and retire them. Such a stock buy-back would raise the value of the remaining stock by reducing the number of shares outstanding. The value of Getty’s family trust would rise.
As it happened, this plan had already been approved by the Getty Oil board more than a year earlier--in April, 1982, before J. Paul Getty’s confidant, C. Lansing Hays, died, leaving Gordon Getty in sole control of the Getty family trust. The program had been suspended precisely because Gordon Getty insisted on making additional studies. Or, as director Chauncey Medberry, retired chairman of Bank of America, now put it directly, “You mean, we spent $1 million to find out that something we decided more than a year ago was right?”
The directors were disgruntled, and it was partly Petersen’s fault; he had failed to tell them about the Goldman study in the misplaced hope that he could work things out with Getty on his own. Even now, there was a danger in angering Getty. With his massive stock holding, he might launch a coup and throw Petersen and his directors out. In fact, at the very moment the directors were attacking Getty in the board room, two of Getty’s attorneys were meeting with museum president Harold Williams at his office in Century City. At Getty’s instruction, they were proposing a joint takeover of the company--something called “a leveraged buyout with a fence,” wherein Getty and the museum would use some of Getty Oil’s assets to borrow enough money to buy all the company’s shares. (The “fence” protected from debt obligations those assets corresponding to the percentage of the Getty family’s stock ownership.) So Getty, too, had to be circumspect at the board meeting. When the directors asked him if he was finished with all his studies, he had to say no, because he wanted to study a leveraged buyout in the weeks ahead. “I think additional alternatives should be considered,” he told the board when pressed to declare an end to the studies.
“Gordon, what is it that you want ?” Greyhound chairman John Teets, a recently appointed director of Getty Oil, inquired, repeating a question that had been asked dozens of times over the last year. “What are your goals? Tell us, so we can understand what you’re doing.”
But Getty was not able, or not willing, to answer in the practical terms demanded by the businesslike Teets. It was his habit to express himself philosophically and abstractly. “What I really want to do is find the optimum way to optimize values,” he said.
“Gordon, you may know what you just said,” Teets replied, “but nobody else in this room does.”
They were stalemated once more. The meeting adjourned. Getty asked if he could speak to Petersen privately and then stepped into the chairman’s office. “I have a list of three things that I am interested now in studying,” he said. “The first priority is a possible leveraged buyout--with a fence--of the entire Getty Oil Co. This would be done in conjunction with the museum; we would be partners, in control of 51% of the stock. I would like Goldman to undertake a study of whether this would be feasible.”
Getty launched into an enthusiastic speech on the potential attractions of such a deal. He displayed no hostility or defensiveness about what had occurred in the board room. He was the same old Gordon, the idea man, his long, thin hands gesturing in emphasis, his eyebrows moving up and down, his brow furrowed in professorial seriousness. He told Petersen that if his deal with the museum didn’t work out, he wanted to dissolve Getty Oil into a partnership, and if that didn’t work, his final alternative was simple liquidation of the company.
Petersen did not argue. What could he say? The man before him owned 40% of the company. Getty said later that he had not firmly decided whether Sid Petersen would stay or go if he controlled all of Getty Oil, but Petersen believed that he had no future in a company run by Getty. As he listened to Getty, Petersen was in a mild state of shock. He had heard of leveraged buyouts before, but frankly, he said later, he didn’t know what the hell a fence was.
His ignorance lasted only briefly, but the irony of that moment lingered for years. Sid Petersen, the finance man, the chief executive who had risen to the top because of his savvy with numbers and budgets and financial strategy, was about to lose his company in a takeover deal he didn’t even understand.
IN OCTOBER, the suppressed bitterness and guarded conversations between Gordon Getty and Sid Petersen finally yielded to open, angry confrontation. Over the summer, Goldman, Sachs had studied the leveraged-buyout idea and declared it impractical. A series of intense negotiations between lawyers for Gordon Getty and advisers to the company over a stock buy-back plan that would put the Getty family trust in majority control of Getty Oil collapsed when the two sides were unable to agree on rules to restrict Getty’s power. Petersen was not about to put Getty in control if his first move would be to fire the board of directors and dissolve the corporation. For his part, Getty was unwilling to be “handcuffed,” as his lawyers put it during the talks, as a concession in the buy-back deal. He wanted what was his. There was talk of appointing a co-trustee to serve with Getty and control his dalliances, but he rejected that too. Petersen never mentioned to Getty or his lawyers that the company was quietly trying to instigate a lawsuit designed to accomplish that same goal. The turning point came in September, when Getty had lunch with director Chauncey Medberry at the Beverly Wilshire. Medberry said he would resign if Getty ever gained control of the company. Apparently for the first time, Getty realized that Petersen and his board were dead-set against him--that the dispute between them was not an abstract matter of management philosophy and oil industry economics, but rather was about personality and power. Getty told his lawyers that the oil company’s directors were “a bunch of snakes,” and he vowed to approach the museum with “an offer they can’t refuse"--a proposal to take joint control of the company by “consent,” an act no more difficult than signing a piece of paper. If the museum agreed to share power with Getty, they could fire Petersen with the stroke of a pen.
When Getty came upon this idea, Harold Williams and the Getty Museum trustees were in London on a kind of shopping trip for works of art. So Getty decided early in October to fly over and make his proposal to Williams in person. Getty’s attorneys told Petersen and his advisers that if they wanted to stop Getty, they had better come up with a favorable plan quickly. Petersen responded by calling an emergency board meeting in Philadelphia, where the directors authorized the issuance of 9 million “treasury shares” of Getty Oil stock, enough to dilute the power of Getty and the museum should they decide to sign a consent takeover. The treasury shares would not actually be issued until an officer of Getty Oil signed them. Petersen and half a dozen of his advisers then flew to London from Philadelphia for a kind of “High Noon” showdown, in which the duel would be fought with pens rather than guns.
En route, none of them knew what Williams had in mind. What did Williams want? What would he do? For much of the summer, Getty and Petersen had each been acting on the assumption that Williams wanted to control Getty Oil as much as they did. But they had not spoken to Williams about it directly. Getty had not talked at length with the museum director since a meeting in July, when they discussed the leveraged-buyout idea. Petersen, too, had been cautious during his few telephone conversations with Williams.
One thing they did know was that Harold Williams had finally hired a lawyer to help him protect the museum’s stock position should open war erupt between Getty and the company. And not just any lawyer--Williams had retained Martin Lipton, Wall Street’s premier takeover attorney, a man of singular reputation in American finance. Both Getty Oil and Gordon Getty’s legal advisers assumed that Lipton had been playing a significant role behind the scenes that summer, advising Williams about how the museum should respond to Getty’s various takeover proposals. Lipton’s reputation exacerbated the fears of Sid Petersen and the others as they flew to London. Harold Williams must be serious about a bid for control of Getty Oil; why else would he retain Marty Lipton, the man of a thousand mergers?
It was in a room at Claridge’s in London that they heard the answers to their questions about Lipton and the museum. A late-night negotiating session between Getty’s lawyers and Petersen’s advisers had produced a stock buy-back plan, with modified “handcuffs,” that was acceptable to the company. The next morning, Getty’s chief legal adviser, San Francisco attorney Moses Lasky, strongly recommended the plan to his client. But Getty promptly rejected it. Getty insisted on making his consent takeover proposal to Williams and Lipton. After meeting with Getty, Lipton came to Claridge’s to inform Petersen and his advisers of what the museum had decided.
“I have just undergone one of the most exceptional and curious experiences of my career,” Lipton began. “I had a meeting with Gordon and his lawyers that was patently absurd. They made an absolutely absurd proposal. It was truly outrageous. It involved firing the entire board of directors, and obviously it is totally unacceptable to the museum.”
Lipton went on to say that Lasky had told him about the 9 million treasury shares authorized in Philadelphia and that he, Lipton, was almost as upset about that news. One of Petersen’s advisers told him that the board had taken that drastic step only because they feared the worst--that the museum would go along with Getty.
“That’s absolutely ridiculous,” Lipton replied. “How anyone with a sense of responsibility could think that a responsible man like Harold Williams or a lawyer like Marty Lipton would ever enter into an agreement like this with Gordon Getty is just inconceivable. Mr. Williams is a responsible businessman. He is respected in the business community.”
Lipton said that it was especially absurd that they were standing around in London discussing this. He proposed a three-way “standstill” agreement in which Getty Oil management, the museum and Gordon Getty would agree to maintain the status quo for 18 months. Petersen’s advisers said that the idea of a truce had some appeal but that they were still worried about what Getty might do.
“I’ll go down the hall and see if Mr. Getty’s lawyers, or Mr. Getty himself, would be willing to enter into a standstill,” Lipton said.
Lipton found Getty in his suite with two of his lawyers, Lasky not among them. “You have one hour to agree to a standstill,” Lipton said. The “or else” attached to his deadline was the implication that Getty Oil would immediately issue its 9 million treasury shares, diluting Getty’s stock position. Lasky was summoned to the suite, and Lipton and another lawyer from his firm stepped into the adjoining room so that Getty could talk privately with his attorneys.
Lasky did everything in his power to persuade Getty to accept the standstill. “In my opinion, Gordon, you’ve done what you were required to do after you became sole trustee of the family trust more than a year ago. You explored all possible avenues of improving and protecting the value of your shares,” Lasky said. “Now that you’ve done that, it is apparent that if you don’t enter into the standstill agreement, the company will be put on the block and sold.”
“I am not going to make a decision about the standstill before Lipton’s deadline,” Getty answered. “One thing I learned from my father is that whenever somebody gives an ultimatum that something has to be done immediately, the thing to do is to refuse to act immediately.”
“But it’s not a matter of being able to avoid a decision,” Lasky insisted. “By refusing to make a decision to enter into a standstill, you would in fact be making a decision to sell the company.”
“I will not meet Lipton’s deadline,” Getty repeated.
Exasperated, Lasky called Lipton back into the room, told him where things stood and suggested that perhaps Lipton could ask Petersen and his advisers to extend the deadline by a day or two. Lipton said he would try.
A short time later, Getty summoned his lawyers to his suite. “I suppose you think I’m out of my mind for rejecting your recommendation this morning and again for refusing to enter into the standstill,” he told them. “But I will not enter into the standstill agreement. I have decided that I must sell the shares of Getty Oil owned by the family trust. I would like the three of you to accompany me to New York tomorrow morning so that we can consult an investment banker on this subject.”
The next day, Sid Petersen and his exhausted advisers flew back to the United States, some to New York, others to Philadelphia and Los Angeles. For the lawyers, the merger game players, there was a self-conscious awareness that the adventures in London had raised the battle for control of Getty Oil to a new plane of exotic interest. “Who do you think will play Gordon in the movie version?” one lawyer asked another on the flight back.
GORDON GETTY FELT BETRAYED by the “snakes” on Sid Petersen’s board of directors. His proposal to Harold Williams and the museum had been flatly rejected. Marty Lipton had described Getty’s think ing as “absurd.” Moreover, Getty’s own attorneys had made it clear that they thought his ideas and plans were wrong, mistaken. In the face of all this disapproval and disappointment, there was a part of Getty that seemed to say, to hell with them. Not long after his return to San Francisco, for example, he received a large bill for services from the Lasky law firm. The bill drove Getty into a rage; Lasky was told that his client was so upset that he was thinking about retaining new attorneys.
The mood would pass--the moods always did, and then Getty would be his whimsical, charming, earnest self again. In fact, just three weeks after his return, he signed the standstill that he had rejected in London. And far from selling his trust’s shares in Getty Oil, he retained New York investment banker Martin Siegel to help him “maximize the value” of his fortune. (Siegel was later discovered to have sold inside information about Getty Oil deals to Ivan Boesky.) Getty also told Petersen that there were new ideas to be explored at the company. But the scene in London had changed things. It had bolstered management’s resolve to support a family lawsuit challenging Getty’s right to be sole trustee of the family stock. And it had stirred the interest of Getty’s relatives.
The first contact came on Monday, Oct. 10, when Gordon Getty’s brother J. Paul Jr. telephoned from London. Paul spoke to both Gordon and his wife, and to both he expressed his concern that Gordon was fouling things up at Getty Oil and that Gordon would lead the family into a new round of internal dissension and lawsuits if he did not accept a corporate co-trustee to help manage the family trust. Gordon and Ann tried to assure Paul, a registered heroin addict who received about $30 million in dividends annually from the trust, that there was no need to worry. At one point, Paul burst into tears over the prospect that Getty’s refusal to accept a co-trustee would lead to family in-fighting.
Shortly thereafter, Paul wrote to Gordon in San Francisco. “It was Father’s clear intention that there should be a corporate co-trustee,” his letter said. “I don’t want to threaten you or even appear to, but I’m afraid that litigation will be inevitable if you don’t quickly agree to another trustee and I’m sad to think that I, too, would be sucked into it.”
At virtually the same time, Gordon began to hear from the daughters of his late half brother, George. “I have heard from several sources that you are attempting to make some major changes that concern Getty Oil, the museum and the Sarah C. Getty Trust,” one of his nieces wrote on Oct. 21. “I am concerned that you are continuing to act as sole trustee.”
Gordon Getty met with some of his relatives in Los Angeles and tried to assuage them. And he wrote to his brother in London: “There is no basis on which anyone has any legal standing to seek the addition of another trustee, and any attempt to do so would be opposed. There is, moreover, nothing to favor a corporate trustee. A corporate trustee, such as a bank, operates through underlings and their judgment about how the company should be operated has nothing to commend it. . . . Your letter deplores another round of dissension in the family. No one would deplore that more than I. . . . The relationship between the trust and the company is now amicable, perhaps more so than at any time since Father’s death. Management and I are cooperating to the common good of everyone. I hope you will not try to upset this amity. Love, Gordon.”
The extraordinary thing about the letter was what it revealed about Getty’s perception of his relationship with Sid Petersen. He appeared to believe that relations between himself and management were better than at any time in the previous seven years. Yet, virtually as he wrote those words, Getty Oil’s management was taking its final steps to undermine Getty’s authority as sole trustee of his family’s wealth.
THE COMPANY’S ATTEMPTS to find a family member who would file suit against Getty had languished since the recruitment of Seth Hufstedler the previous June. After contacts with Getty’s nieces in Los Angeles yielded no action, attention was focused on Paul Jr. in London. Paul Jr.'s English solicitor, Vanni Treves, had been in touch with Getty Oil general counsel Dave Copley since the previous spring. Early in November, Treves called Copley and said that he would fly to Los Angeles on Monday, the 7th, to meet with Hufstedler and discuss Hufstedler’s appointment as guardian ad litem --for the purposes of a lawsuit--representing one of Paul’s children.
The question of which child it would be was complicated. Paul had four children by his first marriage, to Gail Harris, and one by his second, to Talitha Pol, who died in 1971 of a drug overdose. The children by his first marriage lived in California, near their mother. Among them was J. Paul Getty III, the unfortunate heir who lost an ear to Italian kidnapers and was subsequently rendered a paraplegic by a drug overdose. J. Paul III’s medical bills ran to $25,000 a month, and at one point his father refused to pay them, forcing Gail Harris to petition for relief in court. During that period, Gordon Getty had supported Harris and her children. Paul’s son by Talitha Pol, however, had no particular loyalty to Gordon and no mother to intervene should Paul decide to sponsor a lawsuit against his brother in San Francisco. This child’s name was Tara Gabriel Galaxy Gramaphone Getty. He was born, as one might guess, in 1968. He was now a student at a boarding school in England.
Since Tara was a minor, it hardly mattered that he had never met Seth Hufstedler or that he had no idea what his Uncle Gordon had been up to at Getty Oil. If his father signed the appropriate documents, Hufstedler could be appointed Tara’s guardian for the purposes of a California lawsuit.
Vanni Treves flew to Los Angeles from London, met with Hufstedler for two days and was satisfied that the legal documents were in order. He returned to England and met with Paul, who signed the necessary authorizations. Earlier that same day, Treves met with Paul’s son Mark Harris, who was visiting from California. “You must realize that I hate litigation,” Treves said. “Everybody on this floor hates litigation. And everyone in this building hates litigation. We do everything possible to avoid litigation.” Later, Mark Harris rode out to visit with his half brother at his boarding school. Tara told him that he had never met Hufstedler, had never spoken or corresponded with him. All Tara knew, he said, was that his father had told him that his interests were being looked after and that he should not be concerned if his name began to appear in the newspapers during the next few weeks.
Whether it would or not was still up to Sid Petersen and the directors of Getty Oil, who convened for their quarterly board meeting in Houston on Friday morning, Nov. 11. There would later be a great deal of moralizing about the decision undertaken at that meeting to intervene in Hufstedler’s suit against Gordon Getty. In fact, several of the directors expressed the view that intervention in the lawsuit was unseemly, that this was not the way Getty Oil had conducted its affairs when the old man was alive. But in the end, Petersen and his board were persuaded that they had no choice. If they did not formally intervene in the suit challenging Getty’s power, Hufstedler would be reluctant to file it--he did not want to carry the burden by himself. So the directors approved the intervention.
Informed over the weekend about the board’s decision, Hufstedler walked into the Los Angeles County Superior Court building downtown on Monday morning to file a lawsuit on behalf of Tara Getty seeking the appointment of Bank of America as co-trustee of the Getty family trust. The next day, Getty Oil sent one of its own lawyers to the courthouse and filed a formal intervention supporting Hufstedler’s allegations against Gordon Getty.
Sid Petersen and his advisers had assumed from the start that Gordon Getty would be displeased by this legal gambit. But they had consoled themselves with the belief that they were only doing what was necessary to protect the company’s public stockholders from Getty’s exercise of power. What they had not anticipated, to their deep and lasting chagrin, was the reaction of Harold Williams and Martin Lipton.
“We got snookered,” was Lipton’s succinct response. He and Williams both believed that the lawsuit and Getty Oil’s intervention violated both the letter and the spirit of the three-way truce agreement signed after the return from London. Of course, even if it succeeded, the lawsuit would not alter the museum’s stock position. What angered Lipton and Williams was their perception that they had been double-crossed, that Petersen and his advisers had used the negotiated peace to organize a secret initiative designed to undermine Getty’s power. During a volley of cross-country telephone conversations, Petersen’s lawyers and investment banker tried to mollify Lipton and Williams, but it seemed that nothing would placate them.
Finally, the game was beyond anyone’s control. The Hufstedler suit threw Gordon Getty and Williams back into each other’s arms. By the first week in December, they had reached a tentative agreement: They would combine to sign a majority stockholder consent, forcing Getty Oil to withdraw from the Hufstedler lawsuit. Getty wanted to go further; he wanted to return to his London proposal and use the consent to fire the entire board of directors. But despite his anger at Petersen and the board, Williams refused to take such a drastic step, which would inevitably draw Wall Street’s rapt attention to the struggle for power at the company. Williams and Lipton were willing to consider other changes at the company, however.
On Monday, Dec. 5, the pair met with Getty at Lipton’s Manhattan law offices to draft a document. They agreed on a “super-majority” provision requiring that 14 of Getty Oil’s 16 directors approve any major corporate transaction, such as a stock buy-back, merger or restructuring. As part of the standstill agreement signed after their return from London, Williams had been appointed to the Getty Oil board, and Getty was permitted to nominate three new directors loyal to him. Thus, the super-majority provision would give Getty and his allies effective control over the company’s major policies. Late that night, Getty and Williams signed the consent, and the next day it was delivered to Sid Petersen at Getty Oil headquarters in Los Angeles.
Nineteen months after the death of Lansing Hays had brought him to power, Gordon Getty had finally exerted formal control over the policies of his family’s business. It had not been easy, nor had Getty’s ambitions been fully realized. There was still work to be done, he believed. What he did not realize that wintry Monday evening in New York when he signed the consent, what he apparently could not understand, was that the destiny of Getty Oil was now beyond the influence of any one man. “Events had overtaken us,” was the way Harold Williams described it later. Or, to borrow the metaphor so enthusiastically employed by the company’s outside counsel, Bart Winokur, at the Bonaventure Hotel 11 months earlier: The blood was in the water now, and it was spreading irretrievably. The sharks would come now. They always did.
ON DEC. 28,1983, Pennzoil Co. announced a surprise tender offer for 20% of Getty Oil’s shares. On Jan. 1, 1984, Pennzoil’s chairman, J. Hugh Liedtke, met with Gordon Getty at the Pierre Hotel in Manhattan and made a deal to take joint control of the company. Their $110-per-share offer was presented to the Getty directors the next evening.
After an angry, 25-hour meeting, during which the price was raised to $112.50, Getty and Liedtke believed that they had won, that the offer had been approved. But Petersen and his directors thought that they were free to solicit other offers before the final documents were signed. On Jan. 5, Texaco Inc. offered $125 for all the company’s shares, including those owned by the Getty family trust. Late that evening, Texaco chairman John McKinley met with Gordon Getty at the Pierre. Getty agreed to sell, though he said later that he felt he had “no choice” but to do so because otherwise he might be locked in as a minority shareholder in a company controlled by Texaco.
After the Texaco deal was announced, Pennzoil sued the Getty trust, the museum, Getty Oil and Texaco in Delaware, accusing them of breaching Pennzoil’s contract. Because of an oversight by one of Texaco’s attorneys, the suit against Texaco was moved to Houston. A five-month jury trial on the issue of whether Texaco wrongfully interfered with Pennzoil’s contract resulted in a record-smashing $10.53-billion award to Pennzoil, including $3 billion in punitive damages. In February, all but $2 billion of the judgment was upheld by the Texas Court of Appeals.
Gordon Getty, his family trust, Harold Williams, the Getty Museum, Sid Petersen and the directors of Getty Oil have all been named in derivative lawsuits filed by Texaco shareholders since the Pennzoil verdict. Because of the mind-boggling size of Pennzoil’s judgment, which forced Texaco into bankruptcy proceedings, the entire Getty fortune is at risk in the lawsuits. The suit filed by Seth Hufstedler challenging Gordon Getty’s trusteeship continues in Los Angeles probate court. Settlement talks have broken down because of the Pennzoil case. A trial may begin later this year.
Meanwhile, Getty Oil’s headquarters at Wilshire Boulevard and Western Avenue have been emptied, and a bank occupies part of the premises. Sid Petersen and other top executives of the company have taken early retirement, albeit with generous “golden parachutes” provided by Texaco. After being declared “redundant” by Texaco, 1,250 other employees lost their jobs in the merger. Still other employees and assets of Getty Oil were absorbed by Texaco and reorganized. Getty Oil still exists as a wholly owned subsidiary of Texaco, but the independent empire built by J. Paul Getty, a company that once anchored downtown Los Angeles’ industrial fraternity--that Getty Oil is no more.