My Way v. Their Way

I planned each chartered course. Each careful step along the byway,

And more, much more than this: I did it my way!

So crooned Frank Sinatra in the late 1960s. Now, since his semiretirement from show biz, his business rivals are learning that he really meant what he sang. The latest object of Sinatra's approach: the Del E. Webb Corp., a $340 million-a-year Phoenix-based company that was founded by the late Del Webb, the renowned builder and former part-owner of the New York Yankees, who died in 1974. Late last month Sinatra filed with the Securities and Exchange Commission a 14B form, which is the customary prelude to a proxy war. Bracing for the onslaught, the Del Webb Corp. announced that it might postpone its annual meeting, which is now set for April 15.

In the past, the company and Sinatra seemed an ideal match. In addition to its real estate and construction activity, the company owns four major Nevada hotels and casinos: the Sahara and the Mint in Las Vegas, the Sahara Tahoe in Lake Tahoe and the Primadonna in Reno. Sinatra is both a Las Vegas entertainment idol and an entrepreneur. He even held a Nevada gaming license in the early '60s. Evidently impressed by Webb's potential, Sinatra in 1975 quietly began to acquire 420,000 shares, or 5%, of the company's outstanding stock. To finance part of the purchase, he borrowed $850,000 from a City National Corp. subsidiary. Meanwhile, he and his attorney, Beverly Hills Lawyer Milton Rudin, and their allies, Las Vegas Publisher Hank Greenspun and Wife Barbara, bought up another 5% of Webb's stock.

Mismanagement Charge. The company's directors were thoroughly alarmed at the intrusion. Last October, before the Sinatra group was rebuffed in its attempts to gain representation on the board, Greenspun filed a suit charging mismanagement and misappropriation of funds against the present corporate management. His special target: Chairman and President Robert H. Johnson. Johnson is also the executor of Del Webb's estate, which owns about a third of the stock, and the principal director of the Del Webb Foundation. "What is good for the estate is not necessarily good for the public company," argues the pugnacious Greenspun. "What is good for the foundation is not necessarily good for the estate. [Johnson] has to serve all three masters with a certain wisdom, which he doesn't have."

Fighting back hard, the company launched a suit against Sinatra, Rudin and the Greenspuns, charging that they had sought to force Webb to hire certain entertainers for the Nevada casinos and to sell certain properties. "Their allegation is absolutely untrue," says Greenspun.

Faced with the defiance of the Webb board, Sinatra and Rudin last month evidently decided that their most effective course of action was to declare what amounts to a corporate war. After the 14B filing, Sinatra and Rudin were unwilling to say whether they were aiming for total control of the Webb Corp. or for merely one to three seats on the board. But it seems probable that Sinatra will settle only for his way--and that would mean control.

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